Welcome back. I’m Josh Lewis, Certified Mortgage Consultant and Broker, Owner of BuyWise Mortgage here in Huntington Beach, California with your weekly mortgage market update.
You know the format, we’re going to go through the 90 day trend. We’re going to look at current national averages, how that compares to BuyWise and how much money we can save you.
We’re going to look at what happened in the news to move interest rates and then we’re going to look at the technical charts and see what that tells us about rate lock float recommendations moving forward.
So the 90 day rate trend, you’re actually going to see the next slide is a 360 day rate trend. But the 90 day you can see, although it shows that the rates are down over the last 90 days, it shows that downtrend kind of leveling out and up a little bit, which it is over the last couple of weeks, rates are slightly higher.
But if we shift to the next slide, which shows that 360 day trend we can show from November of last year through now, we are still in a well-defined downtrend in interest rates. We expect that to continue, but some of the news over the last week was really critical because in the short term we’re seeing a little bit of a correction in the consolidation and we may see rates get even worse before they continue more of that downtrend.
What does that actually mean right now in terms of interest rates? The average locked rates as of Friday, July 12th, the 30 year confirming 4.127%, so a little over four and an eighth. The 30 year FHA, 4.228% right there at four and a quarter. And the 30 year VA at 3.868%.
So how does that compare to our BuyWise mortgage rates?
For conventional loans, we’re at 4%, on the standard balance, 4.83% and below, and on the high balance, above those numbers we’re at 4.125%.
On FHA, 3.25% and 3.50% on the high balance.
And 3.375%, 3.625% on the VA loan.
How does that compare to those national averages? On the conventional, we’re about an eighth of a percent better, on the FHA we’re almost a full percent better, and on the VA just less than a half percent better.
Those are real numbers and the thing to remember is those national averages we’re quoting typically include some amount of points and anywhere from a $1,000 to $2,000 of lender fees. We have no lender fees. Those are zero-point quotes that we’re giving you there. So not only are we saving you thousands at closing, you’re saving an eighth, a half, a full percent on your monthly interest rate over the life of the loan.
It makes a huge difference in your wealth-building, equity accumulation, and what you’re doing to put your family and yourself in a better position moving forward.
What happened last week that moved the markets? Really the biggest thing is the Fed came out, they didn’t have a meeting last week, the meeting was the week before that, but Fed Chairman Powell was at the Senate and the House giving a semi-annual testimony last week and basically confirmed what everyone expected, that the economy is a little bit slower and that they’re most likely going to be cutting next month.
The markets are fully priced in a quarter-point Fed cut that does not directly impact our mortgage rates, but that downtrend over the last 90 days largely factored that in already.
His testimony last week and the way he answered questions kind of put the markets thoughts aside in terms of a half-point cut next month or another one immediately. Markets are still expecting another quarter-point later in the year and maybe even another half-point later on in the year.
But for right now, the market thinks that rates are about correct in terms of where they should be based on his testimony. The later part of the week we also got some slightly elevated reads on inflation. All of that just amounted to excuses for sort of profit-taking and consolidations.
I know the charts are kind of boring, but let’s look at the charts because last week they’re very instructive. So the first thing we want to look at is the last 90 days, this is the universal mortgage back security. Again, boring, you guys probably don’t care, but Fannie Mae and Freddie Mac are now trading in a universal mortgage-backed security. Rather than the Fannie Mae Bond, we’re looking at the universal mortgage-backed security.
You can see we have that Fibonacci level there way up at the top and that’s been our resistance. We’ve broken through it a few times, but within a couple of days, we get pushed back down below. Then we hit that gold line, the 25-day moving average, which as rates get better, bond prices keep going up.
That’s rising and rising. So we were looking for a breakout ’cause that creates a wedge, that rising trend line and then the Fibonacci retracement, we’re looking for a breakout. Because we had popped above that Fibonacci level a couple of times, we were hopeful for a breakout to the good side, but with all the news last week, what it is, it pushed us down below, not only below the Fibonacci level but below the 25 day moving average.
We’re lucky we’ve got the 50 days moving average a little bit below us and that’s our new trend. So that’s our risk level is down to the 50-day moving average and if that didn’t hold and then we’d go all the way down to that next line below it, which is the next Fibonacci retracement level.
So a long way of saying we’ve got a couple of layers of good support below us, but maybe another eighth of a percent, even a quarter percent in rate and the worst case before we hit those levels.
Unless we pop above the 25 day moving average and then squeeze above that Fibonacci level, we’ve probably seen the best rates in the near term. I do expect we’re going to get more news both domestically and globally, that the economies of the world are slowing and interest rates will move lower and we will continue our longterm downtrend. But for now we’ve probably seen the best of our interest rates for the next two to four weeks until we get some additional negative news that impacts the market.
The next chart here, this again is just the 30 year mortgage backed security. But going back to May, I want to show you that with all of the movement, the movement’s really gone nowhere. We’re talking end of May, all of June, half of July now the market’s been here within about an eighth of a percent. Don’t expect it would get much worse than an eighth worse, and at some point we’re going to break through that Fibonacci level and get better.
So what are we looking at? This is the 10 year treasury. Same thing with the 10 year treasury. We popped above the 25 day. So again, the way the treasuries trade, they trade off of yield. We’re actually looking at the real interest rate versus the bond price. So when we see this one going up, that is actually bad. We broke above that Fibonacci level. We broke above the 25 day moving average and that’s our new chain, our new channel there that we’re going to trade in unless we could get below that.
Long story short, what does that mean? Rates are still great. Very, very good. Home values are as high as they’ve ever been so people have more equity than ever and rates are lower than ever. If you need to reposition some debt, if you need to lower your monthly payment, if you didn’t get in when rates were this low three, four years ago, we’re getting another bite at the apple.
If you’re looking at entering the market, lots of good loans available with low down payments and really good interest rates and mortgage insurance is as cheap as it’s been in a long time.
This is still a good time. We’re getting towards the end of the summer market, that summer buying season will cool down once the kids go back to school. Maybe a little less competition for the homes available in the market, but a long way of saying whether you’re in the market to refinance or purchase, the market is really good. Give us a call. If you’ve talked to someone else, you want a second opinion, be happy to go through those numbers and other than that, have a great week.
We appreciate you joining us and we’ll be back next week and hopefully have some better news that we popped up to the top of this channel.
All right. Talk to you soon.