Mortgage rates

[Concrete Helmet]

It's showing up now. We lost 5 that were on the schedule to close this week. Several lied to the lender about employment status thinking they wouldn't call the employer.... I think the Disney layoffs start next week.
Thank God a couple of our CU's are made up of a lot of Gov. employees and ex military...

 

[URGatorBait]

It's showing up now. We lost 5 that were on the schedule to close this week. Several lied to the lender about employment status thinking they wouldn't call the employer.... I think the Disney layoffs start next week.
Thank God a couple of our CU's are made up of a lot of Gov. employees and ex military...

starts on the 19th.

 

[Concrete Helmet]

BTW still seeing 2.8% on 15 and I believe around 3.65 on 30's....too busy to look.

 

[FireFoley]

BTW still seeing 2.8% on 15 and I believe around 3.65 on 30's....too busy to look.

AAA rated borrowers can probably get below 3.5% on 30 yr. money. but here is an interesting thing. Less than a month ago 30yr. conforming mtge and 30yr. jumbo mtge were about the same rate and at one time jumbo was a smidge cheaper. Fast forward and Jumbo rate is almost 100 basis points higher than conforming. Very interesting as someone once said.

 

[Detroitgator]

Getting Out Of Dodge: After Exiting Loans And Hiking Mortgage Standards, JPMorgan Stops Accepting HELOCs

 

[NVGator]

Market Overview:

Stocks are down with the Dow Jones down 1.19% and MBS bonds are also down in price. This is a rare market day when stock and MBS bond prices are not moving in their traditional opposite direction from each other. The 10-year US Treasury is currently yielding 0.621% which is also not tracking the movement in MBS prices. The huge drop in oil prices is driving the impact on the stock markets, as countries who depend on oil production will suffer large economic hits. The Fed’s active buying of MBS is keeping MBS prices moving independent of other traditional market forces.


Market Details:

Oil Prices. Oil prices are hitting historic lows. The June futures contract dropped to $1.11 per barrel of West Texas Intermediate Light Sweet Crude oil for May delivery, and down to $22 barrel for June delivery. This is down remarkably from the $50-$75 per barrel price in the last five years, and the near $150 peak in 2008. The drop in price is due to the ongoing production dispute between Russia and Saudi Arabia which has resulted in an increase in total world wide oil production at the same time worldwide demand for oil is down dramatically due to the impact of COVID-19 stay at home orders. Whenever more oil is being produced than can be used, the excess oil has to be stored, either in on ground storage tanks or stored on floating oil tankers. Worldwide storage capacity is near full, so literally almost no one can take delivery of new oil at any price, as they have no place to store it. Which is why the May future contract price dropped to $1.11 this morning. Tomorrow is the last day to deliver on this contract so this is not reflective of the entire market, and the June contract at $22 is a better indication of where prices will be for most oil consumers.


Although cheap oil benefits consumers by giving them lower costs of commuting, most people are not commuting too much now, so there is very little short term lift. The other beneficiaries are shipping companies and airlines. The cost to ship goods is a plus for the economy, but the value for the airlines is little, since they are already operating flights that are nearly empty, but they are required to still operate flights in order to hold onto their routes and receive stimulus funds.


Economic Data Releases. The scheduled economic data releases will get media attention this week, but will have little impact on mortgage interest rates, since the Federal Reserves buying of MBS is the entire driver of MBS prices in these market conditions. However, all economic data releases will help the markets get a better understanding of the economic hit to the U.S. and therefore could impact stock prices, which are always trying to predict the future cash flows of U.S. companies.


This week’s releases are:


Tuesday - Existing home sales (consensus -8.2%)

Wednesday - FHFA home price index (consensus +0.3%)

Thursday – Initial Jobless claims (consensus 4.5 million, last 5.2 million)

• Continuing claims (consensus +17.2 million, )
• New home sales for March (consensus -15.8%. last -4.4%)

Friday – Durable goods orders for March (consensus -12.0%, last +1.2%)

 

[Detroitgator]

Thanks... pretty much exactly inline with what i've been saying for weeks. ;)

 

[FireFoley]

10 YR Treasury trading at about 56 basis points. The intraday low was about 31 basis points, but the closing low was around 54 basis points I believe. If we close below 54 basis points, that will give rise to the technicians calling for much lower long term yields I believe.

