Mortgage Rate Forecast | Going Lower?

A quick post after reviewing the price action on the mortgage-backed securities (MBS) I want to share what I see.

So, what is it?

Well, not to bore you with the nitty-gritty technical details that provide a foundation for what I am predicting but, take a look at the last few days of price action depicted below.  You can see the last four days price is moving horizontal in small daily ranges.

This is occurring after MBS prices have moved back ABOVE their 200 day moving average (depicted in the blue line).  This setup is generally bullish;  meaning odds favor higher prices ahead.

As a refresher, higher prices lead to lower mortgage rates, and vice versa.

Who knows what the catalyst for the move higher in price from here will be?  It might be some news report.  It might be something from the equity markets?  It really doesn't matter but the technical setup is ideal for a move higher.

Stay tuned.

3 Month Fannie Mae 4.0% Coupon (MBS) Price

Brett  Grendahl

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I can lend in all 50 of the United States.

Economic Weakness Persists and Mortgage Rates Move Lower

Good morning gang,

I haven't written a blog post in a bit, super busy on many fronts and nothing too much to report.  So, why waste the time writing and tire your eyeballs on the trivial, right?

Well, after looking at the price action in the mortgage-backed securities market today there is news worth sharing.  So, here we go!

What is it?

Well, the September Jobs Report was released today.  Normally, this monthly report comes out on the first Friday of the month but with the government shutdown it was delayed.  Now, the report came out at 148,000 jobs versus the 180,000+ number the market expected.

Mortgage-backed securities (MBS) are up strong on the news and, more importantly, prices have moved back above their 200 day moving average.  Remember, as MBS prices go up, mortgage rates go lower.

Look at these charts:

3 Month Chart on Fannie Mae 4.0% Coupon

The chart above shows how today's move up in price has moved above the 200 day moving average, shown in the blue line.

One Year Chart on Fannie Mae 4.0% Coupon

The chart above shows a longer-term view of the price action.  You can clearly see how prices fell hard from May through September.  From all that choppy price action in August and September prices formed a base of support and have since moved higher.

From the technical setup the odds are increasing that we will see mortgage rates move lower.  I expect that a good price target is a conforming 30 year fixed rate around 4.0%.  For now, I don't think below 4.0% with no points will become available but, in this manipulated market, who really knows, right? :)

Another wrinkle to these improving rates is that we might see the conforming fixed rates move back below the jumbo fixed rates.  We are in a time of a weird market anomaly where the jumbo rates are sometimes pricing lower than the conforming ones.  This won't persist forever.

Bottom line:  expect better mortgage rate pricing in the weeks ahead.

Brett

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I can provide mortgage financing in all 50 states.

The Fed, Tapering and Unemployment Rate Target

Good morning folks!

It is a rainy morning here in Minneapolis and the changing of seasons is being fully felt by me.  A very different feeling than the past few years living in Northern California.  My daughter is excited for snow.  Let's hold off a bit on that, can we? :)

Okay, the announcement from the Federal Reserve Open Market Committee's meeting comes this afternoon.

For months I have expected this to the date that they announce the beginning of tapering of their Quantitative Easing (QE).  The market has been talked there and this is still expected.

I think they will announce tapering to begin in October at a rate of $10-15 billion per month.

Mortgage rates have priced this in and we will likely see a rally in mortgage bonds (driving mortgage rates a little lower) on the news.

Also, I would not be surprised to see the Fed also announce something like lowering the unemployment rate target.  The unemployment rate target is what they've communicated to the market as their trigger point for when they will raise their Overnight Rate.

By lowering the target they will give the market something to offset what they take away with the beginning of tapering.

It should make for an interesting afternoon.

Brett

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Fall Brings Market Changes

Good morning,

Okay, back at writing to the blog after a very busy August and early September.  You can really feel the crispness in the morning air here in Minnesota, the tell-tale sign of the changing seasons.

A lot of change in place in mortgage finance.  I'll begin writing in more depth on these topics in the coming weeks.  For now, here is a quick overview of the topics that are catching my interest and thoughts.

Syria
The global politics and potential unrest from military conflict are unknown.  Need to keep an eye on developments here.  Weird days when Putin seems to be doing better statesmanship than Obama.

Fed Taper
September 18th is this week and this is where I fully expect the taper to begin.  With Summers now bowed out of the options for a replacement for Bernanke the equity and bond markets are rallying this morning.  Yellen is the favored pick now.

Dodd-Frank
More implementation of new rules coming from the Dodd-Frank legislation looms come January 1st.  The industry is abuzz about the Qualified Mortgage rules and Loan Officer compensation models out in the marketplace.  Lots to digest here.

Conforming Loan Limits
Expect these to be lowered come January 1st.  They were moved up to $417,000 back in 2006, stayed there and now look to be going lower.  This will further tighten underwriting and change the marketplace.

Mortgage Rates
Today, mortgage bonds are up strong on the news that Summers is out.  This price action breaks the downtrend so we might see lower mortgage rates for a few weeks.  Great time to be locking in  if you have a mortgage application in process.


Those are the big buckets of thought for me.  I'll be sharing more in the coming weeks.

Have a great day!
BG

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Can Mortgage Rates Improve Here?

