Welcome back, it’s Josh Lewis, Certified Mortgage Consultant with BuyWise Mortgage with the weekly mortgage market update where we take a look back at the economic events of the previous week, and how it’s impacting the mortgage markets and interest rates.
We’ve been talking since the move here starting in early November all the way through the end of the year where we saw about a half percent increase in interest rates.
We had talked about how it’s rare that we see a straight line move that long, and when we do there’s usually a little bit of a correction or sometimes just a consolidation.
Consolidation is what we’re seeing here, where the market’s just trading sideways and absorbing that big move before they try and figure out what’s next.
So we had talked about this overbought status, where from mid-November all the way through the first of the year mortgage bonds were overbought, meaning we were likely to see some selling.
But, although there wasn’t a whole heck of a lot of selling, this sideways trading has got us back to a neutral stage here, we’re between the red and the green lines here on the stochastic indicators, so telling us that at least it’s kind of neutral, which you can see, we’re moving sideways.
We have a layer of resistance, about an eighth of a percent better in interest rates up here, and we have multiple layers of support right below us, a little bit below that with the 25-day moving average, and then again with the 200-day moving average below that. So lots of layers of support, a little bit of resistance up above us.
Meaning, rates have a little bit of room to get better, a little bit of room to get worse within this trading range. So not super risky one way or the other, not a lot of hope of rates getting a ton better, not a lot of risk of rates getting a lot worse.
For that reason, for most of our clients right now, if they’re within 15-21 days of closing we’re probably looking at just locking those and taking the gains from November and December, and getting some of the uncertainty out of the situation.
For longer term perspective, we’re really neutral right now, just looking and seeing what is next in the financial news and what pops up.
If something indicates a strength in the economy, a possible uptick in inflation, we would see rates likely move higher.
If we saw some continued weakness in additional risks, maybe in the China negotiations, the China trade negotiations, some more of the budget impasse, if that drags on and pulls the economy down we may see rates continue to improve. But for right now, probably looking at trading sideways.
When we kick over here and look at the Freddie Mac primary mortgage market survey for last week, a small downtick in rates, but basically flat. You see they’re reporting 4.45 with a half point in origination fees or discount points.
And we can see here, going back to the beginning of December, both the 30-year which is the blue line, the 15-year which is the green line, and five-one arms which is the orange line, have all decreased and continued to be at really good levels relative to where we were.
So not a whole lot of news. We will be back here next week again to give you some updates, let you know what happens, what economic news comes out, and what that’s likely to mean for you as a borrower or you as a real estate professional.
In the meantime, if you have any questions my contact info here is at the end of the video. Call, text, email, whatever works best for you, we love to help. All right, have a great week, and we’ll talk to you soon.