Market Commentary and Rates ending June 27, 2014

Mortgage bond prices finished the week positive putting downward pressure on mortgage rates.  Housing data released early in the week was positive.  Both new and existing home sales were better than expected.  Gross Domestic Product (GDP), a summation of economic output, showed the US economy contracted 2.9% in Q1, 2014.  That was the worst contraction since 2009 and was blamed on the hard winter.  The Treasury auctions of 2,5 and 7-year notes showed tepid demand from investors, a worrisome trend if it were to continue.  The US counts on investors to fund the government’s deficit spending.  Lastly, the two reports on the consumer, confidence and the University of Michigan sentiment report, were better than expected.  Geopolitical issues had little effect on trade last week.  For the week, mortgage interest rates fell by about .125%.

Rate Improvements

While the future of the U.S. economy remains in question, there is no doubt that mortgage interest rates are historically very low. As the economy improves rates will rise.  Housing and consumer confidence data released last week were better than expected; however, GDP and income data was weak.  Weekly jobless claims are persistently above 300K, a sign the labor market is still under pressure. Remember, the Federal Reserve has been one of the largest purchasers of mortgage-backed securities in an effort to keep rates low and stabilize the housing market.  The Fed announced asset purchase reductions at the last several meetings.  Markets do not question if the Fed will continue this reduction.  However, there is great uncertainty as to the future of the U.S. economy.  Now is a great time to take advantage of mortgage interest rates at these exceptionally favorable levels to avoid future market volatility.

The bottom line is that now remains a great time to consider a home purchase or refinance, as home loan rates remain attractive compared to historical levels.

Let me know if you need a second opinion on a loan scenario or for immediate pre-qualifications. We look forward to working with you and your clients in any way necessary.

PROGRAM	(30 Day Lock)		Rate		APR		TREND
30 Year Fixed Conventional		4.000%		4.144%		ä
20 Year Fixed Conventional		3.875%		4.072%		ä
15 Year Fixed Conventional		3.125%		3.626%		ä
10 Year Fixed Conventional		2.875%		3.237%		ä
7/1 LIBOR ARM Conventional		3.125%		3.293%		ä
5/1 LIBOR ARM Conventional		2.750%		3.115%		ä
30 Year FHA/VA		3.750%		5.441%		´³
15 Year FHA/VA		2.875%		4.152%		ä
5/1 ARM FHA/VA		3.000%		4.364%		ä
30 Year USDA		3.750%		4.234%		ä
JUMBO $417,001+ (30 Day Lock)		Rate		APR		TREND
30 Year Fixed (up to $1 Million)		4.000%		4.126%		ä
15 Year Fixed (up to $1 Million)		3.375%		3.606%		ä
5/1 LIBOR ARM		2.750%		2.976%		´³
5/1 LIBOR ARM (Int Only)		2.875%		3.242%		´³
7/1 LIBOR ARM		3.125%		3.377%		´³