Mortgage Rates (2 Viewers)

[Schmeabs]

It is being widely reported that the bond markets have gotten way too far ahead of the Fed re: potential rate cuts. CNBC reported the market has currently priced in 150 bps in 2024 vs. the Fed's dot plot of 75 bps. Rates will back up if Fed actions fall short of mkt expectations (all else equal).

Yep.

12/20/23 10-yr = 3.85%

4/11/24 10-yr = 4.57%

I think we end the year around 3.50%

So pray tell what is it you know that the market doesn't?

Futures contracts tied to the federal-funds rate show traders see rates ending the year around 5%, according to FactSet, implying just one or two quarter-point cuts this year. Entering January, traders had expected the Fed to cut interest rates six or seven times.

Source: 4/11/24 WSJ

I am talking about 10 year Treasury rates, not Fed Funds rate

Um. They are positively correlated .

The entire reason the 10-yr dropped so much in the first place since last Nov/Dec was because of anticipated rate cuts from the Fed.

Regardless, what's your rationale for the 10-yr dropping almost 110 bps in eight months?

I expect growth and inflation will slow and apply downward pressure on interest rates. If we have a hard landing with a recession the 10 year could fall as low as 2.50%. If growth is strong I see it at 4% year end. However, the likely outcome is around 3.50% at year end. The labor market and wage costs have started to slow and I expect that to continue.

And in all those slowdown scenarios there is 99.9% certainty the Fed will cut the Fed Funds rate as a response.

So basically you're just saying the current market view about future rate cuts is wrong (because "growth and inflation" expectations are exactly the factors driving those as well).

Nothing inherently bad about being different, just it would be more convincing if it came with some economic links to back it up or it's just a random prediction.

No, I think we see 50-75 basis points of rate cuts this year. That is in line or a little short of expectations.

Well in that case the 10-year won't move. Because the 50 bps of future cuts is already priced into the current 10-yr rate of 4.6%. It won't go to 3.5% as you predict without new information that significantly changes existing economic expectations. That's how markets work.

The only reason the 10-yr rates have backed up from December is because expectations of the Fed Funds rate have changed. It's right there in my first post in bold underline.

I am very versed in how markets work, I have been managing money over 20 years. I don't disagree with you that rates have backed up with some inflation numbers coming in hotter than expected. I just see that changing and I will agree to disagree with you.

 

[Stoneworker]

It is being widely reported that the bond markets have gotten way too far ahead of the Fed re: potential rate cuts. CNBC reported the market has currently priced in 150 bps in 2024 vs. the Fed's dot plot of 75 bps. Rates will back up if Fed actions fall short of mkt expectations (all else equal).

Yep.

12/20/23 10-yr = 3.85%

4/11/24 10-yr = 4.57%

I think we end the year around 3.50%

So pray tell what is it you know that the market doesn't?

Futures contracts tied to the federal-funds rate show traders see rates ending the year around 5%, according to FactSet, implying just one or two quarter-point cuts this year. Entering January, traders had expected the Fed to cut interest rates six or seven times.

Source: 4/11/24 WSJ

I am talking about 10 year Treasury rates, not Fed Funds rate

Um. They are positively correlated .

The entire reason the 10-yr dropped so much in the first place since last Nov/Dec was because of anticipated rate cuts from the Fed.

Regardless, what's your rationale for the 10-yr dropping almost 110 bps in eight months?

I expect growth and inflation will slow and apply downward pressure on interest rates. If we have a hard landing with a recession the 10 year could fall as low as 2.50%. If growth is strong I see it at 4% year end. However, the likely outcome is around 3.50% at year end. The labor market and wage costs have started to slow and I expect that to continue.

And in all those slowdown scenarios there is 99.9% certainty the Fed will cut the Fed Funds rate as a response.

So basically you're just saying the current market view about future rate cuts is wrong (because "growth and inflation" expectations are exactly the factors driving those as well).

Nothing inherently bad about being different, just it would be more convincing if it came with some economic links to back it up or it's just a random prediction.

No, I think we see 50-75 basis points of rate cuts this year. That is in line or a little short of expectations.

Well in that case the 10-year won't move. Because the 50 bps of future cuts is already priced into the current 10-yr rate of 4.6%. It won't go to 3.5% as you predict without new information that significantly changes existing economic expectations. That's how markets work.

The only reason the 10-yr rates have backed up from December is because expectations of the Fed Funds rate have changed. It's right there in my first post in bold underline.

I am very versed in how markets work, I have been managing money over 20 years. I don't disagree with you that rates have backed up with some inflation numbers coming in hotter than expected. I just see that changing and I will agree to disagree with you.

