Sorry for the delay in posting this today, but been in back to back meetings…..So what’s happening in the market today? A couple of things:
- Unemployment claims: Weekly new unemployment claims came in down at 601,000. Yes, that’s right, down at 601,000. The “ongoing” unemployment claims came in at a record high. So, as one analyst described it, “labor market isn’t hiring, even though firing may have slowed,”
- Retail sales for May came in up .5%. That was less than expected and it was mainly due to increased gas prices. Year to date compared to last year is down 10.2%, showing how much the consumer is pulling back in their spending.
- Yesterday, the Treasury had an auction that pushed rates up. Today, things went better and it pushed rates down.
So, where are we? Basically the same as we were yesterday morning:
30 year fixed:
6.0% with .125 pts for a 30 year fixed refi
5.75% with 0 pts for a 30 year purchase
15 year fixed:
5.375% with .125 pts for a 15 year fixed refi
5.125% with 0 pts for a 15 year fixed purchase
All of those assume credit scores over 740.
Recommendation:
Lock all loans. I’m switching back to an 80/20 bias. I think there’s a 20% chance that we could see a substantive drop in rates, but there’s an 80% chance that rates could go higher.
More as time and news allows.
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- Categories: Lenders, Mortgage Rates
Comments
4 Comments so far
Hday2k
Hello,
How’s the situation with the mortgage interest rate? Will it go down in a few months? I know it’s difficult to predict but in May was below 4.5% and now it went up to 5.25% and up.
Jesse
With all due respect to Mr Vanderwell and the mortgage companies, asking a mortgage agent if they think the rates are going up is not seeking good advice in the correct place. Mortgage rates will be driven up as fast as they can, just as fast as the mortgage companies feel that the marketplace can bear the it. That’s to their advantage and where they make more money and what they would call good business strategy.
Considering the dismal forecast for the present and the coming next few months regarding home sales by the real estate marketplace pundits, the real rate should be between 4.5 and 5, but mortgage companies are always throwing a higher rate on the wall to see if it gets any traction. Hday2k, if you are interested in buying a house and can wait, the interest rate should drop back to the high 4 range. It will happen sooner than you think. The GM collapse will cause a ripple effect through this country over the next several months that will reset everything.
Jesse
Tom Vanderwell
Jesse,
Sorry I didn’t get a chance to answer you sooner. A couple of things that you are wrong about:
1. We don’t want higher rates. Since we are selling the loans to Fannie and Freddie, where we make our money is in the sale of the loan to them. If rates are lower, we write more loans. We write more loans, we and the owners of our organizations are happier.
2. While you are expecting that the rates should drop into the fours, the default rates in Fannie, Freddie and FHA loans and the law of supply and demand and the unbelievable amount of additional debt on the government’s books is going to have the opposite effect and push rates higher.
Tom Vanderwell
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