News from our Lender and Investor Friends
News from our Lender and Investor Friends
We're sharing news from our network of awesome people who know money. Our thanks to Molly Kincaid, Dexter Finley and Jason McConahy for their contributions to our blog. Scroll for their latest news!
The election results were a little painful for rates, but have since reversed direction (image below). The BLS Jobs report the beginning of October was a turning point, and it will take continued weak economic data to regain the ground we lost. Let’s hope the Fed has some bond friendly comments during their press conference this afternoon. The markets are expecting a 25bps rate cut, and the Fed will comment on their thoughts on inflation, the labor market, and the economy.
Please understand the Fed rate does not correlate directly with mortgage rates. In fact, the Fed’s 50bps cut September 16th is a great example as mortgage rates actually increased, and have held that pattern since.
Have a great day!
Overseas tensions have relaxed, followed by a drop in oil prices. This seems to have caused a slight improvement in MBS, but in the bigger picture we are still holding a sideways pattern since the Monday after the Jobs Report (Oct 7th). Retail Sales, Jobless claims, and the Philly Fed Business Outlook are all released on Thursday. These are the only interesting data for the week! Have a great day!
Molly's Mortgage Minute: October 11, 2024
This morning retail inflation (CPI) came in slightly hotter than expected (.3 vs .2), but the markets have improved due to higher than expected jobless claims (initial: 258k vs 230k, 225k previous). You can see the large spike in red below, pushing claims outside the desired range.
Also helpful were the minutes from the Fed meeting 3 weeks ago. This took place before the jobs report last week, but illustrates their concern about the accuracy of BLS data. They are seeking additional reviews from outside sources, and the results could be very interesting. They also are aware of the shelter lag, which means inflation is cooler than the numbers reflect now.
October has been a challenging month, but our progress seems to still be there even if its not reflected in the last 2 weeks of data. As of 1:50pm MBS is up 5bps (slight improvement on the day).
Molly Kincaid | Sr Loan Originator | First Western Trust
200 S College Ave Suite 10 | Fort Collins, CO | www.MollyTheLoanRanger.com
Cell 970-999-2717 | Main 970-407-3100 | Molly.Kincaid@MyFW.com
NMLS 1414626
From Justin Crowley, September 19th:
Good morning, everyone!
I had someone ask me to write up a quick summary of the recent Fed Rate decision, and figured I’d share it with everyone. For your reading pleasure (feel free to forward and distribute), here are my $.02 on the event:
Today the fed announced a 50bps cut to the Fed Funds Rate, after nearly three years of hikes and holds, leaving many people to ask, “how does this affect mortgage rates?” In short, it doesn’t.
While the term “interest rates” is sometimes a ubiquitous term in headlines and sound bites, it’s important to understand that there are many types of “rates,” which, for the most part, rarely have anything to do with each other. The fed funds rate is the rate at which banks can borrow money from the Federal Reserve, ties to things like the Prime Rate, Credit Card Rates, and other short-term borrowing rates. Mortgage rates, on the other hand, are derived from the Mortgage-Backed Securities market, which trades live (just like the stock market), every day, and is driven more by the long-term outlook of rates in the united states.
Just like Treasury Rates, Mortgage Rates can be affected by a myriad of things, including geopolitical events, economic reports, corporate and government bond issuance, and yes – Federal Reserve monetary policy. But because monetary policy is usually telegraphed months in advance, these rate cuts and hikes rarely have a direct impact on those bond rates, as these actions are usually baked into the cake. This recent hike, for example, was referenced in the Fed’s last meeting, where Chairman Jerome Powell stated that it was time to start easing monetary policy at a measured pace. Mortgage rates and treasury yields responded, almost instantly, by easing off anywhere from 0.15% to 0.25% (reflecting the proposed 0.25% to 0.5% initial cut to start the easing process).
In the weeks that followed, several economic indicators and reports started painting a very low-inflation picture, with the job market cooling, consumer confidence waning, and other economic drivers starting to lose steam. The bond markets reacted enthusiastically, forcing mortgage rates down almost another 1.0% in the last three weeks. It seemed as if the bond markets were convinced that this new information would certainly drive the easing process forward faster, and more dramatically, than previously teased.
With Wednesday’s 0.50% rate cut came the standard Policy Statement, which was largely unchanged from the previous month. Moreso, Chairman Powell’s answers to the Q&A portion of the broadcast were cautions and tentative, suggesting that the Fed may stick to its guns of a “slow and steady wins the race” kind of approach to the upcoming cuts. In reaction, bond yields actually went up, and mortgage pricing got marginally worse.
So as future rate cuts are bound to happen, and various news outlets continue to conflate the terms, it’s important to keep in mind that mortgage rates are not directly controlled by, or linked to anything the Federal Reserve *does.* They can, however, have a reaction to what the Federal Reserve *says.* For now, the narrative is that they expect rates to ease, slowly, over the coming couple of years, and that projection has already shaped mortgage rates in the present. And unless or until that narrative changes, it’s safe to assume that rates might just hold in this range for a while. At least, for that matter, until something else (probably not Federal Reserve monetary policy) pushes them in another direction.
Current 30 year rates range from 5.0% (government, with a slight buydown) to 6.00% (Conventional, with no buydown) for most buyers/borrowers.