 

[BMF]

Fannie, Freddie May Soon Buy Home Loans in Forbearance to Help Mortgage Firms

Fannie, Freddie May Soon Buy Home Loans in Forbearance to Help Mortgage Firms

The Federal Housing Finance Agency is weighing whether to allow Fannie Mae and Freddie Mac, the government-controlled mortgage-finance giants, to buy home loans that recently entered forbearance, meaning borrowers have stopped making payments, the people said.

That would help nonbank mortgage companies that lend to home buyers and then quickly sell the loans to Fannie and Freddie.

The strategy was upended recently when Fannie and Freddie announced they would no longer buy loans in forbearance, leaving the debt piling up on the books of the lightly regulated companies that both originate and service home loans.

 

[FireFoley]

For weeks, the mortgage industry has been crying for help from being left on the hook to pay for much of the government’s mortgage bailout. Now, they’re getting some relief.

More than 3 million borrowers have taken advantage of the mortgage forbearance program, which allows those with government-backed loans to delay up to a year’s worth of monthly mortgage payments if they have been hurt financially by the economic fallout from the coronavirus.

Borrowers would have to make those payments at a later date, or over time. Mortgage servicers, however, the companies that collect the payments, were required to advance that money to bondholders for up to a year.

Now, the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, has reduced that requirement to 4 months.

“The four-month servicer advance obligation limit for loans in forbearance provides stability and clarity to the $5 trillion Enterprise-backed housing finance market,” said FHFA Director Mark Calabria. “Mortgage servicers can now plan for exactly how long they will need to advance principal and interest payments on loans for which borrowers have not made their monthly payment.”
The percentage of loans now in forbearance jumped from 3.74% of servicers’ portfolio volume in the prior week to 5.95% as of April 12, 2020, according to new numbers released Monday by the Mortgage Bankers Association. The share of Fannie Mae and Freddie Mac loans in forbearance increased from 2.44% to 4.64%. Since the program rolled out a little over three weeks ago, the number of loans in forbearance has tripled.

The mortgage industry has been fighting hard for relief, led by the Mortgage Bankers Association. While they still want a larger liquidity facility from the Federal Reserve, they praised this latest development:

“This is an important step in reducing the maximum liquidity demands for servicers who are providing borrowers who have a pandemic-related hardship with mortgage payment forbearance,” said Bob Broeksmit, CEO of the MBA.

“While this news reduces servicers’ worst-case cash flow demands considerably, we continue to call on the Treasury and Federal Reserve to provide a liquidity facility to ensure that servicers can continue their important work of advancing missed payments to investors as well as paying property taxes and insurance premiums on behalf of struggling borrowers.”

As a result of the growing number of loans in forbearance, the overall mortgage market has tightened up dramatically, with lenders raising minimum FICO scores and pulling back from jumbo or high cost loans.

“We believe this is a positive step in addressing the liquidity needs of mortgage servicers. It is not a perfect solution, but it offers relief that should help the mortgage market,” wrote Jaret Seiberg housing policy analyst for Cowen Washington Research Group. “This solution also should be positive for the MBS market as it clarifies that Fannie and Freddie will not purchase the mortgages out of the pools after four months. Instead, they will advance liquidity to servicers.”

While the four-month limit will certainly help, if the share of loans in forbearance jump even more dramatically over the next month, some servicers might be unable to fund even those payments.

Larger banks, like JP Morgan Chase and Wells Fargo, have far more capital in reserve to fund these payments, but non-bank lenders and servicers do not. Before this crisis, mortgage delinquency rates were near record lows.

 

[NVGator]

I receive these updates weekly from a Lender we have a relationship with. This is their update from their EVP of Capital Markets. I'm sure @Detroitgator has been saying this for at least a month now.

