Welcome back to the BuyWise Weekly Mortgage Update. I’m Josh Lewis, Certified Mortgage Consultant and broker-owner here at BuyWise Mortgage in Huntington Beach, California.
By now, hopefully, you’ve been watching and know the format. We’re going to talk about the 90-day rate trend where current national averages are on interest rates. We’re going to compare that to BuyWise mortgage rates and show you how much we can save you.
We’re going to talk about the news, what happened to move interest rates this week, then we’re going to look at the technical charts, and we will end with our rate lock float analysis for anyone currently in the market.
With that said, the 90-day rate trend you’re going to see here definitely continuing down. We saw a nice little downward movement today and we may, you’ll see when we get to the technical charts, have broken out of this sideways trend and be moving to slightly better interest rates.
With that, let’s see where we’re at. On the national averages, as of yesterday, the conforming national average was 4.389%, should actually be down a little bit today. FHA is at 4.569% according to the Optimal Blue Mortgage Market Index and VA at 4.199%. Rates were down nicely today, so there should be a little bit of a decrease when those are updated tomorrow.
Comparing that to our current BuyWise mortgage rates, you’re going to see, there’s a ton of money to be saved. Again, as always, our rates have no lender fees, we don’t charge any admin, underwriting, processing, doc fees, any of that fun stuff that lenders love to throw at you that add to your closing costs when you get to the settlement table.
For Conventional loans, as of today with zero points, we are at 4%. For a high balance loan, so $484,350 and above, if you’re in LA, Orange County, San Diego, San Francisco, anywhere in the Bay Area. High-cost counties can go above $484,350, those rates are looking at 4.25%.
On the FHA, again, the government rates are nuts. Everything at zero points is under 4% for well-qualified borrowers. FHA at 3.5%, FHA high balance at 3.75%, VA at 3.625%, and VA high balance at 3.875%. Just spectacular rates for zero points.
Even people with banged up credit. Had a guy with a 620 credit score that was at 4% with a nice rebate today. The government rates continue to be excellent.
What is that discount? What are we saving here relative to those national averages? On the conventional loan, it’s just over 3/8 of a percent, .389%. On the FHA loans, it’s over a full percent. That is a huge, huge difference in the cost of your mortgage over time and your savings and wealth accumulation. And on the VA, .574, over a half of a percent.
Those are big numbers and they make real differences, especially when we’re talking about California loan amounts.
What happened this week? Why did rates get better? Why are we likely moving out of the sideways trend we’ve been in? It was a short trading week due to the Memorial Day holiday, so markets were closing at 2:00 PM Eastern tomorrow, so 11:00 AM here on the West Coast.
There won’t be much activity. Trading desks are cleared out. That can cause some volatilities and some weird action, but really, don’t expect much to happen tomorrow. Next week, we’ll have a short trading week as markets are closed on Monday entirely.
What did we have? We had weaker than expected housing data. The media is making more of it than I think there is there. There are some reasons behind some of that data and some of it is regional. But weaker than expected housing data.
The fed minutes, the minutes, the meeting notes from the last Fed meeting were released, indicated that the fed members are more dovish on interest rates and not likely to increase and, actually, likely to possibly decrease later in the year or early next year.
Then, as always, the China trade war continues on a lot of news. Eventually, we’re going to have a trade agreement. It makes sense for China, it makes sense for us, just a lot of posturing and back and forth until we get there.
Bottom line is, no good news this week for the economy which is good news for the interest rates. When the economy is hot, leads to inflation, inflation leads to higher rates. The converse is true.
When the economy is not doing well, heading toward recession, then we see a lack of inflation and interest rates stay lower and interest rates can be moved lower and manipulated lower by the government to even keep an economy going in the right direction longer. That’s likely what we’re seeing.
Let’s take a look here. This is the chart of the Fanny Mae 30 year and you’ll see here, we have now moved back, it’s funny, to this number, back it was the end of March was the absolute highest we had got on bond prices, lowest in our interest rates. We got back to the exact level today.
It’s going to be interesting to see. We’re above that resistance at 102.844, so as long as we stay above that, that will become a floor of support. Tomorrow, even though we have that weird, short trading day, it would be good to see bonds trade at those elevated levels.
Now, this is on the flip side. The 10-year treasury, we are looking here at yields, so the actual interest rate. You see this big highlighted candle today where interest rates dropped a ton. It had gone down and hit all the way down at 2.30 interday then bounced back up. Long way of saying we’re breaking through layers of resistance of moving to the downside in interest rates.
There is a good chance that this will be a new floor. I’m not thinking rates are going to move a ton lower, they’re already fantastic. If we see conforming, conventional Fannie/Freddie rates under 4%, it would be a little bit surprising for where we are in the cycle right now but we’re not far from that.
The last thing I wanted to point out, about three, four weeks ago, we had mentioned that weakness in stocks, stocks, and bonds compete. When the stock market is doing well, stocks are going higher, interest rates are generally going higher because the prices paid for bonds, bonds are being sold generally to help as the money moves into the stock market.
What we’ve seen, much like we’ve predicted, this long trend, you see the green line here on this chart? That long uptrend in the S&P 500 gave way and we dropped and now we’re trading sideways, and then another drop here today. Just shows that the stock market weakness is good for bonds and that’s probably a big portion of the reason why interest rates are looking better.
What does that tell us right now? Definitely, see no reason to be worried. Definitely a green light right now, but always a cautious green light. I don’t think we’re going to see huge improvements from here because rates are all ready so good, but we want to watch. We want to take advantage.
If you’re comfortable with a little bit of risk and you wanted to float your interest rate during your transaction, now is the time when you can take that risk. If your risk-averse, rates are fantastic. Lock them and just take that stress out of your transaction whether it’s a purchase or a refinance.
Hopefully, you find this information helpful. If you would like a second opinion on your numbers, you’ve already been qualified by someone else, you want to see if we can save you money, always happy to look at it, and always happy to tell you if you’re in good hands and someone is doing a good deal for you.
We’re biased. I think we do the best job here, but there are other good lenders and we’re always happy to give you a second option.
All my contact info here is on the final slide. Hopefully, you found the information helpful. Have a great week, and we’ll see you again next week.