We didn’t send out our update last week due to the holiday, but rates overall have fallen by only .069% on average over the last two weeks. Interestingly, half of our programs had higher rates while the other half had lower rates. Not the norm but also not unheard of. Of those programs, our Jumbo rates for 15-year and 30-year mortgages saw the greatest changes with the 30-year rates falling and the 15-year rates rising. The pricing difference between 15 and 30-year Jumbo loans is only .051% making the less flexible 15-year obsolete, currently. Make sure you are working with mortgage professionals who understand the movements in the market!
Fundamentally, there has been a decent amount of news that has come out over the last two weeks, which has led to very high volatility. The news isn’t about how much rates have changed during the last two weeks, rather it’s the path rates have taken to get where they are now. Up and down daily.
Q1 GDP came back strong while Weekly Initial Jobless Claims are still near 50-year lows. The G-20 Summit also took place since our last update and the US and China have agreed to delay any new tariffs and have re-engaged in trade talks. Stocks liked all this news at the expense of bonds. However, we don’t believe that the “trade war” we are currently experiencing with China to end anytime soon. In addition, the US is now talking about major tariffs on European goods as well, who’s economy has already slowed down far greater than the US. In fact, the German Bund hit another record low last week at -.4%, well into the negative. The US is stubbornly remaining strong while the global economy slows, which has been pitting US stock and bonds against each other and causing the high volatility we are seeing. In addition, July marks the longest economic expansion in US history. Can it last longer? It appears so, but if we become overheated this could change in a hurry and end our record expansionary period.
Technically, bond prices were not able to hold their ground from two weeks ago and they are back to being pinned up against resistance. Without some fundamental news to break this resistance, we could be stuck in this range for a while.
With high volatility, we are recommending locking at opportune times out to 45 days. This advice is ever changing and we will always keep you posted with our weekly Rates and Updates. Make sure you are working with lenders that have the knowledge to see these opportune times.