Market Overview:

Stocks are up slightly today, on cautious optimism that some states may allow select businesses to re-open and employees to return to work. The Dow Jones is currently up 1.03%. MBS bonds are down slightly, with prices down 12.5 -37.5 basis points, depending upon the coupon. Oil prices are down $4.27 in price per barrel, with WTI (West Texas Intermediate) oil trading at $12.67 per barrel. The U.S. 10-year Treasury is currently yielding 0.643%.


Market Details:


Here are the top items driving the market this week:


COVID Milestone. This week the total number of reported cases in the U.S. will reach the one million mark as of this afternoon’s CDC daily reporting. Total COVID related deaths in the U.S. were 52,459 as of Friday’s data, almost double the normal U.S. annual flu fatality rate. In the early days of the COVID infection spreading worldwide, the fatality rate in China and Europe appeared to be about 3.4% which is much higher than the normal U.S. flu fatality rate of 0.1%. If the virus does peak in the U.S. at current levels, and daily new cases begin to decline, it is possible total fatalities may exceed 100,000 people. The following five points will determine the total impact to the U.S. in terms of deaths and economic impact:

1. Actual Fatality Rate. Several recent studies indicate that a much higher number of people were infected with the virus than have been so far reported. Some estimates put the actual infection rate at 50 times higher than has been reported. If confirmed correct, this would bring the fatality rate down closer to the 0.1% of the traditional flu. Also encouraging is that many of those infected appeared to have very mild or no apparent symptoms.
2. Increased Testing. As more testing becomes available, it will help establish the actual fatality rate, it will identify people who are infected and should quarantined, it will allow contact tracing to identify people who were recently in contact with an infected person, and it will help people become confident to go out in public.
3. Improved ICU Capacity. As Ford and General Motors ramp up production of hospital ventilators, and more personal protective equipment is available for first responders, this will have a significant impact on our ability to treat infected patients, reduce the fatality rate and protect our first responders.
4. Immunity. If research shows that prior infections result in some level of future immunity, then this antibody testing will give more people comfort to resume part of their daily lives either as a consumer or going back to work. A vaccine available for the winter flu season would be a surprise boost to optimism as well.
5. Some Visible Return to Normalcy. We will never get back to exactly the way things were in 2019. Many aspects of our lives will be altered, some permanently and some temporarily. As people begin to resume part of their prior activities, and begin to see things as simple as seeing toilet paper on the shelves and the ability to do normal life activities, this will begin to restore consumer confidence, at the same time jobs start coming back.

The above five items will drive when the U.S. consumer and the U.S. economy turn the corner and we begin to recover from the damage of the pandemic. The markets will be watching for any improvements in these five items, and this will have a direct impact on stock prices as well as increased optimism on home purchases.


Economic Data. The following are the key economic data will be released this week. This data will likely drive stock prices, but have little or no impact on MBS prices due to the Fed’s buying activity:


Tuesday, April 28

• Advance Goods Trade Balance - $55 billion drop
• Wholesale Inventories – 0.5% drop
• Retail Inventories – 0.3% drop
• S&P/Case-Shiller 20 City Home Price Index – 0.2% expected drop for February. (up 0.3% in January)

Wednesday, April 29

• GDP, Q1 – Consensus is 3.9% drop, from prior quarter of 2.1% increase. (two consecutive negative quarters = recession definition)
• Personal Consumption – 0.27% expected decline
• Pending Home Sales for March – consensus is 13.0% drop compared to February 2.4% increase
• FOMC Statement – The Federal Reserve Open Market Committee will release their official statement at the conclusion of their meeting. This may drive stock prices but should not impact bond prices.

Thursday, April 30

• Personal Income – 1.6% drop
• Personal Spending – 5.0% drop
• PCE Price indices (inflation rate) – 0.3% drop for March to 1.37% annual. Will have several numbers reported with and without energy costs.
• Initial Jobless Claims – 3.5 million expected
• Continuing Jobless Claims - 19 million expected

Friday, May 1

• ISM Manufacturing Index – 36.1 expected for April, prior 49.1
• Construction Spending – 3.5% expected drop for March, prior was 1.3% drop.

