Las Vegas Mortgage Rates Continue to Improve

For the fourth day in a row, Las Vegas mortgage rates continue to improve.  They are still close to their highest level in a few years but they are still low from a historical perspective and they are definitely lower than they have been on a few other recent occasions, including the end of last week.  Las Vegas mortgage rates are also low relative to what they will probably be over the next year as the tapering of the Quantitative Easing program #3 will begin soon and as that program winds down, there will be less support for bond prices (to the tune of about $45 billion per month when the program ends completely) which means higher rates as bond prices fall.

The message to prospective buyers should be two-fold:  1)  Buy now.  Home prices and rates aren't getting any lower.  Experts forecast prices to increase 10-12% over the next year and for rates to be about 1% higher over that same time period.  This means that a buyer won't be able to afford as much home and that the cost of a home he can afford would have been much cheaper in overall price and monthly payment now than a year from now.  2) If a buyer isn't going to buy now for some reason, that buyer should at least consider taking advantage of our Lock and Look program.  This program allows a buyer to lock in current rates for up to a year while they shop around for a home.  If by chance rates happen to be better than what they locked at, we can float down to current rates but if they go up as I expect they will, the buyer is protected on the rate side; too bad the only way they can lock in today's price is to buy TODAY.

Data will continue to be the driving force for Las Vegas mortgage rates and when the Fed finally decides to begin the tapering process.  This morning we had two data points that should have had a negative impact on rates:  Consumer confidence came in higher than expected and last month's number was adjusted higher as well.  Additionally the Richmond Manufacturing index did an about face from -11 last month to +14 this month.  Both of these should have sent the benchmark bond down in price which would mean higher interest rates.  However, the unrest in Syria and the debt ceiling issues of the US are providing good support for bond prices now.  Remember that bad news for the world means good news for interest rates as bonds are thought of as safe haven investments which means as investors move from stocks and other "riskier" investments to the safety of bonds, bond prices increase and the rate goes down.

Mortgage Bond Chart:

Bond prices have come off their highs because of the economic data from this morning but they are still currently up 18 basis points for the day as of this very minute.  My advice is to float with caution (and use me to handle your client's mortgage).  Watch rates and economic news closely because there are a number of things that could turn the market on a dime and you or your client could miss out on the recent gains.  Please feel free to share and comment.  Please also subscribe to my YouTube channel (www.YouTube.com/TheWunderliTeam) where I provide video updates every Monday and Friday along with bonus videos regarding new loan programs and guidelines as well as marketing strategies.  Make today great!

Las Vegas Mortgage Rates Continue to Rise

Las Vegas mortgage rates have continued to trend higher recently with a big down week of 182 basis points last week.  With existing home sales coming in at 5.39 million units vs. expected of 5.1, we are seeing strong housing numbers in the face of rising interest rates which is bearish on bonds meaning that investors / traders will continue to sell off in anticipation of the Fed beginning their tapering process of the Quantitative Easing program.  Of course as the economy shows more signs of recovery, investors will increasingly choose stocks over bonds as their investment of choice since they offer a better return.  My recommendation is to lock rates on any loans that are closing within the next 30 days and to take advantage of our Lock and Look program for loans that will likely close beyond 60 days.

Here's a look at the mortgage bond chart from this morning:

There is some good news and the theme for the good news is ONE YEAR.  With las vegas mortgage rates on the rise, there are two pieces of good news to help offset this not-so-pleasant news.  The Lock and Look program allows buyers to lock in a rate today while they shop for their home.  With this program, the rate is locked for ONE YEAR and the buyer doesn't need a property address.  This is also great for buyers who have a home under contract awaiting short sale approval or for buyers who are buying a new home and they are more than a month out from completion of construction.

The second piece of good news is that FHA has relaxed their guidelines regarding borrowers who have had a short sale, bankruptcy or foreclosure.  Buyers who have had any one of these or all three can now use an FHA loan to finance the purchase of a home ONE YEAR after the event if certain hardship parameters are met that led to these events.

Please like, comment and share and subscribe to my blog.  I would love to help you are someone you know who needs a mortgage so feel free to contact me at 702-812-1214 if I can help you with that (I'm also licensed in California).

Good Friday morning.  I've got the Friday morning episode of The Las Vegas Mortgage Market Minute for you.  I'll be gone all next week so no blog posts or videos until Monday the 19th.  Please subscribe and share.  Thanks.

Las Vegas Mortgage Rates and the Economy

Las Vegas mortgage rates continue to be relative quiet this morning relative to the volatility the mortgage bond market has seen over the last several weeks.  There is no major economic date to move the markets one way or the other this morning.  There is a speech by some Fed talking heads today and tomorrow but the next decently important bit of economic data will come out on Thursday morning with the release of initial and continuing jobless claims.  Last week the jobless claims came in much lower than expected at 326,000 (this week's expectation is for an increase to 336,000) which is good news for the economy but not for Las Vegas mortgage interest rates.  That didn't translate into a good employment number on Friday which is what drove the recover of bond prices higher.  Yesterday we saw some pullback because of a bit of good economic news with the ISM non-manufacturing index coming in at 56 where the expectation was for 53 and last month's number was 52.2.