Good afternoon,

Quick post on mortgage rates as mortgage bonds sit at a key technical level.  Reminder, as mortgage bond prices go down, rates go up and vice versa.

If you look at the 3 month chart below on mortgage bonds you can see they've been moving lower in price.

Take important note of the green line I drew.  That line represents a level that has proven to be stiff price resistance to any move higher.

Well, today's positive action in price (up) is breaking that trend line.  Will this hold?  Will bonds head higher in price?  I don't know.  Let's keep a close watch.

Mortgage Rate Monitoring

Quick note, we have changed our focus to the FNMA 4.0% coupon for gauging mortgage-backed securities trading, and mortgage rates.

Just a few months ago we were watching the 3.0% coupon, then to the 3.5% one and now stair-stepping up again.

BG

Update on Mortgage Bonds

Quick update with a chart (below) on mortgage bonds.

Price is stable and the trading range is narrowing before we get news from the Federal Reserve on Wednesday and the monthly Jobs Report looms on Friday.

Where will we go from here?  The news of the week will likely be the catalyst now.

3 Month Price Chart on Mortgage Bonds (FNMA 3.5% coupon)

If we get an upward break from here we should see a little room to run higher and, subsequently, some lower mortgage rates for a few weeks.

Brett
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Mortgage Rates. Here they are, but where are they going?

Happy Friday everyone!

Man, this was a busy week;  "what happened again?"

Better to be busy, than not, so I'll keep going and update on where mortgage rates sit.  And, provide a glimpse into where they might be going.

Here goes!

Check out this chart.

3 Month Mortgage Bond Price Chart

What is important about this chart?  What the heck does it mean?

Remember, as prices on mortgage bonds go down, mortgage rates go up -- and vice versa.

The blue line is the 200 day moving average.  As you can clearly see, we have fallen WAY below it.

The red line is the 25 day moving average and over the past 10 trading days this has been acting like a magnet on price.  I like it.  I like it because I see technical strength being built.  A new key price floor is, hopefully, become strong.

The Federal Reserve will have a lot of money in hand from recent prepayments on mortgages that were just paid off on a refinance.  They will put that money back to work in buying the current market.  None of their communications have indicated that this practice will end.

For a refresher, the Federal Reserve's Quantitative Easing is accounting for $85 billion in open market bond purchases.  $45 billion of this is in U.S. Treasuries.  The remaining $40 billion in mortgage-backed securities.  The monthly amount of of rollovers from early prepayments is estimated at $20-50 billion.  A lot of money.

The Federal Reserve is now changing their dialogue to discuss a possible lowering of the unemployment target of 6.5% to something like 6.0%, or 5.5%.  This is another way they can adjust and continue to monetary stimulus.

Rates Will Do...?

The way I read the technical picture, and my gut feel, is that we will see a rise in price from the 25 day moving average area and get to 103 basis points (bps) before serious price resistance kicks in.  That gives a possible 200 basis points at hand.  Such a move may translate into a 0.5% lower 30 year fixed rate.

You know, that seems even more plausible as that'd take the 30 year fixed rate to near 4.0%, a key psychological level.


This is how it feels as a loan originator these days:

You know, sometimes it feels like I'm always guiding my clients through an ever-changing maze.  At least I feel confident that I have a good feel on predicting the twists and turns so that we can execute through them.  When a client's home purchase is on the line, making sure we close smoothly and on time is what I'm thinking.

The cartoon above lets you know the humor you need or mortgage finance may drive you crazy these days!

Do you know anyone thinking about buying a home?  If so, please introduce us as I'm never too busy to help lend a hand.  My business is primarily from the introductions by past clients like you.

Have a fantastic weekend!
Brett

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The Lowest Unemployment City is Minneapolis

Good morning!

Welcome back from the 4th of July holiday.  I hope you built some great memories.  Mine include two fireworks shows from equally impressive vantage points.  My young son saying "I just don't know where to look!" as we could see 10 separate shows going off across the metro area.  The second from a river bluff over the St. Croix river where the fireworks were right in front of us.  Wow!

Add in a drive in movie last night to cap the long weekend off!

Check out this article in Slate where we find that Minneapolis has the lowest unemployment rate for any city with a population over one million people in the United States.
http://www.slate.com/blogs/moneybox/2013/07/03/you_should_move_to_minneapolis_lowest_unemployment_big_city_in_america.html

This is great news for our local economy and, in turn, the housing market.

Have a great week!

Brett
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Mortgage Rates Headed Higher

Here we are on what would normally be a light day of financial news but after the release of the strong than expected June Jobs Report mortgage bonds are getting creamed!

As I type I see the Fannie Mae 3.5% coupon trading down 194 basis points in price.  Ugh.  Just looking at this chart (see below) makes me want to close my laptop.

When will this carnage end?  Hard to say as we continue to blow through expected levels of price support.

The continued downslide in price (move higher in rates) continues to cement in what I thought weeks ago.  What was that?

That the end of the secular (11 year run) for lower and lower mortgage rates is now done.  Finished.

So, while it might take a little while to accept this reality accept it we must.

Don't let hope for a return to lower rates misguide your thinking.  The odds are severely stacked against it.

I'll continue to watch the trading and inform you here as we will eventually find price support somewhere.

Until then, enjoy the holiday weekend and the growing strength in the housing market that we are seeing in the data.

