MORTGAGE RATE TRENDS~
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Current Retail Discount Pricing:
30yr. Fixed-rate: 2.625% (2.80% APR)
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.41%, near eye-lash even with May's average, as Feds keep this ship on auto-pilot. For those following events closely, we know what happened to a large vessel on auto-pilot traveling through the Suez Canal on Easter Sunday. The series of mortgage reports listed below could be dated today, and Gate #3 could be opening soon.
SHIP OF FOOLS ?
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.37%, moving slowly down through the week, and .10% below March average, as the credit markets set their ship on auto-pilot as Treasury keeps the bilges of debt from piling higher by printing up new money to keep things afloat. What does new money look like? Some of it shows up in the chart here on the expansion of M-2 money supply, going from 16,103 billion (ie, 16.1 trillion) in March 2020, to 19.7 trillion in February, a 22% increase in 11 months. Fed balance sheet chart shows a take off at the start of COVID in March from $4.10 trillion to 7.793 trillion by April,14, 2021, a 90% increase, all used to finance budget deficits and keep these mortgage rates low by buying them when the international markets won't.
The age old definition of inflation is "too much money chasing too few of goods," and the real estate market may be an early illustration of that. While home-owners call it appreciation, would be-buyers see it as an inflationary cost of living. It's a good time to expect the unexpected so lock in your rate today, and if you already own a home, buy silver and gold tomorrow, as fixed assets are a way to weather an inflationary storm brewing.
CAN'T FOOL WITH MOTHER NATURE ?
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.49%, up .21% since the start of the week, and a whooping 1/2% from January's averages, as Fed cloud-seeding of the bond market to create artificially lower rates gets blown away by market forces. In a weird way, this action was duplicated on a much smaller scale where Game Stop professional short selling manipulators were trying to force this stock down, but millions of millennial traders ganged up on them, buying the stock , and blew the pros away with huge losses. investors worldwide are challenging the pros at the Fed by selling mortgage-backed securities (or any dollar-denominated debt), betting rates to rise naturally no matter what the Feds do, as the Dollar droops in value, some 4% from last year (roughly meaning bond investors at sale get back Dollars that are worth 4% less than what they had invested, or a supermarket example, it takes $4 more dollars to buy $100 worth of goods than it did 12 months ago) . Wild-eyed spending bills continue to pile on as Congress just passed new spending bill of $1.9 trillion without, as usual, showing how to pay for it.
QE3 SQUARED: TO INFINITY AND BEYOND? / ON A MAGIC CARPET RIDE (?)
FNMA wholesale 30yr. fixed-rate mortgage auction results: 1.99%, ever so slight increase on January's average of 1.98%, as Feds continue to keep a lid on mortgage prices with their Midas touch. While everyone in the financial world offers predictions of the new year, much is based on scenarios so here are the potential flight patterns described like a new Disney ride:
Passengers. Please decide which trip you have selected and pickup your boarding pass at the gate:
Gate #1 requires a crash helmet for riders and offers a return to times of the pass, though the accumulated debt since 2010 is quadruple that, and accelerating like rocket man flying off to a new magical adventure, but this adventure ride has a finite journey when money is created, not by the production of goods and services, but by the movement of a decimal point to increase cash holdings, much like having $1,000 in savings and overnight goes to $10,000--a magical moment. However that magic ends due to the realities of the economic forces involved in just creating money on a wish: that $10,000 now buys you a 3 day solo trip to Disney World. Interest rates rise from inflation (mortgage rates were as high as 14% in 1984) and puts that home purchase out of reach.
Gate #2 also requires a crash helmet where governments all over the world attempt to stop this erosion of the purchase power of the Greenback (and other currencies) by creating a one world digital crypto currency. They claim it cannot be controlled or manipulated--like moving the digital currency supply another decimal point over--or so they promise. Carpet ride ends in a second heap next to Gate #1 exit, closing down the park.
Gate #3 requires seat belts for initial bumps in weeks to come followed by a complete overhaul and cleansing of global archaic systems that have corrupted and bankrupt nations over time--and the replacement stabilizes systems and creates a future of prosperity for all.
IDES OF MARCH COMES EARLY/
ET TU ALL OF YOU?
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.00%,
slowly rising from January's start at 1.88%, as the most tumultuous election in our lifetime comes to an end, but the end becomes the beginning. Stocks are hitting new highs (DOW up 31,068), and the credit markets continue pumping out record low rates, seemingly oblivious to what is happening behind the scenes. In ancient times, Senators in Rome were plotting treasonous actions behind closed doors. "It would soon be over for Caesar," Brute whispered amongst his peers all huddled in their chamber. And yes, as in ancient times, all roads lead to Rome, and this one document attached below tells that tale for the Ides in 2021. But unlike history repeating itself, the Centurions are at the Gates under the command of Caesar who knows of their plotting, and it is the Senators who are destined to fall on their own knives. When the die is cast, and history records the events unfolding now, what will market scribes scramble to notate? "Darkest before The Light?" he hastily writes.
TRANQUIL WATERS IN A DIGITAL WORLD (?)
FNMA wholesale 30yr. fixed-rate mortgage auction results: 1.90%, as these auctions flatline and held at bay by Fed purchases with money created digitally. There's something else in the air outside of viruses that is slated at a Davos meeting right as someone is being sworn in as President of the U.S. Perhaps that's the reason for the timing of this meeting discussing a global financial reset. The markets aren't discussing this just yet since much is in the air on who and what, and why, but "digital" is a clue word that likely won't go away.
