How low can we go? 30 yr fixed at 3.75% with no fees...

[SoclosetoIrvine]

I recommend Ally bank - same 1.15% but offers same day transfers!

Not sure if Ally has the same, but amex doesn't charge for any wire transfer fees to escrow etc.  Thought it was a nice touch and the customer service is quite good as well.  Besides some small play money in stocks, I like having my amex account for easy access to funds.  Most major bank require money to be in a 15 month+ CD to match the 1.15 rate or better.

 

[eyephone]

I didn't want to say anything, but I will. 1.15% is low
Have you consider other alternatives?

So what are the higher rate alternatives that are FDIC insured, has no minimum, no fees and quick access to your cash?

The options that come to mind are not FDIC insured.

I.e., you are telling them to invest that cash.

Through the stock market or fixed income or corporate bonds/debt

 

[Perspective]

Fed raised the Funds Rate 25 bps, again. The 10Y UST has held above 300 bps for a few days. Housing prices are under rate pressure. Where will the 30Y fixed rate be in 2019?

 

[Cares]

Fed raised the Funds Rate 25 bps, again. The 10Y UST has held above 300 bps for a few days. Housing prices are under rate pressure. Where will the 30Y fixed rate be in 2019?

Hopefully 30 year fixed stays decent by January when I have to lock my rate.

 

[usctrojancpa]

Fed raised the Funds Rate 25 bps, again. The 10Y UST has held above 300 bps for a few days. Housing prices are under rate pressure. Where will the 30Y fixed rate be in 2019?

The 10-year bond rates, which correlates to the 30-year fixed rate, actually went down after the announcement. I think rates will remain below 5%.

 

[Perspective]

10Y UST is up 64 bps this year, and 20 bps this month. Looks like it dropped 4 bps after today's Fed announcement.

https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldYear&year=2018

 

[usctrojancpa]

10Y UST is up 64 bps this year, and 20 bps this month. Looks like it dropped 4 bps after today's Fed announcement.

https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldYear&year=2018

The more that the Fed raises rates, the higher the probability that it will cause the economy to get into a recession which will cause mortgage rates to fall.  Watch for the bond curve to invert because the economy tends to enter recession 12-18 months after that happens.

 

[sgip]

Just a reminder of some of the important facts about rates and rate info.

1) When the Fed raises rates, they aren't the rates that directly impact 30 year fixed rates. The price of Mortgage Backed Securities does. Yes, as well all rates are rising, but when the Fed goes up .25, mortgages don't go up as well by .25%. Lenders have "margins" they can move lower to absorb some of the rise in rates. Margins, however, have been squeezed for some time now and expect to see all banks move their mortgage rates up a bit in the coming weeks.


2) Every Thursday Freddie Mac releases their mortgage rate survey. Tomorrow you will hear "rates have gone up" and also "and they are expected to continue as long as the Fed keeps hiking rates". When you hear that phrase, remind yourself these folks have no idea what they are talking about. I strongly recommend that you find something else to watch or listen to. Perhaps this - which we saw last week.... https://www.rottentomatoes.com/m/borg_vs_mcenroe/ ...but I digress

3) The Freddie Mac Weekly rate survey is parroted by all of the news outlets. They may say "the average rate is 4.75%" right after you've been quoted 4.875% by a lender. Why is that? The 4.75% rate costs 1/2 point in fee. The 4.875% you were quoted does not. Here's the link to Freddie's data: http://www.freddiemac.com/pmms/


4) Lots of people thing a recession is coming in 12 months or less. Recessions often mean interest rates, including most mortgage rates, will be pushed down to stimulate the economy.  A refinance is highly likely to be in your future.

5) If you're likely to refinance, shouldn't you take an 5/1 or 7/1 ARM product instead of a 30 fixed? Not always. If your more comfortable with a fixed loan, even though it may mean $$$ over the longer term, take the fixed rate. A "highly likely" refinance is not an "absolute certain" refinance. I'd personally rather pay $$$ and sleep well at night rather than to take an ARM and watch Soylent Red pace the hallways wondering how high the loan might adjust to in the far off future. Some may have the opposite view. Great! Everyone's situation is different. There isn't a right or wrong way forward here, only one that gives you peace of mind.

My .02c

SGIP

 

[fortune11]

So here is the deal with what happened today --

The Fed hiked , and they actually said they will hike more in 2019 than what was at the time priced by the market (before the Fed)

Why did the treasury market rally (rates falling) then ?  Shouldn't the yields have gone higher ? Here is thing -- the rates market is calling the Fed's bluff

The Fed already said that inflation is not out of control and will stay around 2% .  then why keep hiking ?

inflation in check + potential disruption from trade wars and supply chain disruptions = recipe for the Fed to blink down the road (in 2019) and pause

this is the market telling the Fed -- go ahead and say you will hike, we don't believe you !