Brett
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Median Home Mortgage Rate History

Good morning,

The office, the roads and the coffee shop sure are lighter as many people are already off on vacation for the 4th of July holiday.

I was doing some research on mortgage rates.  So many conversations with people the past few weeks have been "what happened and will now happen" to mortgage rates.  We just saw the conforming 30 year fixed rate mortgage move from around 3.5% to 4.5%.

The 3's for the 30 year fixed rate mortgage look to be gone for years to come.

But, is 4.5% really that high?  Yes, it seems so in comparison to a 3.5% rate but let's take a longer view of history.

The median mortgage rate for the past 10 years is 5.72%.

The median mortgage rate for the past 20 years is 6.52%.

The median mortgage rate for the past 30 years is 7.45%.

And, for the past 40 years that median rate is 8.15%.

So, a 4.5% rate is still low by historical standards.  Instead of being too upset that the 3's are no longer available we should still be thankful to have rates lower than most time in history.

Now, some mortgage humor.  If you have been in the mortgage business for a long time, like me, this cartoon is laugh out loud funny in depicting what the business has become the past few years.

Brett
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New Mortgage Payment Relief on the Way

More U.S. homeowners struggling to make their mortgage payments will receive relief soon through the Streamlined Modification Program.

These are for borrowers whose loans are with Fannie Mae and Freddie Mac.

Read this article for more details.

http://money.cnn.com/2013/07/01/real_estate/mortgage-payments/index.html?hpt=hp_t3

Mortgage Rates Stabilizing Here?

Quick update on mortgage rates.

Mortgage bonds have taken a beating the past few weeks.  However, the past few days trading action show possible stability.  This looks to me like an area of price support establishing itself.

Look at this chart.

Remember, as mortgage bond prices go down, mortgage rates go up.

That green bar on the very right hand side shows prices that prices opened and have moved higher (that's why the bar is colored green).  This pattern of today's bar in conjunction with yesterday's one is called a Bullish Engulfing candlestick pattern.  This pattern, seen at the end of a downward move, is typically a sign of the market turning.

So, what does that mean to you?

Well, if you are in need of locking in a mortgage rate on a current mortgage loan application in process you should watch for a move for improving rates in the coming days.

Now, don't expect much lower rates but 0.125, 0.25 to maybe 0.375 lower in rate might be available.

However, once we reach the low of the upcoming move expect rates to stop their improvement and then get back on the rising trend we are now in for years.

Brett
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Home Price Rise Sets a Record

Good morning,

Some good news in the housing data today.  The Case-Shiller report for April noted 12% gains in April.  That is the largest monthly year over year gain reported since this index has been calculated.

Here are some articles for more details:

http://www.cnbc.com/id/100839986

http://www.marketwatch.com/story/home-prices-see-record-jump-in-april-case-shiller-2013-06-25

http://www.businessinsider.com/april-case-shiller-home-prices-2013-6


Brett
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Bond Market Worsening

Good morning,

The bond market continues to weaken.  In fact, the recent move in the 10 Year Treasury is the biggest move in over 50 years.

Can we say volatility is back?  Look at these two charts.

6 Month Fannie Mae 3.5% Coupon Price

and this one....

6 Month 10 Year Treasury Yield

Many have  forgotten what market volatility looks like after the heavy-handed years of the Federal Reserve with their Quantitative Easing policy and actions of late.

Price stability is being sought and it still is too hard to say where it will occur.

So, we watch.

Mortgage rates continue higher in the meanwhile.

Mortgage rates under 4% are now gone and do NOT expect to see them again for years and likely decades to come.

Brett

Get My Contact Information Here

Mortgage Rates Having a Tough Go of It

Minus 127.

Minus 127 basis points that is.

Minus 127 for mortgage bonds today.  It sure has been some time since I've seen a print like that for the mortgage bond market for the day's trading action.

Things were going along fine until the Federal Reserve's press release after their two-day meeting.  Then, this (see chart below):

Remember, red is bad (it means higher mortgage rates).  Green is good (lower mortgage rates).

Since the beginning of May mortgage bonds have lost 600 basis points.

Mortgage rates have now moved almost a full point higher.

Where do we go from here?  Well, a move higher that retraces a third or half of the move down from early May is reasonable but I do not expect any further gains in prices for mortgage bonds from there.

The die seems cast for an upwardly trending mortgage rate market for the foreseeable future.

I expect this fact to take time to settle in for people as we've been spoiled by 11 years of mortgage rates moving lower and then hitting record lows.  Time to change the mentality on such things.

Brett
www.BrettGrendahl.com

4% is New Psychological Level

I am working late this evening after taking some great family time with my young kids and their grandparents. You only live once, or so they say.

The term once seems so finite and hard to place into a quantum world.

No surprise I'm reading financial news and looking for nuggets to see the near future.

One theme developing is the news stories talking about 4% mortgage rates.  Here are some articles on the topic if you want to go deep on the topic:

http://money.cnn.com/2013/06/13/real_estate/mortgage-rate/

http://www.usatoday.com/story/money/personalfinance/2013/06/13/mortgage-rates-near-4/2420219/

http://www.bloomberg.com/news/2013-06-13/u-s-mortgage-rates-rise-for-a-sixth-straight-week.html

What do I think about it?

Well.....this should not be unexpected.  Why not?

