Daily Mortgage Rates 11/30/15

Mortgage Rates
Currently Trending
Today’s Mortgage
Rate Forecast
Today’s Potential
Rate Volatility

Neutral

Neutral

High

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market.  This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events.  When MBS pricing goes up, mortgage rates or pricing generally goes down.  When they fall, mortgage pricing goes up.  Tracking these securities real-time is critical.  For more information about the rate market, contact me directly.  I’m among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

 Sigma Research says that rates are trending worse this morning.  Last week the MBS market improved by +13 bps.  This was not enough to affect rates or  fees.  There was low volatility last week.

Today’s Rate Forecast: Neutral

According to  Sigma Research this is the week markets have been anticipating for a month. Friday the Nov employment report along with other key reports and Fed officials out like ants on a sugar cube led by Janet Yellen. By the end of the week there should be no more speculation about what the Fed will do when the FOMC meets on Dec 15th and 16th about increasing interest rates. Since that very strong Oct employment report that shocked with 271K job growth the expectation of the lift-off increased; the idea being that unless the Nov employment report was an equally weak report as the Oct was strong, the Fed will have what it needs to make the move. Global data: Japan; industrial production rose 1.4% m/m in October according to preliminary data. The reading missed economists’ expectations but beat the 1.1% gain from September. Retail sales jumped a better-than-expected 1.8% in the year to October after declining 0.2% y/y in September. German retail sales unexpectedly dropped 0.4% m/m in October (2.1% y/y) after remaining unchanged in September (3.5% y/y). Italy’s consumer price index fell 0.4% m/m in November, according to an initial estimate. Economists had been forecasting a smaller decline and the CPI actually rose 0.2% m/m in October. UK mortgage lending expanded by a greater-than-expected 3.60B £ in October, the same as it had in September.

Today’s Potential Rate Volatility: High

According to Sigma Research the risk for volatility this week. The mortgage markets are neither bullish or bearish; building a pattern of very tight ranges that is likely to set off a big move later this week.

 

The strength of the US Dollar.

Explore Outbound Opportunities &

Capitalize on the Strength of the US dollar

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After years of decline and stagnation, the US dollar has gained momentum over the past year.  The dollar is up 25.5% against the euro, 20.8% against the Japanese yen, and 9.5% against the British pound. As a global real estate professional, what does this mean for you?  Now may be a great time to plan a more-affordable European vacation. Imagine sipping limoncello while watching the sun set over the Amalfi Coast. Sounds good, right? But before you pack your bags, there’s something else to consider─ now may also be a good time to increase your earning potential by capitalizing on outbound international business.

Impact of the US Dollar Overseas

The robust US dollar coupled with depressed asset prices throughout many markets around the world, creates opportunity for US investors looking to purchase property outside the United States. CNN reports, “More Americans are taking the leap to buy that overseas pied-a-terre they’ve been thinking about.” In particular, a number of destinations in Europe offer substantial bang for your buck.  According to the global real estate consultancy, Knight Frank Property, prices in some European markets fell 40-50% during the financial crisis, and they have not yet fully recovered.   Low property prices and the current strength of the US dollar means that American investors will find that their cash can buy much more than it did this time last year.

For example, if an investor had US $400,000 to spend on a property last spring, he would have been looking at properties listed at €293,000. However, a year later, US $400,000 equates to €363,835─ a difference of over €70,000![1]

The Euro is not the only currency affected substantially by the current strength of the US dollar. Take a look at the below chart which illustrates the fluctuation, from this year and last, between the US dollar and a number of world currencies.  It’s apparent that American investors looking to find good deals overseas have many destinations to consider.

