Yellen was confirmed last night to be the next Fed chief, which should be calming news for mortgage rates. But they haven’t changed much anyway since the Fed announced the $10B taper on December 18th.
30-Year Fixed Rate:
December 12: 4.42%
January 7: 4.62%
Just the mentioning of the taper caused rates to pop up 1/2% in one week at the end of June, so losing only 1/4% after the actual taper should mean a fairly steady road ahead.
Another benefit for the Fed this year is that the volume of MBS has dropped dramatically, so they could spend less without much, if any, effect. With rates in the mid-4% range, the refinance market has had its head caved in, and mortgage apps are at a 13-year low:
Mortgage rates should stay reasonable for now, but the market doesn’t really get cooking until next month. Hopefully we’ll be coming off a big Chargers victory in the Super Bowl! It could happen – Manning always chokes, and New England has a lot of injuries!
Here’s how a computer simulation figured the winner:
I did an AccuScore simulation of the playoffs and BOOM. Your San Diego Chargers are winning the Super Bowl. pic.twitter.com/mT87xLSZbh
— *Hall of Fame* (@HOFSportsTalk) January 3, 2014
Chargers are going to the Superbowl…..they just ‘aint going to win it. Seattle/Carolina/49ers will crush them with suffocating defense.
Rates staying steady is a bit of a misdirection since the Fed is really doing the bidding of Wall St. There are still a fair amount of people out there that missed the re-finance boom. If the market sours this year then then having rates in the high 4’s allows the Fed to fire up the printing press again.
Right, maybe you should buy gold to offset that evil Fed?
What’s interesting to me is why are loan applications down? Is it seasonal, cyclical, or the inability/difficulty to qualify which discourages people?
Or does it have to do with a super low inventory which doesn’t allow for mortgage applications? I think it’s a combo. Housing Tracker had Monday at 6,839, the lowest number on the charts.
At some point I wonder if the banks need to make it easier to borrow in order to still make money from lending. Underwriting is too tough right now.
@Mozart
“Right, maybe you should buy gold to offset that evil Fed?”
Nope….bought a house instead.
To your point about tough underwriting, though.
We closed escrow at the end of Sept ’13 and the underwriting process was about as fun as a rectal exam. Obviously we were qualified buyers, but at any time we could have lost the loan if we didn’t have all of our documents in order. Providing the necessary documentation to the underwriters was the easy part. It was the never ending statements of explanation for every deposit and withdrawal. At one point, I had to write an explanation for a $44 monthly withdrawal for my son’s sports lessons. Seriously!? Not once did they ask about the $1000/mo for his daycare. Thankfully I have a very flexible work schedule that allowed me to take care of the non-stop faxing and emailing of documents and making phone calls during business hours. We would have lost the loan otherwise.
Your mileage may vary.
Annoying, frsutrating, ridiculous underwriters? Absolutely.
Tough credit guidelines? Not really – they are the same as they were in the 1980s and 1990s.
It is the paranoia spread down to the underwriters about buybacks. Fannie/Freddie regulators have stuffed enough loans down the throats of the big boys that management now insists that underwiters and underlings dot every i, and cross every t.
The documentation required is more stupid than ever, but the basic qualifying ratios, money required, incomes, etc haven’t changed.
True, but at some point a clean track record and high credit score should be weighted more heavily. Right now it gets you in the door but not very far along.
But, JtR, what’s your take on the low mortgage application numbers? Symptom of the market or a forward indicator?
But, JtR, what’s your take on the low mortgage application numbers? Symptom of the market or a forward indicator?
Word on the street was that the mortgage pipeline between late 2012 and August 2013 was 80% refinances. Once rates popped 1%, the refinances disappeared – and the graph backs it up.
What does it mean for the market?
The people who were heavily involved in the refi industry are scrambling like those who were linked to the REO industry last year. The abruptness at which it stopped must have shocked many if not most.
Those who bought new Range Rovers and condos in PB have either gone back to their old job at the mall, or are tending bar again. Refi shops like WJ Bradley, who had six offices a year ago, is now down to two.
Add to the mix that mortgage brokers have had their supply lines cut or terminated with little or no notice, and it’s a mess all around.
It probably means that the short-sale business will continue, just with folks from the industry having to re-position themselves.
Today’s mortgage rates fell at their fastest pace in 2014 and to their best levels. Such a feat was only manageable due to what has been an exceptionally flat market up to this point. Even today’s move was fairly small by historically standards, equating to only 0.03 percent in terms of rate. That means that the improvements over yesterday would be seen in the form of lower closing costs with interest still averaging 4.625% for ideal, conforming 30yr Fixed loans (best-execution).
To put the recent flatness in more perspective, there have only been 3 days in the past 30 where rates moved any more than they did today. It continues to be the case that the events in the latter half of the week (beginning tomorrow morning) have more potential to break the monotony, or rather, to continue breaking the monotony that was preemptively broken today.
Good insights on the refis. I wonder if this means more ARM’s? Seems likely.
But not a lot of room for prices to go up without credit until incomes grow, which would seem to be slow but also likely.
Kind of sounds like a nice stable market.