Mortgage rates hit record lows.  Eventually there is a record low that will stay such a record for many years.  The Federal Reserve has made this a manipulated marketplace with their monthly quantitative easing.  They are about 85% of the buy side of this market.  Manipulated.....I said that already, right?

My gut tells me the record lows are now in our collective rear-view mirror.

Rates are not upwardly trending.  What is not yet known is the slope we ascend.  How fast will they rise?

That answer will be found in how the economy heals and when, and at what intervals, the Fed raises their Overnight Rate.

The mortgage marketplace is going through a shift from a predominantly refinance transaction market to one of predominantly purchase transactions.  The purchase market sure does not feel what I'd call robust.  This is based on my own conversations with clients, financial advisors, CPAs, Realtors and acquaintances.

Low inventory is a positive to the health of the purchase market.

Tight mortgage finance underwriting guidelines persist.  This slows how much activity can be handled based on the workloads of originators, processors, underwriters, closer and so on.  It deters possible buyers who have resistance and reservations to undertake, as my own client named it, their "financial colonoscopy" that is getting a mortgage loan approved these days.

It is tough out there.  Yes.  But, you know, it had the usual bumps but we still closed the above clients new home purchase in 28 days from application.

However, the seasoned mortgage folks, the ones in the business from the 1990's or earlier, they are the ones that will power this market.  New entrants should align with these people as their mentors.  To do so will provide a clear direction on how to do well in this line of work.

Well, rates are headed higher.  If you want to stay on top of where they head please stop by here from time to time.  Or, join my mailing list here.

I think about this stuff all day long so you don't have to.

Brett Grendahl
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Will Mortgage Rates Mover Lower?

Well, it sure has been a hard fought week in the financial markets.  Equities are battling near the 50 day moving averages on the S&P 500, the Dow Jones and the Nasdaq composite indexes.  So far, these are proving to be price support.  So far.

The mortgage bond market had a horrible May and June hasn't been going all that great either.

However, prices are beginning to flatten out sideways the past few trading days.

Today, some good news.

Mortgage bonds were up 66 basis points (bps).   Check out the chart below:

For the casual passerby, green is good and red is bad for mortgage rates.

Hopefully, tomorrow or early next week we will see the price action break higher and break the downtrend we've been in since early May.  If you have a home purchase closing in late June and you have not locked in your rate yet you should wait and see if we can get a little lower by next week.

Are you buying a home?  Are you planning to buy a new home this summer?

If so, please reach out to me and let me explain why you really have a choice of using me or anyone else.  I'm happy to share my advice and what I can do.  If you find a better loan structure somewhere else I'll be the first to tell you to go with them.

But, if I can provide the best financing for you I will let you know.  In addition, you can rest assure that your closing will happen on time.

Brett Grendahl
Get my contact information here www.brettgrendahl.com
NMLS 455329

It's not just a house, it is your home!

Empirical Proof of Low Housing Inventory

As I was driving around today something was bubbling in my mind.  What was it?

Well, as I drove around I saw a few For Sale signs in the yards of homes.  What caught my attention and was then on my mind the rest of my drive to the office was the fact that 6 of the 7 signs I saw all had "Sold" affixed to them.

That sure seemed like a high percentage in just my little real world observations.

To me, that confirms what I hear from clients and Realtors across the country, housing inventory is very low.

Thank goodness!

Low inventory is a primal economic force for a better housing market for us all.  Supply versus demand.  Low supply will help keep prices up not matter what the demand is.

From my drive today, demand was high for 6 of 7 homes to be sold.

BG


Here are some articles on the topic:

http://www.marketwatch.com/story/in-some-places-homes-sell-in-just-one-day-2013-06-10

http://www.prweb.com/releases/low-housing-inventory/Minneapolis-home-sales/prweb10538864.htm

http://blog.equifax.com/real-estate/low-inventories-may-hurt-spring-real-estate-market/

30 Year Fixed to 5/1 ARM Mortgage Rate Spread Widening

Here is a quick update after I scan mortgage investor pricing this morning.

As mortgage rates experience upward pressure one thing of interest is the widening of the spread of the interest rate on the 30 year fixed rate mortgage as compared to the 5/1 ARM.

That spread is opening up to about 1.5 points.

For example, if a 30 year fixed rate prices at 4.25% for a particular loan scenario the corresponding rate on the 5/1 ARM is running around 2.75%.

As this spread opens up it makes sense to compare the ARM programs in your mortgage product selection.  Why?  It can save you a lot of money.

ARM loans went out of favor during the financial crisis as homeowners and homebuyer's became more risk averse.  However, every loan has its purpose.  What happened in the years leading up to the financial crisis was the misapplication of loan programs to borrower scenarios.

For example, a first time homebuyer with limited financial reserves should never be put on an Option ARM program with the potential for negative amortization that they do not understand.

However, a borrower with substantial financial liquid reserves with a varied income stream might find this loan program to match up perfectly for them.

Back to today, if you are buying a new home you should consider the ARM programs in your program selection.

However, make sure you enlist the professional advice of someone who truly understands how these programs work and when they best match up to your situation.

That is how I advise my clients across all 50 states.  I'm happy to help you, just reach out to me and we can discuss how.