 

Currency

June 1, 2014

June 1, 2015

Difference

Australian dollar

US $400,000 =

AUD $ 429,558

US $400,000 =

AUD $ 522,725

AUD $93,167

Brazilian real

US $400,000 =

BRL $895,480

US $400,000 =

BRL $ 1,270,320

BRL $374,840

British pound

US $400,000 =

GBP £ 238,625

US $400,000 =

GBP £261,378

GBP £22,753

Canadian dollar

US $400,000 =

CAD $433,664

US $400,000 =

CAD $497,908

CAD $64,244

Euro

US $400,100 =

EUR €293,000 =

US $400,100 =

EUR €363,835 =

EUR €70,835

Japanese yen

US $400,000 =

JPY ¥40,667,600

US $400,000 =

JPY ¥ 49,643,600

JPY ¥ 8,976000

Mexican peso

US $400,000 =

MXN ₱ 5,140,920

US $400,000 =

MXN ₱6,149,680

MXN ₱1008760

 

Not all countries have been impacted by the US dollar’s recent rise. Countries whose currencies have remained strong include Costa Rica and China. Additionally, countries that peg their currency to the US dollar– such as Panama, Ecuador, and a number of countries in the Caribbean, would not be affected.

Currencies fluctuate daily, but many economists believe the strength of the US dollar won’t change any time soon.  CNN reports that “America’s economy certainly won’t stop the dollar’s surge. The job market is on a tear, growth is picking up and the Federal Reserve is likely to raise its key interest rate this year for the first time in almost a decade.  At the same time, Europe’s new stimulus program is lowering interest rates across the pond. It’s a recipe for the dollar to gain even more value this year “.

How do mortgage rates move?

 

Mortgage Rates
Currently Trending
Today’s Mortgage
Rate Forecast
Today’s Potential
Rate Volatility
Neutral Neutral

Low

 

 

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market.  This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events.  When MBS pricing goes up, mortgage rates or pricing generally goes down.  When they fall, mortgage pricing goes up.  Tracking these securities real-time is critical.  For more information about the rate market, contact me directly.  I’m among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Lower

 Sigma Research said that rates are trending slightly lower this morning.  Yesterday the MBS market worsened by -4 bps (higher rates).  This was  not enough to affect rates or fees.

Today’s Rate Forecast: Neutral

According to  Sigma Research  Treasuries and MBSs traded better this morning, still confined in a very narrow range. US and Europe stock markets doing better early. Two reports at 8:30; weekly jobless claims and the Nov Philly Fed business index. Claims were expected to decline 6K to 270K, claims were down 5K to 271K; the 4 week average increased a little to 270.75K from 267.75K. Weekly claims have generally flat-lined in the last few weeks around 270K. The Nov Philly Fed index was thought to be 0.0 after Oct dropped to -4.5; as reported the index was up to 1.9. The index is a volatile one recently, the better than expected reading didn’t generate any movement in the bond or mortgage markets. Yesterday the minutes from the Oct FOMC meeting might have cleared the air on what the Fed will do at its Dec meeting on increasing the FF rate. The general take-away by most economists and analysts was that the Fed has made it clear now that a rate increase will happen on Dec 16th when the FOMC concludes its meeting…. “Most participants anticipated that, based on their assessment of the current economic situation and their outlook for economic activity, the labor market, and inflation, these conditions could well be met by the time of the next meeting”. One report has to be hurdled to make it a certainty, the Nov employment report on Dec 4th; Oct was a very strong report, unless Nov completely reverses Oct and shows weakness the Fed will move. It has been a year now since officials have been talking about the potential of a slight increase; time to get it done.

Today’s Potential Rate Volatility: Low

According to Sigma Research we’ve had a minor pump in the MBS pricing this morning (better rates), but nothing that would substantially affect mortgage rates.    Short of an escalation in the terrorist fights, we expect MBS market and mortgage rates to be stable today.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact us for information.

Traditional way to obtain a mortgage loan and not get taken!

If a lender tells you that you can be pre-approved in just a few minutes, you might want to stop and run in the other direction — fast. A real pre-approval involves much more than just a loan application and credit report.

Here’s what a normal pre pproval includes:

■ You’ve submitted an application with a lender.
■ You’ve authorized the lender to pull your credit.
■ You’ve provided all requested supporting documentation.
■ Lender has specifically reviewed all supporting documentation, including your tax returns and every piece of financial documentation.
■ Lender has determined you meet all credit guidelines based on the financial strength of your credit, debt, income and assets.
■ Lender has communicated to you what monies you need for closing and total mortgage payment, as well as all suitable programs for which you qualify.
■ Lender has run automated underwriting on your scenario.

