Is it any surprise to see a strong reaction to economic data when the phrase “data dependent” has come to unequivocally rule all other approaches to understanding the interest rate outlook? Yes, actually, it can sometimes still be a surprise because data dependency depends on the data being depended upon. In today’s case, we have a report that has been inconsequential more often than not over the past decade, but increasingly relevant in the last 2 years. There could be some debate as to whether that’s due to the gradual increase of acceptance for S&P’s PMI data in a country where ISM has long been the dominant source of PMI data or whether it’s simply due to the bond market’s strong desire for econ data. Either way, it’s a market mover today.
The reaction is so blatantly obvious that it begs the question as to how the underlaying data justifies the move. After all, there wasn’t a huge departure in Indices themselves. We’ll focus on the services side of the economy here, just to keep the chart simple, but the takeaway from Manufacturing is no different.
Broader context is helpful. Today’s move in yields is well within the weekly range and not-at-all meaningful in the bigger picture. In other words, it becomes less impressive the more we zoom out.
Average mortgage rates inched lower yesterday. But all that did was wipe out last Friday’s similarly tiny rise.
Earlier this morning, markets were signaling that mortgage rates today might barely budge. However, these early mini-trends often alter direction or speed as the hours pass.
Current mortgage and refinance rates
Find your lowest rate. Start here
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.302%
7.353%
+0.01
Conventional 15-year fixed
6.757%
6.836%
+0.01
30-year fixed FHA
7.064%
7.111%
-0.07
5/1 ARM Conventional
6.888%
8.036%
+0.12
Conventional 20-year fixed
7.199%
7.257%
+0.05
Conventional 10-year fixed
6.663%
6.737%
+0.06
30-year fixed VA
7.292%
7.332%
+0.01
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
Should you lock your mortgage rate today?
This morning’s Financial Times reports, “While the base case remains a reduction in borrowing costs, the options market shows a 20% probability of an increase.” That means most investors think the Federal Reserve will cut general interest rates this year, but they reckon there’s a 20% chance of the central bank actually hiking them. That’s new and scary.
Although the Fed doesn’t directly determine mortgage rates it has a huge influence on the bond market that does. And I very much doubt mortgage rates will fall consistently before the Fed signals that a cut in general interest rates is imminent. And a Fed rate hike is likely to send mortgage rates much higher: maybe back up to 8% or beyond.
So my personal rate lock recommendations remain:
LOCK if closing in 7 days
LOCK if closing in 15 days
LOCK if closing in 30 days
LOCK if closing in 45 days
LOCKif closing in 60days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So, let your gut and your own tolerance for risk help guide you.
>Related: 7 Tips to get the best refinance rate
Market data affecting today’s mortgage rates
Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data are mostly compared with roughly the same time the business day before, so much of the movement will often have happened in the previous session. The numbers are:
The yield on 10-year Treasury notes edged down to 4.6% from 4.64%. (Good for mortgage rates.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
Major stock indexes were rising this morning. (Bad for mortgage rates.) When investors buy shares, they’re often selling bonds, which pushes those prices down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
Oil prices decreased to $81.59 from $82.06 a barrel. (Good for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
Goldprices fell to $2,333 from $2,350 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold prices rise and worse when they fall. Because gold tends to rise when investors worry about the economy.
CNN Business Fear & Greed index — climbed to 40 from 33 out of 100. (Bad for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So, lower readings are often better than higher ones
*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.
Caveats about markets and rates
Before the pandemic, post-pandemic upheavals, and war in Ukraine, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.
So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today look likely to be unchanged or close to unchanged. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.
Find your lowest rate. Start here
What’s driving mortgage rates today?
Today
This morning’s two April purchasing managers’ indexes (PMIs) will likely be good for mortgage rates. These “flashes” (initial readings and subject to revision) are both from S&P.
Here are this morning’s actual numbers in bold, alongside the prepublication consensus forecasts, according to MarketWatch, together with the March actual figures:
Services PMI — 50.9 actual; 52 expected; 51.7 in March
Manufacturing PMI — 51.1 actual; 52 expected; 51.9 in March
You can see that the PMIs were worse than expected, which is typically good news for mortgage rates.
Tomorrow
Tomorrow’s durable goods orders for March rarely affect mortgage rates. And they’d need to contain some pretty shocking data to do so tomorrow.
Markets are expecting those orders to have risen by 2.6% in March compared to a 1.3% increase in February. They’ll probably need to be significantly higher than 2.% to exert upward pressure on mortgage rates and appreciably lower to push them downward.
The rest of this week
Nothing has changed since yesterday concerning economic reports due on Thursday and Friday. So, I’ll repeat what I wrote yesterday:
We’re due the first reading of gross domestic product (GDP) for the January-March quarter on Thursday. And that could have a larger effect than PMIs and durable goods orders, depending on the gap between expectations and actuals.
But Friday’s personal consumption expenditures (PCE) price index for March is this week’s star report. That’s the Federal Reserve’s favorite gauge of inflation. And it could certainly affect mortgage rates, possibly appreciably.
The next meeting of the Fed’s rate-setting committee is scheduled to start on Apr. 30 and last two days. So, the PCE price index will be the last inflation report it sees before making decisions.
And index that shows inflation cooling could change the mood at that meeting. True, it’s vanishingly unlikely that a cut to general interest rates will be unveiled on May 1 no matter what.
But a PCE price index that shows inflation cooling could help the Fed to move forward with cuts earlier than expected, which should cause mortgage rates to fall. Unfortunately, one that suggests inflation remains hot or is getting hotter could send those rates higher.
I’ll brief you more fully on each potentially significant report on the day before it’s published.
Don’t forget you can always learn more about what’s driving mortgage rates in the most recent weekend edition of this daily report. These provide a more detailed analysis of what’s happening. They are published each Saturday morning soon after 10 a.m. (ET) and include a preview of the following week.