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Mortgage Rates Continue Higher

Good morning,

As mortgage bond trading gets started for the week mortgage bonds are trading lower in price again, hitting a new 12 month low.  See the chart here.

Remember, lower prices equals higher mortgage rates.

Mortgage bonds continue to see a level of price support.  I will continue to watch for signs that a new level of price support is setting in.

Until then, I advise a locking rate stance on any new mortgage application.

Brett

www.BrettGrendahl.com

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Mortgage Rates Stabilizing

Good morning!

Mortgage bonds are slightly up in trading this morning.  So far, they seem to be settling in and forming a base of price support after last week's dramatic drop.

You know, I've watched the daily trading of mortgage-backed securities for over 10 years now.  In recent years, given the market manipulation by the Fed and the very narrow range rates have been moving up and down in, I stopped watching the day to day moves.

Things are changing.

Why?

Well, as the Fed begins to "talk the market" out of Quantitative Easing (QE) we need to acknowledge their eventual exit from their strong hand on the bond markets.  As the markets migrate back to a place of normal market dynamics, what makes the markets move up and down, going back to the daily charts on mortgage bond trading becomes important again.

For clients who will be purchasing a new home, timing of the mortgage rate lock has the ability to save hundreds and thousands of dollars of interest over the course of the loan's amortization.

In general, we are going through a secular change to a trend of higher interest rates in the future but there will still be ups and downs in the market.

In order to advise my clients on the most opportune time to lock in a rate for their home purchase I am getting back into my old regimen of watching the intraday mortgage-bond trading to have a read on the market's pulse.

So, if you or a friend is planning to buy a home, please stop by here for my thoughts on the market and what is going on with mortgage rates.

Then, when you find the home you will purchase, please let me know and I can share why the decision to have me assist with the financing is one that you will never regret.

Have a great week!
Contact Brett Grendahl

Mortgage Rate Update

Well, here we are at the end of May and it falls on a Friday!

I always love May -- it has my birthday, my anniversary, the flowers are blooming and summer is kicking into gear!

Mortgages rates, on the other hand, did not fare well during May.  Just look at this chart below on mortgage bond prices (prices down, rates up).

That blue line being plotted on the chart is the 200 day moving average.  This is a very good indicator to show the strength or weakness of the market on a longer based view.

As you can see above, mortgage bond prices have tanked since early May.  They are now at the lowest point they've been in over a year.

While no one really wants higher rates the ones we have after this decline in price still are low in comparison to most of history.

The important signal we are getting from May's price action in mortgage bonds is that we may have finally tipped over the edge and the end of the long, 11 year cycle in lower rates.

A secular change is underway.

While the market will still ebb and flow the longer term trend will be for lower prices (higher rates) for mortgage bonds.

Have a great weekend!
Brett Grendahl

Bond Prices Down, Home Prices Up

Some good news and bad news this morning.

First the bad:  mortgage bonds are moving lower in price (higher in rate for mortgages) and have now hit a price level not seen since last May.  Here is the chart.  Red is bad, green is good (when you are thinking about mortgage rates to you).

What is the good news?

The Case-Shiller 20-City Compoasite Index reported home price gain of 1.4%.  This is the fastest gain in prices in over 7 years.  Here are some articles on it:

http://www.marketwatch.com/story/us-home-price-growth-fastest-in-nearly-7-years-2013-05-28

http://www.cnbc.com/id/100769361

Keep in mind, even though mortgage rates are rising they are still near record low levels and any rise from here should not impact a decision of home affordability.


If you are buying a home in any of the 50 United States, I can assist.  When you want a seasoned person to help you on the largest financial transaction in your life, call me.  Let me tell you why!

Brett
www.BrettGrendahl.com

Mortgage Bonds at Key Technical Level

Mortgage bonds are falling in price again today, continuing the downslide of this week.  See it here:

The 101.50 level is a key level of technical support.  This price area must hold or it may get even uglier real soon.

Good news is that the bond market is only open until 2 PM EDT today and is closed on Monday.

Should be a good thing to have some days of rest and contemplation.  Hopefully, that will bring better mojo on Tuesday.

Also, another element to note is that all the refinance applications taken during late April and the first few days of May will be closing and the prior loans paid off in late June and early July.  Why is this important?  Well, the Federal Reserve owns a lot of these loans right now and will take the cash from the prepayments and redeploy into new purchases.  That added money supply should provide more support for higher bond prices in the near future.

As always, this market is a complicated one and manipulated one so super hard to predict!


Did you know that I can handle a mortgage financing need in all 50 states?  Yep!  If you want the help of a seasoned pro, just reach out and engage me.  -- Brett

www.BrettGrendahl.com

Mortgage Bonds Getting Hammered Today

Wow!  Look at this chart on mortgage bond prices today.  See that big red line near the far right?  That shows mortgage bond prices down 91 basis points today.

This is some ugly price action and expect mortgage lenders to be repricing rates to the worse today.

Today's price action is moving to new lows of the year, dipping under the lows we saw in March.

This action is coming off of Bernanke's testimony.  Let's hope we see some stabilization soon.


www.BrettGrendahl.com

Unemployment Rate for College Graduates

Quick jot down of something I just read.

The unemployment rate for those with a college degree is under 4%.  I have to validate this data.

If true, that speaks to the tighter labor market for skilled people.

