Good afternoon. It’s Josh Lewis, certified mortgage consultant with BuyWise Mortgage, back with the weekly interest rate update.
It is the first report of this year, January 7th, Monday. And here we go!
So, we’ve seen sort of the end of this long uptrend in bond prices, or downtrend in interest rates. We had been talking about the likelihood that the market would consolidate somewhere here, and that’s finally what we’re seeing in the last couple of days.
Last Thursday, we had a huge, big up day, and we saw the highest in bond prices, or the lowest in interest rates. Immediately the next day, last Friday, we had a really strong jobs report which led some belief to some more strength in the economy, and that the stock market might pick up.
So, stocks reacted really well on Friday, and continued through on Monday, so we see a little bit of worsening here in the bond prices. When we’re looking at right here, we closed the day ending right around 102, and we don’t have any support all the way down until 101.85, so with that it’s not a big difference.
We also have some stronger support down here where the 25 day and the 200 day moving averages are coming together.
So, we have some strong support. Don’t have any reason to believe that rates are going to get significantly worse, but this probably tells us that in the near future, the next one to three weeks, we’ve probably seen the best of the interest rates, and the market will continue consolidating the gains that we saw.
What that means, we’ve been talking about being overbought, so anytime the stochastic indicator down here is up above the green line it tells you that we’re overbought, and likely to see some consolidation. So, until we get back down here in this range where we have a neutral market, we’re probably going to see interest rates continue to get a little bit worse.
But again, we have some solid support not too far below us. We’re probably going to see interest rates of about this range for the foreseeable future, but it’s likely that the best rates are behind us.
So, what does that actually mean in terms of interest rates? Let’s kick over here. This is the Freddie Mac weekly primary mortgage market survey, and this shows us over the last three years. So, if we go back in time three years, we were right around 4%.
The best levels in the last three years were down around 3.5% on the 30 year fixed. We started out last year, so January 4th of 2018, at about 3.95%, ran up at the highpoint of the year to about 4.95%, and we saw this nice recovery towards the end of the year. Right now for the week ending January 3rd, the average was at 4.51% on your vanilla 30 year fixed rate mortgage.
So, generally 20% down, excellent credit, not a high balance loan like we see a lot of in Orange/LA county, and some of the other high priced counties in California. So, likely to trade somewhere in this range, 4.5 to four and three quarter for the foreseeable future. Make sure you tune in next week.
We’re going to go really in depth with a 2019 forecast of what’s likely to move interest rates, and the range that we’re likely to see both in interest rates, and housing prices for California. So, stay tuned! Hope you enjoy us, and have a great week.