Federal Reserve MBS Purchases. The Fed continues to the largest buyer of MBS, which is the primary factor holding interest rates down, and is expected to stay at current levels for many months. Although the Fed has announced that they are buying fewer MBS this week, they are still buying more MBS than any other investor and they continue to be the key force impacting MBS price levels.

 

[Detroitgator]

I receive these updates weekly from a Lender we have a relationship with. This is their update from their EVP of Capital Markets. I'm sure @Detroitgator has been saying this for at least a month now.

Thanks for posting these, and yup, even though everything mentioned regarding the ECONOMY in that report is not just negative, but horrific, at worst, by the end of the week, i expect the MARKETS to be flat, more likely up, possibly significantly, especially after the Fed speaks on Wednesday (mentioned in the summary, and likely MARKET bullish effect).

We are in a completely disconnected reality, but if you are trading, again, you play the market that's in front of you, not what you think (even know) it should be.

 

[NVGator]

Market Overview:

Stocks are up significantly this morning on news that a COVID vaccine in development by Moderna has shown very promising results in a clinical human trial, and the daily increase in new infections dropped below 1% for the first time since February 24. Additionally Fed chair Powell’s interview on 60-minutes is also giving the markets confidence that the economy will begin to recover in the second half of 2020. The Dow Jones is presently up 2.97% and MBS bond prices are down slightly. Oil prices are up today, with WTI up $3.62 per barrel, to $33.09 based upon expectations that re-opening local economies will drive increased fuel demand. The U.S. 10-year Treasury is currently yielding 0.703%.


Market Details:



COVID Vaccine. Moderna is a Cambridge, Massachusetts based firm which is developing a COVID vaccine in conjunction with the NIH. In the second phase of a human clinical trial, all participants showed development of significant amounts of antibodies for the COVID virus which would help a person’s immune system fight off a COVID infection. The 100% success rate in this trial is giving the markets hope that a vaccine could become broadly available by year end. The good news on vaccine development was announced at the same time worldwide infection rates dropped below 1% new daily infections for the first time since February 24. More importantly, the daily increase in deaths dropped below 1%, which is the lowest daily increase since data was tracked from the beginning of the virus outbreak. Worldwide total infections are 4.8 million people, with over a 6% fatality rate. As more testing occurs worldwide, the fatality rate is expected to drop, possibly below 1%, as people who were infected with no or mild symptoms are included in the denominator of the calculation.


Federal Reserve Outlook. Fed chairman Jerome Powell did an interview with 60-Minutes on Sunday evening which gave the stock markets confidence that the US economy will recover and this will not be an economic depression. Powell was clear that unemployment could hit 25%, a level equivalent to the Great Depression, but that it would not stay that high for as long as it did in the Great Depression. Powell also indicated that he is very concerned about small businesses that go into bankruptcy, so they are not able to begin re-hiring as the economy re-opens. He confirmed that the Federal government needs to continue to support the markets, that he is not in favor of taking interest rates below zero, and the Federal Reserve is well equipped to provide additional assistance to the U.S. economy if needed. Powell stated “We’re not out of ammunition… Not by a long shot.”


Federal Reserve MBS Purchases. The Fed continues to be the largest buyer of newly issued MBS, along with a continued large buyer of U.S. Treasury bonds. In my opinion, the Fed has clear targets for where they want bond prices to be, both on MBS and Treasury bonds, and they are adjusting their purchase patterns to attempt to keep prices in a certain range, to avoid creating daily price volatility in bonds, which drives huge margin calls to many parts of the financial system, including MBS prices, which directly impact consumer rate sheets.

 

[FireFoley]

30 yr. conforming for best customers below 3% today. I know Crete and those involved in the biz think this is great b/c it lines their pockets, but behind the curtain 0% long term rates is not a precursor to a strong economy. All it does is allow people to pay a greater price for a home b/c they only consider their monthly payment. This is all following my prediction. It is these people who will be the ones that will be in trouble 12-18 months from now when jobs are not back, unemployment is 9-11% and that mortgage payment is an albatross. Learn the concept of total debt, not monthly nut and we will all be better off in the long run.