This is about 2019 now.  The Fed almost certainly will hike again in December this year. 

 

[usctrojancpa]

So here is the deal with what happened today --

The Fed hiked , and they actually said they will hike more in 2019 than what was at the time priced by the market (before the Fed)

Why did the treasury market rally (rates falling) then ?  Shouldn't the yields have gone higher ? Here is thing -- the rates market is calling the Fed's bluff

The Fed already said that inflation is not out of control and will stay around 2% .  then why keep hiking ?

inflation in check + potential disruption from trade wars and supply chain disruptions = recipe for the Fed to blink down the road (in 2019) and pause

this is the market telling the Fed -- go ahead and say you will hike, we don't believe you !

This is about 2019 now.  The Fed almost certainly will hike again in December this year. 

Totally agree with your take.  The market is almost daring the Fed to invert the yield curve because it knows that deep down the Fed doesn't want to do it.  I think the Fed stops at 3.00 to 3.25% and we end up getting a flat yield curve.

 

[sgip]

One has to wonder with 30 fixed likely to have 4.x rates seen only in a rear view mirror, and ARM rates eventually creeping above 4.5%, if a heavy brake will be applied to home sales based on psychology or affordability.

I've heard it before when rates were in the 3's moving to 4's that "I don't deserve a rate in the 4's!!" as a market rate would cause social discomfort at the weekend gatherings when people compare the rate they got to others. Still there are others looking at high rent now becoming competitive with high house payments and saying "meh, do I really need to own now?"

These are interesting times indeed.

 

[fortune11]

One has to wonder with 30 fixed likely to have 4.x rates seen only in a rear view mirror, and ARM rates eventually creeping above 4.5%, if a heavy brake will be applied to home sales based on psychology or affordability.

I've heard it before when rates were in the 3's moving to 4's that "I don't deserve a rate in the 4's!!" as a market rate would cause social discomfort at the weekend gatherings when people compare the rate they got to others. Still there are others looking at high rent now becoming competitive with high house payments and saying "meh, do I really need to own now?"

These are interesting times indeed.

Agree

Higher rates also affect the move up buyer locked into rates from say 3 or 4 years ago

I was at a conference last month in New York where a panel of economists and home builder experts were touting continued expanded cycle of housing starts to 1.4mm in the next 3 years but those charts and data don?t take into account this human behavioral bias

FWIW , I think the Fed is Locked And loaded now into a hike in December and 3-4 next year unless the equity market calls their bluff by selling off and by that I mean atleast 10 percent (where current fed chairs pain threshold is I guess) . This means mid to high 5 percent mortgages are not inconceivable => we start to see more arm product or looser standards to keep the party going ...

 

[irvinebullhousing]

One has to wonder with 30 fixed likely to have 4.x rates seen only in a rear view mirror, and ARM rates eventually creeping above 4.5%, if a heavy brake will be applied to home sales based on psychology or affordability.

I've heard it before when rates were in the 3's moving to 4's that "I don't deserve a rate in the 4's!!" as a market rate would cause social discomfort at the weekend gatherings when people compare the rate they got to others. Still there are others looking at high rent now becoming competitive with high house payments and saying "meh, do I really need to own now?"

These are interesting times indeed.

Agree

Higher rates also affect the move up buyer locked into rates from say 3 or 4 years ago

I was at a conference last month in New York where a panel of economists and home builder experts were touting continued expanded cycle of housing starts to 1.4mm in the next 3 years but those charts and data don?t take into account this human behavioral bias

FWIW , I think the Fed is Locked And loaded now into a hike in December and 3-4 next year unless the equity market calls their bluff by selling off and by that I mean atleast 10 percent (where current fed chairs pain threshold is I guess) . This means mid to high 5 percent mortgages are not inconceivable => we start to see more arm product or looser standards to keep the party going ...

The 10% sell off is reasonable when all assets will be re-priced in 2019.

 

[fortune11]

One has to wonder with 30 fixed likely to have 4.x rates seen only in a rear view mirror, and ARM rates eventually creeping above 4.5%, if a heavy brake will be applied to home sales based on psychology or affordability.

I've heard it before when rates were in the 3's moving to 4's that "I don't deserve a rate in the 4's!!" as a market rate would cause social discomfort at the weekend gatherings when people compare the rate they got to others. Still there are others looking at high rent now becoming competitive with high house payments and saying "meh, do I really need to own now?"

These are interesting times indeed.

