My Thoughts for the Week of May 12, 2014

Mike Thomas

Mike Thomas

After almost three straight weeks of small interest rate improvements, the rate markets have hit the brakes and rates edged up a little over the last few days. Rates are still great, about the same as we started last week and among the best we’ve seen in the last 6 months. This week we have several key economic reports that could add some volatility to the bond markets and interest rates. Our stock market will also have an effect on rates, with the DJIA bouncing off its all-time highs right now. Money moving into stocks will often come from money moving out of bonds, causing yields and rates to move higher. The recent improvement in rates could be behind us now. Most still believe we will end the year with rates higher, with the recent dip in rates having been unexpected but welcomed. Now may be the time to take advantage if you have the opportunity.

 

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VA IRRRL Streamline Refinance

Mike Thomas

Mike Thomas

I just thought i would share some of the details of our VA IRRRL Streamline Refi for Veterans and Active Duty (Interest Rate Reduction Refinance Loan):

  • 620 minimum fico score
  • No appraisal required, AVM will satisfy
  • No Asset Verification
  • No Income Verification unless the P&I payment is increasing by more than 20%
  • 0x60 mortgage lates in the last 12 months
  • Veteran must benefit from either a lower interest rate, or refinancing from an ARM to a Fixed rate loan
  • Closing costs can be rolled into the new loan
  • Owner occupied properties only for IRRRL
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My Thoughts for the Week of May 5, 2014

Mike Thomas

Mike Thomas

Great headlines for the April employment report last Friday, with +288k new jobs and a massive drop in the unemployment rate to 6.3%. Great news for the economy and bad news for interest rates, right? Not so fast. The +288k new jobs is good, and about 75k more than the markets were expecting. But the huge drop in the unemployment rate was due to 800k people deciding they no longer want to work, dropping themselves from the labor participation rate which is now at a 36 yr low. Dig further into the employment report and you’ll see the jobs that are being created are low paying jobs and the avg number of hours worked a week is also declining. First quarter GDP numbers were no bueno as well. Markets were hoping for growth readings in the 2-3% range, but first reports of 2014 Q1 growth came back at a measly 0.1%, almost declining. Yikes.

So what does this mean? First off rates are not moving higher on the better than expected job growth number. In fact, by the end of the day Friday after everyone had a chance to really dig into the April employment report, rates moved lower on the news. Jobs are being created but not good jobs. The economy is growing, but not at a healthy rate. The world is a cool place, but tensions still remain high in Eastern Europe surrounding the Ukraine/Russia conflict. These three factors are keeping rates from moving higher, something that will inevitably happen. On the other side of the spectrum, the stock market is bouncing of new all time highs on strong corporate earnings (businesses are running lean and mean while working fewer employee’s harder) and real estate values are climbing. Personal wealth is up and consumer sentiment is improving. Interest rates are trending down a bit and are now at the best levels since early February. Overall, things seem to feel better than the reports show. It’s tough to say how the rest of the year will pan out. Stay tuned

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My Thoughts for the Week of April 21, 2014

Mike Thomas

Mike Thomas

I hope everyone enjoyed their Easter weekend. In case you were wondering, the date Easter falls on has a window of 35 days. Easter occurs on the first Sunday following the full moon after March 21. Towards the end of last week the UN made some progress with peace negotiations with the Ukraine/Russia situation. Signs of peace moved “safety” money out of bonds causing the 10yr Treasury yield to rise and mortgage rates up around .125%. The song lyrics “freedom isn’t free, it costs folks like you and me” comes to mind. Either way, interest rates are still very good in the low 4’s and much lower than they are expected to be once this country is finally and officially out of the Great Recession, which seems to be well underway.

If you are in the market to purchase real estate, now could be a good time to make the jump and try to beat the upcoming Spring/Summer purchase season. If supply starts to dwindle, sellers will be less likely to negotiate on their asking prices. It’s go time. And check out our 15 yr rates, they are awesome! If you are curious what refinancing from your current mortgage into a 15 yr would do to your payments give me a buzz and we can discuss the numbers.

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My Thoughts for the Week of April 14, 2014

Mike Thomas

Mike Thomas

Last week was rough for US stocks, which often leads to money moving into bonds. Higher demand for “safe” Treasury bonds means lower yields (rates) for bonds and therefore mortgage rates as well. We’ll take that. Tensions over the issues in the Ukraine have been offsetting improving economic data here in the US. If you removed Ukraine from the picture (which could happen anytime) then the improving economic reports would be pushing rates higher. So we should be keeping one eye overseas and one eye on what’s going on domestically. Now could be a great time to lock and take advantage of the small recent improvements in rates.

Trading this week should be pretty light, barring any unforeseen events. Thursday is a half day and markets will be closed on Friday in observance of Good Friday. Enjoy the Easter holiday!

