Week of 2017 October 30th Mortgage Rate Summary

This Week's Mortgage Rate Summary

How Rates Move: Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market.  This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events.  When MBS pricing goes up, mortgage rates or pricing generally goes down.  When they fall, mortgage pricing goes up.  Tracking these securities real-time is critical.  For more information about the rate market, contact me directly.  I’m among few mortgage professionals who have access to live trading screens during market hours. Rates Currently Trending: Lower Mortgage rates are trending lower so far today.  Last week the MBS market worsened by -1bps.  This caused mortgage rates to move sideways.  Mortgage rates were actually very volatile for the week. This Week's Rate Forecast: Neutral Three Things: These are the three areas that have the greatest ability to impact mortgage rates this week. 1) Central Bank, 2) Geopolitical and 3) Domestic. 1) Central Bank: Believe it or not, we have a Fed meeting this week. The market keeps talking about a potential December meeting rate hike, but you never hear about the November 1 meeting. That is because unlike the December meeting, this one is not followed by a live press conference with Janet Yellen. Since they just announced their "taper" last time around, look for no change to that plan. The bond market will be looking for forward guidance on rate hikes. The BofE (Bank of England) will also be in the spotlight as they are widely expected to raise their rates. Fed Chair: We are supposed to learn who President Trump's nomination for Fed Chair on Thursday. 2) Geopolitical: Domestically, we are supposed to get the official Tax Reform bill and will learn what the proposed plan includes. This can have a significant impact on mortgage rates depending on how stimulative bond traders perceive it. Overseas, Spain/Catalonia, as well as North Korea, are still providing upward momentum on long bonds. 3) Domestic: While the markets are expecting a "pass" by the FOMC this week, we have plenty of economic data with the gravitas to shift expectations of their next action with ISM Manufacturing and Services, PCE and Consumer Confidence. But its Friday's Jobs report that will carry the most weight as we look for a major rebound from -33K jobs in the last report to +300K in this report. As usual, Average Hourly Wages will get a lot of attention. This Week's Potential Volatility: High There are a lot of events this week that can move mortgage rates and cause volatility. The Fed Chair announcement and the tax plan being the two big ones, but Friday's jobs report could undoubtedly move rates as well. Bottom Line: If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Difference in price between an all-cash 10-day close double-end sale vs. a conventional sale

Nowadays, the general public SEES sales data through sites like Redfin, Zillow, and Trulia.  However, the general public often does not know how to INTERPRET the data.

One example is the discrepancy in sales price of IDENTICAL units in the SAME complex.

In the past month, identical 2-bedroom 1-bathroom 858 square foot units sold in the SAME Middlefield Meadows complex for very DIFFERENT final sales prices.

96 Flynn Ave #A sold for $725,000
122 Flynn Ave #A sold for $650,000

Why such a HUGE difference?  I took a closer look.

After looking into it, I found out that 122 Flynn Ave #A had two reasons for such a low sales price:

--ALL-CASH deal closing in just TEN DAYS.  There's no comparison between an all-cash, 10-day close deal like that to buyers who have only  20% down payment.  The other Flynn (which has a CONVENTIONAL buyer with over 20% down payment) paid $725,000.

--That listing agent's company DOUBLE-ENDED that transaction, meaning the same real estate company had BOTH the seller AND the buyer.  Perhaps in an effort to earn double-commission, that real estate company settled for a lower price after only 3 days on the market.

 

In summary:

122 Flynn Avenue #A

sold for $650,000 <-- all-cash="" closing="" days="" in="" span="" ten="" this="" was="">

 

96 Flynn Avenue #A

sold for $725,000 <-- 20="" conventional="" down="" loan="" over="" span="" this="" was="" with="">

Difference in price between an all-cash 10-day close double-end sale vs. a conventional sale