TRANQUIL WATERS (?)
FNMA wholesale 30yr. fixed-rate mortgage auction results: 1.95%, almost exactly the average for September returns, and up about 1/8% from August average, as there's hardly a ripple here all Summer long. As comforting as that may be on the surface, below it is a continued expansion of Fed printing habits necessary to keep these mortgage rates in check and Federal government operating by financing huge budget deficits. This is because roughly one-half of the Federal Reserve balance sheet is composed of Treasury debt with the other half represented as purchases of these vary mortgage-backed securities. The chart shows how these purchases sky-rocketed starting Mid-March, coincidently on the heels of CV outbreak, from $4 trillion to $7 trillion. But the good news here is at least the funds are helping homeowners reduce their debt load with lower refi rates, and incentivizes buyers into the housing market, freeing them from rising rental rates. The other half of the balance sheet is covering Congress's emergency spending and long-term inability to cope with ever rising budget deficits. How this ends will likely involve more than just ripples but some analysts say it will spell a new beginning, just around the corner in 2021.
NO GAIN WITHOUT THE PAIN (?)
FNMA wholesale 30yr. fixed-rate mortgage auction results: 1.95% rising slowly each day in September and increasing by .10% from August averages, even while stocks tank (DOW down 405pts to 27,534). Analysts say investors are get a sinking feeling that a trillion plus government stimulus package isn't going to happen anytime soon. If that's the motivation, then the stock market is living off temporary government assistance programs just like the credit markets obviously are doing with these artificially record low rates (see previous reports below on this). The operative word is "temporary" and direction looms large on election outcome. On the optimistic side, the line that might best describe from here to there is: no gain without some pain. Will the pain of 9-11 anniversary tomorrow reveal big changes to come or wait for the October surprise?
30yr. Fixed-rate: 2.875% (2.89% APR)
STOP THE PRESSES (NOT)
FNMA wholesale 30yr. fixed-rate mortgage auction results: 1.84%, up only .05% from 8-11 report, but the shot heard around the national mortgage market added about 1/4% to mortgage prices on 8-12. . So we know lenders have been pricing their loans much higher than these wholesale prices to offset losses from delayed mortgage collections, but now Fannie Mae and Freddie Mac, who are being led toward independence from government ownership control,, say they too need that margin increase to offset mortgage payment delays and potential defaults down the road. Of course, that's ok with the Feds since they have unlimited Dollar printing abilities. But maybe this a foreshadowing of things to come in the world at large when countries say they want more bang for the Buck when they covert their currencies to the Dollar.to protect from future declines in the Dollar's value.
RATE LOCK IN ADVICE: This has the looks of the end of the road for mortgage rate declines so best lock in soon.
ROCKET, MAN PROPELLANT/ or STOP THE PRESSES (NOT)
FNMA wholesale 30yr. fixed-rate mortgage auction results: 1.79%, up a slight .01% from the opening, but losing ground during the session as the rate indicator above demonstrates. A trillion here, a trillion there, and next thing you know your talking some serious money. Easy way to write it down is to remember there are 4 sets of 3 zeroes after 1. The chart here on M-2 (savings) after all this printing shows supply running in Space X missile trajectory at the start of 2020, no longer following the gently rising hillside landscape scene over the last 25 years. That 18,400 posted as the latest entry is in billions, which has 3 sets of zeroes, which registers an explosive economic propellant of 18.4 trillion dollars, an increase of 3 trillion in just 6 months. With all this cash thrown at the markets (including Fed purchases of these mortgage-backed securities), any wonder why real estate prices here in San Diego shot up in July?
Current Retail Discount Pricing:
30yr. Fixed-rate: 2.75% (2.90% APR)
SHOT IN THE ARM (?)
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.02%, down a notch from yesterday and about 1/8% from 7-1, as these rates continue trickling down to lows that briefly touched down for a week or so in 9/2012 before turning up quickly, all the while the Feds were in full buying mode of these mortgage-backed securities. As the lender of last resort, the Feds are now the buyers of last resort of these securities to hold the rate down. Granted this massive shot in the arm gives a temporary fix, but putting its balance sheets way up, holding these securities and treasury debt to a staggering $7 trillion dollars. Since money doesn't grow on trees, the next best thing is to print it (actually just move some decimal points to the right and save on paper). Will the old definition of inflation get used again: "too much money chasing too few goods?" And with inflation comes rising interest rates. Best to lock in while the gettin's good.
30yr. Fixed-rate: 3.00% (3.36% APR)
06/04/2020 2:00 PM
WORM TURNED (?)
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.38%, up .10% from Wednesday and that much higher against April and May's average. If there was a target for these auctions, induced by Fed purchases, it's 2.28% or there about. That's the price investors get when buying these fixed-rate mortgage securities, which seems like a good buy vs 10yr. treasuries at .8%. But that was before the latest unemployment report today showing it had dropped from 20% to 13% just in 30 days. Stocks took off (DOW up 829 pts to 27,110), attracting investors away from these smaller yields. With overblown fears of a deadly pandemic abated, many analysts outside of mainstream media figure a new act has just been tossed onto the stage in hopes of continuing fear and anxiety--perhaps all the way to the elections. Others see these bad actors getting rounded up. This 3rd party spreadsheet tracking all district court recordings count an incredible amount of sealed indictments totaling over 148,000, and one indictment can have multiple individuals named.
BRAVE NEW WORLD (?)
