ABBA First Mortgage News

Some Interesting Interest Rate News

April 13th, 2020

Here are some facts that many of you may have known but may not have seen them put together in such a format.  The Fed rolled out their big guns (more like Bazookas) in March to fight the War on Covid19. They made it very clear – to the country and world – they will do ANYTHING to support the global financial markets. The Fed is providing an unprecedented level of liquidity through several channels. The Fed made 2 Emergency Interest Rate cuts to Fed Funds in March: one on March 3 cutting rates by 0.5%, and another on March 15 cutting rates by an additional 1.0%. In a statement, the Fed said they will keep Interest Rates low until they are: “confident that the Economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.” The next FOMC Meeting is scheduled for April 28 and 29.

 

The Fed knows it can’t prevent an Economic downturn, but aggressive Monetary Policy can soften the blow and hasten a recovery. Along with Interest Rate cuts, the Fed announced a litany of additional emergency actions aimed at pumping massive amounts of liquidity into Banks and the Financial Markets. Some of the other actions are:

  • Expanding the Fed’s Balance Sheet by buying $500B of Treasury Securities and $200B of MBS – plus reinvesting payments from Treasury Debt and MBS into purchasing more Treasury and MBS Securities
  • Encouraged Bank and Depository Institutions to use the Discount Window to meet credit demands
  • Lowered the Discount Rate by 1.5% to 0.25% and extended Discount Window borrowing up to 90 days, pre-payable and renewable on a daily basis

Encouraged Banks to use the Fed’s Intraday Credit on a collateralized and uncollateralized basis.

Re- posted with permission from UHM – MBS Huddle   Matthew Graham | 4/2 7:02 PM

What does all of this mean to you, the average, everyday, normal interest rate shopper that happened upon the ABBA First Mortgage website and read the NEWS section and is questioning what’s it all about?  I can only say that we are living in unprecedented times and although we may not know what the future holds, we can safely assume that there are many pieces of the puzzle that are being jostled about trying to find out how we, as an industry, can find a way to make our economy whole once again.  My hope and prayer is that the answer my friend is found soon, before we find ourselves holding each other accountable for each and every negative issue that we face.  That could become ugly.

How low will mortgage rates go? Not to “0” for sure!

March 25th, 2020

Mortgage rates in the U.S. could hit new record lows as the coronavirus outbreak continues, but there are multiple factors preventing them from falling to zero. In and of itself, the Fed’s rate cut won’t cause rates on home loans to fall. Because mortgages are long-term loans, their interest rates tend to track long-term bond yields rather than short-term interest rates such as the federal funds rate. Indeed, this is not the first time the Fed has dropped its benchmark rate to zero. Rates were held at that level between December 2008 and December 2015 to help the U.S. economy weather the Great Recession.

Even through all of that, the median rate on 30-year fixed loans was 4.2% during that time period, noted Danielle Hale, Chief Economist with realtor.com. And even if Treasury yields were to fall to the same level as the federal funds rate, rates on home loans likely wouldn’t follow. “Because mortgage bonds are considered riskier than government bonds, they tend to be slightly higher than 10-year rates,” Hale said. “Even if the market spread were to return to normal, given where 10-year rates have been in the last week or so, we’re looking at average rates on 30-year fixed loans around 2.5% at best.”

Source: MarketWatch

The highs and lows of the first 3 months of 2020

March 24th, 2020

Believe it or not, we started the year quite smoothly. Yes, we were expecting some excitement due to the fact that we had a Presidential election coming our way. Little did we know that the primaries would take a back-seat to something much larger. It took just a few weeks to go from a smooth ride to one of the biggest roller coasters in history. If you are keeping score here is what we have thus far–

After hitting record highs this year, the stock market has had record one-day increases and decreases — right after one-another. Overall, we have seen a retrenchment of over 25% in the major indices reached within days after the latest moves by the Fed. Obviously, actions by the Federal Reserve have not calmed the markets. Not to be outdone, oil prices and interest rates have also plunged. Oil has moved down well over 50% from recent highs and now we have gas prices we have not seen for years. Refinances are soaring in response to lower interest rates, though mortgage rates have been very volatile. Finally, gold prices have been very volatile as well.