BG

Mortgage Rates Headed Back Down

Hey there!

It's a great Thursday, lots of sunshine.  I like it!

Looks like mortgage bonds like today too as they are up big after being hammered the past week or so.

Take a look at this chart below.  Remember, green is good for lower mortgage rates.

The technical pattern formed by the past three trading days is a variant of a Morning Star Candlestick pattern.  You don't need to know what that is just what it means.  What does it mean?

Well, after a downtrend, the appearance of this pattern means that a price bottom looks to have been found and we should see higher prices in the days ahead.

Higher prices for mortgage bonds means lower rates.

This might coincide with a pullback in the equity markets.  It has been a very long time since the stock market has had a 5% pullback.

For now, it looks like better pricing on mortgage rates in the coming days.

Brett

www.brettgrendahl.com

Interesting Article on Key Bond Technical Level

After you get past the ominous title of a "death cross" this is an interesting article on the key technical action in the bond market at present.

http://www.cnbc.com/id/100739611

Brett

Mortgage Bonds Holding Their Ground Today

Look at the green candlestick line on the far right of the chart below.  Why?  Well, that shows the positive action of today's trading in mortgage backed securities.  When those prices go up, mortgage rates go down and vice versa.

Now, looking ahead, if we see continued price strength and a resumption of the uptrend seen in this chart we should see rates get back to the levels seen last week.

That big red candlestick line on the right hand side of this chart was last Friday.  Why the price decline on that day?  Well, that was the monthly Jobs Report number and it came in better than expected.

Now, one report does not make a trend so let's wait and see where mortgage bonds go from here.

www.brettgrendahl.com

Consumer Debt Service Level Lowest in 30 Years

Found an interesting article during my morning reading today.  This is a positive sign for all of us.

Consumer Low Debt Service Levels

Record Low 15 Year Fixed Mortgage Rate

Wow!

The 15 year fixed mortgage rate has hit a record new low.  Funny thing is, from the read of the technical picture further downward move on rates looks likely.

Here is an article on it
http://www.marketwatch.com/story/15-year-mortgage-rate-hits-record-low-of-256-2013-05-02-1091013?link=MW_popular

Reminder, I can help with mortgage needs in all 50 states.  If you want my advice and assistance, please email me to start talking about it.

Brett

www.brettgrendahl.com

Loan Originator Satisfaction Poll

To my fellow mortgage loan originators, this is an interesting survey to review.

http://www.teamhammerhouse.com/2013/04/22/3rd-annual-originator-opinion-survey/

BG

Big Money in Real Estate

Here is an interesting article How Big Money Took Over Real Estate

The Jumbo Mortgage Market Healing

Good morning all! Happy Monday. So, I am sipping my morning coffee, enjoying the nice weather of the day reading news on secondary market bundling and sale of non-conforming (jumbo) mortgages. Seeing some sales is good news as the entire secondary market for these mortgages literally vanished in late 2008.  Zippo.  Gone! As the credit quality of these securities is now better from the tighter underwriting and rigid auditing on the new loan originations we are seeing market forces, investors seeking yield, come back. What's happened of late? Well, JP Morgan recently priced a deal of $570 million.  Everbank, a lender in Florida, had their first issuance of $308 million.  There deal was comprised of 30 and 15 year fixed rate mortgages.  Redwood Trust, a REIT in California, sold their 4th deal of the year.  Wells Fargo and Credit Suisse are working on new offerings as well. These are good signs as these secondary market operations come back.  We all benefit from an active marketplace that will act as a conduit to bring capital to non-conforming mortgages and keep those rates low. Now, let's keep this in perspective.  In 2012, the mortgage market was a $1.8 trillion marketplace but only 10% of it was non-agency (Freddie Mac, Fannie Mae, Ginnie Mae, FHA, VA) paper. Have a great week! Brett www.brettgrendahl.com

Lower Mortgage Rates Ahead

Yeehaw!

That's what I thought to myself when I saw the chart below showing mortgage bonds breaking up (higher price) from this chart pattern.

I'd been watching for this and happy to relay the technical breakout.

This should result in lower mortgage rates in our near future.

Remember, I am able to lend in all 50 states so if you or someone you know has need for mortgage financing, please give me a chance to show you how you have a choice to work with me or with everyone else and why there is a difference.

Happy Friday!  Have a fantastic weekend!  -- Brett

www.brettgrendahl.com

Mortgage Bonds Look Ripe for a Breakout

Just got back from a fun and sun filled trip with my two young kids (4 and 5) visiting friends in Palo Alto, CA the past few days.

Finally getting a chance to scan the recent trading action of mortgage-backed securities and with one quick glance at the chart below, the price action sure looks ripe for a run higher.

Check this out.

Now, this chart might not make sense to you but to me this is an ideal setup for higher prices (lower mortgage rates) ahead.

This will likely unfold in tandem with continued pullback in the equity markets.  I sure hope so as I have an existing bet on some Put options on the Dow Jones Industrial Average.

Let's see what this next week brings.

I'll be back with analysis within a few days.  Cheers!

BG

www.brettgrendahl.com

3 Month Outlook on Mortgage Rates

Good morning!

So, a pair of ducks was walking down the middle of my street this morning, saying hi.  A nice sign of spring and the change of season!

