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Updated Interest Rates

VMG Rate Tracker – 10/14/2014

 NMLS# 35986    
VMG Weekly Rate Tracker- Your Local Mortgage Leaders (sharing is caring)
DATE:  Tuesday, October 14th, 2014
TIME:  5:30 PM PST
CHANGE THIS WEEK: BETTER (from last Tuesday)
SUGGESTION:  LOCK/BE IN POSITION TO LOCK –  Keep a close eye and get updates from your Loan Consultant (see below for more commentary)
VMG CLIENT’S FIXED RATE PRICING OPTIONS  (rates subject to change)
***Below rate optional pricing has NO additional lender-related fees (i.e. processing, underwriting, application, etc.).  Lender credits below result in (negative) lender fees applied toward 3rd party fees or prepaids (taxes, insurance, interest).  Contact Loan Consultant for personalized quote.
*Rates change daily.  Conforming interest rate samples based off $240,000 loan amount, 75% Loan to Value, 740 or higher FICO score, with impounds on a 30 day rate lock period.  FHA/VA based off 3.5% down payment, but other same variables.  Costs or credits shown pertain to interest rate and do not include any other applicable 3rd party title and escrow charges or prepaid tax and insurance reserves which may or may not apply.  Lock period suggested depends on current loan volume and lending climate at time of loan application and approval.  Other risk-based pricing adjustment may apply.  The displayed annual percentage rates (APRs) include total points and additional prepaid finance charges but do not include other closing costs.   On adjustable-rate loans, rates are subject to increase over the life of the loan.   Learn more about assumptions and APR Information. Loan pricing may only be locked through a home loan consultant to be effective.  Rates will depend in part on your unique credit history and transaction characteristics. Please email or call for updated pricing at anytime as rates and pricing are subject to change. This information does not constitute a loan commitment or approval.
Rate Lock Advisory – Tuesday Oct. 14th 

10:32AM ET: Tuesday’s bond market has opened well in positive territory following more stock selling yesterday. The major stock indexes are in positive territory during early trading, but have recovered only a small portion of yesterday’s 223 point loss in the Dow and 62 points in the Nasdaq. The Dow is currently up 42 points while the Nasdaq has gained 13 points. The bond market is currently up 18/32 (2.22%), which should improve this morning’s mortgage rates by approximately .250 of a discount point if comparing to Friday’s morning pricing. The bond market was closed yesterday for the Columbus Day holiday, but the stock markets were open for business.

There is no relevant economic data set for release today. This morning’s bond strength is mostly due to yesterday’s stock selling and some economic news from overseas that indicated slower economic growth. There is no doubt that bonds have rallied and mortgage rates have moved noticeably lower over the past week or so. However, I am not comfortable shifting to a less conservative stance towards rates just on this move alone. We are due for some profit-taking and possibly a sizable upward move in my opinion. If I was closing on a loan in the near future, I would seriously consider locking at these low rates before that move comes. There may or may not be a little more improvement, but the risk of a sizable upward spike in rates outweighs the potential gain of continuing to float much longer in my opinion. 

We have three reports scheduled for tomorrow, all of which are considered highly relevant to bonds and mortgage pricing. September’s Retail Sales report is the first at 8:30 AM ET tomorrow morning. It measures consumer level sales and is very important to the markets because consumer spending makes up over two-thirds of the U.S. economy. If consumer level spending is strong, overall economic growth is likely to be stronger, making bonds less attractive to investors. If we see weaker than expected readings in this report, the bond market should respond favorably and mortgage rates should drop again tomorrow. Current forecasts are calling for a 0.2% decline in sales. Good news for the bond market and mortgage pricing would be a larger decline.

Also set for release at 8:30 AM ET tomorrow is September’s Producer Price Index (PPI). This index measures inflationary pressures at the manufacturing level of the economy and is also considered to be highly important to the bond market. Analysts are expecting to see a rise of 0.1% in the overall index and an increase of 0.1% in the more important core data reading. A larger than expected increase in the core reading could raise inflation concerns, pushing bond prices lower and mortgage rates higher. Inflation is the number one nemesis of the bond market because it erodes the value of a bond’s future fixed interest payments. When inflation is a threat, even down the road, bonds sell for discounted prices that push their yields higher. And since mortgage rates tend to follow bond yields, this leads to higher rates for mortgage borrowers.

The third and final relevant report of the day is the Federal Reserve’s Beige Book, which is named simply after the color of its cover. This report details economic conditions throughout the U.S. by Federal Reserve region. It is relied upon heavily by the Fed to determine monetary policy during their FOMC meetings. If it shows surprisingly softer economic activity since the last report, the bond market may thrive and mortgage rates could drop shortly after the 2:00 PM ET release. If it reveals signs of inflation growing or rapidly expanding economic activity in many regions, we could see mortgage rates revise higher tomorrow afternoon.

Overall, it appears tomorrow is an easy label for the most important day of the week although today’s unexpected bond rally makes today a worthy opponent also. In addition to the economic data this week, there are many companies posting earning reports, including some big names such as Citigroup, GE and Intel. If the corporate earnings releases are generally weaker than forecasts, stocks may suffer, making bonds more appealing to investors. The end result would likely be an improvement in rates. The flip side though is stronger than expected earnings that drive stocks higher, pushing bond prices lower and mortgage rates upward. Accordingly, please maintain contact with your mortgage professional if still floating an interest rate.

Harris Consulting, Inc. DBA Vantage Mortgage Group, Inc.


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