Based on the technical analysis from the chart, there is a much greater risk to the downside then there is a possibility of upward movement in bond prices so I recommend locking.  The long term trend for rates is up due to the high probability that the Fed will begin the tapering process for the Quantitative Easing program sometime between September (next month) and the end of the year with the likelihood of the program ending altogether by mid-2014.  This will take the support out from under the mortgage bond market which will allow the prices to fall and interest rates to continue their upward trend.

Solution to interest rates trending up:
If you are in the market to buy a home over the next year and are concerned about rising interest rates but don't have a property picked out now, we have a solution that will allow you to lock in an interest rate now without even having identified a property.  We now offer a forward lock commitment that will allow a borrower to lock a rate for a year based only on a loan amount.  If you have a property but you are awaiting a short sale approval from the seller's lender, you can lock that loan as well using this option.  If rates are better than the rate you lock in, we can re-lock you at current rates.  This is an amazing bit of insurance against rising rates - what are your thoughts regarding this?  Please comment and share your ideas.  Contact me if you would like to learn more about this or if I can help you in any way - 702-812-1214.  Thanks for your support and business - please share this with your friends, family, neighbors, clients or anyone you know who is looking to buy a home or refinance their current mortgage.  I believe that no one knows Las Vegas mortgage rates better than me.  

The Las Vegas Mortgage Market Minute

The Las Vegas Mortgage Market Minute is up on my YouTube channel:

In this video you will get advice on whether to lock or float and other information about the mortgage bond market.

I also introduce a new value-added thing we can do for our Realtor partners and their clients:  forward mortgage commitments which means we can lock loans for up to 1 year.  Since interest rates are trending up and will probably accelerate that trend due to the soon-to-be tapering of the quantitative easing program and its eventual end, being able to lock in an interest rate today is a great thing.

What makes this even better is that we can lock on TBDs (no property address needed) or you can use it to lock a loan that is waiting on a short sale approval from the seller's lender.  By being able to offer this, you are able to real in the buyer so that they won't even consider using another Realtor.  We can also "float" down if by some chance rates are better then what the client locked at.

For details, please call me at 702-812-1214.  Feel free to comment and share your thoughts.  Make today great.

It's video time today with The Mortgage Market Minute.  It's short, like always so check it out and feel free to comment.  It gives an update on the employment report and my recommendation about whether to lock or float.  I'd love to hear your feedback.  Have a great weekend.

Mortgage Rates - What Really Drives Them, Part 2

In yesterdays post I wrote about what drives mortgage rates from the technical and fundamental side of things.  What I didn't tell you about is the third thing that drives interest rates - the lenders themselves.

All lenders sell mortgages in the secondary market; there are some lenders who offer portfolio products and those are held in the lenders portfolio, at least for a short time and sometimes for the life of the loan.  The regular loans that can be securitized like FHA, VA, conventional and jumbo all get sold off.  The lenders may or may not keep the servicing rights but they sell off the interest rate rights which frees up more capital to write more mortgages.

Big lenders have targets as to how much penetration they want to have in any given market.  If they are considerably under that target, they may offer rates that are below the market for a short time in order to "buy" more mortgages.  This entices borrowers to go with them or mortgage bankers and mortgage brokers to send more loans their way until they have the level of business they want at which point their rates will revert to market rates.

Conversely, if a lender decides that it has all of the exposure it wants in a given market, it will raise rates such that it won't be attractive for a borrower to choose that lender.  This happened at Bank of America when I worked there in 2009.  In a sales meeting our sales manager told us that the bank had all the exposure it wanted in Southern Nevada and so they were going to raise interest rates to a point such that borrowers probably wouldn't choose to do business with them but if they did, the reward for Bank of America would be good enough to offset the additional risk of another loan in the saturated market.

Herein lies one of the advantages that a mortgage banker who sells to a number of lenders has over the big banks.  When a big bank raises their rates, they don't have an alternative to offer their clients to keep the business coming in.  When one source of a mortgage bankers list of lenders raises its rates, the mortgage banker still has a number of other options to choose from.  With the lenders we sell to, it is usually the same three or four who always have the best terms.  It varies as to which one of those lenders has the best rate on any given day but having these options is a great thing for the clients.  Another added benefit is the fact that some lenders interpret guidelines a little more liberally than others but that's a topic for a whole different post.

It's important to remember that for the most part, mortgage rates are driven by technical analysis, fundamentals (economic data) and the secret sauce - the lenders themselves.  Feel free to comment and share your thoughts and ideas.  Here's a snapshot of the mortgage bond market currently: