Mortgage Market Survey 2/11/16

Mortgage rates have dropped for the sixth week in a row and the average rate for a benchmark 30-year loan has dropped to 3.65 percent, matching its one-year low and within 6 basis points of its lowest rate since 2013 as concern about a global slowdown and market weakness drive the 10-year Treasury yield down.

The average 30-year mortgage rate is now 32 basis points below the 3.97 percent rate in place prior to the Fed’s first rate hike in December and the probability of a second rate hike by The Fed next month has dropped to 0.1 percent according to the futures market, a move which shouldn’t catch any plugged-in readers by surprise.

17 thoughts on “Benchmark Mortgage Drops to One-Year Low, Odds of a Hike: Nil”
    1. Which calls to mind the Coyote, running in place off the cliff, suddenly aware of his predicament, trying to save himself by unloading that anvil he’s been carrying around…

      1. Well, we don’t have anything like the data to make that sort of joke. It’d for sure lead to higher housing prices though.

          1. Lower rates equals lower payments for the same loan amount and vice versa. And for cash buyers lower rates lowers the opportunity cost for their cash and vice versa. So it would stand to reason that lower rates would push up home prices all things being equal. But I haven’t seen any studies that show a good correlation between rates and prices.
            You could speculate on a few reasons though. Rates themselves may be reflecting the economic outlook. So rates may be low or ultra low exactly because we are in recession or the markets may feel that the future outlook for economic growth is weak. Real (inflation adjusted) rates may be more relevant than nominal rates (though if this were the only factor it would easily be corrected for in studies) and more generally the spread between general interest rates and mortgage rates may change. Time’s may change, anecdotally people have started to focus more on the mortgage payment amount vs the home price. Momentum and buyers future home price expectations can play a big role.
            In short, all other things are far from equal.

  1. My bank contacted unsolicited and told me they wanted to lower my rate. Not a refi but just please take it please. I guess they want to keep my mortgage and though I was likely to refi with someone else

    Jumbo rates are now 3.387% so I am about to contact them

    1. same here. I have a 3.9 , and my broker said he can get me down to 3.5 without a fee. extra $350/mo which covers my HOA. very cool

        1. Someone (Banks, Fannie Freddie, investors,..) is holding all these loans at these super low interest rates. Good for them in the short term if rates keep falling, but could be very troubling if rates rise longer term

          1. I’m sure a lot of them end up at the Fed. While the Fed is no longer increasing the size of its MBS portfolio (which it built up during the prior rounds of QE) it is reinvesting the principal that matures (either from time or refi’s) back into MBS.

  2. We don’t appreciate how well we have things in California in particular and in the US. The ROW is much further down the recessionary slide scale and every country wants to devalue vs. the dollar. All of our exports become more expensive and imports cheaper… The Fed raising rates only exacerbates the dollar strengthening.

    The upshot as noted above, is that the enfranchised owners keep winning. (re-fi, re-fi, re-fi) If the SF real estate market slows down, it seems rather unlikely to be due to rising borrowing costs. Good for owners/flippers/developers.

  3. “All of our exports become more expensive and imports cheaper”

    In other words, tough luck for people who make actual things. Unfortunately, the market for fake things (eg disruptive donuts on demand ™) is going down the drain, too. Who knew that an economy needed more parts than just bottomless VC capital, koder kidz packed in shoeboxes, and bartenders to serve them?

    1. Most people know that. Janet Yellen (praise Jesus) can’t set a short term interest rate for San Francisco that is different than for the rest of the country. If she could, we would all be better off in aggregate, and there would be more affordable housing and fewer feverish facebookers from the far east falling on our fair forum.

      Maverick’s is tomorrow. Ride the wave or stay on the shore, but don’t whinge about those in the fray. Zerohedge misses you.

      1. Price is a reflection of supply and demand. If SF rent is $200 instead of $3300, we could have millions of people coming to SF and we will have a 100 times of problem for “available housing” even if we have solved the “affordable housing” problem by limiting rent to $200 per month.

        “Available housing” is what we need. If the $200 per month housing are all occupied, all of the newly arrived San Franciscans would have to become homeless even if they are as rich as Zuckerberg.

  4. “disruptive donuts on demand”…..I can’t stop laughing, Two Beers sums up the current market for fake things very nicely.

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