 

[Concrete Helmet]

30 yr. conforming for best customers below 3% today. I know Crete and those involved in the biz think this is great b/c it lines their pockets, but behind the curtain 0% long term rates is not a precursor to a strong economy. All it does is allow people to pay a greater price for a home b/c they only consider their monthly payment. This is all following my prediction. It is these people who will be the ones that will be in trouble 12-18 months from now when jobs are not back, unemployment is 9-11% and that mortgage payment is an albatross. Learn the concept of total debt, not monthly nut and we will all be better off in the long run.

I am the son of a midwest conservative father who only invested in bonds and paid cash for his house and any car he bought. At heart I'm never a fan of where the economy has been heading since the Clinton years...….but again when in Rome do as the Romans do....just make sure you're smarter than most of the other Romans and leave a clear path out of town while the place is burning to the ground...

 

[NVGator]

Market Overview:

Stocks are up this morning with the Dow Jones Industrial Average up 1.92% or 479.64 points, with Boeing and Raytheon stocks up and driving the index higher. Pending home sales in May were up 44.3%, much better than the market’s expectation of a 15% rise. China reported that their May industrial profits were up 6% compared to last year, which is the first positive monthly report in 2020. The stock markets rallied on this better than expected news, in spite of increased COVID infection rates causing several states to slow down their re-opening efforts.


Oil prices rose $1.18 per barrel with WTI hitting $39.66 per barrel based upon optimism of increased demand for fuel. MBS bond prices were very flat today, with most coupons only up or down a few basis points in price. The 10-year Treasury is currently yielding 0.646%.


This will likely be a volatile market week due to the early closing of the markets on Thursday July 2, and the markets being closed all day on Friday July 3. In addition this is quarter end, so many investors will be squaring away their positions and then not look to do substantial amounts of new trading in the last two days of a quarter. This means liquidity in both stock and bonds could be diminished this week, which will then make the market prices much more sensitive to unexpected good or bad economic news, which will then drive potential higher price volatility this week. Most of the volatility would likely be in the stock market, but the lack of volatility will also impact MBS prices, which will then impact lender rate sheets.



Market Drivers:



Stock Prices and COVID. The stock market’s efforts to predict how increased COVD infection rates will impact business revenues in the third and fourth quarters of 2020 continues to be the primary driver of stock prices. It is important to know that there are two COVID data trends that will drive the stock market’s view. The first is the trend of total infections, which is expected to mathematically continue to increase until at least early 2021 when vaccines become widely available and the trend line of new infections can begin to be bent downward. The second is the trend of new COVID deaths which may or may not directly correlate to the trend line of new infections. Between now and year end, as new daily data is released on both the trends in the total infection rate, and the death rate, these two factors will be the top drivers of stock price levels.


For the pessimistic scenario, In the last two weeks, we have seen data showing new infections are increasing at an accelerating rate (upward sloping curve) in many states. Part of this is due to less social distancing as businesses re-open, and part could be due to increased testing, specifically for people with mild or no symptoms, who may not have been previously had a reason to request to be tested, or they wanted to be tested, but tests were only available for the highest risk people. As a result the pace of business re-opening will slow in some states.


For the optimistic scenario, the death rate for COVID has been decelerating since the first week of May, and this bending down of the curve has continued even as the curve for new infections has increased in some states. Below is a graph from Johns Hopkins University that shows total U.S. COVID deaths from January 1 to present. The red dot on the graph on May 1 shows that the trend rate was curving up before, and then after May 1 the trend rate has consistently bending or trending down. Possible explanations for the decreasing mortality rates for COVID is that emergency rooms have learned a great deal about improved treatment strategies, new treatment drugs are helping to reduce hospitalization times and improved access to personal protective equipment is reducing what is called “viral loading” where a person who is exposed to high levels of the virus for a long time period will have a much more severe infection than a person exposed to lower levels for a shorter time period. It should be noted that the Johns Hopkins graph below shows the level of total deaths, not the rate of deaths as a percentage of infections, so this excludes increased testing as an explanation for the downward bending of the curve.




