The mortgage market experienced significant fluctuations during the first week of June, continuing May’s wild ride (during which mortgage rates hit their highest point since 2011). During the week ending June 7, average mortgage rates for both fixed and adjustable rate loans started to inch backwards, easing concerns of some buyers.
Here are the big stories in the mortgage market for the week ending June 7.
- The 30-year fixed, 15-year fixed and 5-year Treasury-indexed hybrid adjustable-rate mortgage rates were all down during the week of May 31.
- This drop occurred “as investors piled into safe-haven assets” in reaction to the May spike, noted reporter Andrea Riquier
- The year-to-date (YTD) average for the 30-year fixed was 4.39% on June 1.
- A mortgage payment on a $400,000 home now costs $116 more per month compared to a year ago. (Based on prevailing average rates, calculated with the Realtore.com mortgage calculator).
Published by: CNBC
on June 1, 2018
- Monthly job reports showed gains of 223,000.
- The nationwide unemployment rate is 3.8%, slightly below the 3.9% projection.
- Supported by the May jobs report, rate increases by the Federal Reserve (Fed) are expected in June.
- "The Fed meets in less than two weeks, and another rate hike along their gradual path of firming interest rates is a slam dunk," according to Chris Rupkey, Chief Financial Economist at MUFG Union Bank.
- Mortgage rates rose at the start of the week, following the trend that began on May 30.
- May 29 mortgage rates were at their lowest point in more than a month.
- Bonds sold off significantly during the afternoon of June 4, which may have led lenders to increase rate offerings.
- The broad trend of continued rate increases is expected to continue.
- Originators should encourage rate locks as opposed to floating.
- After climbing for four weeks (to their highest level in more than seven years), mortgage rates finally slipped during the week ending May 31.
- 30-year fixed mortgage rates averaged 4.56%, with an average 0.4 point ― down from the previous week’s average of 4.66% but up from 3.94% a year prior.
- 15-year fixed mortgage rates averaged 4.06%, with an average 0.4 point ― down from the previous week’s average of 4.15%, but up from 3.19% a year prior.
- Ellie Mae launched an artificial intelligence (AI) feature for loan officers at last month’s MBA National Secondary Conference.
- Incorporated within the Loan Officer Connect portion of the Ellie Mae Encompass lending platform, the AI helps Alexa answer consumer questions and is planned to learn preferred methods of communication.
- The 30-year fixed rate rose to 4.42% and the 15-year fixed rate rose to 3.87% on June 6.
- Both of these rates remained lower than the average from a month prior.
- Reporter and CFA Claes Bell suggested, “it could make sense to go ahead and lock if you see a rate you like. Just be sure to shop around.
Published by: CNBC
on June 6, 2018
- “It took a few weeks, but borrowers finally took notice of a drop in mortgage interest rates,” reported Diana Olick.
- Mortgage application volume rose 4.1% for the week ending June 1, but volume was still down 2% from the prior year due to a reduction in refinance loans.
- Rate decreases are projected to be temporary.
- Mortgage rates fell two weeks in a row, dropping to 4.54% for 30-year fixed mortgages.
- A 4% increase in purchase loan applications indicates buyers are taking advantage of the dip.
- Although a healthy job market is supporting demand, housing supply shortages may continue to drive listing prices up in the weeks to come, according to Freddie Mac Chief Economist, Sam Khater.
What Do Recent Mortgage Reports Mean?
- Mortgage rates are inconsistent day-to-day and hour-to-hour.
- In the first seven days of June, headlines touted both dramatic drops and continued increases.
- On June 4, news outlets published articles highlighting mortgage rate declines and projected rises.
- Two days later, new sources proclaimed rates hit their lowest level in six weeks, and applications were rising as borrowers moved quickly to avoid increases.
- Multiple news outlets pronounced originators should encourage clients to move forward with a rate lock.
- Economists from Freddie Mac, Realtor.com and CNBC agree housing supply shortages will continue to affect listing prices. This is creating a barrier for prospective buyers regardless of falling rates.
- Although the jobs report is indicating a healthy employment environment, jobs will not immediately solve the problem of housing inventory deficiencies.
The Fed meets on June 12 and 13 in Washington, D.C. During this meeting, an interest rate hike is expected. If this happens, it will be the second rate increase of 2018.
What Should You Do Next?
June is a month of action and movement for purchase business. Before the June 12 Fed meeting, focus on connecting with clients who have not yet locked their rates. Discuss the benefits rate locks versus holding out for decreases.
Also examine your marketing strategy for the remainder of the summer season. The market is moving quickly as supply dwindles.
Evaluate your digital strategy:
- Are you nurturing old leads with new urgency?
- How are prospective borrowers finding you online as they hunt for listings?
- Can you join a real estate colleague on an upcoming open house?
Contact the expert team at Best Rate Referrals
to gain insight on how to best tackle current market conditions and win.
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