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My Thoughts for the Week of March 31, 2014

Mike Thomas

Mike Thomas

Today we wrap up the first quarter on 2014 and interest rates are slightly better than when we started off the year. There was a lot of fear in the bond/interest rate area 4 months ago when the Fed began to back off their bond purchasing program (QE3) with the taper now well under way. The initial smoke has cleared and it hasn’t disrupted markets quite as bad as some thought it might. Moving forward we will have to focus on the economy and job creation to see where interest rates move next. The consensus is that we will still end 2014 with higher rates, but that next big move up in rates may not come till we see some significant job growth.

On that note, this is employment week and markets will be focusing the most on Friday’s Non-Farm Payroll report which is expected to come in at +196K new jobs. +196k is a pretty healthy number and if we get that or a 200k+ report it could cause rates to move higher. On the other hand, if we get another weak report like we’ve been seeing the last few months than rates could dip a little bit, though it would take some horrible numbers to really do anything significant. So as usual for the current environment we are in, a flirty wink ; ) could cause rates to go higher but it would take a whole song and dance to move rates much lower. Keep that in mind if you will be in the market for a loan in the near future.

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My Thoughts for the Week of March 17, 2014

Mike Thomas

Mike Thomas

The US 10 Yr Treasury bond is kind of the Vegas odds indicator for world events. As uncertainty and fear over Crimea/Russia grew again last week money moved into Treasury bonds with the yield dropping from 2.80% to 2.64% and mortgage rates improving along with it. Yesterday, without any violence Crimea voted to rejoin Russia, worldwide sanctions were issued, and no significant threat of escalation have caused fears to diminish and safety moves into Treasury bonds to be reversed. This has caused the benchmark yield to lose some of the improvements made as the fear element in the Ukraine has lessened. Vegas odds are saying that not much more will happen I suppose.

Until something overseas changes, attention should return to domestic economic data and this week’s FOMC meeting. Wednesday will be the new Fed Chair Janet Yellin’s first press conference at the helm. Will the Fed continue their QE3 bond taper? Most likely they will taper another $10B, the third equal taper in a row. So far there has been very little impact, if any, on long term interest rates from the tapering that most people feared. In fact 30yr interest rates are about .25% better than when the tapering began last December, not that there is any direct correlation but just to point it out. On Wednesday, markets will look to additional information about the Yellen led Fed’s outlook for the economy. This will have much more effect on bond and mortgage rates moving forward. We continue to get mixed signals from economic reports about the direction we are heading, including the goofy Jobs reports over the last few months. Is the economy growing, shrinking, adding jobs, moving sideways? I can’t tell anymore.

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My Thoughts for the Week of March 10, 2014

Mike Thomas

Mike Thomas

Two things caused rates to increase slightly last week; easing tensions in the Ukraine and better than expected Jobs reports for February. At the beginning of last week I recommended my clients to lock their rates. This captured some of the improvements in rates from the conflict in the Ukraine and took the uncertainty of the Feb Jobs report out of play. This week we don’t have a whole lot of economic reporting to worry about so looking at the technical charts will be the key. I think rates should recover pre-jobs report levels this week. The jobs report was not really that much better than what was being predicted. The problem is that the numbers didn’t come in well below the expectation which has become the norm. It’s a no win scenario for bonds, that’s why I recommended locking. As the market recovers from Fridays sell off, rates will revert back to the mean, assuming nothing changes fundamentally this week.

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LOCK Alert!

Mike Thomas

Mike Thomas

Yesterday I mentioned how the civil unrest in the Ukraine has caused mortgage rates to improve, and that most of that improvement has probably already been priced in. Well, late last night we found out that Putin began pulling his troops back from the Ukraine boarder and tensions are easing. Sure enough, rates are increasing this morning and I recommended our clients to lock in their rate. We were able to take advantage of the improvements over the last week, and remove the risk from the Job reports starting tomorrow. I encourage anyone else to lock their loans in now before lender pricing gets any worse. Putin gaveth, now he taketh away!

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My Thoughts for the Week of March 3, 2014

Mike Thomas

Mike Thomas

Proof that world conflicts can affect mortgage rates are once again in play. Turmoil in the Ukraine and Russian involvement has spooked traders throughout the world and this sends money into safe investments, like US Treasury bonds.  When demand for these bonds increases, yields are driven down. And since mortgage rates tend to fluctuate with 10 yr Treasury, interest rates have improved a bit in the last week. I think most of the effects of this have made their way into pricing now and unlikely to improve much more without substantial military action, so attention must be turned to domestic economic data for the remainder of the week and there is plenty to deal with here. Already this morning we’ve had better than expected personal spending and personal income reports for January. This has taken away some of the gains we saw early this morning. The biggy this week will be the February employment report, first from ADP on Wednesday and then the official report from our Govt on Friday, along with any corrections to previous months. Markets could get dicey this week.

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