The Fed followed their emergency rate cuts with a press conference in which Chairman Powell said the Fed would be patient before lifting rates again. “We will maintain the rate at this level until we’re confident that the economy has weathered recent events and is on track to achieve our maximum employment and price stability goals,” Powell said. Even if we don’t have a huge pandemic here, our economy will be affected by the preventative measures in place. The only question is — how bad will it get? The good news is that we have one of the stronger world economies going into this crisis, giving us some cushion. Let’s hope the effects are fairly short-lived so we can get off this roller coaster quickly.

From The Origination Pro as written by Dave Hershman to which I subscribe and obtain this insightful and useful information that I pass on with permission to my readers of ABBA First Mortgage Inc. 

Rates moving up

March 18th, 2020

For the week ending March 12, Freddie Mac announced that 30-year fixed rates moved up to 3.36% from 3.29% the week before. The average for 15-year loans decreased to 2.77% and the average for five-year ARMs moved down to 3.01%. A year ago, 30-year fixed rates averaged 4.31%, almost 1.00% higher than today. “As refinance applications continue to surge and lenders work to manage capacity, 30-year fixed-rate loans ticked up from last week’s all-time low. Rates on home loans remain at extraordinary levels and many homeowners are smartly weighing their options to refinance, potentially saving themselves money,” said Sam Khater, Chief Economist, Freddie Mac.

Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Rates take an unexpected nose dive!

March 12th, 2020

Here is a recap of what has been going on in the world of mortgage interest rates.  We’ve been steady to slightly improving over the past couple or three weeks as the MBS-Mortgage Backed Securities, along with the 10 yr Treasury Bonds, had made marked improvements leading to the lowest rates in 50 years.  However, Tuesday and Wednesday took much of that improvement away (and then some more) as banks actually raised rates and literally shut their doors due to the overwhelming amount of loan applications they had received during the past month prior to this week.

What do you do?  The following suggested action is taken from a leader in the mortgage industry who monitors the rates on a daily basis and makes modified recommendations as we move along:

For loans that have 15-30 and 30+ days (before closing), I’d definitely float.

I’ve been saying we would see events like the last couple of days, although I didn’t think they’d be quite so severe and run back to back. Still, I stand by my belief that we don’t have to fear rates going up longer term at this point, especially with rate sheets having so much extra margin baked in still. When lenders clear the board and start wanting more volume, we will see rates drop back down again, but that may be a couple of weeks. Plenty of reason and room to see MBS improve from here as well.

Please be patient as we navigate these unchartered times together as seen below.  Thank you.  Call me with any concerns or questions.

Lowest rates in more than 50 years!

March 7th, 2020

The 30-year fixed-rate mortgage hit 3.29% Thursday – the lowest interest rate Freddie Mac has recorded since 1971.  ABBA First is offering lower rates for clients than that!  Give us a call at 866-676-3349 and find out what you are qualified to lock your rate in at!

Freddie’s Primary Mortgage Market Survey revealed that the 30-year FRM plunged from last week’s 3.45% and was lower than last year’s 4.41% average.

“The average 30-year fixed-rate mortgage hit a record 3.29% this week, the lowest level in its nearly 50-year history. Meanwhile, mortgage applications increased 10% last week from one year ago and showed no signs of slowing down,” said Freddie Mac Chief Economist Sam Khater.

The 15-year fixed-rate mortgage also fell from the previous week’s 2.95% to 2.79% this week. At this time in 2019, the 15-year FRM averaged 3.83%.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage dropped two basis points from 3.20% to 3.18%. A year ago at this time, the 5-year ARM was 3.87%.

“Given these strong indicators in rates and sales, as well as recent increases in new construction, it’s clear the housing market continues to be a positive force for the broader economy,” Khater said.