Saw Lake Tahoe had 10 inches of snow last night, wish I was driving up for a ski trip from my old place.

But, back to spring!

Take a look at this 6 month chart on the FNMA 3o Year 3% coupon trading.  Take a look and then I'll continue on with what we can derive from it.

FNMA 30 Year 3%

Do you see that green trend line I drew?

That line shows the area in price where resistance to further upward movement exists.  However, in early April the price broke through.  Interesting to note as it appears this is the clue to the trend change in motion.

After breaking through this resistance area, the price came back down and has since went up.  This shows a base of price support now exerting itself.

What does this mean for our future?

Expect mortgage bonds to be in a 2-3 month upward move.  This should bring us slightly lower mortgage rates in the months ahead.

Heck, with the Dow Jones hitting a record high why not set a new record low for mortgage rates?

Seems to make sense with the nonsense of today's financial markets!

Brett

www.brettgrendahl.com
@brettgrendahl

Fun Post: Can You Read This?

Arocdnicg to rsceearch at Cmabrigde Uinervtisy, it deosn't mttaer in waht oredr the ltteers in a wrod are, the olny iprmoatnt tihng is taht the frist and lsat ltteer are in the rghit pcale. The rset can be a toatl mses and you can sitll raed it wouthit pobelrm. Tihs is buseace the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe.

Inst Taht Amzanig!  - Brett

Mortgage Rates Pushing Lower

Good morning,

Mortgage bonds are rocking in trading this morning and we have the lowest mortgage rates available since last December.

There is a strong chance for more improvement.  Why?

Well, the technical picture for higher mortgage bond prices (lower rates) is shaping up.  Then, if we see escalating military tension in the Korean Peninsula OR an overdue pullback in the equity markets, that should drive more momentum to the bond market.

Stay tuned.

BG

www.brettgrendahl.com

P.S.  I can assist with home financing needs in any of the 50 United States.

Twin Cities a Home Sellers Market in 2013?

Here is an interesting article, relevant to you if you are considering buying or selling a home in the Twin Cities this year.

http://www.prweb.com/releases/Minneapolis-housing-2013/home-buyers-market/prweb10396169.htm

From my own personal experience of operating a mortgage company and owning several properties, the Twin Cities marketplace was one of the very first in the country to turn south.  I can recall speaking to a buddy who ran a mortgage company in Atlanta in 2007 telling him how the market was eerily quiet.  He was shocked and said his production was only down 6% year-over-year at that time (early Spring).  I told him the Case-Shiller projections for 20% price declines in some markets.  This was before most people has heard of the Case-Shiller data.  He could not believe it! 

Well, believe we all have had to accept.

So, it is not surprising to me that now this marketplace is showing great strength rising out of the doldrums.

BG

Market Technicals and Fundamental Catalysts

Sitting here this morning, sipping my coffee, scouring the financial news and watching mortgage bonds trade.  Rainy outside, blah.  I guess the rain of this week should setup some green grass outside soon.

So, here it is Tuesday and a slow news day for the markets today.  In these cases the technicals drive the trading activity for equities and bonds.

Mortgage bonds have traded higher the past few days, sending mortgage rates back to several month lows.  More importantly, mortgage bonds have moved back above their 200 day moving average which has been acting as price resistance since December.

Stocks continue their upside ride, moving up within a narrow channel of price movement, for the Dow Jones Industrial Average and the Nasdaq Composite.

What's ahead?  Some possible big news events that may turn into catalysts of big moves.

What is the news?

Well, on Wednesday we will get the Fed's minutes of their most recent policy meeting.  The language of those minutes will be read closely for clues to the continuation of Quantitative Easing and their continued purchasing of mortgage bonds on the open market.

Also, have you seen the political banter between North Korea and South Korea (an by default, the United States)?  Who knows what will happen but any major escalation of the conflict from words to armed conflict would definitely take stocks down and move bonds up.  

The technical landscape is ripe for bonds to go higher and a 10% or so pullback in the equity markets.  All these markets need are the right fundamental event, a news event, and the spark for such a move exists.

That is the takeaway on the markets for now.

BG
How to Contact Me

Sharing some ideas on the financial markets

Hey everyone!

I am very excited for spring.  Felt good to see outdoor activities this weekend, didn't it?

Now that the family has settled into a new life routine after our big move I find myself back into my normal routine of scouring stock charts, financial news, mortgage bond charts, and trying to get a glimpse into some future possibilities.

Found some interesting articles and have some ideas.  Here are some of the more important ones.

The current labor participation rate in our economy is at 1979 levels.  The number on this is 90 million people in our country.  Let me repeat.  That was the 70's.  At face value, not an exciting statistic.
Read the article here

The bond market rallied strong on last Friday's Jobs Report.  While an immediate pullback is likely, the die is cast for more momentum to the upside and improving mortgage rates in our near future.  Will this be the final rally of the now12 year bull cycle?  Feels like it.  But, keep in mind, this is a manipulated market and we are at either the government discretion or a market move once the control is back in the hands of the market.

More costs to consumers for home loans?  The Consumer Finance Protection Bureau is considering a Compliance Fee to be allowed to be a new line item charge you will see on your next loan transaction.  What is this?  Given all the additional work needed on a loan these days to maintain compliance with the broadly sweeping regulations I'd rate this likelihood high.

