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Mortgage News Letter


Mortgage News Daily

Making Sense of This Week's Fed Drama
Fri, 18 Jun 2021 19:56:19 GMT

The Fed released a new scheduled policy announcement this week as well as updated economic projections. Relative chaos ensued. Let's talk about why and what it means going forward. Background on Fed Funds Rate and Mortgage Rates There's a fairly prevalent misconception that the Fed sets/changes mortgage rates directly. That's really only true for HELOCs (home equity lines of credit, which are often based on a rate that's based on the Fed Funds Rate). The Fed does not set/change mortgage rates, even though things that happen on "Fed Day" can have a big impact. The rate the Fed changes is the Fed Funds Rate , which is a target that big banks use in determining the rates they charge each other for overnight loans. This rate is important. Even though banks have lots of money, depending on the day ...read more

No, Mortgage Rates Aren't Lower Today!
Thu, 17 Jun 2021 20:41:56 GMT

It's Thursday on a volatile week for the bond market and thus time, once again, to play our favorite game: "no, rates didn't really do that." Sometimes, a majority of mortgage rate headlines say rates went higher when they're really lower. In today's case, rates are much higher than they were yesterday morning despite multiple headlines suggesting the opposite. Who's right? Who's wrong? And Why? First off, timing matters . Yesterday morning's rates were much lower than yesterday afternoon's rates. This morning's rates were higher still. Finally, this afternoon has brought some relief, but not enough to get the average lender back to yesterday morning's levels. In all cases, this week's rates are definitely not lower than last week's. The headlines that disagree with that assertion are invariably ...read more

Rates Jump After Fed Announcement
Wed, 16 Jun 2021 21:00:30 GMT

Mortgage rates were already drifting higher in the first half of the week, but that was nothing compared to today. This afternoon's Fed Announcement was certainly on the radar as a potential source of volatility. Needless to say, it delivered. But how much did it deliver, exactly, and why? There's a fairly prevalent misconception that the Fed sets/changes mortgage rates directly. That's really only true when it comes to something like HELOCs (home equity lines of credit) and even then, the Fed is only changing its policy rate. HELOC lenders then set rates that use the Fed's rate as a baseline. On a somewhat similar note, there's another misconception about changes in the Fed Funds Rate correlating with mortgage rate movement. While that can be true over long time horizons, we don't need to ...read more

Rates Moving Higher Ahead of Fed
Tue, 15 Jun 2021 21:29:26 GMT

Mortgage rates had a great week last week, ultimately getting very close to the lowest levels since March. One of the main sources of motivation was the market phenomenon known as a "short squeeze." In not so many words, this means that too many traders were betting on rates moving higher for them to all be right, so the market self-corrected with a quick move back toward lower rates. The problem with short squeezes is that they don't serve as a good foundation for sustained low rate momentum--a tendency that's proving to be true so far this week . In other words, last week's rate-friendly trend has run its course and markets are now gearing up for tomorrow's policy announcement from the Fed. In today's case, that took the form of a moderate move back toward higher rates. While the Fed is not ...read more

One of The Biggest Paradoxes You'll Ever See For Mortgage Rates
Fri, 11 Jun 2021 22:25:27 GMT

No, this isn't one of those click-bait headlines that promise to share "one weird trick" or proclaim "you'll never believe what happened next." Well, actually, some people might have a hard time believing this one. In the interest of respecting the time of those who are already up to speed on this week's economic data and interest rate movements, we're about to talk about the paradoxical drop in rates despite decades-high inflation. Everyone else, read on! ...read more