Recent trends
According to Freddie Mac’s archives, the weekly all-time lowest rate for 30-year, fixed-rate mortgages was set on Jan. 7, 2021, when it stood at 2.65%. The weekly all-time high was 18.63% on Sep. 10, 1981.
Freddie’s Apr. 18 report put that same weekly average at 7.1%, up from the previous week’s 6.88%. But note that Freddie’s data are almost always out of date by the time it announces its weekly figures.
Expert forecasts for mortgage rates
Looking further ahead, Fannie Mae and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.
And here are their rate forecasts for the four quarters of 2024 (Q1/24, Q2/24 Q3/24 and Q4/24).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were updated on Mar. 19 and the MBA’s on Apr. 18.
Forecaster
Q1/24
Q2/24
Q3/24
Q4/24
Fannie Mae
6.7%
6.7%
6.6%
6.4%
MBA
6.8%
6.7%
6.6%
6.4%
Of course, given so many unknowables, both these forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.
Important notes on today’s mortgage rates
Here are some things you need to know:
Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care’
Only “top-tier” borrowers (with stellar credit scores, big down payments, and very healthy finances) get the ultralow mortgage rates you’ll see advertised
Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
Refinance rates are typically close to those for purchases.
A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.
Find your lowest mortgage rate today
You should comparison shop widely, no matter what sort of mortgage you want. Federal regulator the Consumer Financial Protection Bureau found in May 2023:
“Mortgage borrowers are paying around $100 a month more depending on which lender they choose, for the same type of loan and the same consumer characteristics (such as credit score and down payment).”
In other words, over the lifetime of a 30-year loan, homebuyers who don’t bother to get quotes from multiple lenders risk losing an average of $36,000. What could you do with that sort of money?
Verify your new rate
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.
How your mortgage interest rate is determined
Mortgage and refinance rates vary a lot depending on each borrower’s unique situation.
Factors that determine your mortgage interest rate include:
Overall strength of the economy — A strong economy usually means higher rates, while a weaker one can push current mortgage rates down to promote borrowing
Lender capacity — When a lender is very busy, it will increase rates to deter new business and give its loan officers some breathing room
Property type (condo, single-family, town house, etc.) — A primary residence, meaning a home you plan to live in full time, will have a lower interest rate. Investment properties, second homes, and vacation homes have higher mortgage rates
Loan-to-value ratio (determined by your down payment) — Your loan-to-value ratio (LTV) compares your loan amount to the value of the home. A lower LTV, meaning a bigger down payment, gets you a lower mortgage rate
Debt-To-Income ratio — This number compares your total monthly debts to your pretax income. The more debt you currently have, the less room you’ll have in your budget for a mortgage payment
Loan term — Loans with a shorter term (like a 15-year mortgage) typically have lower rates than a 30-year loan term
Borrower’s credit score — Typically the higher your credit score is, the lower your mortgage rate, and vice versa
Mortgage discount points — Borrowers have the option to buy discount points or ‘mortgage points’ at closing. These let you pay money upfront to lower your interest rate
Remember, every mortgage lender weighs these factors a little differently.
To find the best rate for your situation, you’ll want to get personalized estimates from a few different lenders.
Verify your new rate. Start here
Are refinance rates the same as mortgage rates?
Rates for a home purchase and mortgage refinance are often similar.
However, some lenders will charge more for a refinance under certain circumstances.
Typically when rates fall, homeowners rush to refinance. They see an opportunity to lock in a lower rate and payment for the rest of their loan.
This creates a tidal wave of new work for mortgage lenders.
Unfortunately, some lenders don’t have the capacity or crew to process a large number of refinance loan applications.
In this case, a lender might raise its rates to deter new business and give loan officers time to process loans currently in the pipeline.
Also, cashing out equity can result in a higher rate when refinancing.
Cash-out refinances pose a greater risk for mortgage lenders, so they’re often priced higher than new home purchases and rate-term refinances.
Check your refinance rates today. Start here
How to get the lowest mortgage or refinance rate
Since rates can vary, always shop around when buying a house or refinancing a mortgage.
Comparison shopping can potentially save thousands, even tens of thousands of dollars over the life of your loan.
Here are a few tips to keep in mind:
1. Get multiple quotes
Many borrowers make the mistake of accepting the first mortgage or refinance offer they receive.
Some simply go with the bank they use for checking and savings since that can seem easiest.
However, your bank might not offer the best mortgage deal for you. And if you’re refinancing, your financial situation may have changed enough that your current lender is no longer your best bet.
So get multiple quotes from at least three different lenders to find the right one for you.
2. Compare Loan Estimates
When shopping for a mortgage or refinance, lenders will provide a Loan Estimate that breaks down important costs associated with the loan.
You’ll want to read these Loan Estimates carefully and compare costs and fees line-by-line, including:
Interest rate
Annual percentage rate (APR)
Monthly mortgage payment
Loan origination fees
Rate lock fees
Closing costs
Remember, the lowest interest rate isn’t always the best deal.
Annual percentage rate (APR) can help you compare the ‘real’ cost of two loans. It estimates your total yearly cost including interest and fees.
Also, pay close attention to your closing costs.
Some lenders may bring their rates down by charging more upfront via discount points. These can add thousands to your out-of-pocket costs.
3. Negotiate your mortgage rate
You can also negotiate your mortgage rate to get a better deal.
Let’s say you get loan estimates from two lenders. Lender A offers the better rate, but you prefer your loan terms from Lender B. Talk to Lender B and see if they can beat the former’s pricing.
You might be surprised to find that a lender is willing to give you a lower interest rate in order to keep your business.
And if they’re not, keep shopping — there’s a good chance someone will.
Fixed-rate mortgage vs. adjustable-rate mortgage: Which is right for you?
Mortgage borrowers can choose between a fixed-rate mortgage and an adjustable-rate mortgage (ARM).
