To borrow a phrase from my friend Assemblyman Brian Jones "Are you kidding me?". These are the lowest rates that we have seen in 2013 and unfortunately are not on the most stable ground. In a normal market (which this is not even close to being by the way), you would see a pattern that would show 90% of the time, when the stock market is up, mortgage bonds are down (which equates to home loan rates rising). Also the inverse of that would "normally" be true. Well this last week we can through all of that normal stuff out the window. Both the mortgage bond market and the stock market have both had some strong rallies causing both markets to hit some lofty highs. This is the longest run in the history of the stock market without a correction of 10% or more. While at the same time, the Fed has been buying up record amounts of mortgage bonds to keep home loan rates artificially low in an effort to spark the economy.
Well the good news is that some of what the Fed is trying to do is actually working since the only consistent bright spot in the economy has been the housing sector and that in turn has fueled the stock market rally. The arch nemesis to mortgage bonds however is that dirty word "inflation" as it erodes yields from bond investors. The crazy thing is that we have not seen any real measurable increase in inflation either so that has kept the mortgage bond market going and home loan rates down low.
This has also made things very difficult for interest rate forecasters like me to give a solid read on where the market really wants to go. Now my job has turned more into determining the highest risk vs reward level and that brings me to what will most likely be the biggest market mover this week and that is the "Jobs Report" which will be released on Friday (I know that ADP will also put out some numbers tomorrow, but Friday is the real deal). Should the jobs report come in strong, than the mortgage bond market could have a VERY bad day since the next real level of support is a significant loss away. If the jobs report comes in off mark, meaning not enough jobs were created to meet expectations, than that could be very bad news for stocks and we may see a slight gain in home loan rates. And that is where the rub is. I can only see a slight improvement in home loan rates if the report is bad, but the down side on a strong report could be significant. That is why I will be recommending clients lock in prior to Fridays report results.
Please watch the attached video to see where home loan rates are at today.If you would like to talk about your specific scenario or needs, please do not hesitate to call or email me directly.
This statement of current rates is not an offer to enter into an agreement for a loan at a specified interest rate, number of points or both. Current interest rates and discount points are subject to change at any time without notice to you. Stated rate examples were calculated using a $300,000 loan amount, 80% LTV and 720 Min Fico at the stated term lengths. Licensed by the Dept. of Corporations under the CA Res. Mtg. Lending Act – 431-0421; Rates and charges in the advertisement do not apply to all loans made by the financial institution.
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