Welcome back to the Weekly Mortgage Market Update. I’m Josh Lewis, certified mortgage consultant and broker/owner here at BuyWise Mortgage.
You know the format by now. We’re going to talk about current interest rates, look at the 90-day trend, national averages. We’re going to compare that to our interest rates here at BuyWise Mortgage, and then we’re going to look at the technical charts.
We’re going to do a little something different. We usually talk about the news that moved the market, but since there wasn’t really any this week we’re going to go over something a little bit different.
Then what we’ll do is we will end up looking at the technical charts and we will finish up with a rate float recommendation for the near term future. All right, here we go. The 90-day trend, you’re going to see here we have this nice line across the bottom.
Those three interest rates, if I took the box out there that shows you what the actual current averages were as of Friday, you would see that all three, the VA, FHA, conventional, basically moving in lockstep. The bottom line there, the lowest one is the VA rate.
When we draw that line back on March 27th, the VA was at 4.133% on the national average. As of Friday, it was 4.131%. So really, we’re going on March, April, most of May with absolutely no movement in the interest rates.
I Shouldn’t say no movement, we had a tiny run up, less than an eighth of a percent, down less than an eighth of a percent. For most borrowers, we were able to lock somewhere near the lows of anyone that’s been in the market for the last four to six weeks.
Looking at the national averages, the conforming Fannie Mae/Freddie Mac loan at 4.352% according to the Optimal Blue Mortgage Market Index, the 30 year FHA at 4.549%, and the VA at 4.131%.
Let’s compare that to our ZERO fee broker rates here at BuyWise Mortgage in California.
We have the conventional at 4.125%. The conventional high balance, so if you’re in a high-cost area where we can do the conventional loans above $484,350, that’s 4.375%, so a little bit more than a quarter percent better than the national averages, again with no points and no fees.
FHA at 3.625% and then 3.75% for the high balance. VA at 3.625 and 3.875 for the high balance. When we look at those, FHA is almost a full percent better than the national average and the VA more than a half percent better than the national average.
What I wanted to do, we talk about that, wanted to quantify it for you. Since there wasn’t a whole lot of news that moved the market, not a whole lot to talk about.
Let’s just go through what does it mean if you’re, for example, getting a VA loan and we’re .506% higher than you going somewhere else, getting the national average from your local bank.
On a $300,000 loan amount, the difference between 3.625 and 4.125 is $85 a month. That gives you a savings of $30,000 over the life of the loan. Most loans don’t run 30 years, but let’s say it’s 7 to 10 years.
You’re looking at a good $8,000 to $10,000 savings plus the savings of lower costs at the closing table. Now, if you’re in southern California, you’re in the Bay area, some of these higher cost areas, and you have a $600,000 loan amount, that now jumps up to a $170 monthly savings or over $60,000 over the life of the loan.
We’re talking about real numbers here. As you can see, over the last six weeks we come here and we update, you’re going to say what happened with the rates? Well, they were up and they were down and they were up and they were down.
We can almost always save you close to a half percent, a quarter, a half, to 1%, depending on the type of loan that you’re looking at, and have a couple of thousand dollars lower fees at the closing table.
With that said, the technical charts. Well, there wasn’t a whole lot of news this week. The technical charts actually are a little bit interesting. When we look at the Fannie Mae 30 year, 4% over the last three months. You can see, not a lot of action.
The same top. Again, here at the top, that’s when rates are the lowest. When mortgage loans are at their highest, that’s when rates are at their lowest. So, that flat line across the top there, that tells us that rates have really been going sideways over the last 90 days.
But then, the bottom line here, we can see that the price trend is higher. We keep getting higher highs, but that’s forming what’s called a wedge formation and eventually, we will have a breakout. That breakout probably should come in the next week or two.
We’re going to talk a little bit more about what that break is likely to look at, but that wedge should tell you we’re not going to have the sideways trend forever.
Now, the next chart, when we look at the US 10 Year Treasury over the last 90 days, you can see over the last 30 days a downtrend. Now, I’ve highlighted the line there. That is actually resistance as we’re trying to move lower. So, support for rates being higher, resistance for us trying to push lower.
We’re getting close. We tested it twice last week, couldn’t quite break through. But, if I were to hazard a guess, I’m going to say we’re going to break through that and we’re going to move lower. Now, what does that mean? It means we won’t have this complete sideways trend.
That resistance right now is at 2.359. Let’s call it 2.36. The next level of support, which is resistance for lower rates is at 4.29. So we’re talking less than a .125% of improvement. While I do believe that rates are going to get better in the near term, and even more so over the remaining portion of the year, don’t think it’s going to move a whole heck of a lot.
So, if you’re in the market, we’re going to have a cautious green light/yellow light situation up. If you’re happy with your interest rates, you’re within 30 days of closing escrow, or you’re looking at locking in a rate on a refinance, these are great rates.
Let’s just take them and use them while we have them. Hopefully, this has been helpful. Hopefully, it helps you make some good decisions. If you have questions about your loan, how we can save you money specifically or just want a second opinion on an interest rate quote you have from someone else, we’d be more than happy to do it.
Have a great day and thanks for joining us.