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.26%, back to May 1st level, after reaching a new low of 2.20% on 15/15/2020. If Rip Van Investor had been asleep for one year and woke up to a yield on a 10yr. Treasury note at .63% from 2.30% back then, and went to his local bank and was stopped because he wasn't wearing a mask (when it normally would have likely triggered a silent alarm and a police escort out of the bank), he'd think he walked into the Twilight Zone. From a booming economy and record low unemployment, to Depression levels of 20% and businesses banned, he learns it's all from a flu virus. In San Diego, he reads a chart today displaying 220 deaths and California has 3630. He whips out his calculator and divides 220 by 3,325,000, the population of San Diego County, and gets .0066% death rate. In California, with a population of 40,000,000, the figure is .009%. Wondering what's a good baseline, he figures about 40,000 annual deaths on the highway and divides that number by 330,000,000 people = .012%. So the chances of San Diegans dying from Covid-19 is almost half that of driving on the highway. He fumbles his calculator and reaches for his pace-maker that's missing a beat, and reminded that 500,000 Americans die each year from heart attacks. His calculator says that's a .15% death rate, and keels over and back to slumber.
BRAVE NEW WORLD 2020 SCI-FI(?)
What once was required reading in high school, these two books are gathering several decades of dust on them. Summary from Sparknotes: "Like George Orwell’s 1984, this novel (Brave New World) depicts a dystopia in which an all-powerful state controls the behaviors and actions of its people in order to preserve its own stability and power. But a major difference between the two is that, whereas in 1984 control is maintained by constant government surveillance, secret police, and torture, power in Brave New World is maintained through technological interventions that start before birth and last until death, and that actually change what people want. The government of 1984 maintains power through force and intimidation. The government of Brave New World retains control by making its citizens so happy and superficially fulfilled that they don’t care about their personal freedom. In Brave New World the consequences of state control are a loss of dignity, morals, values, and emotions—in short, a loss of humanity."
May 1st, 2020
MAY DAY A RECORD DAY
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.26%, slowly creeping down over the last 2 weeks, 1/8% lower than April's average to an all-time record low.
While these wholesale prices look amazing to see, retail lenders see risk in closing the loans, only to have some go delinquent before even selling to Fannie Mae or Freddie Mac, as borrowers line up asking for forbearance. This higher risk translate to lenders padding their prices and instituting tighter guidelines. Major corporations are forming a different line, putting up corporate bonds sales estimated at $240b to pad their reserves in case business doesn't bounce back soon. Billionaire Elon Musk isn't following the narrative for continuation of shutdown:
Musk did not doubt that there was a public health issue at large, but he felt allowing governments to end all economic activity as a means to safeguard health was Orwellian, to say the least.
“The expansion of shelter-in-place, or as we call it, forcibly imprisoning people in their homes, against all their constitutional rights, is, in my opinion, breaking people’s freedoms in ways that are horrible and wrong."
SQUEEZIN' BLOOD OUT OF A TURNIP (?)
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.34%, down .03% from last trade day on Thursday, lowest this year, and since the average of 09/2012. Back then on 9/12/12, the Fed announced the purchase of $40b in these mortgage-backed securities on a monthly basis, which produced 2.33% average for that month. Today, for the upcoming week, the schedule calls for roughly $19.5b. Assume that is the pace over the next 30 days, the figure adds up to $78 billion, nearly double the amount the Feds threw at the market in 2012. Will rates fall further? With the companion 10yr Treasury yielding a miniscule .732%, a historical low, it would seem there really isn't much lower the market could go.
DEATH OF THE FEDERAL RESERVE IS GREATLY EXAGGERATED (?)
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.46%, up a slight .01% from yesterday, staying in a narrow trading range, aided by FED purchases of these mortgage-backed securities. For several years now, the Trump Administration has wondered what life would be like without the Federal Reserve. Considering it is a privately owned (not publicly as we all once assumed) institution, and the owners own the 12 very large member banks, they get to instruct the Treasury to print money and give (loan at very low discount rate) to their own member banks, who loan it out at higher rates and also invest in stocks, bonds, and other securities. Nice work if you can get it. This group was established in 1914 to provide stability in the markets, but the track record, as famed economist Milton Friedman once said, is not a good one.
Other nations prefer to steer clear of this kind of private control by a handful of elites and some are choosing to trade in other currencies outside of the "Petro-Dollar." fearing the potential of a weakened Dollar from unlimited printing. Recall there once was a closely watched index call M-2, money supply measurement to monitor inflation potential, but few mention this anymore. The charts say maybe we should. M-2 over the last year grew by 6.8% but GDP grew by less than half of that so that other half doesn't represents the result from goods and services produced and sold. This chart shows growth from 1959 to present and note it took 40 years for money supply to grow to $5 trillion, but this doubled from there in half the time to over $15 trillion. Purchasing hard assets like real estate (while rates at historical lows), gold, silver and other precious metals would be good ways to defend against what is bound to come sooner or later.
APRIL FOOLS RUMORMONGERING (?)
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.48%, up .10% from yesterday, exactly even with March average, as stocks drop (DOW at 21,168 by 750pts) due to more fears of virus projections, while a real war lies below the surface. What if the virus ends up killing less people than the 80,000 who died here in U.S. from a common flu in 2018, and is a smoke screen to eradicate an enemy described long ago by John F. Kennedy in his speech warning about the dangers of secret societies? What if these secret societies with nefarious goals own and control central banks around the globe, and Trump Administration just closed one of their head quarters here in the U.S. known as The Federal Reserve (a privately owned corporation who are also owners of its member banks)? What if all communications are shutdown for 3 days as part of a global roundup of what's known as New World Order Cabal? What if all of this is one big April Fool's joke?
