Whopper of a week for rates.
Holy Cow, rates have gone into the toilet this week, further the increase since the 4th of January.
As you can see by the chart, mortgage back securities in January worsened by 129 Basis Points, and in the 1st 2 days of February have worsened by an additional 76 basis points IN TWO DAYS!
So, what has this done to rates, well at the beginning of January, Starting January 3rd, most of our conventional rates were in the 3.875% to 4.00%. Today, we are sitting at the 4.50% to 4.75%. That is a HUGE increase in rates in a VERY short time.
Government rates have gone from 3.75% to 4.00 to 4.125% in that same time period as well.
So, what has happened? It is the economy!
Pretty much each and every economic report that has come out in the last 30 days has all been good to GREAT. Just this week we have had:
- Durable good up 2.9% vs est. of 0.8%
- Personal Income up 0.4% vs est. of 0.3%
- Consumer Confidence 125.4 vs est. of 123.6 (PAR is 50)
- ADP private payroll 234,000 new jobs vs est. of 185,000
- Weekly Jobless Claims 230,000 vs est. of 238,000
- Government non-farm payroll 200,000 new jobs vs est. of 180,000
- Average Hourly rate 2.9% vs est. of 2.6%
These numbers, plus the run up in the stock market has caused bond traders to sell bonds and invest in the Stock Market and Commodities.
Oil in January is up from $60.37 to $65.44
Gold in January $1316.10 to $1343.30
With all of these increased, why would a bond hold put their money in a 10-year bond, only yielding 2.79%, so they are selling.
Further, the Federal Reserve believe inflation will be heading to 3.0% in the VERY near future, and the Atlanta Federal Reserve say the believe GDP will be 5.0% up from 2.8%.
These are crazy numbers, and dramatically affecting our Mortgage Rates.
The other affect is kind of sobering, just today, I have had to tell 2 clients that they no longer qualify for mortgage because the interest rate takes them too high to qualify for a home price they requested. They will either need to make more money or find a less expensive home.
This is no market for the weak in constitution, lock them rates and ride it out. There is really nothing in the cards to cause rates to drop, with the exception of 3 items:
-Item one, the unknown, which is unknown.
-Item two, North Korea and Nukes.
-Item three, impeachment of Trump
In other news:
Court of Appeals came out this week and ruled that the CFPB and its Director is Constitutional, the CFPB can have 1 director, nominated by the President and confirmed by Congress. Now this is more than likely going to go to the Supreme Court. But for now, the CFPB can be ruled by a Dictator.
Guess what! No new guideline changes in the last 2 weeks!!!!
Realtor Marketing Idea
It is that time of year, when all Realtors have to come to terms with the IRS, and pay “The Man”. But how would you like to pay “The Man” less next year. Obviously you need to consult your CPA, but here is an idea:
Spend $1000 or $2000 on SWAG, pens, Frisbees, koozies, calculators with your logo, name and phone number and start handing them out.
Make 2018 the year when you get your name out, hand these items to past clients, the checker at Wal-Mart, the Car Wash Attendant, anyone you basically come into contact with.