3-29-19 BuyWise Mortgage Weekly Interest Rate Update

Welcome back to the weekly mortgage market update. I’m Josh Lewis, certified mortgage consultant and broker owner here at BuyWise Mortgage in Huntington Beach, California.

As always, with the weekly update, we’re going to talk about the 90 day trend. We’re going to show you where our current BuyWise Mortgage broker rates are and how those compare to the national averages. We’re going to talk about the fundamentals, what happened in the news this week that’s impacting interest rates.

We’re going to look a little bit at the technical charts, and then we’re going to end up with our rate float advice for this week.

So looking at the 90 day trend, you can see here we are still in a downward trend across the board. Rates were down about an eighth to a quarter over the last week, so looking at current BuyWise rates, your conventional zero lender fee rate is at 4%. That’s an amazing rate.

We’ve gotten lower in the past when we had a lot of the quantitative easing and market manipulation by the Fed back in 2013 but other than that, it’s about as good as we’ve seen interest rates.

4% on a standard balance conforming loan. On the high balance, so if you’re over 484,350, if you’re in an area like Orange or LA County that allow the high balance loans, you’re by the quarter percent higher about 4.25%

So moving over to the FHA loans again super good here, 3 5% on the standard balance FHA and 3.75 on the high balance FHA and the VA’s are almost as good as that, that 3.625 and 3.875 so all of the government loans with zero points in lender fees are down under 4% so really, really good rates there.

So let’s look at how that compares to the national averages. How are BuyWise rates compared to the national averages? On the conventional loans, we’re all a little more than a quarter percent better. On the FHA loans we’re over a percent better than the national averages and on the VA, a little over a half percent better than the national averages.

So speaking of those national averages, let’s take a look here. The 30 year conforming on the national average is 4.318, the VA is 4.539 and the 30 year FHA, I’m sorry, the FHA is 4.539 and the VA is 4.133 so that is coming from the Optimal Blue mortgage market index. Optimal Blue is the biggest pricing engine in the country. Over 30% of lenders nationwide use Optimal Blue for locking loans and that is the average of locked rates as of yesterday.

So what happened this week in the news that was moving interest rates? One thing that didn’t move the interest rates, it was actually surprising, is the Mueller report came out, confirmed there was no collusion with the Trump campaign and Russia.

We felt as though that was one of the things that was clouding the market’s thinking, worried that there may be something come out of that that could lead to impeachment and taking that risk away should have or could have led a worsening of interest rates and some of the risk premium coming out of the bond markets.

That didn’t happen so a little bit surprising, but it was good. Good for interest rates. The Fed did their refunding this week. They had on Tuesday, a two year auction on Wednesday, a five year auction today, Thursday, a seven year auction. The two and the seven were really good. The five was pretty good. Just goes to say that there is an appetite for US treasuries right now. The more important ten and thirties will go next week.

So what we did see in the market is that, and we’ll look at this in the charts, the Treasury securities the US ten year treasury outperformed mortgaged back securities. So we saw more improvement, more decrease in treasury rates then we saw an interest rates for mortgages and that’s to be expected.

As we talked about last week, the Fed announced that later in the year they are going to begin reinvesting in treasury so more demand, more buyers in the market pushing those treasury yields down. We do expect that will help mortgage rates in the long run, but not seeing it as much as we would have expected in the short run.

So looking here at the chart of the Fannie Mae 30 year, we’ll see uptrend in prices so downtrend in yields is definitely still strongly intact. What we do want to look up there at the far side of the chart, the last two days of these little red candles, that’s the beginning of an evening star pattern.

It could be a bearish for us going forward. Long run, I do expect rates to stay good or even get a little bit better than this, but in the short run, after we’ve seen a nice run down in interest rates, we could see it get a little bit worse.

So the last thing I wanted to show you here is the the US 10 year treasury chart and the reason for that as you can see, that steep drop. As long as we stay at the current level, which is under 241, say below 241, that’s a strong level of resistance now for yields to go back up. As long as we stay below that, interest rates are going to remain good. Mortgage rates will be good.

If we look back at the previous chart of those mortgage rates, we’re in a pretty wide range, so anything could happen. We could get a little worse, we could continue to get a little bit better. Don’t expect any big movements, maybe an eighth better, an eighth worse.

So in the long run, what does that tell us? A big green light this week. As always, cautiously floating because we’re in this big trading range and anything can happen from day to day, but definitely would say, if you’re in the market, we can safely float right now. If you’re looking at less than 30 days to close, it’s never a bad idea to look at locking in the games that we have with the rates being at almost two year lows, basically the lowest since the election in 2016.

So hope this was helpful. If you have any questions regarding mortgage programs, interest rates, cost fees, any and all of that, feel free to reach out. Until then, have a great week and thanks for joining us.

Josh Lewis

For 20 years, Josh Lewis, a Certified Mortgage Consultant, has worked with home buyers and their professional advisors to assure that homeownership is a key foundation to long term wealth creation by creating and implementing custom tailored mortgage plans that minimize ownership costs while maximizing wealth accumulation.
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