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See current mortgage rates on Zillow Mortgage Marketplace

Rates on the rise. . .Why?

About 2 weeks ago I had indicated that "we are in a bubble" and rates would drop and then rise.  Well . . . Rates dropped from about 5.875% to 5.5% and have since retreated and gone back up to as high as 6.125% today. 

 

The question is why? 

 

Hindsight of course is always 20-20.  However the reality is that factors affecting the price of mortgage bonds is really pretty simple to ascertain. 

 

You look at aggressive rate cut by the Federal Reserve coupled with stronger housing, and today's revision of GDP (gross domestic product: measure of all goods and services produced by US both on and off American soil) coming in at .9% vs. .6%; you look at yesterday's and today's extremely weak T-bond auctions where investor participation was only 16% vs. the 3 year average of 33%; finally we see inflation abroad in England at 3.6% on an annualized basis. 

 

So what does all this "stuff" mean?  Higher global inflation along with over supply of bonds and we saw rates on the rise. 

 

So for all of the Zillow clients who were or still are sitting on the fence, take advantage of this service and the quoting and understand that rates plain and simply are on the rise!  Mortgage bonds have been testing the 200 day moving average for the price of bonds all week.  Yesterday they crushed below the 200 day average and have remained well below today.  Only 3 times in the last 3 years have the price of mortgage bonds dropped below the 200 day moving average.  And that my friends signals a significant changed in direction for rate. 

 

Quite frankly . . . Mortgage rates are now and for the forseeable future on the rise.  So lock em if you got em and be safe with your money!

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May 29 2008 - US
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Replies (28)

I never saw 5.5...

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May 29 2008

I did :) I still see the same investor at 5.875% at end of biz today at par on a 21 day lock:

email me Salem and I will pass website along to you.

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May 29 2008

I hate par... who cares what par is? Get to the nitty-gritty- what is your rate, based on what you want to make in YSP. That's all the client needs to know. But your quotes all come with points, don't they Mike?

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May 29 2008
Profile picture for Rob Cochems

Here is my prediction for rates tomorrow.

 

Lakers win = lower rates

 

Lakers loss = higher rates

 

Remember that when they are in the finals.

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May 29 2008
Profile picture for Wayne.T_ .....Colo.

Ok Rob, Lakers win = lower rates.   The difficult part is by how much?  X Points ahead = how much lower rate?   I'm sure we get to 5.125 at par w/o points and only $395 in total fees. 

 

So you're a Lakers fan, eh! 

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May 29 2008

Well, hopefully the Celts beat them in the finals...

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May 29 2008
Profile picture for Rob Cochems

Nope you only get to 5.125% with $395 in fees if the Dodgers go all the way.  A Lakers win can only improve rates by .125%.

 

Yeah I gotta support my local teams.

 

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May 29 2008

Hopefully being the key word Jen...the Lakers are destined to redeem the Charger's loss to the Pat's...

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May 29 2008

Ha! Geoff, no way... If the Celts win this series (and they should... even if they go 7 games yet again) they aren't going to keep making the same mistakes- they will beat the Lakers, and in less than 7 games one would HOPE... You know what it is? I can't stand Kobe.

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May 29 2008

The only saving grace for the Lakers is that Fletch LOVED them, and I love Fletch :)

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May 29 2008

Well if they go 7 games again they are going to be too tired to keep up with the Lakers and Kobe...I don't hate any Boston players on any team...Just their fans in general :) haha I'm joking, well kind of at least. Just keep up with the "HOPE" :)

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May 29 2008

Who needs a casino with the market volatility we have right now? Stay, Hit, Lock, Float, thats about where we are right now. There is no solid data to determine which way the rates are going next. With all the "new" accounting and different interpretations of the same stats, who knows? I say we go up tomorrow AGAIN and we dip back down next week. We will see.

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May 29 2008

Yep lakers won and go California.  For all you haters who cant charge points, it is ok.  No hate here.   & yes Jenn in CA we get to charge points......ohhhhh scary. Pretty customary.