Agree

Higher rates also affect the move up buyer locked into rates from say 3 or 4 years ago

I was at a conference last month in New York where a panel of economists and home builder experts were touting continued expanded cycle of housing starts to 1.4mm in the next 3 years but those charts and data don?t take into account this human behavioral bias

FWIW , I think the Fed is Locked And loaded now into a hike in December and 3-4 next year unless the equity market calls their bluff by selling off and by that I mean atleast 10 percent (where current fed chairs pain threshold is I guess) . This means mid to high 5 percent mortgages are not inconceivable => we start to see more arm product or looser standards to keep the party going ...

The 10% sell off is reasonable when all assets will be re-priced in 2019.

To be clear , I am not saying equities will sell off 10 percent

Just that that?s the type of market pain that will cause the fed to restrike their put and acknowledge tightening financial conditions .

Will they sell off 10 percent - I don?t know , is the honest answer . What I do know is companies across the board are feeling the heat on margins

And top line growth has to overcome some really tough comparisons versus the stellar 2018

 

[Perspective]

Wells' published 30Y fixed refi rate for conforming loans has a 5 handle today!
https://www.wellsfargo.com/mortgage/rates

 

[irvinehomeowner]

So is "rising rates" another thing to think about for those who say you should wait for housing prices to drop?

 

[sgip]

How some conversations are going now - one from yesterday......

realtor: Hi John, just got into escrow with my buyer and they are shocked by the rates they can now get.
Me: Hmmm. Tell me about the deal.
realtor: It's a Non-Owner Occupied, 2-Unit purchase, 25% down.
Me: And the FICO?
realtor: Right about 700.
Me: OK. My guess is the rate is 5.5% with more than a point cost, AMIRITE?
realtor: Um...yeah...about that range. The buyer won't move forward without a lower rate....

I go on to explain that the Agency Loan Level Pricing (LLPA's) hits are yuuuge. Here's the data for those who like keeping score:

https://www.fanniemae.com/content/pricing/llpa-matrix.pdf

Strike 1: Non-Owner. That's 2.125 in fee.
Strike 2: 700 FICO. That's 1.25 in fee.
Strike 3: 2 Units. That's 1.0 in fee.

Pricing has to be adjusted by 4.375 points. Using average rate data per Freddie Mac at 4.71% with .40 points, the final rate and fees would likely be 5.50 for perhaps 2 points or more. At a certain rate most lenders have the same cost/rebate example:

4.750 .40
4.875: -0-
5.000: .50 rebate
5.125: 1.0 rebate
5.250: 1.0 rebate
5.375: 1.0 rebate

In some cases you can use a Jumbo product to reduce the LLPA's but it's often a very narrow situation that applies. Hard to say if Non-Owner will still pencil out if we reach a 6 handle on rates.

My .02c

 

[irvinebullhousing]

How some conversations are going now - one from yesterday......

realtor: Hi John, just got into escrow with my buyer and they are shocked by the rates they can now get.
Me: Hmmm. Tell me about the deal.
realtor: It's a Non-Owner Occupied, 2-Unit purchase, 25% down.
Me: And the FICO?
realtor: Right about 700.
Me: OK. My guess is the rate is 5.5% with more than a point cost, AMIRITE?
realtor: Um...yeah...about that range. The buyer won't move forward without a lower rate....

I go on to explain that the Agency Loan Level Pricing (LLPA's) hits are yuuuge. Here's the data for those who like keeping score:

https://www.fanniemae.com/content/pricing/llpa-matrix.pdf

Strike 1: Non-Owner. That's 2.125 in fee.
Strike 2: 700 FICO. That's 1.25 in fee.
Strike 3: 2 Units. That's 1.0 in fee.

Pricing has to be adjusted by 4.375 points. Using average rate data per Freddie Mac at 4.71% with .40 points, the final rate and fees would likely be 5.50 for perhaps 2 points or more. At a certain rate most lenders have the same cost/rebate example:

4.750 .40
4.875: -0-
5.000: .50 rebate
5.125: 1.0 rebate
5.250: 1.0 rebate
5.375: 1.0 rebate

In some cases you can use a Jumbo product to reduce the LLPA's but it's often a very narrow situation that applies. Hard to say if Non-Owner will still pencil out if we reach a 6 handle on rates.

My .02c

Even 6 months ago 5% rate was unfathomable with the high prices. Now we are breaking that threshold.

 

[lnc]

We should change the thread title to "How high can we go?"

Anyone think it will hit 6% for 30 year fixed? 

I think it's possible that it reaches close to 6% but just briefly though.  Once the rate hit that level, the recession probably starts to kick in and the rate starts to reverse it's course. 

 

[irvinebullhousing]

We are now on the upswings rate cycle. 6 % May comes sooner than we think. And I would dare to say that it will stay above 6 for along while and closer to 7% >