Fixed-rate mortgages (FRMs) have interest rates that never change unless you decide to refinance. This results in predictable monthly payments and stability over the life of your loan.
Adjustable-rate loans have a low interest rate that’s fixed for a set number of years (typically five or seven). After the initial fixed-rate period, the interest rate adjusts every year based on market conditions.
With each rate adjustment, a borrower’s mortgage rate can either increase, decrease, or stay the same. These loans are unpredictable since monthly payments can change each year.
Adjustable-rate mortgages are fitting for borrowers who expect to move before their first rate adjustment, or who can afford a higher future payment.
In most other cases, a fixed-rate mortgage is typically the safer and better choice.
Remember, if rates drop sharply, you are free to refinance and lock in a lower rate and payment later on.
How your credit score affects your mortgage rate
You don’t need a high credit score to qualify for a home purchase or refinance, but your credit score will affect your rate.
This is because credit history determines risk level.
Historically speaking, borrowers with higher credit scores are less likely to default on their mortgages, so they qualify for lower rates.
So, for the best rate, aim for a credit score of 720 or higher.
Mortgage programs that don’t require a high score include:
Conventional home loans — minimum 620 credit score
FHA loans — minimum 500 credit score (with a 10% down payment) or 580 (with a 3.5% down payment)
VA loans — no minimum credit score, but 620 is common
USDA loans — minimum 640 credit score
Ideally, you want to check your credit report and score at least 6 months before applying for a mortgage. This gives you time to sort out any errors and make sure your score is as high as possible.
If you’re ready to apply now, it’s still worth checking so you have a good idea of what loan programs you might qualify for and how your score will affect your rate.
You can get your credit report from AnnualCreditReport.com and your score from MyFico.com.
How big of a down payment do I need?
Nowadays, mortgage programs don’t require the conventional 20 percent down.
Indeed, first-time home buyers put only 6 percent down on average.
Down payment minimums vary depending on the loan program. For example:
Conventional home loans require a down payment between 3% and 5%
FHA loans require 3.5% down
VA and USDA loans allow zero down payment
Jumbo loans typically require at least 5% to 10% down
Keep in mind, a higher down payment reduces your risk as a borrower and helps you negotiate a better mortgage rate.
If you are able to make a 20 percent down payment, you can avoid paying for mortgage insurance.
This is an added cost paid by the borrower, which protects their lender in case of default or foreclosure.
But a big down payment is not required.
For many people, it makes sense to make a smaller down payment in order to buy a house sooner and start building home equity.
Verify your new rate. Start here
Choosing the right type of home loan
No two mortgage loans are alike, so it’s important to know your options and choose the right type of mortgage.
The five main types of mortgages include:
Fixed-rate mortgage (FRM)
Your interest rate remains the same over the life of the loan. This is a good option for borrowers who expect to live in their homes long-term.
The most popular loan option is the 30-year mortgage, but 15- and 20-year terms are also commonly available.
Adjustable-rate mortgage (ARM)
Adjustable-rate loans have a fixed interest rate for the first few years. Then, your mortgage rate resets every year.
Your rate and payment can rise or fall annually depending on how the broader interest rate trends.
ARMs are ideal for borrowers who expect to move prior to their first rate adjustment (usually in 5 or 7 years).
For those who plan to stay in their home long-term, a fixed-rate mortgage is typically recommended.
Jumbo mortgage
A jumbo loan is a mortgage that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac.
In 2023, the conforming loan limit is $726,200 in most areas.
Jumbo loans are perfect for borrowers who need a larger loan to purchase a high-priced property, especially in big cities with high real estate values.
FHA mortgage
A government loan backed by the Federal Housing Administration for low- to moderate-income borrowers. FHA loans feature low credit score and down payment requirements.
VA mortgage
A government loan backed by the Department of Veterans Affairs. To be eligible, you must be active-duty military, a veteran, a Reservist or National Guard service member, or an eligible spouse.
VA loans allow no down payment and have exceptionally low mortgage rates.
USDA mortgage
USDA loans are a government program backed by the U.S. Department of Agriculture. They offer a no-down-payment solution for borrowers who purchase real estate in an eligible rural area. To qualify, your income must be at or below the local median.
Bank statement loan
Borrowers can qualify for a mortgage without tax returns, using their personal or business bank account as evidence of their financial circumstances. This is an option for self-employed or seasonally-employed borrowers.
Portfolio/Non-QM loan
These are mortgages that lenders don’t sell on the secondary mortgage market. And this gives lenders the flexibility to set their own guidelines.
Non-QM loans may have lower credit score requirements or offer low-down-payment options without mortgage insurance.
Choosing the right mortgage lender
The lender or loan program that’s right for one person might not be right for another.
Explore your options and then pick a loan based on your credit score, down payment, and financial goals, as well as local home prices.
Whether you’re getting a mortgage for a home purchase or a refinance, always shop around and compare rates and terms.
Typically, it only takes a few hours to get quotes from multiple lenders. And it could save you thousands in the long run.
Time to make a move? Let us find the right mortgage for you
Current mortgage rates methodology
We receive current mortgage rates each day from a network of mortgage lenders that offer home purchase and refinance loans. Those mortgage rates shown here are based on sample borrower profiles that vary by loan type. See our full loan assumptions here.
Granted, there was a possibility that today could have been a rally day for the bond market, but as seen in the overnight trading session, that possibility depended on the escalation of war in the Middle East. There aren’t many other reasons for bonds to push back too much on recent weakness. One of the only other reasons would be Friday position squaring and short covering, but that would be just as much of an indication of ongoing bearishness in bonds. In that sense, holding sideways is possibly the best victory we could have hoped for today. The fact that we’ve avoided Tuesday’s high yields through the end of the week could even signal sideways vibes until May, at which point data and the Fed will let us know the direction of the next big move.