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.38%, up .10% from yesterday's record low start, but still over 1/2% below February average. Stocks attracted money flows from the credit markets yesterday, and still holding their own this A.M (DOW at 22,396), as news that Chinese manufacturers showed "an unexpected strong rebound...
China’s official service sector purchasing managers index climbed to 52.3 in March from a record-low reading of 29.6 in February...The PMI readings were well above expectations and almost too good to be a true for an economy that is still not fully functioning at its pre-crisis optimum level, said Michael Hewson, chief market analyst at CMC Markets, in a note."
Another surprise is the Dollar rose higher, even as Treasury printing presses worked over-time, preparing for the $2 trillion U.S. relief aid package.
As low as these wholesale mortgage auctions have gone since February, lenders are awaiting a clear and stable level before diving lower. That's why it is best to have your loan in processing, awaiting significant moves.
COMPUTER VIRUS OF A DIFFERENT SORT (?)
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.41%, down .03% from yesterday, with the hour glass trend indictor above saying it's getting better all the time and likely beating the lowest return in 2020 and back in September 2012. Stockholders thought the same, and got off the mat, rising after last week's knock-out punch (DOW up 20% in last 3-day run), running around the ring like Rocky Balboa unchained, but got decked this morning (down 719pts at 21,815) with news headlines saying more in U.S. inflected than China's total. CDC says there were 80,000 deaths in the U.S. in 2018 from the flu, or 219/da on average, but did anyone notice except next-of-kin? While hospitals and clinics have lines of panicked people awaiting testing to see which kind of flu they might have, this new one, though more contagious, has killed only 1300 so far. Some analysts call the real threat a "computer virus," like digital communications spreading panic and fear electronically via TV sets 24/7 throughout the world-- one that could endanger the global economic system by continuing the status quo. Far more deaths and misery, they say, would occur similar to the '30s depression. President Trump is calling for a return to work following Easter Sunday, and have the 20% most likely threatened--the elderly and those with impaired immune systems-- continue self-quarantined at home.
While lenders are slow to jump on this latest movement until a series of new lows register, best to get loans in process, awaiting solid movement lower. When businesses re-open, it's likely these record lows will be over.
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.44%, down .06% from yesterday morn, and improving per the trend monitor above.
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.50%, down .16% from yesterday, and just .10% higher than the lowest results since 03/06/202. President Trump wants the business quarantine ending by Easter Sunday, April 12th. These rates, brought down by a virus, could easily rise back by 1/2% to pre-virus levels if state and local governments cooperate and open businesses again.
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.66%, up .06% from yesterday, and what's trending on the price monitor above says that launch yesterday by the FED after opening today was experiencing turbulence.
03/23/2020 8:00 A.M:
HOUSTON...WE HAVE LIFT OFF !
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.60%, DOWN .42%, from early auction results on Friday (and it got worse during the day), probably the largest one day decline ever posted in these daily returns, as FEDs roll up their sleeves and give it all its got. Over the weekend, the FEDs said they ready to buy "unlimited" amount of funds to the bond market to keep rates low, so like the QE of old, they out buying up new mortgage-backed securities, and it's working. Overnight lending to member banks' chart, the first troubled indicator spotted weeks ago, has taken a sharp turn downward to just 3.55b on Friday. But like all emer-gencies, it may not last long. Some are indicating this virus strain is showing signs of weakening, so the best bet is to
get your loan in process, as it is one of the few things a homeowner can do while self-quarantined at home. The optimal results could be a potential waiver of appraisal to avoid appraiser house calls, a lower monthly payment, and cash out to stockpile 6 months of living expenses, as it could be a rocky road from here. Call or write today to see if you qualify for appraisal waiver via Fannie Mae or Freddie Mac automated approval--for free. The worst case scenario on mortgage pricing was a real one for one day, and summarized below (see No Free Lunch).
NO FREE LUNCH (?)
FNMA wholesale 30yr. fixed-rate mortgage auction results: 3.02%, UP .31% from yesterday morning, as the best laid plans of mice and men (and women) not working yet--and the trend monitor above shows it ain't getting any better after the initial auctions. Many analysts say lenders are raising rates to stem the surge of loan applications, but these auction results say that's not the case, as the auctions are a result of global demand by institutional investors for this product. High demand lowers the rate and vice-versa. These rates shot up after it became apparent that new massive government debt will need to be financed if everyone gets "free" money from Congress and the Administration. Last figure from President Trump was: "it will be big."
Will the FEDs go to the QE well one more time and buy up these mortgage-backed securities to increase market demand and lower the rates? It worked well in the past albeit at lower debt levels. Does the phrase: "gone to the well one too many times" apply here? The market will tell us in so many words from here on.
03/18/2020 2 PM
CONSPIRACIES GALORE (?)
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.71%, up .02% from yesterday, as the wheels fall off stocks (down 1,338 to 19,898), with headlines that shout out: loss wipes out all of Trump's gains since his Inauguration in 2017. If ever there was a conspiracy to defeat Trump with any means necessary, this would fit the bill. Of course, conspiracies involve secret colluding using nefarious means, so no evidence here just yet. Plans are afoot to put $2000 check in the mail to Americans to the tune of $500B (works out to about 250 million people) which is a far better idea than the $750B given to bureaucracies like State governments back in 2008 stimulus and whittled away. That would help to pay household bills while future data determines the real threat. Tax deadlines would be extended as well. Latest chart on Fed overnight lending to member banks shows a total of $243b over last 3 days, but the good news is it has receded to $52b today, nearly half the amount as Monday.
