6-14-19 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, a mortgage brokerage here in Huntington Beach, California.

Hopefully, you’ve been watching and you know the format here. We’re going to cover the 90-day interest rate trend. We’re going to look at current nationwide averages on interest rates. We’re going to see how that compares to our much lower broker rates here at BuyWise.

Then we’re going to look at both the news of the week and the technical analysis and come up with what will be our rate lock and float recommendation for this week. Jumping in here, you can see as we expected in last week’s report, basically just trading sideways here, not really up, not really down from last week.

That’s to be expected and we’ll get to that when we get to the technicals. What does that actually mean for interest rates right now? The 30-year conforming on the national averages as of Friday was 4.122%, the 30-year FHA, 4.324%, and the VA at 3.879%.

Now we can save you a good chunk of money here at BuyWise, so let’s take a look at those interest rates.

All right then. Our average here, our discount to the national average on the conventional loans, almost a quarter percent, 0.247%.  We’re at 3.875% with zero points, zero lender fees, no admin fee, no doc fee, no underwriting fee, one of those junk fees that can add up to $1,000, $2,000 easily with a lot of lenders. On the High Balance, a little bit higher, 4.125.

FHA, 3.25% three and a quarter and 3.5% three and a half for the High Balance again. High Balance as loan amounts, $484,350 and above currently.

In VA, 3.375% and 3.625% for High Balance. Those are again amazingly good interest rates, but that’s where we see the huge, huge differences from the nationwide averages. On the FHA, we’re over a percent lower. On the VA, we’re over a half a percent lower.

Whether you’re borrowing $200,000 or $600,000, those differences make a huge difference in your monthly payments.

Let’s take a look at the news this week, what happened? What was moving interest rates? Well, we had tame inflation data. The Consumer Price Index came in, it was only up 0.1% showing inflation under 2% for the year.

There were two decent treasury auctions. It was interesting with rates down to see how the bidding was going to go for both the 10 and the 30-year bonds up for auction last week. They were both a little above average, not great auctions, but good auctions, which bodes well for interest rates going forward.

Not really a market mover in terms of interest rates, but good news last week with rates as low as they right now, mortgage applications were up 26.8% last week as a lot of people look to take advantage of the lower interest rates or even higher home values along with lower interest rates to consolidate some debts, pay off the first and the second, eliminate other high-interest rate debt. Let’s take a look.

The chart here pretty straight forward for the week. What do we see? We’re looking at a range here. We’re totally range bound here. This a Fibonacci resistance level, Fibonacci support level in terms of retraces where the 23.6 Fibonacci resistance level at 102.274. What does that mean? It means that it’s going to take something pretty big to move us out above 102.274 which would push interest rates lower. Then we’ve got support here on the downside.

We’ve got a dual layer of support. We have this 101.719 that was the peak, that was the resistance here that we broke through and then finally broke through again here. So that layer, and then we’ve got the 25-day moving average coming up at 101.574. So dual layer support. Even if this first layer gave way, we’ve got another amount of support underneath us.

For that reason, if you’re not risk-averse and you are in the market currently or let’s say the benefit of refinancing isn’t quite there, I think we have a really good opportunity at some point in the near future, whether that’s two weeks, six weeks, two months down the line, that will break through this resistance level to the high side and we will see better interest rates.

What does that mean for us? What’s the rate lock, float recommendation for right now? We definitely have a green light. You don’t have to lock. If you’re in escrow on a purchase and you need to close in the next 30 days, got a whole lot of benefit to floating, but as you can see, or as you did see from the previous chart, we’re towards the bottom end of that range, meaning the high end of interest rates, probably have a little bit of room to move up this week.

The big market mover that we’re going to see is on Wednesday. Tomorrow and Wednesday, the Federal Reserve has their monthly meetings, they’re close to monthly, about 10 times a year. They now have a press conference after each one of those meetings.

The press conference will come Wednesday where the Fed chair briefs the press on exactly what their thoughts and their discussions were and we’ll get some insights into what’s likely to happen. The expectation is they will not cut rates but likely to cut rates at the following meeting. Depending on how they word their guidance, it’s going to dictate what direction we’re going to go.

Again, if you have a short window, probably just lock it and move forward. If you have a longer timeframe, definitely still expect rates to get better. Just not sure what that time horizon looks like or what that black swan event is going to be that pushes rates out of the current range and onto better levels. Thanks for checking in. Have a great week. We look forward to talking with you soon.

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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