Market on the Hump - 4/1/15
I know I know, I'm a day late. Story of my life. But it's still early(ish) so I wanted to recap the market movements at the mid-week point to help you (and your clients) understand what's going on.
For those that like things condensed (except soup....nobody likes that), here's the gist of what I'm I'll be rambling about for the rest of this blog post: RATES ARE BACK DOWN!! Right near historic lows, on mixed economic news, some technicals, and investors still not knowing what the heck they're doing with other people's money.
Like I discussed in the last Weekly Humpdate, it's a tremendous time for mortgage holders to either reduce their mortgage term or rid themselves of PMI. It's an ESPECIALLY good time for FHA mortgage holders that purchased homes over the past 2 years to switch to a conventional loans and either get conventional PMI or use LPMI to reduce their payment and rid themselves of that nasty, life-of-loan PMI that HUD thinks low-moderate income borrowers should be burdened with (BONUS: Shorter term loans mean lower cost PMI...so knocking 10 years off your loan might not cost you much per month). But you're a Realtor, why should this concern you? Opportunity to be your client's go-to expert, and someone looking out for them when it comes to saving them money after you've helped them buy - you can be a hero again by sharing the news!
For those with the opportunity to reduce their loan term, the only down side is that monthly payments can go up slightly. This, however, should be looked at long term. Like, yes, perhaps you'll have to grow accustomed to ordering a Grande instead of a Venti each morning, but on the bright side, when retirement rolls around, you'll never have to eat condensed soup or ramen from a baggie unless it's to your heart's content. Oh, and if you're buying a home. DO IT NOW. LOCK IN YOUR RATE AND BE THANKFUL, you've won the lottery of "Getting the best deal". Just kidding, the best deals are gone. Home values have gone up, at least a little bit, in most areas across the country, BUT, the next best time to buy if you didn't 2-3 years ago is today, before both homes prices AND rates go up.
Monday was a pretty solid day for rates, with some volatility, as per the usual at the end of a quarter, but ended with rates improving modestly despite positive February pending home sale data. Even in the face of a rough winter (I heard a rumor that it snowed in some parts of the country this year), pending home sales were up. Since this report is a crystal ball into the short term future of home buying, it's a good sign heading into Spring.
Tuesday, the market continued to work in our favor, again despite good economic news. Consumer confidence surged (Low gas prices....let's pop bottles!!!), and the stock market dropped (why? I'll get to that later).
Wednesday made it three good days in a row for mortgage rates and brought us back to that level jussssst a smidge above historic lows for rates (and the same level that saw a jump in rates to follow the last couple times we've been here). We had some support from poor economic reports, including a decline in manufacturing (we have a strong dollar...nobody wants to buy from us!) that helped push rates down. In unrelated news, Wednesday evening showed us that John Meussner is not good at quizzo. He also is easily perturbed when the clues/questions in quizzo are inaccurate.
Today, bonds are down so rates are up just slightly, but the markets are closed for the week soon due to the Easter holiday (yay! Close those markets before we lose the recent gains!).
So the dollar is strong, gas prices are crazy low (unless you live here in CA, THANKS OBAMA!), consumer confidence is up, jobless claims are down.....and this is a bad thing, according to the markets. Welcome to the global economy, ladies and gentlemen -where high gas prices keep the oil industry busy (and rife with high paying jobs), a cheap dollar means more exports (I wonder if everything sold in China has a little golden sticker on it that says "Made in USA"?), and consumers hating their lives makes big-money investors celebrate because it means rate hikes may be pushed into the more distant future. Normally, good economic news helps the stock markets (at the expense of mortgage bonds), but not in today's crazy world. Good economic news means banks are going to have to start paying interest on borrowed money when rates are hiked, and the days of rapid expansion using Monopoly money are near an end.
Markets are closing early today and will be closed tomorrow in observance of Good Friday. So enjoy your Easter weekend folks, and don't. I repeat. DO NOT , buy your kids a rabbit for Easter, unless it's chocolate, in which case, buy 2. One for the kids, 1 for me.