09:38 AM
Initially stronger overnight, but giving up gains since then. 10yr down 1.7bps at 4.609. MBS up 1 tick (.03).
10:27 AM
10yr all the way back to unchanged at 4.627. MBS down 2 ticks (.06)
02:02 PM
Broadly sideways and choppy, but currently unchanged in MBS and 10yr.
04:27 PM
Still sideways. MBS up 1 tick (0.03) and 10yr down half a bp at 4.622
Download our mobile app to get alerts for MBS Commentary and streaming MBS and Treasury prices.
The recent rise of the average long-term U.S. mortgage rate, which poses a new obstacle to aspiring homeowners hoping to purchase a property during this homebuying season, could have dramatic consequences on the country’s housing market.
The national weekly average for 30-year mortgages, the most popular in the nation, was 6.88 percent as of April 11, according to data from the Federal Home Loan Mortgage Corp., better known as Freddie Mac. That was 0.06 of a percentage point higher than a week before and up 0.61 compared to a year before. The national average for 15-year mortgages was 6.16 percent, up 0.1 of a percentage point compared to the previous week and 0.62 compared to a year before.
Read more: How to Get a Mortgage
On Monday, experts monitoring mortgage rates on a daily basis noted that the national average for 30-year fixed mortgages reached 7.44 percent—the highest they’ve been so far this year and close to the 23-year weekly record of 7.79 percent reached on October 25, 2023. On Monday, the 15-year mortgage rate was 6.85 percent. At its peak on October 25, 2023, it had reached 7.03 percent.
“Big one-day jump,” commented journalist Lance Lambert on X, formerly known as Twitter. “The average 30-year fixed mortgage rate ticks up to 7.44 percent. New high for 2024.”
Aerial view of homes in desert of Adelanto, Southern California. Rising mortgage rates could have a chilling effect on one of the busiest times of the year for home sales. Aerial view of homes in desert of Adelanto, Southern California. Rising mortgage rates could have a chilling effect on one of the busiest times of the year for home sales. Visions of America/Joe Sohm/Universal Images Group via Getty Images
The rise in mortgage rates comes as homebuying season, a time when the number of homes listed for sale increases, is heating up. This climb in inventory starts in spring and normally peaks in summer before declining as the weather gets colder, marking one of the busiest times of the year for home sales. But higher mortgage rates could have an early chilling effect on the market.
Read more: Compare Top Mortgage Lenders
The median monthly U.S. housing payment hit an all-time high of $2,747 during the four weeks ending April 7, up 11 percent from a year earlier, according to a report from real estate brokerage Redfin last week. It noted that the average 30-year fixed mortgage rate, then at 6.82 percent, was more than double pandemic-era lows.
There’s not much hope that mortgage rates will come down soon, as the U.S. Labor Department said last week that inflation has risen faster than expected last month, at 3.5 percent over the 12 months to March. That was up from 3.2 percent in February.
“For homebuyers, the latest CPI [consumer price index] report means mortgage rates will stay higher for longer because it makes the Fed unlikely to cut interest rates in the next few months,” said Redfin Economic Research Lead Chen Zhao. “Housing costs are likely to continue going up for the near future, but persistently high mortgage rates and rising supply could cool home-price growth by the end of the year, taking some pressure off costs.”
Jamie Dimon, CEO of JPMorgan Chase, voiced concern last week over “persistent inflationary pressures” and said the bank was prepared for “a very broad range of interest rates, from 2 percent to 8 percent or even more, with equally wide-ranging economic outcomes.”
While the jump in mortgage rates appears modest, it makes a huge difference for borrowers, who might end up paying hundreds of dollars a month more on top of what’s already one of the most significant expenses in their lives.
Many might decide that they can’t afford to buy a home—which is what happened when mortgage rates suddenly skyrocketed between late 2022 and early 2023 as a result of the Federal Reserve’s aggressive interest rate-hiking campaign.
Between late summer 2022 and spring 2023, a drop in demand caused by the unaffordability of buying a home led to a modest price correction of the housing market. But prices have since climbed back due to the combination of pent-up demand and historic low inventory.
While the Federal Reserve doesn’t directly set mortgage rates, these are hugely influenced by the central bank’s decision to hike or cut interest rates. The Fed left rates unchanged in March and is considered unlikely to cut them this month considering the latest data on inflation.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Piggyback, 2nds, POS Products; G-Rate’s CEO Podcast Interview; Agency News
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Piggyback, 2nds, POS Products; G-Rate’s CEO Podcast Interview; Agency News
By: Rob Chrisman
Mon, Apr 22 2024, 11:28 AM
When I was a kid, whenever I would walk by a pay phone or newspaper vending machine, I’d check the coin change slot. Or periodically check under my Dad’s La-Z-Boy… every penny or dollar counted! (Nowadays, I still get excited when I find a forgotten quarter in my own pants or backpack.) Plenty of folks at last week’s Great River Conference were trying to do the modern equivalent of that by learning about the current vendor offerings of technology, or meeting with their current vendors to see if pennies or dollars could be saved on every loan given the current $12k+ cost per funded loan. Smart and compliant speed and efficiency are critical… speaking of which, found here, today’s podcast features an interview with Guaranteed Rate’s Victor Ciardelli on the company’s goal of closing a loan in one-day and how they will get there. This week’s podcasts are sponsored by Calque. With The Trade-In Mortgage powered by Calque, homeowners can buy before they sell, make non-contingent offers, and tap their home equity to fund the down payment on their next home.