Mesa Pacific is open for business, existing in cyberspace since 1998. We have been obtaining appraisal waivers more now than anytime before. Please write or call to determine if you are eligible, as Fannie Mae and Freddie Mac loan pre-approvals you receive come with this written guarantee. A regular visit to our website offers an automated hourly national rate trend monitor. Righ now, you will find the needle in the red zone under worsening conditions, but maybe see some green tomorrow.
PLUGGIN' THE DIKE (?)
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.69%, up .06% from yesterday, as apparently it is not all downhill from here. Stocks finally perked up this A.M. by 517pts, albeit after getting hammered down nearly 9000 pts to 20,719. The chart on FED overnight lending spiked to $100b yesterday, so we not out of the dog house yet. The Rate Trending Meter above will indicate where this Mortgage market is headed from here today. As another indicator of liquidly squeeze, the FEDs announced an opening up of a commercial paper facility because banks/institutional dealers likely didn't have adequate funds to roll-over short-term business debt used for things like payroll. Rates there had risen by 1%, not seen since 2008 mortgage meltdown era, so now the FEDS will be plugging that dike, injecting funds here for the foreseeable future. Gold, the place to go when other markets get queasy, had a rough day a week ago Monday, but that's because financial institutions were scrabbling for cash to meet stock sell orders, so they reached for their gold and sold it. It's now making a comeback, up 3%, and still in reach for mom & pop to buy at around $1534/ounce to put under the pillow, if they too are feeling queasy. Silver is a cheaper alternative but rises with gold.
QE # WHATEVER (?)
03/16/2020 9:00 A.M:
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.63%, down .36%, as the FEDS force these mortgage rates down the old fashion way called quantitative easing. The FEDs, no doubt through conference calling on Sunday, slashed short-term borrowing rates to zero, but also pulled out some old QE medicine for the mortgage market: $700b in purchases of mortgage-backed securities. As the auction results confirm, this now working and more than likely will help unplug the mortgage origination pipeline. Chart on overnight lending to member banks , which was the first sign of liquidity problems last week, dropped to 22.75b on Friday, from two day previous highs of $95b. FED efforts to calm stock markets not working just yet (DOW down 1,897pts to 21,200) as news of two U.S. emergency docs , one in his 40s,in serious condition from corona virus .
FRIDAY THE 13TH WEEK (?)
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.99%, UP .18% from yesterday morning, and UP .66% from the bottom that didn't stick for long on 03/09/21, as the markets got whipsawed with a financial storm not seen since October 1987, called Black Monday. It was Friday, the 16th, when what looked like a typo on a screen, showed these mortgage auction rates had jumped a phenomenal 1% from a day earlier. Stock players saw this action in the bond market and proceeded to the exits, and by Monday, the stock market had lost 22.6% in value, largest one day drop in history. Back then, the Dollar was falling regularly against the Yen, hitting new lows, and Japanese investors had enough of that and moved in unison by selling all Dollar denominated debt, shooting up these yields. The funny thing is, like a global vacuum getting filled, the rate fell back to what it was prior to the sell-off as global investors saw bargains and bought up Dollar denominated debt. Today, it appears to be a liquidity problem that stirred up these markets. As pointed out earlier, huge chunks of cash were being printed out of thin air to support bank balance shortfalls at the Fed window called Overnight Repurchase Agreements. In the past, large banks lent to one another overnight to shore up each others' balance sheets, but they suddenly claim it's cheaper to have the FEDs do it. It started 9/17/19 with $40b, but, as the chart shows, blossomed to $74b on Monday, when stock dealers were pressed with sell orders and went to their banks for the cash to cut the checks to stock sellers. The figure rose to $95b daily thereafter. Now the Feds say they will make (create) $1.3 trillion Dollars available. This band aid will work for now as stocks recovered this morning, with DOW up 256pts, but as some wise old sage once said, "you can't borrow your way into prosperity." Rumors are a new system will be coming by 2021, that will take out the old, and restore the global financial system onto a sound path for the future. Buying hard assets now, like real estate and precious metals, seems like the thing to do because future currencies will be backed by one or more of these items, and also serve as a hedge against inflationary winds that may be ahead.
LEAPING LEAP YEAR (?)
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.40%, down .07% from yesterday, and a sudden leap from the plateau that held rates in check since 2/07/2019--down to levels not seen since September 2012. Back then, the markets and consumers were still licking their wounds, recovering from the Great Recession. While many might assume these low fixed rates are masterminded and controlled by the Fed Reserve, which just lowered short-term rates by 1/2% on Tuesday, this mortgage market, like 10yr. Treasuries, is open to worldwide investors, money managers and the like, and rates are subject to the whims of these buyers and sellers (which is why the Fannie Mae daily (hourly) pricing is called auction results. These players are in sympathy with the FED, realizing all is not good with a virus that can potentially curtail business activity worldwide. Whether this thing escaped a lab, escorted out of the lab, or mutated from a bat is being questioned along with how severe it is. How much further these rates go down will be based on answers to these questions. But the bets are off if inflation spikes from flooding the market with more Dollars and fewer goods being produced, since the classical definition of inflation is "more Dollars chasing fewer goods." In our real estate market in San Diego, we have a prolonged case of more buyers chasing fewer listings and the results are posted in the adjoining column. While many homeowners may have a current rate of 3.50%, it's no good if you can't pay it. Consider a refinance at around 3.00% with cash out. Sage financial analysts have always advised to have 6 months of monthly expenditures in a savings account to prepare for a recession that might not end well for any job one has now. Hard assets like real estate, physical gold and silver (not the paper certificates) are important to own for a hedge against inflation-- that is, if you have the perception the Feds can't just keep printing more Dollars out of thing air without inflationary repercussions down the road.
