The stock market suffered five losing sessions in a row this week, although the total decline was not significant, reflecting global economic uncertainty. China’s economy appears to be in real trouble because of US trade restrictions and the European Central Bank
Rates were generally stable last week as inflation remains in check at an annual core rate of 2.1%, right at the Fed inflation target. Combined with uncertainty in major overseas markets, stable inflation allows the Fed to keep monetary policy steady when the Fed governors meet this week.
The stock market, buoyed by stable Fed policy, continues to edge upward toward record levels once again. Higher stock values are a key component of consumer confidence and contribute to a robust real estate market.
Markets are watching the 10 year bond yield very closely, as a move below 2.6% would likely usher in a period of lower rates. Wouldn’t it be nice if all mortgage rates were under 4% again?!
For several years we have reported that jumbo fixed rates have been lower than conforming/Fannie Mae rates. This probably happened because banks cost of funds were so low that they could charge lower mortgage rates and still maintain a healthy profit margin. With the increase in short term interest rates we have seen the spread narrow so that regular conforming rates are now comparable to jumbo rates and conforming high balance rates are the same or just a bit higher. What does this mean for home buyers? Conforming loans are easier to qualify for on several levels, including credit scores, credit utilization and cash reserve levels, and therefore can be closed more quickly and with fewer hassles.
It's impossible to predict with certainty that this situation will continue, but for the moment all of us, professionals and home buyers, should enjoy this period of reduced stress!
©2019 Finance of America Mortgage LLC | Equal Housing Lender | NMLS 1071 | Mortgage Banker License #0910184 | Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act. All information contained herein is for informational purposes only and, while every effort has been made to ensure accuracy, no guarantee is expressed or implied. Any programs shown do not demonstrate all options or pricing structures. Rates are subject to change without notice and are subject to underwriting approval. Some products may not be available in all states and restrictions apply. Check with your Mortgage Advisor for specific down-payment requirements. Rates effective as of 3/18/2019