Lender and Broker Products, Software, and Services
When people say they can see miles and miles on a clear day, they aren’t wrong: the horizon is about 3 miles away, with some variation depending on your height. And whatever may lie beyond, Dark Matter Technologies is helping lenders prepare with its first annual Horizon user conference. The event kicks off Wednesday at the Fontainebleau Miami Beach and will bring together hundreds of industry notables to network, get the inside scoop on Dark Matter’s innovation roadmap, and explore business trends including market growth strategies, AI, and cybersecurity. Feeling a little FOMO? Request a consultation today and your team could be working smarter with the Empower LOS, and catching some Florida sun, by this time next year.
Does it feel like your current point-of-sale vendor has lost focus on mortgage? As a mortgage-specialized partner, Maxwell is committed to giving lenders a competitive advantage in a changing mortgage market. With Maxwell Point of Sale, lenders can tailor workflows to fit the unique needs of their organization, so back-end teams can work quickly without costly interruptions. Compared to a top competitor, Maxwell Point of Sale averages a 5.9 percent higher pull-through rate from rate-lock to close. For the average lender using Maxwell POS, this equates to $42MM in additional loan volume. Schedule a call with the team to learn how Maxwell Point of Sale can start working for you, your borrowers, and your lending team quickly.
Take your accounting department from “Cost Center” to Revenue Generator” with Loan Vision & LV-PAM. Loan Vision customers report a 10 percent reduction in loan fallout, 30 percent+ decrease in days to close the books, and 20 percent+ reduction in accounting headcount. Interested in learning how Loan Vision can reduce internal costs and help you gain a competitive edge? Contact Carl Wooloff to schedule a call today.
LoanStream wants you to Spring into more business with its April Specials on Prime, Non-QM and Closed End Seconds now through April 30th, 2024. Includes 25 BPS Price Improvement on FHA/VA loans 620+ FICO (excludes DPA and CalHFA) on Prime, 25 BPS price improvement on all Non-QM loans (excludes Select) and 25 BPS Price Improvement on all Closed-End Seconds. Restrictions apply so contact your LoanStream Account Executive to learn more. Specials are valid for loans locked 4/1/2024 through 4/30/2024. Offers subject to change at any time, terms and conditions apply.
Symmetry Lending introduces its April Special for Piggyback Pricing! Enjoy a remarkable discount on Piggyback HELOC transactions until April’s end, including a -1.00 percent Spring Discount for qualified customers with a FICO score of 740+ and a draw of $200k+, equating to Prime + .25 percent margin. This offer demonstrates appreciation for clients’ support and trust. Ready to seize this opportunity? Connect with your Symmetry Lending Area Manager to formulate a plan for getting these solutions in front of your clients today!
eClosing Survey by STRATMOR
Today, Snapdocs released new industry research that found lenders using the company’s eClosing platform experience 18-day faster loan velocity than their industry peers. The survey was conducted by STRATMOR Group with data self-reported by mortgage lenders. I got a note from Michael Sachdev, CEO of Snapdocs that said eClosing technology, when paired with the right partner to scale adoption, is helping lenders set new industry benchmarks for loan processing speed, operating costs, and borrower satisfaction. So often we see vendors make claims about their product value, but this report is a good example of that validation being sourced directly from the lender users themselves.
Agency and Investor News
Last week, the Department of Housing and Urban Development issued a HUD final rule that it says will increase lender participation in the Section 184 Indian Housing Loan Guarantee program, strengthen regulations to meet growing demand, and ensure the program will remain a vital resource for Native American families for years to come. Miki Adams, president of CBC Mortgage Agency, a correspondent investor that is wholly owned by the Cedar Band of Paiutes in Utah, stated, “The Section 184 program is a vital tool for so many Native American homebuyers. The new regulations will bring more clarity and predictability to this important program, and we applaud the Administration for the improvements and their efforts to work closely with Tribal leaders and other stakeholders. There is still more that must be done to modernize the program and we look forward to working collaboratively with HUD on future improvements.”
Loss mitigation: what would you do? A borrower is out of work, is three months delinquent on their mortgage payments, has been offered a new job in another state, and will relocate within 60 days. They’re also unable to catch up on their arrears and have equity in the home. What should the servicer do? Review this and other scenarios from Fannie Mae’s March Loss Mitigation webinar and download the presentation.
Fannie Mae has launched “Mission Index,” a new initiative to sell agency mortgage-backed securities (MBS) that cater to socially conscious investors, aiming to attract more buyers to the market, Bloomberg reported. Fannie Mae assigns scores to MBS pools based on affordable rental housing availability, borrower location (high-poverty or rural areas), and other indicators, giving investors more visibility into the underlying mortgages and stimulate lending to underserved borrowers, potentially leading to lower interest rates for these borrowers.
Saving for a down payment is a barrier first-time homebuyers face. While there are numerous down payment assistance programs (DPA) available, it can be difficult for housing professionals to find programs that meet the specific needs of their borrower. Given the number of DPA programs in the market, there hasn’t been a consistent way to match the right DPA program to the needs of a particular borrower. To address this issue, Freddie Mac launched DPA One®, a free online solution to help DPA program providers reduce submission errors and program requirement questions from lenders by developing a single, standardized, online access point to manage their DPA program information. To learn more, read Freddie Mac’s case study about how one of Freddie Mac’s housing finance agency partners, Southeast Texas Housing Finance Corporation (SETH), is promoting affordable housing in the Southeast Texas community.
As part of a recent Fannie Mae Mortgage Lender Sentiment Survey® (MLSS) special topic analysis, Fannie’s economists surveyed senior executives of mortgage lending institutions to better understand how they feel about Technology Service Provider (TSP) solutions, particularly as TSPs have become an increasingly essential part of lenders’ day to day operations. The results are in a new Perspectives blog.
Ginnie Mae announced revisions to its monthly single-family reporting requirements to include expanded Payment Default Status (PDS) reporting. The expanded PDS dataset will include loan default information, any mitigation actions taken, and the timing of those actions. For more information regarding the transition to the new reporting requirements, see All Participants Memorandum (APM) 24-06.