Here is the deal whatever the fee structure, don't you agree it is essentially the same? 

 

I mean lets say I quote 5.875% and I charge a point on a $300,000 deal?  ok $3000 commission

You charge what 6.25% at (1.25% ysp) and make $3750.  Is the client really better off over 300 years with your higher priced deal????  You said in another thread . "Who needs that crap?" 

Well perhaps there is a little thing called break even analysis on the cost of those crappy points vs. your higher priced loan.   Think about....I am sure you will agree :) (lol)

 

The point is all my loans have points; in fact I will give you a couple right now:

  1. Charge what you are worth
  2. Close on time
  3. Be honest
  4. Don't be afraid to pass

But you all know all this because there is no way you are possibly reading yesterday's paper trying to advise your clients?   Or are you??

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May 29 2008

Here's a quick sample of rates this morning for a 6.0%, 30-year fixed, Florida, $200k, 80%, 720 score, rate/term, 30-day lock.

 

Provident (.750)

Chase (.008)

Taylor Bean (.002)

Wells .051

Fifth Third .070

First Horizon .375

Countrywide .375

SunTrust .421

 

Anyone have others to add?

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May 30 2008

RI,

PF is the leader price wise for sure and the rest are all packed together.. Amtrust is right at PAR and Everbank is in the FHN/CWIDE range..

Mike,  Mornin' bud. I have no issues with points at all.  I get paid exactly the same regardless of rate/product/term/credit, etc...  (credit very rarely under 720, but nonetheless).  The main reason I stay on the NO POINT side is simply this: regardless of charts/break even points, etc..., but history shows us that we do not make it to the break even period in most cases.  It is a very small portion of folks that have not been to the REFI bar at least 1-2 times in the last 4-5 years.. We have billions in unused/expired gift cards, phone cards, timeshares.. you nwme it.  It is the prepaying for an equation that takes quite a while to "catch up"  To each his own, but I have seen your math layout about investing and whatnot and that's all good, but what if you "primed the investment well" upfront with the points not paid in the investment coffers? Where might that be in the 4-6 years?  I understand both sides, personally don't care as to my client's final decision and give them both sides.  When the lower payment/break even comes up in our chat, I wimply ask them to use the same valuation on the "saved" upfront lumpsum and then make the decision based upon what they have really doen in their past (how many times moved/refied, etc..) and not simply a chart of 30 years.  Another kink in the points paid is when it is complicated with bi-weekly/mortgage accelerator porgrams shortening the term..  Buying down a 30 year rate and paying it off early is a waste and actually raises the APR..

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May 30 2008

Mike- which is 'higher priced'??? You mean mine, with the higher rate??? What is the difference in payment between 6.25 and 5.875?

 

I CAN charge points, when did I say I couldn't? I have in the past, and each time it worked to the client's DISADVANTAGE. They got divorced, refi-ed or otherwise GOT RID of the loan prior to the break even point.

 

Take your 'analysis' one step further, and figure out the break-even on the scenario above. I've seen your quotes Mike- you quote par and charge 1-1.5% in fees... It's not rocket science. You are doing that for one reason only- to have the most 'competitive' rate they receive in their inbox. But is it truly competitive? THAT is the question. And so far, I've heard very little to change my mind about this.

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May 30 2008

Martin- good points, especially in terms of the 'buy-down' and then accelerated payment.

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May 30 2008

If the "pay" is the same to the originator, I don't care which loan is chosen for anyone and any Broker.  I don't buy phone cards, prepaid phone minutes, etc..  and remember the big stink about expiring gift cards (now most without expiration), but pushing a rate down for future payments that history has proven our clients to be nomads seems like a gamble I don;t want to take.  No, not the ARM solution either as a FIXED has a backup safety net as well, but if you factor the chalkboard and reality of what msot of us really do.... It's like a lifetime membership to BALLY healthclub with a 1 time payment.. to some.... ( a very small sum)  it is worth it when looking at it historically, but most will lose interest and simply drive by BALLY to get to BASKIN ROBBINS...  Once again, to each his own, but I personally have not seen history play out for most in that scenario.

