Mortgage Rate Watch
Mortgage Rates Quickly Approaching 4-Year Highs

Let's clear one thing up before we begin.  Freddie Mac, MBA, and Ellie Mae all noted new 4-year highs in mortgage rates this week.  They are all technically wrong.  This has to do with the way their data is collected and/or averaged.  And while I have no doubt that they are accurately conveying the results of their data collection efforts according to their methodology, there is a more accurate way to do things.  Specifically, we can track actual lenders' rate sheets every day. 

Even if we take an average of that daily data, we still find that rates aren't quite back to 4-year highs just yet.  Depending on the lender, these occurred on one of the days near the end of February.  In fact, some lenders' rates from March 21st are still higher than today's.  Are we talking about very big differences between now and then?  Not at all!  But if we're going to talk about rates hitting 4-year highs, we might as well be precise about it.

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Mortgage Rates Jump to Highest Levels in About a Month

Mortgage rates jumped higher today as bonds continued a move away from narrow Springtime range seen in March and early April.  Bonds dictate rate movement and yesterday saw the bond market make its first convincing attempt to break what had been a friendly, narrow range.  This of course coincided with a narrow range for rates in the past few months.  It was also "friendly" relative to the trajectory seen in the first part of the year.

When these sorts of ranges become established, the boundaries take on a special significance.  As soon as the floor or the ceiling is definitively broken, there tends to be some additional momentum in the direction of the break.  That's why yesterday's headline mentioned that bonds were suggesting "more trouble ahead."  I'd hoped to be wrong about that, but...

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Mortgage Rates Inch Higher as Bonds Suggest More Trouble Ahead

Mortgage rates moved higher today as bond markets continued a mildly weaker trend for the month of April.  Bonds (which underlie rates) are under pressure for a variety of reasons.  The most notable headwinds are longer-term and bigger-picture.  Rates responded to these headwinds in a fairly big way in Jan/Feb and have basically been "taking a break" since then.

Rates have moved very little during this "break," with most borrowers being quoted the same NOTE rate on any given day in the past 2 months.  Upfront costs have been the only way the modulate the EFFECTIVE rate of the average lender's 30yr fixed quote.

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Modest Improvements For Mortgage Rates

Mortgage rates had a calm day.  Lenders who had offered improved rate sheets yesterday afternoon didn't see much reason to drop rates any further today.  Lenders who took a more conservative route yesterday ended up being a little better off.  Although there were several economic reports this morning, bonds (which drive rates) did nothing to respond and have generally been uninspired so far this week. 

In fact, in a broader sense, bonds haven't exhibited much inspiration for more than a month.  Although rates have descended modestly since late February, it's just as fair to label that movement as "flat" in the context of typical rate movement.  For example, most borrowers would still be quoted the same "note rate," with the only difference being slight changes in upfront fees/points.  

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Mortgage Rates Back to Unchanged After Starting Higher

Mortgage rates began the day at higher levels, as bond markets lost ground overnight.  Bonds dictate rates, and "losing ground" means bond prices are falling.  When bond prices fall, rates move higher.

There's some chatter in the marketplace about developments in Syria being the motivation for every little move in bonds/rates.  Rather, it's more accurate to say it's ONE OF the motivations behind SOME of the moves.  Bonds had a few other concerns overnight.  That's why they were able to improve during domestic hours even though nothing changed with respect to Syria.

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