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.95%, down .02% from Thursday, and down .36% from December's average, as the markets ignore today's sizzling new job gains of 225,000 and a Presidential impeachment dismissal, and take stocks for another rollercoaster ride downward (DOW down 277pts after breaching new highs). Not everyone was taking China's word on the limited spread of this new virus, especially after expanding their quarantine to cover over 50 million. And now the markets feel the same reluctance, wondering about the negative impact for the global economy. Fears always favor the relative safety of the bond market, so if fears wane, so will these rates. Fed Reserve officials will have more to say on this next week.
Current Retail Discount Pricing:
30yr. Fixed-rate: 3.375% (3.59% APR)
01/03/2020 9:00 AM
FNMA wholesale 30yr. fixed-rate mortgage auction results: 3.22%, down .07% from yesterday, and lower by .09% from December's average, as U.S. airstrike on Iranian general sends some quivers through the market. Headlines say DOW at 28,635 lost 234pts on the news, but that followed a new all-time high of 28,868 on Thursday, and still above the year-end of 28,515. Gold (up $2.80) and oil (up $2) are also places investors headed, and waiting to see what happens Monday. With the exception of deep state bad actors, since neither Trump Admin nor Iran want war, it would be a good time to lock rates in on Monday A.M. After all, the Fed printing presses will be hard at work having to deal with an estimated $1.1 trillion dollar deficit that could easily result in higher inflation and interest rates.
12/06/2019 9:00 AM
A GRINCH NO SHOW ?
FNMA wholesale 30yr. fixed-rate mortgage auction results: 3.30%, even with yesterday, and only .01% higher than November's average, despite Job gains of a whopping 266,000 for November. In days of old, numbers this high would cause the credit markets to mover rates higher on all long-term fixed-rates, figuring the Feds would move and raise short term rates to stave off higher inflation down the road. But since the Dollar strengthened on the news, global money managers stayed the course (albeit 10yr Treasury yields rose .04% and could migrate to these mortgage-backed security Monday), and spread the wealth around, pushing stocks higher (DOW up 337pts to 18,015, near the all time high of 18,174 on 11/27/19), as strong wage growth and consumer sentiment up per Michigan index rising s portends higher holiday sales. But beneath the veneer of all the happy numbers and shoppers, could the ghosts of Christmas past be lurking in the shadows? Since September, the Feds have pumped in (printed) $320 billion into the repo market , a place where big banks lend to one another overnight to shore up balance sheets. If this becomes a never ending patch work, it's anyone's guess what Christmas 2020 will look like.
THE MARKETS VOTE "AYE"
FNMA wholesale 30yr. fixed-rate mortgage auction results: 3.17%, down .09% from yesterday, and a significant .18% lower than Wednesday when Fed announced a 1/4% cut in Fed Funds rate. The credit markets got added fuel from the October Employment Report, showing a 3% increase in wage growth from a year ago, signaling inflation is not a problem just yet, while stocks (DOW up 262pts to 27,309) liked the strength in job growth at 128,000 new jobs. That's not so great a number except 45,000 auto workers were on strike and September payroll revisions showed an increase to 180,000 from the initial 136,000. All this good news on the economic front amidst Congress vote on setting rules for impeachment hearing. After Speaker Pelosi called Trump "totally ineffective" mid-week, no doubt many in Congress who voted "aye" squirm in their seats on today's employment data, where blacks have broken thru the lowest unemployment on record at 5.4%. Ineffective? The markets certainly don't see it that way.
WHISTLIN' IN THE WIND ?
FNMA wholesale 30yr. fixed-rate mortgage auction results: 3.03%, down .20% from the 1st, and .09% from September's average, as both stocks (DOW up 372pts to 26,573, 3% away from all time high) and credit markets continue to reap the benefits of moderate inflation and and economic growth. While plenty in the media can't wait for some evidence for impeachment of Trump, hoping that more anonymous second hand whistle-blowers might hit pay dirt, investors ignore the hype and do their own whistling-- to the bank.
09/23/2019 9:00 AM
FNMA wholesale 30yr. fixed-rate mortgage auction results: 3.18%, DOWN .14% from Friday, as soft data from Europe gives global investors reason to head back to U.S. denominated debt like these mortgage-backed securities-- and their will be a heap of U.S. debt coming tomorrow totaling $113b, so supply may weigh on these yields.
09/16/2019 9:00 AM
FNMA wholesale 30yr. fixed-rate mortgage auction results: 3.33%, up .125% from Friday, and losing all the gains made since that low hash market reached on 09/05/19 (see below), and returning to July rates. The attack on Saudi oil fields over the weekend not only shot up oil prices $7 to $61.88/bl, and gold up $6.40 to $1505.90, but also these mortgage rates picked up some of the shrapnel fallout. A steady rise in stocks by some 884 points in the DOW that kicked off on 09/05, took a slow toll on the credit markets and these mortgage rates, rising almost daily since the last report, and wounding borrowers who did not lock in the pricing on their mortgage loan. With lots of finger-pointing as to who will be assigned the blame for the attack, if real history holds any clue, it will initially be the wrong party.
