{"id":658,"date":"2018-04-27T12:56:02","date_gmt":"2018-04-27T19:56:02","guid":{"rendered":"http:\/\/www.ezmortgages.us\/?p=658"},"modified":"2018-05-01T12:56:25","modified_gmt":"2018-05-01T19:56:25","slug":"ez-mortgage-monitor-april-27-2018","status":"publish","type":"post","link":"https:\/\/ezmortgages.us\/ez-mortgage-monitor-april-27-2018\/","title":{"rendered":"EZ Mortgage Monitor – April 27, 2018"},"content":{"rendered":"

I sometimes wonder if I\u2019ve been brainwashed.<\/p>\n

When I got into the mortgage business, 15 years ago, when people asked what I was thinking, I used to joke that I liked the challenge of getting into something right before rates started back up again.\u00a0 At that time, interest rates for 30 year fixed mortgages were dipping below 6%, down from about 7% the year prior, and we all thought those were low.<\/p>\n

Now?\u00a0 Now we think 4.5% or 5% is high.<\/p>\n

And, that brings me back to the brainwashing.\u00a0 You\u2019ve seen me post this chart many times.\u00a0 It\u2019s a snapshot of prevailing 30yr fixed mortgage rates since they\u2019ve been tracking them, starting in 1971:<\/p>\n

\"\"<\/a><\/p>\n

Basically, since 1981, when I was 11 years old, interest rates have been declining.\u00a0 Yes, we\u2019ve seen periods of rising rates within that larger trend, but the overall trend was nevertheless lower.<\/p>\n

Now, we\u2019re at what \u201cmight\u201d be, finally, another inflection point.\u00a0 Maybe, just maybe, we\u2019ll see that rates are on the rise, never to look back and turn lower again.\u00a0 I\u2019m just not sure I buy it.<\/p>\n

That could be a result of my life long, and certainly career-long, brainwashing.\u00a0 Or, maybe we\u2019re not quite \u201cthere\u201d yet?<\/p>\n

Here\u2019s a look at both the average 10yr treasury yield, and mortgage rates for the last 10 years:<\/p>\n

\"\"<\/a><\/p>\n

Again, prior to the market meltdown, we had 30yr fixed mortgage rates in the 6%s.\u00a0 We know the history of the last decade.\u00a0 They eventually bottomed between Oct. 2012 and May 2013, when then Federal Reserve Chairman Ben Bernanke said, and I\u2019ll paraphrase \u201clook people, at some point this extreme monetary policy will need to normalize\u201d.\u00a0 The markets freaked out.<\/p>\n

We saw a nearly 1% spike in rates, in what is now called the \u201ctaper tantrum\u201d as markets feared that without the Fed\u2019s massive bond-buying program who would support that market?\u00a0 30yr fixed mortgages shot up from roughly 3.5% to 4.5% in June of 2013, and the yield on the 10yr US Treasury hit 3%.\u00a0 Both moves, however, proved temporary.\u00a0 The markets calmed themselves, and rates drifted lower again for the remainder of the year.<\/p>\n

Until December 2013, when the Federal Reserve Open Market Committee announced their plans to actually begin curtailing their bond and mortgage backed security purchases.\u00a0 The tapering would begin in earnest in January of 2014.\u00a0 Again, the 10yr Treasury yield hit 3% and again, mortgage rates spiked alongside them.<\/p>\n

Only to drift lower again.\u00a0 By January of 2015, just one year later, rates had rested down to within a fraction of the prior floor, established in late 2012 and early 2013.<\/p>\n

But again, they were not done trying to break higher.\u00a0 The economic skies appeared to be finally clearing.\u00a0 Real estate was appreciating in most markets at a rapid clip.\u00a0 Job creation was solid.\u00a0 Consumer spending was growing.\u00a0 Inflation was nowhere to be found (at least statistically speaking).\u00a0 The market was absorbing the demand for treasuries and mortgage backed securities, despite the Fed\u2019s curtailed purchases.\u00a0 By the middle of 2015, mortgage rates were back above 4%.\u00a0 Was this finally liftoff?<\/p>\n

Not so fast.<\/p>\n

By the middle of 2016, rates had again bottomed out at about that same historically low level we\u2019d now seen twice before.<\/p>\n

Then came the election of President Trump.\u00a0 That was interesting.\u00a0 The market futures went crazy \u2013 in a bad way \u2013 and it looked like mortgage rates may plummet as the down tanked.\u00a0 Only the opposite happened the following day.\u00a0 Mortgage rates spiked from about 3.5% to 4.25% or so, basically overnight, and there was a rally in equities.<\/p>\n

Maybe the pro-business policies of the Trump Administration would spur faster economic growth, and finally get interest rates off the floor?<\/p>\n

Again, not so fast.<\/p>\n

By springtime 2017, mortgage rates were again drifting lower.\u00a0 By September, they were back down in the 3.75% to 3.875% range.\u00a0 Where would they go from there?<\/p>\n

So far?\u00a0 Higher.\u00a0 In December of last year, they again climbed the up escalator, and, so far, have not stepped off.<\/p>\n

However, they\u2019ve again seemed to stall out at what appears to be a key 3% mark on the 10yr Treasury Yield, and about 4.5% for a no-points 30yr fixed mortgage.<\/p>\n

Now, if only I could see the future, I\u2019d tell you what will happen next, from my beach-side or slope-side perch, with my favorite beverage in hand.\u00a0 Instead, all I \u2013 or any of us can do \u2013 is read the tea leaves, and make some guesses.\u00a0 Hopefully somewhat informed and educated guesses, but guesses nevertheless.<\/p>\n

So, here\u2019s some of what I see in those tea leaves on the \u201crates may only rise\u201d side:<\/p>\n