In Bulletin 2024-1, Freddie Mac announced changes to trust income requirements pertaining to history of receipt for trust income with pre-determined fixed payments, and documentation of continuance for all trust income types. Pennymac is aligning with these changes effective with loan deliveries on or after April 30, 2024. View Pennymac Announcement 24-36 for details.
Pennymac posted Announcement 24-37 informing it will update Conventional LLPAs effective for all Best Efforts Commitments taken on or after Monday, April 22, 2024.
Capital Markets
Investor attitudes drive investor demand, and therefore rates. So, what is driving investor attitudes? There is the escalated geopolitical uncertainty between Iran and Israel (central bankers are girding for potential oil shocks that could reignite consumer-price growth), there is rising volatility amidst fear of a potential rate increase due to sticky inflation (voting Fed members have not ruled out the possibility of a future rate hike and have urged patience for any potential easing at least until year-end), there is also cautious optimism surrounding the world economy (earnings season continues on Wall Street this week), and new economic releases are always on the docket, even if most are backward-looking (Q1 GDP, due out later this week, is expected to have risen to 2.9 percent as of the most recent estimate).
More germane to the mortgage industry, we learned last week that existing home sales were down 4.3 percent during the month of March. Meanwhile, housing starts fell 14.7 percent in March although some of the decline was attributed to weather conditions in parts of the country. In terms of the American consumer, retail sales in March rose 0.7 percent which was well above market expectations for a 0.3 percent increase. Additionally, retail sales from February were revised higher from the initial release. The 1.1 percent jump in control group sales led some economists to increase their forecast for personal consumption growth in the first quarter.
Bank economists are growing more optimistic about the outlook for credit conditions compared to the latter half of 2023, according to the American Bankers Association’s latest Credit Conditions Index. Conditions are expected to improve for a second consecutive quarter in Q2, which would mark the highest level in two years, reflecting a moderate increase in optimism. Job growth is expected to continue, inflation is forecasted to ease toward the Fed’s 2 percent target, and three rate cuts are expected by the end of the year.
This week’s highlights include month-end supply consisting of $183 billion in fixed coupons and $44 billion 2-year FRNs auctioned over tomorrow through Thursday, flash PMIs from S&P Global, new home sales, Fed surveys, durable goods, Q1 GDP, PCE, and Michigan Sentiment. No Fed speakers are scheduled with the Fed in blackout ahead of the May 1/2 FOMC meeting. The week gets off to a quiet start with one data point, Chicago Fed National Activity Index for March, due out later this morning. We start Monday with 30-year Agency MBS prices worse roughly .125 from Friday evening and the 10-year yielding 4.65 after closing last week at 4.62 percent.
Employment
radius financial group inc. is looking for an experienced Accounting Manager to lead all accounting operations. radius is a full-service retail mortgage banker that has been making mortgages better through a customer obsessed and team inspired culture since 1999. We are seeking an experienced Accounting Manager to lead all loan accounting, financial reporting, accounts payable and payroll functions. The Accounting Manager will report to the CFO and must have experience in a mortgage accounting system (Loan Vision is a plus), branch reporting and MSR accounting. Remote candidates will be considered and should send confidential inquires to Mike Clark.
Imagine a world where you, as a loan officer, aren’t stuck choosing between a broker model and a retail model. What if there was a company that blended the best of both worlds: the transparency of a broker model with the solid support of a retail banking platform? What if this company not only generated qualified local leads for you but also helped you add value for your existing realtor partners and connect with new ones? What if I told you this company is not just a dream: It’s real and it’s here to revolutionize your workflow. Please schedule a confidential Zoom meeting with Next Wave Mortgage.
TAYGO INC. presents an enticing new opportunity for a SaaS Sales Representative! This pivotal role is instrumental in propelling the success of TAYGO through selling our SaaS solutions to prospective clients. The key focus is comprehending the requirements and challenges of mortgage lenders (as well as mortgage brokers) and adeptly showcasing how our products, WEB-GO and RIN-GO, can optimize their operations and business performance. You must have a strong understanding of CRM products, their features, and the mortgage industry. You must effectively engage with prospects to understand their needs. You must also carefully monitor existing clients’ activities to identify upsell opportunities. You must have exceptional communication skills for online demos and meetings, cold or warm calls and emails. Your expertise, patience, and ability to build and maintain strong customer relationships will be vital in achieving our sales goals and ensuring customer satisfaction. Please send your resume to [email protected].
Alanna McCargo, President of the Government National Mortgage Association (Ginnie Mae) and whom I have had the opportunity to spend some time with, will resign from public office, effective May 3. “McCargo has served in the Biden-Harris Administration since January 2021, first as the Senior Advisor for Housing Finance in the U.S. Department of Housing and Urban Development (HUD) for former Secretary Marcia Fudge and then later nominated by President Biden to lead Ginnie Mae. McCargo’s confirmation, with bipartisan support by the U.S. Senate, made history as she became the first woman and woman of color at the helm of this U.S. Government corporation.”
The announcement came with the usual platitudes from Ms. McCargo about the Administration and Ginnie Mae and its “complex $2.5 trillion guarantee business” as well as others saying some very nice things about her.
Principal Executive Vice President (PEVP) Sam Valverde will serve as the Acting President upon President McCargo’s departure. Senior Advisor for Strategic Operations and Interim Chief Operating Officer Laura Kenney will assume additional responsibilities as part of this transition.
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On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about home prices, mortgage rates and the effect of war on the 10-year yield.
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The HousingWire Daily podcast examines the most compelling articles reported across HW Media. Each morning, we provide our listeners with a deeper look into the stories coming across our newsrooms that are helping Move Markets Forward. Hosted and produced by the HW Media team.
The Federal Reserve’s latest semiannual financial stability report — a survey of financial professionals — found inflation and high interest rates to be respondents’ top concern. But policy uncertainty — a lack of clarity about the direction of foreign and domestic policy — was the No. 2 concern.