As always, I'm happy to weigh in with thoughts regarding your plans and mortgage financing.    Click below to get my direct contact information.

Brett Grendahl

These sure are weird times in the financial markets.  Don't you think?

We get a dismal Jobs Report today of 88,000 gains in March.  This is far below the 150,000 needed on a monthly basis to keep up with the population growth.  It is super far below what is needed to replace the displaced in the Great Recession.

So, what happens to the markets?

Well, the futures markets priced 1% or so declines in the major indexes.  The markets open but gain strength during the day and the close is nothing more than an average day in the markets.

Bonds?

Well, they rocked it today!  Big spike up on big volume.

Going back to the first point, these are weird times.  Normally, during such a big move in the bond markets you'd expect to see the opposite in the equities.  Not really so today, was it?

What news will take the markets up these days?  What will take them down?  Hard to predict.

Why?

We posit that we are in such a delicate thread of government manipulation of the financial markets and currency that it is extremely difficult to "read the tea leaves" the market gives us.  And, so we get the weird inter-market activity that is par for the course these days.

Look for an email blast before Monday about the near future forecast for mortgage rates.

Not getting my emails?  If you want them, sign up at www.brettgrendahl.com

BG

Jobs Report news taking mortgage bonds higher, mortgage rates lower

Good morning,

Pulling my head up from watching the mortgage bond trading activity to report solid gains for mortgage bonds today.

The monthly Jobs Report news is out with only 88,000 jobs created in March. This number is far below what we need for a healthy economy.  On the news, the markets are moving.

For now, it looks like lower mortgage rates are in our near future.

BG

Mortgage Rates Pricing Better Today

Quick post after I reviewed today's mortgage rate pricing.  I'm seeing better pricing on both conforming and non-conforming rates as we begin the month and quarter.

From the looks of the charts, I think we should see further improvement.

More detailed analysis and commentary to come in a future post.

Volatility Creeping In...

Those that have known me a longer time know my fascination with the financial markets.  Some might even call it an obsession!

Every day I scour stock charts and the charts of mortgage-backed securities trading on Wall Street.

For years, I subscribed to a service to watch the daily moves in the mortgage-backed securities.  Then, the marketplace became so manipulated and rates became so much more stable that I found it not a great use of my time.

Well, things are changing.

What is going on?

The 12 year and counting downtrend in mortgage rates is near its end.  Financial markets never go in one direction forever.

In fact, the "funkiness" of the mortgage-backed securities market on Wednesday "feels" like a beginning to me.  A beginning to more volatility and the eventual move higher in mortgage rates.

Now, I'm not saying it will be immediate nor swift.  It might be but this is still a market firmly manipulated by the federal government and the Federal Reserve.

The key point is to recognize the shift underway as that has impact on your future finances.

As always, I'm happy to discuss your specific needs and plans.  You can find the best means to contact me here at www.brettgrendahl.com

Brett

NMLS 455329

Link to Receive Email Updates

Hi there!

If you want to receive my periodic email links, please sign up here
http://eepurl.com/cOp_Q

I HATE SPAM and believe in Karma.

So, you will only get something from me that I think will be informative.  You can always unsubscribe at any time.

BG

Expect Rising Prices for Mortgage-Backed Securities

This weekend's news on the bailout of Cyprus has broken a taboo that will rattle the markets come Monday morning.

What taboo?

Well, as part of the bailout the government is assigning a levy (a tax) on bank deposits.  Oh great!  So, imagine you put money into a bank to keep it safe and the government puts a 6 to 9% tax on it being there.  Yeah, not so exciting as your safety has become too expensive.

The market shift on Monday should send money into U.S. bond markets, including the mortgage-backed securities.

This should help mortgage rates begin a move lower.  Let's see what the morning brings.

Articles on this topic:
http://blogs.marketwatch.com/thetell/2013/03/17/cyprus-deposit-levy-shakes-up-markets/

http://www.cnbc.com/id/100561394

BG

www.brettgrendahl.com

Where Homebuyers Find their New Home

here is a good article on how people find their new home
http://www.businessweek.com/articles/2013-03-07/why-redfin-zillow-and-trulia-havent-killed-off-real-estate-brokers

Feds to Keep Mortgage Rates Low

Good article on this topic here:

http://ml-implode.com/viewnews/2013-03-06_FedsToContinueToKeepMortgageRatesLow.html

BG

The Changing U.S. Homebuyer

Here is a great article that provides detail on something I find true in my mortgage practice, especially during my recent years in Silicon Valley.

http://www.mortgagenewsdaily.com/03052013_homeownership.asp

The melting pot that is the United States of America is seen on the front lines of the housing market.

BG
www.brettgrendahl.com

@brettgrendahl on Twitter

New Stock Market Highs

Five years later and we see the Dow Jones Industrial Average make its way to new record highs.  This is occurring with mortgage rates for both conforming and jumbo loan programs remaining near record lows.

Weird relationships in the financial markets these days.

What to expect for mortgage rates?  

Well, it continues to be hard to predict out very far but I do not anticipate much for movement in rates until the 2nd half of 2013.

You should expect to hear the Fed "talking" the market before they take action to adjust their Overnight Rate.  We see a little of that happening but nothing substantial yet.

Just a quick observation for the day with the Dow Jones taking the headlines.

BG