Nearly all the residential loans being originated to Fannie Mae’s or Freddie Mac’s standards must pass automated underwriting through Desktop Underwriter (DU for short or Loan Prospector, LP). Each loan is carefully run through an automated underwriting system whether you’re looking for a conventional mortgage, FHA mortgage or even a jumbo mortgage. If your loan does not pass automated underwriting, it’s more than likely your loan won’t move forward.

It’s absolutely critical in the information-gathering stage — after the lender determines how much you can afford (this calculator can help) –  they run an automated underwriting approval to make sure your loan gets the green light. Most loans do “pass” in each system, provided the lender has done the proper loan analysis and have utilized the numbers from the supporting documentation you provided.

Are you pre-qualified or pre-approved?

If there is any step in the bulletpoints above that is not completed, then you are not pre-approved. A good lender who knows what they’re doing will typically ask you a series of questions pre-application to determine whether or not you meet the credit score requirements, down payment requirements, and the debt and asset requirements. In other words, you can’t get preapproved without getting pre-qualified first.

Oftentimes, real estate agents want you to be pre-approved before even showing you a home. A pre-qualification, on the other hand, is simply a verbal conversation with your loan professional about your financials, that’s it. It holds no water in a real estate purchase contract offer situation. However, a pre-approval letter conveys to the home seller you’ve diligently done your legwork, and more importantly you have the ability to perform as a home buyer.

How strong is your pre-approval?

Did your lender ask you a series of questions about your credit score, credit history, income assets and monthly obligations? Did it feel like your lender was grilling you with questions about your finances? This is a good sign you have a professional in your corner. A good lender will question everything to better understand you, your finances and determine if you can qualify. Most real loan officers need at least a few hours after having the complete application, credit report and documentation to review your figures, especially if there is any of the following:

■ A foreclosure, short sale or bankruptcy in the last seven years
■ A previous loan modification of any kind in the last seven years
■ High consumer debt payments — like income-based student loans, car loans, credit cards, tax, child, tax or alimony payments
■ Gyrating income
■ 2106 un-reimbursed expenses on your tax returns
■ Any and all self-employed income
■ Investment property scenarios
■ Or anything the lender deems to be complex

Any lender or mortgage broker that offers a pre-approval letter and a quick cursory review of your financials is gambling with your money, which could end up costing you your earnest money down the road, especially if the underwriter later determines something in your financials does not jibe. Be smart and give the time the lender requests for doing a solid pre-approval and allow them to do their analysis.

Don’t put the house before the finances

This is undoubtedly an “aha” moment, as the allure of real estate is far more fun and exciting than the idea of getting a mortgage. Let’s be honest — putting together tax returns, debts, pay stubs and financial documentation for most consumers is understandably not the most pleasant thing in the world to do. However, picture this: For whatever reason you’ve not gotten pre-approved yet — work, family and life got in the way. Then you find a house one Sunday afternoon that you “must have” — it’s the ideal home for your family with location, and all the other bells and whistles. Offers are due the next day Monday at noon sharp. You call a lender, or one the real estate agent recommends, and demand they pre-approve you on the spot for you to get your offer in for consideration. This is a recipe for disaster. Not only is it reckless to ask the lender to do a cursory review your financial documentation, but it also sets you up for more questions and more conditions in the underwriting process later on because the lender did not have the time to properly devote to examine your financial profile earlier on.

This is why it’s better to get your finances lined up before you even start looking at homes. That includes checking your credit reports and credit scores ahead of time, just to see where you stand (you can get your free credit scores on Credit.com). You will be glad you did — many times over — once you do find a home that is a fit for you.

Hope this article helps you.  Would you like more information?

Contact Shelley Propernick at 206.920.0244 or email shelleyshomes4u@yahoo.com

Are you ready to buy a home? Down payment assistance program available now!,

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shelleyshomes4u@yahoo.com

Cell: 206.920.0244