Go find any current yield curve. Look at the rate 10 yrs and 8 months from now. It's approx 4.6%. That's a proxy for what investors currently expect the 10-yr to be yielding at the end of the year absent any new information. 3.5% is dead wrong and therefore simply represents one random individual's prediction with no backup provided whatsoever. But thanks for the conversation.

US Treasury Yield Curve

An app for exploring historic interest rates

www.ustreasuryyieldcurve.com

 

[Schmeabs]

It is being widely reported that the bond markets have gotten way too far ahead of the Fed re: potential rate cuts. CNBC reported the market has currently priced in 150 bps in 2024 vs. the Fed's dot plot of 75 bps. Rates will back up if Fed actions fall short of mkt expectations (all else equal).

Yep.

12/20/23 10-yr = 3.85%

4/11/24 10-yr = 4.57%

I think we end the year around 3.50%

So pray tell what is it you know that the market doesn't?

Futures contracts tied to the federal-funds rate show traders see rates ending the year around 5%, according to FactSet, implying just one or two quarter-point cuts this year. Entering January, traders had expected the Fed to cut interest rates six or seven times.

Source: 4/11/24 WSJ

I am talking about 10 year Treasury rates, not Fed Funds rate

Um. They are positively correlated .

The entire reason the 10-yr dropped so much in the first place since last Nov/Dec was because of anticipated rate cuts from the Fed.

Regardless, what's your rationale for the 10-yr dropping almost 110 bps in eight months?

I expect growth and inflation will slow and apply downward pressure on interest rates. If we have a hard landing with a recession the 10 year could fall as low as 2.50%. If growth is strong I see it at 4% year end. However, the likely outcome is around 3.50% at year end. The labor market and wage costs have started to slow and I expect that to continue.

And in all those slowdown scenarios there is 99.9% certainty the Fed will cut the Fed Funds rate as a response.

So basically you're just saying the current market view about future rate cuts is wrong (because "growth and inflation" expectations are exactly the factors driving those as well).

Nothing inherently bad about being different, just it would be more convincing if it came with some economic links to back it up or it's just a random prediction.

No, I think we see 50-75 basis points of rate cuts this year. That is in line or a little short of expectations.

Well in that case the 10-year won't move. Because the 50 bps of future cuts is already priced into the current 10-yr rate of 4.6%. It won't go to 3.5% as you predict without new information that significantly changes existing economic expectations. That's how markets work.

The only reason the 10-yr rates have backed up from December is because expectations of the Fed Funds rate have changed. It's right there in my first post in bold underline.

I am very versed in how markets work, I have been managing money over 20 years. I don't disagree with you that rates have backed up with some inflation numbers coming in hotter than expected. I just see that changing and I will agree to disagree with you.

Go find any current yield curve. Look at the rate 10 yrs and 8 months from now. It's approx 4.6%. That's a proxy for what investors currently expect the 10-yr to be yielding at the end of the year absent any new information. 3.5% is dead wrong. But thanks for the conversation.

US Treasury Yield Curve

An app for exploring historic interest rates

www.ustreasuryyieldcurve.com

That's the beauty of the market, everyone can have an opinion. I'll assume you believe the 10 year will end the year at 4.60%. We can revisit this at year end. Have a great day!

 

[Stoneworker]

It is being widely reported that the bond markets have gotten way too far ahead of the Fed re: potential rate cuts. CNBC reported the market has currently priced in 150 bps in 2024 vs. the Fed's dot plot of 75 bps. Rates will back up if Fed actions fall short of mkt expectations (all else equal).

Yep.

12/20/23 10-yr = 3.85%

4/11/24 10-yr = 4.57%

I think we end the year around 3.50%

So pray tell what is it you know that the market doesn't?

Futures contracts tied to the federal-funds rate show traders see rates ending the year around 5%, according to FactSet, implying just one or two quarter-point cuts this year. Entering January, traders had expected the Fed to cut interest rates six or seven times.

Source: 4/11/24 WSJ

I am talking about 10 year Treasury rates, not Fed Funds rate

Um. They are positively correlated .

The entire reason the 10-yr dropped so much in the first place since last Nov/Dec was because of anticipated rate cuts from the Fed.

Regardless, what's your rationale for the 10-yr dropping almost 110 bps in eight months?

I expect growth and inflation will slow and apply downward pressure on interest rates. If we have a hard landing with a recession the 10 year could fall as low as 2.50%. If growth is strong I see it at 4% year end. However, the likely outcome is around 3.50% at year end. The labor market and wage costs have started to slow and I expect that to continue.

And in all those slowdown scenarios there is 99.9% certainty the Fed will cut the Fed Funds rate as a response.

So basically you're just saying the current market view about future rate cuts is wrong (because "growth and inflation" expectations are exactly the factors driving those as well).

Nothing inherently bad about being different, just it would be more convincing if it came with some economic links to back it up or it's just a random prediction.

No, I think we see 50-75 basis points of rate cuts this year. That is in line or a little short of expectations.