Bloomberg News
WASHINGTON — Inflation and uncertainty surrounding the direction of federal policy on trade, spending and other issues are banks’ top financial stability concerns, the Federal Reserve Board said in a report released Friday.
For its semiannual report on financial stability, the Fed surveyed a range of financial professionals — including broker-dealers, investment fund managers, research and advisory professionals as well as academics — about the top issues facing the financial system. Policy uncertainty emerged as a major new source of anxiety for industry experts — it was cited by 60% of respondents, up from the just 24% of respondents who cited it as a top concern in the Fed’s last survey in October 2023.
Since 2019, the Fed has issued two reports on financial stability per year, usually releasing one in the spring and another in the fall.
Persistent inflation and high interest rates remained the top concern across the board, with 72% of respondents listing it as their primary concern — the same percentage as in the October report. The report indicated that interest rates may remain elevated above current market expectations for an extended period and that persistent inflation could prompt a more stringent monetary policy, causing increased volatility in financial markets and adjustments in asset valuations.
But the rise of policy uncertainty — including unpredictability stemming from fluctuating trade policies, influenced by geopolitical tensions such as the conflict in the Middle East and Russia’s war against Ukraine that has lasted more than two years — was an unexpected source of market disruption for many survey respondents. Respondents also flagged the upcoming U.S. elections in November as a source of stress.
“Further escalation of geopolitical tensions or policy uncertainty could reduce economic activity, boost inflation, and heighten volatility in financial markets,” the report said. “The global financial system could be affected by a pullback from risk-taking, declines in asset prices, and losses for exposed U.S. and foreign businesses and investors.”
Concerns about the credit quality of commercial real estate — which was the No. 2 concern cited in the October report — was cited as a top concern among 56% of the survey’s respondents. But that fell from 72% in the October report. The Fed noted that prices across all sectors of CRE continued to decline in the second half of 2023, and the report makes clear the full impact of CRE price drops have yet to be reflected in the data.
“These transaction-based price measures likely do not yet fully reflect the deterioration in CRE market prices because, rather than realizing losses, many owners wait for more favorable conditions to put their properties on the market,” noted the report. “Capitalization rates at the time of property purchase, which measure the annual income of commercial properties relative to their prices, moved modestly higher but remained at historically low levels, suggesting that prices remain high relative to fundamentals.”
Banking sector instability continued to feature prominently despite the report noting high levels of liquidity and low funding risks in the sector since the October report.
While the Fed’s emergency lending facility, the Bank Term Funding Program, ceased operations on March 11, the report noted the BTFP continues to reduce liquidity pressures for depositories. The report said mostly small institutions with under $10 billion of assets — representing 95% of beneficiaries — benefited from the program.
Tuesday marked the highest mortgage rates since November, capping a mini surge that began after last week’s inflation data. After a moderate improvement yesterday, rates moved back up toward (but thankfully not above) the recent highs today.
Financial markets reacted to stronger economic data and comments from Federal Reserve officials regarding the possibility of no Fed rate cuts in 2024 and even a small chance of rate hikes. Importantly, Fed members don’t see hikes as being likely and the economic data would have to accelerate enough to justify a change in strategy.
We’re definitely not there yet, but we’re just as certainly not there when it comes to lower inflation readings required to validate the first rate cut. At the March Fed meeting, officials still saw 3 cuts by the end of the year, albeit just barely. Based on data that’s come out since then, markets are betting on only one cut.
Other news sources are running headlines regarding a big jump in mortgage rates to 7.10% based on Freddie Mac’s weekly survey results released today. Keep in mind that’s a weekly number based on average of last Thursday through yesterday and that it doesn’t account for the impact of discount points. In other words, rates are definitely not 7.1 today, and especially not without points.
As thousands of Chicago-area families go house-hunting this spring, the dream of homeownership continues to drift further and further away.
By Don DeBat
21-Apr-24 – Average long-term mortgage rates inched above 7 percent nationwide for the first time this year, reported Freddie Mac’s Primary Mortgage Market Survey on April 18.
Benchmark 30-year fixed-rate home loan rates hit 7.10 percent, up from 6.88 percent a week earlier. That’s its highest level since October 26, 2023, when 30-year fixed loans hit 7.79 percent. A year ago, 30-year fixed mortgage rates averaged a more affordable 6.39 percent.
“The 30-year fixed-rate mortgage surpassed 7 percent for the first time this year,” said Sam Khater (left), Freddie Mac’s Chief Economist. “As rates trend higher, potential home buyers are deciding whether to buy before rates rise even more or hold off in hopes of decreases later in the year.”
Interest charges on 15-year fixed loans on April 18 averaged 6.39 percent, up from 6.16 percent a week earlier. A year ago, 15-year fixed mortgages averaged 5.76 percent.
Khater noted that home purchase applications rose modestly the week before, but “it remains unclear how many home buyers can withstand increasing rates in the future.”
The Freddie Mac survey is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who place a down payment of 20 percent and have an excellent credit score of 740 or higher.
The truth is home buyers in Chicago and across the nation really are starting to get rate-shy. Sales of existing homes in the United States fell 4.3 percent in March to a seasonally adjusted 4.19 million, reported the National Association of Realtors (NAR). That’s the first monthly decline in sales since December 2023, and follows a nearly 10 percent monthly sales jump nationwide in February.
“Home sales essentially remain stuck because mortgage rates have been stable and inventory is not really rising,” said Laurence Yun (right), NAR’s Chief Economist.
Unfortunately, Yun predicted that mortgage rates are likely to rise above 7 percent in the coming weeks. Early in 2024, Yun had predicted that 30-year fixed loan rates would average 6.3 percent by the fourth quarter of this year.
The interest rate rise is a direct result of the Federal Reserve’s aggressive interest rate hikes intended to tame soaring inflation numbers not seen in 40 years.