09/05/2019 3:32 PM
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.87%, DOWN .12% from the last trading day in August, and a whopping .42% from July's average. These rate declines don't seem likely to continue if stocks continue on the rise (DOW up 372pts to 26,728) since global institutional investors have to favor either stocks or bonds to be ahead of the game, but not both. With the ADP report showing private sector job increases of 195,000, the hand will likely tilt toward stocks if the employment report tomorrow confirms this surge. Others look to new trade talks being scheduled with China as additional boost for stocks. Still, the credit markets are relaxed, figuring the Feds won't be raising rates any time soon with President Trump holding the trump card. That card says the President can fire Fed Board Members. While rising prices on goods due to a continued trade war with
China might be considered inflationary, it's a one-time cost increase event. This tension between Trump Administration and Federal Reserve has been simmering for about a year, particularly when Feds starting raising rates. Incredibly, a former Fed Reserve Board Member Dudley has openly called for the Fed to get politically involved in the upcoming Presidential election to stop Trump from reelection by torpedoing the economy via higher interest rates-- Yipes!
STAR WARS BLUES (?)
FNMA wholesale 30yr. fixed-rate mortgage auction results: 2.97%, DOWN .39% from 8/01/19, lowest since 10/24/16, as stockholders head to safety of U.S. credit markets, leaving the DOW down 303pts this morning to 25,719. Gold is also is in the winner's circle, up $30 to $1515, which is often used as a hedge against uncertainty. But when uncertainty is based on Disney park attendance that fell flat with their new rides, it is a wonder what the trigger points are for global stocks these days (Disney led stock declines).
Rumors are there is more in stock for Disney, and it won't help their stock prices anytime soon. In the meantime, the real ride is a good one for home-buyers.
07/12/2019 9:00 AM
FNMA wholesale 30yr. fixed-rate mortgage auction results: 3.42%, up.17% from Thursday, but matching Wednesday's return, but light years away from the recent low that hit on 6/20/19 of 3.08%. Feds look to be lowering rates in July, in a nod to President Trump to keep the economic fires burning, while the credit markets wonder if it is they that will get burned from inflation when and if it heats up. Wholesale producer prices are up 1.7% from a year ago, lower in over 2 years. its only hot from food prices (corn up 19% due to floods). They say gasoline prices down 5% but out here in California, another tax hike hits poor and rich alike, up another 7.5% and kicked in 7/01/19 bring total Fed and State to 65.76 cents per gallon (that $14 bucks where 7.75% sales tax is on this tax for a 20 gallon tank). Fill up once a week and you contributed $728 dollars to roads and repairs-not. See: California's Soaring Gas Taxes Aren't Even Going to the Roads
For downtown San Diego residents, it gets worse, as politicians seek to stuff you into buses. 447 parking spaces on the street are giving way to bike paths used by a handful of bicyclists and will shrink motorist lanes, all to fight global climate change on this tiny speck of land called Downtown San Diego.
6/20/2019 9:00 AM PST
FNMA wholesale 30yr. fixed-rate mortgage auction results: 3.08%, DOWN 1/4% from yesterday, and lowest since 11/08/2016, supposedly all on fears of Iranian conflict. Strange financial world we are in as these fears don't show up in stocks, other than oil stocks, as DOW hits new record highs at 26,796, up 276pts from yesterday. Considering President Trump doesn't want war with Iran and Iran doesn't either, who exactly is doing all the shooting?
6/07/2019 9:00 AM PST
FNMA wholesale 30yr. fixed-rate mortgage auction results: 3.33%, DOWN .07% from yesterday, lowest since 9/11/17, as employment growth disappoints with 75,000 new jobs in May when the market expected 175,000. Stockholders see opportunity knocking with lower rates as DOW rises 275pts. to 25,988.
6/06/2019 9:00 AM PST
FNMA wholesale 30yr. fixed-rate mortgage auction results: 3.40%, even with yesterday, and down 1/4% from May's average, as Feds talk of lowering rates to offset the effects of higher tariffs.
5/13/2019 9:00 AM PST
FNMA wholesale 30yr. fixed-rate mortgage auction results: 3.65%, down .05% from Friday, and .11% below April's average, as stocks take a hit (DOW down 646 pts to 25,288) and investors shift proceeds to U.S. credit markets from U.S./ China trade impasse.
05/03/2019 1:00 PM PST
FNMA wholesale 30yr. fixed-rate mortgage auction results: 3.80%, up a slight .03% from yesterday, and only .05% from last month at this time, as a new employment report gets stronger than last month, with 263,000 new jobs. More important to the credit markets are wage gains since wages make up 2/3rds of inflation gauge. Like last month, they rose 3.2% from last year's measurement. Another 3.2% showed up this week, and that was the GDP growth figure for the 1st Q, strongest 1st Q since 2015. Businesses are spending more on capital goods, though there are noticeable weak spots in auto sales and shrinking retail outlets. A real test for the U.S. credit markets has already come and gone as the appetite for U.S. debt is unabated following some $374 billion absorbed by global investors in the 1st quarter. Only 30 billion is on tap for the 2nd q which gives these mortgage-backed securities some breathing room in the competition. Could that lead to a decline in these rates?