Sincerely,
Justin Crowley | Sr. Mortgage Loan Originator / Regional Residential Mortgage Director | First Western Trust
Here's the Link to his Trailhead System:: https://www.elevationscu.com/.../mortgage-team/dexter-finley #howtogetamortgage
Molly's Mortgage Minute / Rates as of August 19th, 2024
Hello hello.
The Fed is at their annual Jackson Hole symposium this week, with meeting minutes released Wednesday. The market will be watching for any changes in their projections for rate cuts. A 25bps rate cut has been priced in for the Sep meeting, as well as 2 additional cuts for 2024. If there is any indication higher or lower, it will most likely cause volatility. We will also see revisions to Q1 BLS data (Wednesday) and as always Jobless Claims (Thursday).
There is one more round of inflation data (PCE, CPI, & PPI), and one more jobs week (Sep 2nd - 6th) between now and the Fed’s next rate decision. If the data continues to illustrate softening, we could see a 50bps cut. While the Fed rate is different than mortgage rates, the Fed’s monetary behaviors do influence them. If the markets have already priced in a 25bps cut, there should be little reaction to the actual cut itself (all things being equal).
We made so much progress in inflation the last 12 months (1.7% in PCE & 1.5% in CPI improvements), and the labor market has cooled more than expected, so chances are good the Fed has favorable comments for us over the next 30 days.
Have a great week!
Conventional 30 year | ||||
| LOAN 1 | LOAN 2 | LOAN 3 | LOAN 4 |
Purchase price | $550,000 | $550,000 | $550,000 | $550,000 |
Loan amount | $533,500 | $495,000 | $467,500 | $440,000 |
Down payment | 3% | 10% | 15% | 20% |
Interest rate* | 6.5% | 6.5% | 6.5% | 6.5% |
Principle & interest (PI) payment | $3,372 | $3,129 | $2,955 | $2,781 |
Taxes (estimate) | $382 | $382 | $382 | $382 |
Insurance (estimate) | $213 | $198 | $187 | $176 |
Private mortgage insurance (PMI) payment | $182 | $78 | $43 | -- |
Total payment** | $4,150 | $3,788 | $3,567 | $3,339 |
Cash to close*** | $27,170 | $64,900 | $91,850 | $118,800 |
FHA |
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| LOAN 1 | LOAN 2 | LOAN 3 |
| ||||
Purchase price | $500,000 | $500,000 | $500,000 |
| ||||
Loan amount | $482,500 | $475,000 | $450,000 |
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Down payment | 3.5% | 5% | 10% |
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Interest rate**** | 6.125% | 6.125% | 6.125% |
| ||||
Principle & interest (PI) payment | $2,983 | $2,937 | $2,782 |
| ||||
Taxes (estimate) | $348 | $348 | $348 |
| ||||
Insurance (estimate) | $193 | $190 | $180 |
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Private mortgage insurance (PMI) payment | $221 | $218 | $206 |
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Total payment** | $3,745 | $3,692 | $3,516 |
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Cash to close*** | $27,150 | $34,500 | $59,000 |
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*Based on a 780 credit score, 38% DTI, & single family home. |
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**This payment includes an estimate of taxes and insurance as these will vary depending on the property, insurance company, and coverage amount. |
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***Based on the down payment plus 2% of the loan amount to cover closing costs and prepaids. Once under contract we can determine a better estimate on fees based on title, taxes/insurance, and close date. | ||||||||
****Based on a 700 credit score, 38% DTI, & single family home. | ||||||||
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Molly Kincaid | Sr Loan Originator | First Western Trust
200 S College Ave Suite 10 | Fort Collins, CO | www.MollyTheLoanRanger.com
Cell 970-999-2717 | Main 970-407-3100 | Molly.Kincaid@MyFW.com
NMLS 1414626
-- I LEND IN ALL 50 STATES! --
August 20, 2024 Update from Dexter Finley
August 9, 2024 Update from Dexter Finley
August 1, 2024
Brinkman Latest Quarterly Report: https://brinkmanre.com/the-brinkman-report/
July 30, 2024
From: Molly Kincaid | Senior Loan Originator | First Western Trust
200 S College Ave Suite 10 | Fort Collins, CO | www.MollyTheLoanRanger.com
Cell 970-999-2717 | Main 970-407-3100 | Molly.Kincaid@MyFW.com
-- I LEND IN ALL 50 STATES! --
This could be a big week for interest rates.
There are a series of employment data throughout the week that could move markets 
(Tue, Wed, Thur, & Fri). Also, the Fed begins their 2-day meeting/press conference (PC Wednesday). The markets do not expect a rate cut, but have priced in almost complete certainty of a cut September 18th. Powell’s comments have been fairly steady recently, so if he deviates from that narrative, rates will move. With the first rate cut in sight, there is a good possibility that we will hear something new. 
molly.Kincaid@myfw.com Molly KincaidLatest from Dexter Finley | Elevations Credit Union
Loan Officer | NMLS # 2272441 | Licensed in CO, WY, KS
Phone: 970.689.9352
Jason.mcconahy@fairwaymc.com
Visit my HECM (“Reverse” Mortgage) webpage HERE!
Request your FREE Reverse Mortgage Book HERE!
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Many buyers are understandably hesitant to purchase a home given that interest rates are at historic highs. Those high rates have many people sitting on the sidelines, waiting for better conditions to come. These current conditions can actually work to your advantage, and now is a great time to consider buying for many people. Watch this video to understand why!
- Why Now Might be a GOOD Time to Buy! (click here)
- A Success Story at 7.75%! (click here)
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