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May 30 2008
Profile picture for Rob Cochems

No credit to the Lakers for helping out with rates today????

 

Not quite an 1/8th, but better then a stick in the eye

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May 30 2008

What this all really shows us is:  Nobody really knows anything coming in the future.  Nothing wrong with thinking we can guess at what will happen, but as mike pointed it out in the thread starter, he thought FED action might help rates... and they might... then again... the inflation cat may be so far out of the barn that that "traders" will continue to press Bond yields higher.. Everyone is yippin' and yappin' and the LIBOR is running again as well.  A word to all and maybe the wise:  If you are happy with your quote.... take it lock it and close it... because that rate/point combination whether you lock or not is now your ceiling for pain in your head and anything worse will "sour" the experience and deal.  For Brokers... locking is good as your "crying clients" will want you to eat the first portion of damage and you will to "keep the deal" rates that are moving northerly are belt-tightening, budget busting loans. With the amount of "pending" loans anyone has, it would be sad to cut the "income" by 1/2... but we will hear of that story in a 2-4 week period... Happens every time.  Keep rockin'.

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May 30 2008

the rates are on the rise because its heading for summer like it is every summer. They try to cash in on the good weather where more homes are built, more additions are made, more houses are sold. You have to wait until october until rates come back down.

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May 30 2008
Profile picture for Rob Cochems

I want my 3 seconds back Tom

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May 30 2008

It sounds like we are debating on gas prices rising for "summer demand" or OJ futures during the hurricane season...  There are not more homes being built now than last year or year before...  there are not more additions being done this year.. This is why people get "jacked" when they want their 3 sentences of fame like you/I are being asked to guest host CNBC on MONDAY.  If you want to explain "future" predictions, become a weather person. We do have real MAIN ST inflation and BONDS hate it.. We price to an instrument similar in nature to teh 10YR BOND... It's not looking good and hasn't, but anyone banking on "housing starts" or rehab starts as a demand for money reason due to good weather for rate hikes......  Just asking for issues.  To each his own, but T, I'm being straightforward about this without rippin',  read your statement again and then pretend you never wrote it and were just a reader.. What would you think...  especially against the bombing zone backdrop of F/C, SFR builidng permits (not apts) and whatnot.  Each are entitled to opinions, but buyers/borrowers look to us as experts. Come on man.  Keep rockin'.

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May 31 2008

That was a pretty simplistic/silly explanation TD...

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May 31 2008

Nic,

 

Good to see you again.  Vegas?  Winds of War?  Hope you had good luck in both.  Don't understand some rhetoric, "every" year and "wait until OCT"?  are we talking MLB playoffs?  It's why some folks have more scar tissue on their rumps..  C'est la vie.  keep rockin'.

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May 31 2008

Vegas was rough......Think i paid the light bill for the Harrahs corp. for a few days so hope they're appreciative.  Oh well it was good to get away from the RR for a while.

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June 01 2008

Simplistic yes. Silly? No.

 

Rates go up as sure as gas prices. I cant honestly say why. All I know is the mortgage rates go up during the peak seasons.

 

 

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June 02 2008

TD,

 

That is not true.. Summer of '03... llowest in 40 years... followed by a massive spike.. nothing to do with gas prices/demand necessarily...  Those "I know" statements that you have thrown on many threads always get you chastised.  ALWAYS , I KNOW, should never really be used and I have yet to meet a "foreacaster"  that is dead on or why do anything, but buy/sell stocks and bonds like clockwork.  All the predicting INV banks are getting crushed.. Maybe their "ALL I KNOW" metere wasn't working.  Construction demand this year rising for what... A shed?

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June 02 2008
 
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