Feds cut rates BECAUSE of Coronavirus Outbreak

March 7th, 2020

The Federal Reserve has announced an emergency rate cut of half a percentage point in response to the economic threat posed by the coronavirus outbreak.

Market watchers had predicted a rate cut in response to the outbreak, with some predicting that the Fed would cut rates before its March 17-18 meeting. However, today’s move was the first emergency cut made by the Fed since December 2008, according to a CNBC report.

“The coronavirus poses evolving risks to economic activity,” the Federal Reserve said in a statement. “In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate.”

President Donald Trump, who has repeated said that the Fed should cut rates more aggressively, said in a tweet that today’s cut wasn’t far enough.

“The Federal Reserve is cutting but must further ease and, most importantly, come into line with other countries/competitors,” Trump said. “We are not playing on a level field. Not fair to USA. It is finally time for the Federal Reserve to LEAD. More easing and cutting!”

Rates edged up with week ending February 13th, but presently have moved down again.

February 19th, 2020

For the week ending February 13, Freddie Mac announced that 30-year fixed rates moved up to 3.47% from 3.45% the week before. The average for 15-year loans remained at 2.97% and the average for five-year ARMs moved down to 3.28%. A year ago, 30-year fixed rates averaged 4.37%, almost 1.00% higher than today. “With rates on home loans hovering near a five-decade low, refinance application activity is once again surging, rising to the highest level in seven years. This surge coupled with strong purchase activity means that total demand remains robust, reflective of a solid economic backdrop and a very low interest rate environment,” said Sam Khater, Chief Economist, Freddie Mac.

With uncertainty such as this, ABBA First suggests that if this is as low as it has ever been, of if it is almost there, why risk it getting away due to the risk or the gamble that you may save $10 more a month, but in fact, you’re doomed to lose $20 monthly for the unnecessary risk that you took. Please call us at 910-332-0650 and run your situation by one of our loan officers and we can advise you based on you circumstances as to what might be best for your situation.  We’re always out to see our clients get what they want and typically what they deserve.

Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Oh where, Oh where did the house that I wanted to buy go-(especially under $200k)?

February 17th, 2020

US home inventory has hit a record low, according to a study by realtor.com.

National housing inventory fell by 13.6% in January, the sharpest year-over-year drop in more than four years, according to realtor.com. The decline pushed the supply of for-sale homes to its lowest level since the website began tracking the numbers in 2012.

The steep annual dip last month equated to a national loss of 164,000 listings, according to realtor.com. And with the volume of newly listed properties down by 10.6% since last year, the housing crunch shows no signs of abating in the near future.

“Homebuyers took advantage of low mortgage rates and stable listing prices to drive sales higher at the end of 2019, further depleting the already-limited inventory of homes for sale,” said Danielle Hale, realtor.com’s chief economist. “With fewer homes coming up for sale, we’ve hit another new low of for-sale listings in January. This is a challenging sign for the large numbers of millennial and Gen-Z buyers coming into the housing market this homebuying season, as it implies the potential for rising prices and fast-selling homes – a competitive market.”

The inventory crunch is affecting both prices and days on market, according to the study. The median US listing price grew by 3.4% annually to $299,995 in January, while prices in 18 metro areas spiked by more than 10%. Forty-six of the 50 largest metros posted annual gains in listing prices, while homes are selling in an average of 86 days, two days faster than in January of last year.

Rates went down last week, but went right back up yesterday and today.

February 13th, 2020

For the week ending February 6, Freddie Mac announced that 30-year fixed rates moved down to 3.45% from 3.51% the week before. The average for 15-year loans decreased to 2.97% and the average for five-year ARMs moved up to 3.32%. A year ago, 30-year fixed rates averaged 4.41%, almost 1.00% higher than today. “As rates fell for the third consecutive week, markets staged a rebound with increases in manufacturing and service sector activity. The combination of very low interest rates, a strong economy and more positive financial market sentiment all point to home purchase demand continuing to rise over the next few months,” said Sam Khater, Chief Economist, Freddie Mac.

Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.