Mortgage rates remained unchanged throughout last week with rates standing at very near the levels seen last Monday before the government shutdown. This past week was the first meaningful pause in mortgage rates since May when rates rudely shot up, and then reversed course with a sharp two week countertrend movement that began on September 18th. This week brings auctions on 3 year, 10 year, and 30 year US debt issuance.
This Wednesday also brings us the minutes from the September 17-18 Fed meeting; when the Fed made a surprise announcement of “no tapering” of the Federal Reserve asset purchase program currently in place. My current rate sheet remains unchanged from the week before:
Rates subject to change, rates change daily.
5YR ARM…….3.125% (3.193% apr)
7YR ARM…….3.50% (3.570% apr)
10YR ARM…..3.99% (4.055% apr)
30YR FIXED…4.125% (4.197% apr)
15YR FIXED…3.25% (3.375% apr)
This assumption is based upon a $250K purchase price with 20% down and 740 credit score.
While on the subject of the Fed and economic data I came upon an interesting piece over the weekend. This piece written by a recognized author and Loan Officer describes how the Fed re-acts to economic data. He basically sums up the current interest rate environment (volatility is still in the forecast) with an overlay of one of the well-known market axioms, that economics (and economists) is an imperfect science and, further, the Fed is prone to “double speak.” An excerpt from the article:
“What happens from here?
With so many twists in the economy landscape, it’s almost impossible to predict the future. The government shutdown has added more complexity to an already confusing picture. Heck, if the Fed Chairman himself doesn’t know, how would we the lesser mortals have any idea.”
GOVERNMENT SHUTSTORM-THE IMPACT ON MORTGAGES AND ECONOMIC DATA RELEASE
I was tempted to contribute and article late last week but I wanted to digest the news and comprehend the shakeout. With no real news about rates (mortgage rates are currently holding steady for the last 5 days) I’m glad I did just that.
First, there are delays in underwriting due to decreased service from the IRS and their ability to get tax transcripts to the lender. This IRS service problem is causing disruption. Article here.
Second, new lending on FHA insured loans is severely limited due to the shutdown.
The government shutdown has thus impacted the loan process in both the GSE and government backed (FHA) sectors of the mortgage market. There is now discussions and commentary that with the disruptions in the mortgage market that negative impacts on the housing market may follow suit. Article here.
We also have seen an interruption in the distribution of economic data. The September monthly jobs and employment data was not released this past Friday. This data and any other previous monthly data revisions is significant in the Feds determination of whether (or not) to taper the asset purchase program which has been cherished by lenders, real estate professional, and the public. The next Fed meeting (Click here for calendar) is October 29-30 and then the Bernak’s last whirl on December 17-18. After which the table is set for a new Fed Chairperson. For this week’s calendar and economic releases (or lack thereof) Article here
The market is thirsting for data and government shutdown resolution. It’s difficult for the mortgage market to take much of a stand between now and then. What it does portend is, odds are, that the movement from current rates will be abrupt-for better or worse. The September jobs data is anticipated to be released within a couple days of the government resolution of the current blackout. Until then the mortgage market maintains an eerie silence.
“If you would like to contact Gil about questions about mortgages, you can call him at 312-961-4510 or email him at firstname.lastname@example.org. To find out more about him and the people he works with, please go to www.gilvalentine.com Gil is a licensed Loan Officer, NMLS#1019717
This article was written by Gil Valentine and is not meant to be taken as financial advice. All links are curated by Gil Valentine and are provided to you, the reader, to give you a more thorough education on the contents of this article.
“Midwest Lending Corporation 1732 West Hubbard #2A Chicago IL 60622. Illinois Mortgage Licensee#MB6759631 NMLS#204212 Equal Housing Lender”