04/05/2019 08:00 AM PST
FNMA wholesale 30yr. fixed-rate mortgage auction results: 3.75%, up .04% from yesterday, and up 1/4% from the low reached on 03/27/19, as employment report today shows the economy is bouncing back with new jobs increasing by 196,000, a far cry from February's 33,000. The credit markets focus most on wage increases where inflation gets embedded, which eased off to 3.2% from 3.4% in February.
With 180,000 average monthly growth in new jobs in the first quarter, all this moved the interest rate needle up and reduced fears of recession down the road.
How do you receive a minimum of $2500 savings compared with the competition?. By simply comparing prices. Call or write today for a loan summary.
03/25/2019 08:00 AM PST
FNMA wholesale 30yr. fixed-rate mortgage auction results: 3.60%, down .02% from Friday, as the credit markets hold on to new position, while stocks get a slight bump with DOW reversing gears and up 30pts.
03/22/2019 08:30 AM PST
SOMETHING HAPPIN' HERE...WHAT IT IS AIN'T EXACTLY CLEAR
FNMA wholesale 30yr. fixed-rate mortgage auction results: 3.62%, DOWN .07% from yesterday, and nearly 1/2% lower than the 1st of this month, as Feds say no more rate increases while watching the 10yr German or Japanese bond slip below zero yield. Attn: Global investors. Raise your hand if you want to pay interest on a 10yr. government bond, or prefer to be paid interest of 2.46% over the same time period on a U.S. note. Or, if unsure about committing that long, try a 3 month U.S. bill yielding slightly more. Yep, that's the dreaded inverted yield curve on the lips of analysts these days and now registering briefly today. Much like reading tea leaves, it allegedly portends recession down the road. Stockholders got chills from this reading of what could be, as DOW sinks 460 pts to 25,502. In a way, stockholders create a self-for-filling prophecy as they sell out of fear and put their proceeds into bonds, which drive interest rates lower. One thing seems likely is these lower rates make home purchasing more attractive, along with stocks that ride on the tail of the housing market.
Are politics also at play here? With Mueller report now in and available Sunday, Monday's opening prices will determine if this movement is an anomaly or a continued trend.
03/06/2019 08:30 AM PST
JAWBONING THE FED (?)
FNMA wholesale 30yr. fixed-rate mortgage auction results: 4.03%, down .06% from yesterday, and up slightly from February average of 3.99%. Some analysts are waiting for the other shoe to drop in the mortgage market, as annual budget deficits of roughly $1 trillion dollars pile up like gigantic snow drifts where the U.S. now finances 23% of the total projected budget of 4.4 trillion in 2019 expenditures. The thinking goes with so much debt to choose from, investors will hold back purchasing Dollar denominated debt until rates rise high enough to attract them. But the market says otherwise, as these rates have stayed steady, more so than seen in the past. With President Trump jawboning the Fed about rate increases, they seemed to have listened and backed off raising short-term rates. It's hard to argue against success, as stocks are up about 40% since Trump took office.
2/1/2019 08:30 AM PST
FNMA wholesale 30yr. fixed-rate mortgage auction results: 3.95%, down .06% from yesterday, and 1/8% lower than January's average, even as stocks climb out of January hibernation with DOW up 64 pts to 25,064, following a serious pratfall late last year. The stock markets got what they wanted: the Feds announced they are backing off further rate increases and a strong jobs report today of some 304,000 new jobs created, biggest increase in almost a year, signaling more growth ahead. The credit markets don't seem concerned just yet over wage increase of 3.2% in January data, which can fuel inflation. Over the horizon, though, the U.S. government will be running yet another trillion dollar deficit, which could be troublesome as other countries start to shift their allegiance away from this debt instrument called the Dollar and trade outside of it. If so, a declining value on the Dollar will not bode well for any Dollar-denominated debt, including these mortgage-backed securities and force rates higher.
12/19/2018 02:30 PM PST
FNMA wholesale 30yr. fixed-rate mortgage auction results: 4.19%,
down .06% from yesterday, despite another Fed rate hike of 1/4% on short-term rates today. Stockholders continue to shed their holdings with DOW at 24,000
prior to the announcement and ending 352 pts. lower. No doubt many plowed their proceeds into these mortgage-backed securities and other Dollar-denominated debt, driving rates lower.
12/07/2018 08:00 AM PST
FNMA wholesale 30yr. fixed-rate mortgage auction results: 4.34%, even with yesterday, but lower by .18% from November's average, as stocks continue wild swings, but mostly on a downward trajectory. The DOW is down 275 pts to 24,625, some 900 pts lower since December 1st, despite a decent job growth number of 155,000 in November. But Feds may back off of planned rate increase later in the month to calm the equity markets. Very little is mentioned about Danske Bank, Denmark's largest bank, being included with Deutsche Bank in money laundering schemes. Big names in public and private sectors may get swept up here.
DIRTY LAUNDRY ?
12/01/2018 08:00 AM PST
FNMA wholesale 30yr. fixed-rate mortgage auction results: 4.42%, down .02% from yesterday, and .07% lower than October's average, as the U.S. credit markets keep a low profile with Fed Reserve easing on tougher tightening stance of last month. The DOW rose 199 pts today (25,538) on expectations that the meeting this weekend between Trump and Xi of China will reduce trade tensions. Speaking of tensions, rumors run amok that disclosures of arrests of large crime syndicates are forthcoming and that the Deutsche Bank raid last week involving massive money laundering is just the tip of the iceberg. If so, these rates should head lower as investors seek safe haven in U.S. denominated debt.