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Mortgage interest rates move down slightly again

Interest rates for buying a home on the Palos Verdes Peninsula stayed steady this week but the rate of increases is slowing and may decline slightly next week. The following are excerpts from the newsletter on interest rates published by HSH Associates :

" In recent weeks we've seen a number of economic conditions that have helped mortgage rates reverse course, at least a little. Of course, shaving about an eighth of a percentage point off a 61 basis point rise in 2018 isn't much of a retreat, but homebuyers and even some refinancers in the market welcomed the chance at a slightly lower rate in the last couple of weeks.

A few factors have contributed to this minor decline: The Fed has so far expressed a willingness to let inflation run a little warmer than they would prefer for a time without a stronger policy response; oil prices have settled back for several weeks in a row after steadily rising for about three months, quelling concerns of faster inflation; trade and tariff issues plus unsettled politics and stumbling economies outside the U.S. have seen investors express their concerns by plowing money into the shelter of U.S.-backed bonds, driving yields down and pulling mortgage rates down along with them.

With the U.S. economy seemingly firing on all cylinders at the moment, and inflation at or perhaps now moving above its preferred target, the Federal Reserve will meet on Tuesday and Wednesday, with the expected outcome of the meeting including a lift in the Federal Funds rate. At the same time, Fed members will release updated expectations about near and far-term economic growth and inflation and projections for the future path of interest rates. While the expected interest-rate increase is "baked in" to today's mortgage rates (futures markets place a 92% chance of the move), what isn't known and will likely move the markets is whether the outlook for the rest of the year will suggest if two (or only one) additional rate hike can be expected. Members were split about 50-50 in March, and if more have moved into the "two move" camp we could see mortgage rates start heading back up before long.

 

 

 

Strong economic conditions, an active Fed and inflation chugging its way higher over time should be ingredients for higher interest rates and firming mortgage rates. However, as has been the case at times since the Great Recession, influences from other parts of the world have helped to keep them tethered or even pull them lower for a time. These transient influences are important for homebuyers and even refinancers as they get short windows to capture lower rates if they can move quickly, but the greater trend for now continues to suggest higher rather than lower rates as we go.

The Fed needs to continue along its path of raising rate if it hopes to be able to conventionally combat the next recession by lowering interest rates. In recent weeks, a consortium of economists are forecasting that the next recession may be as close as 18 months away, a sentiment echoed by none other than former Federal Reserve Chairman Ben Bernanke this week. A year and a half from now is a long way off, a lot can happen between now and then, and long-range forecasts of anything aren't particularly trustworthy.

Neither are short range ones, for that matter. Last week we called for a five-basis point rise in the average conforming 30-year FRM as posted by Freddie Mac and instead got slapped by a two basis point decline. At the moment, the underlying current for rates is slightly firmer, but next week's data and central bank activities suggest to us that some of the 12 basis point cumulative decline in rates is bound to go. As such, we expect a 3-4 basis point increase in the benchmark 30-year FRM when next Thursday's report comes."

 

The following are interest rate quotes from John Alvin of American California Financial:

 

30 Yr Fixed FHA
Rate APR  
4.000 5.141 Details
 

 

Conforming 30 Yr Fixed up to $453,100
Rate APR  
4.500 4.624 Details
 

 

Conforming Jumbo 30 Yr Fixed $453,101 - $679,650
Rate APR  
4.750 4.864 Details
 

 

Jumbo 30 Yr. to $1.5 Mil
Rate APR  
4.625 4.722 Details
 

 

Jumbo 7/1 ARM $1.5 Mil (higher loan amt available)
Rate APR  
4.125 4.622 Details
 






For more information about Palos Verdes and South Bay Real Estate and buying and selling a home on the Palos Verdes Peninsula, visit my website at http://www.maureenmegowan.com . I try to make this the best real estate web blog in the South Bay Los Angeles and the Palos Verdes Peninsula. I would love to hear your comments or suggestions.

Comment balloon 1 commentMaureen Megowan • June 09 2018 08:06PM

Comments

This is much to the dismay of some of the doom sayers that claim catastrophe is around the corner\!

Posted by William Feela, Realtor, Whispering Pines Realty 651-674-5999 No. (WHISPERING PINES REALTY) 2 months ago

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