Economic Releases. The main significant economic releases this week are on Thursday. This will be a shortened market week due to the July 4th holiday. Here is a summary of the key items to be released this week. As a reminder, any reports that come out better or worse than the markets are expecting will drive stock prices up or down respectively, but will likely have little or no offsetting correlation with MBS prices moving in their normal opposite direction of stock prices, due to the Fed’s strong buying of MBS.


Tuesday – June 30

• CaseShiller will release their home price index for the top 20 U.S. housing markets for April data. The markets are expecting April to show a 0.5% monthly increase in home values, with a 4.0% annual home price appreciation rate.
• Consumer Confidence data will be released for June. The markets are expecting the index will come in at 91.8 for June, up from 86.6 in May. This report will likely drive stock prices Tuesday morning if it comes out materially different from the 91.8 prediction, since the U.S. consumer spending is such a larger driver of the U.S. economy.

Wednesday – July 1

• MBA application, purchase, and refinance index data. The Mortgage Bankers Association will release their weekly data showing new application activity for purchases and refinances. The stock markets will not be very focused on this data, so should have little or no impact to stock prices.
• ADP National Employment Data. ADP which is a private payroll firm, will release their June data showing the number of new jobs created in June. The markets are predicting a 3.0 million increase for June, compared to the 2.76 million drop in May. This report could move stock prices if it comes out surprisingly better or worse than the 3.0 million new job prediction.
• ISM Manufacturing Data. The Institute for Supply Management will release their June survey index which reflects the sentiments of U.S. manufacturers. The markets are predicting a 49.4 index value for June, up from the 43.1 value for May. A value over 50.0 indicates that the manufacturing sector is expanding. The survey reflects sentiments so it is mostly forward looking.

Thursday – July 2 (early market close day – possible volatile stock market day!)

• June Non-Farm Payrolls. The U.S. Labor Bureau will release their June new jobs report, with the markets predicting a 3.0 million new jobs created number for June, up from May which showed 2.509 million new jobs. The markets will also compare this report to Wednesday’s ADP to see if both come in close to each other, which would give the markets more confidence that the data is not a one time reporting blip.
• June Unemployment Rate. The markets are expecting the June unemployment rate to drop slightly to 12.3%, down from May’s 13.3%.
• Average Earnings. The average U.S. worker earnings for June are expected to be down 0.7% in June, compared to the 1.0% decrease in May.
• Weekly Jobless Claims. The initial jobless claims for the week ending June 22 are expected to be 1.35 million, down from the prior week’s 1.48 million.
• Continued Jobless Claims. For the week ending June 20, the total jobless claims are expected to be 19.0 million, down from the prior week’s 19.52 million.

Friday – July 3 – The Stock and Bond Markets are closed all day for the July 4 holiday.

 

[Concrete Helmet]

But, but, but.....the end of the world....

Were down....to about 225 a month now but 98% full title so mo money...mo money...mo money and the one lender(national) that is still doing HELOC and no insurance 2nd's is hitting us up for 350-400 O&E reports a month....

Try getting a pool built, addition, windows, deck or any other type of home improvement in C. Fl. right now.....good luck.

 

[Durty South Swamp]

I just locked in a 15 year fixed refi at 2.25. No buy down needed, and they gave me 400 towards closing bc of good credit. These rates are awesome.

 

[FireFoley]

I just locked in a 15 year fixed refi at 2.25. No buy down needed, and they gave me 400 towards closing bc of good credit. These rates are awesome.

Yes mortgage rates are awesome for those who understand how to use them like you just did. but the problem is and always will be those who are constantly re-fying to a higher number to take cash out and spend it stupidly. Or those who think every tick down in mortgage rates means they can go up another 10K in purchase price. As long as their maximum monthly payment does not change that is all that matters to most. Those that re-fi to a lower rate, for a shorter period and for the amount they still owe only, truly understand how to take advantage. Yes there are specific circumstances to take money out, but for 99% of people, they have no idea how to make wise decisions like you just did.

 

[Concrete Helmet]

Those of you refinancing in Florida need to make sure and let the lender and title company know that you have your original owners policy if you still have it to get credit for reissue on the title insurance. Not all lenders or title agents are upfront about this. Saves you more money on closing cost.