Home Loan Rates

Mortgage rates are at all-time low levels.  We have recommended a floating position the past couple weeks and that position has proved beneficial.

Volatility

The financial markets are experiencing extreme volatility.  Yesterday the Dow Jones Industrial Average had its biggest one day drop ever……this morning US stocks are rallying.

Mortgage lenders are seeing interest rates fluctuate .125%-.25% intra-daily!

US 10-year treasury note

On February 21st the yield on the US 10-year treasury note, which mortgage rates tend to follow was 1.50%.  Yesterday the yield touched .40% before moving higher.  Yields have never been this low.  Some analysts think they may go even lower.

Normally when the yield on the US 10-year treasury note moves up or down by .25% we expect mortgage rates to follow suit.  However, there is currently a disconnect between mortgage rates and treasury yields because lenders are over capacity.

Refinancing

There is currently over $10 trillion of mortgage debt held by homeowners in the US.  Estimates are that 50%+ of those loans would benefit from refinancing into today’s rates.  In 2019 the mortgage industry originated less than $2.0 trillion of mortgage volume.  Mortgage rates are not likely to decrease further until additional lending capacity is available.

Are you thinking of refinancing?  Watch THIS VIDEO.

The week ahead

Although there are still economic reports being issued the financial markets are reacting entirely to developments on the spread of the Coronavirus.  As mentioned earlier mortgage rates are being driven by lenders ability to absorb additional loan volume.

Given that rates are at all-time low levels I am recommending a locking bias.

Current Outlook: Locking bias