The Fed has raised its key benchmark lending rate to a range of 5.25 to 5.50 percent, the highest level since 2007. Based on moves by the Fed, mortgage analysts say 30-year fixed home loans could reach – or surpass – the 8 percent level in the near future. Home loan rates have not hit the lofty 8 percent level since August 11, 2000, more than 23 years ago.
Searching for a better deal, some borrowers are beginning to flock to riskier adjustable-rate mortgages (ARM), lenders say.
“This week we have issued 30-year loan commitments with rates as high as 7.5 percent, depending on down payments and borrower credit scores,” said Jeremy Rose (left), Chicago-based loan consultant for Loan Depot, one of the largest lenders in the nation. “Mortgage interest rates may have gradually declined over the past two decades, but home prices have tripled.”
Today, the buyer of a $400,000 home with a credit score of 740, who places a 25 percent down payment and takes out a $300,000 mortgage for 30 years at Loan Depot, would pay a rate of 7.5 percent. If the buyer is willing to pay a 1 percent discount point, or a loan fee of $3,000, the interest rate would drop to 7.125 percent.
“The most motivated buyers will accept the current level of mortgage rates and make offers when they find a place that’s suitable,” said Holden Lewis (right), a home and mortgage expert at Nerd Wallet. “High mortgage rates aren’t holding buyers back as much as lack of inventory and high prices.”
“If you’re always waiting for the perfect market conditions to arise, you could end up missing out on a lot of great opportunities,” warned Jacob Channel, Senior Economist at Lending Tree.
Mortgage rate history
Thirty-year fixed-mortgage interest rates ended 2020 at a rock-bottom 2.65 percent – the lowest level in the Freddie Mac survey history, which began in 1971.
Home loan rates set new record lows an amazing 16 times in 2020, and tens of thousands of homeowners refinanced.
Archives of the now-defunct Federal Housing Finance Board show long-term mortgage rates in the 1960s were not much higher than the Great Depression, when lenders were charging 5 percent on five-year balloon loans.
Nearly six decades ago, between 1963 and 1965, you could get a mortgage at 5.81 to 5.94 percent. Between 1971 and 1977, the now-defunct Illinois Usury Law held rates in the 7.6-to-9 percent range.
In the early 1980s, runaway inflation caused home loan rates to skyrocket into the stratosphere. According to Freddie Mac, benchmark 30-year mortgage rates peaked at a jaw-dropping 18.45 percent in October 1981 during that Great Recession.
Rates finally fell below 10 percent in April 1986, and then bounced in the 9-to-10 percent range during the balance of the 1980s. Twenty-three years ago, in August 2000, when some of today’s Millennial borrowers were still in diapers, lenders were quoting 8.04 percent.
(Left) October 1981 issue of Inc. magazine
Between 2002 and 2011, rates bounced in the 4-to-6 percent range. They inched into the 3-to-4 percent range until 2020, when they fell into the rock-bottom 2 percent bracket.
The Fed expected to be able to cut rates 3 times in 2024 as recently as March. Financial markets agreed. But the data that’s come out since then has everyone singing a different tune. This week’s data was more of an afterthought compared to last week’s.
The chart above pertains to Fed rate expectations, and that’s not exactly the same as longer term rates like mortgages and 10yr Treasury yields. The latter saw a bit more volatility this week.
Monday’s Retail Sales data was much stronger than expected and markets reacted immediately. Tuesday’s data was consequential, but it was followed by a speech in which Fed Chair Powell had an opportunity to provide some updated thoughts on the rate outlook. After all, the Fed hadn’t seen the most recent CPI data (and several other strong reports) at the time the last round of rate projections came out in March.
As the market expected, the tone is evolving. While Powell and the Fed repeat that the rate path depends on economic data, it’s no surprise to see recent comments acknowledging a surprising amount of strength in the recent data. Stronger data means fewer rate cuts. Powell went as far as saying there was new uncertainty as to whether the Fed will even be able to cut in 2024.
Two days later, NY Fed President John Williams struck similar tone. Just last week, he had pushed back on the CPI data, saying the Fed wasn’t surprised by setbacks in the inflation data. This week’s comments did more to acknowledge the other side of data dependency. Specifically, Williams said the Fed could hike again if the data called for it.
To be sure, these are not earth-shattering “ifs” and “thens.” But the market hones in on the subtle differences with which the data dependency is communicated. It didn’t help that Thursday morning’s Philly Fed Manufacturing Index moved up to the highest levels in 2 years or that the “prices paid” component of the same report moved up much more than economists expected.
Here’s how the entire week looked in terms of 10yr Treasury yields.
Friday’s reaction to the attacks in Iran is important because it shows us that some geopolitical news is indeed worth a reaction. That was less clear earlier in the week as multiple batches of somewhat similar headlines failed to cause as much movement. The difference on Friday was the uncertainty over the status of Iran’s nuclear sites as well as concern that it would be the catalyst for the outbreak of much more significant fighting. The market calmed down quite quickly once it was clear the nuclear sites were not damaged and that Iran was not retaliating. The correlation between stock prices and bond yields further confirms the “flight to safety” trading pattern commonly seen after such news.
In the bigger picture, the past 2 weeks have gone a long way toward making the end of 2023 look like yet another “false start” toward lower rates. Up until then, we had sort of a sideways fighting chance. While we have labeled late 2023 as the 3rd false start of this cycle, it wouldn’t meet the purest definition until rates rise back above last October’s highs. We’re definitely not there yet and we won’t know if we’ll get there until we see the next round of big ticket economic data in May.
In the meantime, home sales remain constrained.
Next week’s economic data is fairly muted apart from Friday’s PCE price index. This isn’t as much of a market mover as the Consumer Price Index (CPI), but it could certainly cause some volatility if it happens to send a different message.