Rate update: Push-me, pull-me rate monster

 Interest Rates, Residential Mortgage  Comments Off on Rate update: Push-me, pull-me rate monster
May 272015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

The same forces that have existed for months are pulling on mortgage rates – among them, the German bond market, US economic data, the Greek debt soap opera, and Fed rate hike fears – which has resulted in volatility and unpredictability. Recently, German bonds seem to have held the most sway. Even on days when the other forces push down, German bonds seem to be able to drag US rates the other way. Really, I don’t see that changing, but a couple upcoming events at least have a chance.

Greece has a debt payment due next week, and it seems they really don’t have the money this time. I’d say odds are that the European Union will figure out some way to rescue them again, but if it doesn’t, Greece would default. The effect probably won’t be catastrophic as it won’t be a big surprise, but it should put some downward pressure on rates.

Next week also is a jobs report week. The last report was back on trend of a little more than 200k jobs, but, unfortunately, average earnings also returned to trend showing little income growth for US workers. As I’ve said previously, I think earnings growth is more important than job growth at this point. The addition of low-paying service jobs makes for weak economic growth and little pressure on interest rates.

HARP refinance program extended again

 Loan Programs, Residential Mortgage  Comments Off on HARP refinance program extended again
May 192015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

The Home Affordable Refinance Program or HARP has been a boon for homeowners wanting to refinance. The program targets underwater mortgages, but its reduced documentation requirements and favorable interest rates make it attractive to all homeowners.

The Federal Housing Finance Admin reports the program has helped 3.3 million homeowners refinance their mortgages since its inception in 2009, and it was scheduled to end at the end of this year. However, Mel Watt, Director of the FHFA recently announced a one year extension through 2016. Watt claims an additional 600,000 homeowners still could benefit from a HARP refinance.

Keep in mind the two most important restrictions of the program. To be eligible:

– Your mortgage must be owned by Fannie Mae or Freddie Mac. (Fannie and Freddie have a tool on their Web sites to help you determine that or give me a call for help.)

– And, your mortgage must have closed prior to June 1st, 2009.

If you still haven’t been able to refinance, you may want to give this program one more look. The expanded eligibility requirements might allow you to qualify even if you’ve run off the road a couple times in your financial past.

Rate update: Volatility rules, watch for dips

 Interest Rates, Residential Mortgage  Comments Off on Rate update: Volatility rules, watch for dips
May 182015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Mortgage rates have been on a tear lately, rising from near record lows to the highest rates of the year in a few, short weeks. But it seems the train has run out of coal for now. Rates have plateaued. The question is will we regain the ground we lost?

There is hope. Recent US economic data has been disappointing, and some analysts are tossing around the dreaded “R” work – recession. Overseas economies don’t look much stronger, and the European Union still is struggling with the Greek question.

With all that acting as a wet blanket, you wouldn’t think we’d be worried about higher rates.

The problem is the German Bund. Investors drove German rates close to zero earlier in the year. A few weeks ago, investors started selling, and German rates rose rapidly, dragging US rates along for the ride.

For now, let’s take solace in the fact that rates have paused, but it’s entirely possible that the lemmings will start running towards the cliff again. If you choose to hope for lower rates, float cautiously and remain vigilant. Mortgage rates are likely to remain volatile, but floating could be a successful strategy if you watch for a dip like last Fri.

Rate update: Volatility returns with higher rates

 Interest Rates, Residential Mortgage  Comments Off on Rate update: Volatility returns with higher rates
May 112015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

After a very quiet winter, volatility has returned to mortgage rates in a big way. Thirty-year rates have shot up about 3/8th of a percent in the past two weeks. This rapid rise has been harder to understand because it’s not related to the typical market forces we watch. US interest rates are rising primarily because European rates are rising.

The increase in Europe has been much more severe and seems to be related to the belief that European quantitative easing has cured all that ails the European economies. Whereas previous record low yields in Europe pushed US rates down, now they’re pulling them up.

An additional factor is the recent record issuance of US corporate debt. Corporations are racing to take advantage of debt financing before rates rise. Corporate debt also acts as a substitute for mortgage bonds.

The short-term market sentiment clearly has turned against low rates. While US economic data still doesn’t support higher rates, if you have a short-term time horizon, it would be risky waiting for rates to reverse. It’s quite possible when rates do dip that they’ll be a higher than today.

Rate update: Could jobs report give us a bounce?

 Interest Rates, Residential Mortgage  Comments Off on Rate update: Could jobs report give us a bounce?
May 052015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Mortgage rates moved higher last week – and quickly – but why? The 1st quarter GDP report showed almost no growth of the US economy to begin the year. It seemed that that coupled with other weak economic data would keep rates low.

Unfortunately, the markets didn’t cooperate. We’ve talked a lot this year about how super-low European rates have supported low US rates even when the US economy seemed to be strengthening. Last week, European rates increased dramatically, and it seems they drug US rates along for the ride.

Another contributing factor may have been the report showing wage growth picked up last quarter. As we discussed before, the lack of wage growth in our economic recovery probably was helping keep rates low.

How about the week ahead? The market seems oversold at the moment, which could support a bounce to lower rates. This is a jobs report week. If we get another disappointing report Fri, we could quickly recover what we lost during the last week. However, a strong report could confirm the current market sentiment and leave rates where they are.