Well in that case the 10-year won't move. Because the 50 bps of future cuts is already priced into the current 10-yr rate of 4.6%. It won't go to 3.5% as you predict without new information that significantly changes existing economic expectations. That's how markets work.

The only reason the 10-yr rates have backed up from December is because expectations of the Fed Funds rate have changed. It's right there in my first post in bold underline.

I am very versed in how markets work, I have been managing money over 20 years. I don't disagree with you that rates have backed up with some inflation numbers coming in hotter than expected. I just see that changing and I will agree to disagree with you.

Go find any current yield curve. Look at the rate 10 yrs and 8 months from now. It's approx 4.6%. That's a proxy for what investors currently expect the 10-yr to be yielding at the end of the year absent any new information. 3.5% is dead wrong. But thanks for the conversation.

US Treasury Yield Curve

An app for exploring historic interest rates

www.ustreasuryyieldcurve.com

That's the beauty of the market, everyone can have an opinion. I'll assume you believe the 10 year will end the year at 4.60%. We can revisit this at year end. Have a great day!

No, that's not what I assume. That's what the market currently believes.

I asked you to provide tangible backup for why your random personal opinion of 3.5% was different than the market and consensus economists' forecasts, hoping to gain some insight. You had none.

So it turned out to be a waste of time.

 

[Schmeabs]

It is being widely reported that the bond markets have gotten way too far ahead of the Fed re: potential rate cuts. CNBC reported the market has currently priced in 150 bps in 2024 vs. the Fed's dot plot of 75 bps. Rates will back up if Fed actions fall short of mkt expectations (all else equal).

Yep.

12/20/23 10-yr = 3.85%

4/11/24 10-yr = 4.57%

I think we end the year around 3.50%

So pray tell what is it you know that the market doesn't?

Futures contracts tied to the federal-funds rate show traders see rates ending the year around 5%, according to FactSet, implying just one or two quarter-point cuts this year. Entering January, traders had expected the Fed to cut interest rates six or seven times.

Source: 4/11/24 WSJ

I am talking about 10 year Treasury rates, not Fed Funds rate

Um. They are positively correlated .

The entire reason the 10-yr dropped so much in the first place since last Nov/Dec was because of anticipated rate cuts from the Fed.

Regardless, what's your rationale for the 10-yr dropping almost 110 bps in eight months?

I expect growth and inflation will slow and apply downward pressure on interest rates. If we have a hard landing with a recession the 10 year could fall as low as 2.50%. If growth is strong I see it at 4% year end. However, the likely outcome is around 3.50% at year end. The labor market and wage costs have started to slow and I expect that to continue.

And in all those slowdown scenarios there is 99.9% certainty the Fed will cut the Fed Funds rate as a response.

So basically you're just saying the current market view about future rate cuts is wrong (because "growth and inflation" expectations are exactly the factors driving those as well).

Nothing inherently bad about being different, just it would be more convincing if it came with some economic links to back it up or it's just a random prediction.

No, I think we see 50-75 basis points of rate cuts this year. That is in line or a little short of expectations.

Well in that case the 10-year won't move. Because the 50 bps of future cuts is already priced into the current 10-yr rate of 4.6%. It won't go to 3.5% as you predict without new information that significantly changes existing economic expectations. That's how markets work.

The only reason the 10-yr rates have backed up from December is because expectations of the Fed Funds rate have changed. It's right there in my first post in bold underline.

I am very versed in how markets work, I have been managing money over 20 years. I don't disagree with you that rates have backed up with some inflation numbers coming in hotter than expected. I just see that changing and I will agree to disagree with you.

Go find any current yield curve. Look at the rate 10 yrs and 8 months from now. It's approx 4.6%. That's a proxy for what investors currently expect the 10-yr to be yielding at the end of the year absent any new information. 3.5% is dead wrong. But thanks for the conversation.

US Treasury Yield Curve

An app for exploring historic interest rates

www.ustreasuryyieldcurve.com

That's the beauty of the market, everyone can have an opinion. I'll assume you believe the 10 year will end the year at 4.60%. We can revisit this at year end. Have a great day!

No, that's not what I assume. That's what the market currently believes.

I asked you to provide tangible backup for why your random personal opinion of 3.5% was different than the market and consensus economists' forecasts, hoping to gain some insight. You had none.

So it turned out to be a waste of time.

The base case for UBS is that the 10 year will end at 3.50%. That could change but that is where it is today.

Go ahead and post where you think it will end up since you are the expert.

 

[FBG Moderator]

It is being widely reported that the bond markets have gotten way too far ahead of the Fed re: potential rate cuts. CNBC reported the market has currently priced in 150 bps in 2024 vs. the Fed's dot plot of 75 bps. Rates will back up if Fed actions fall short of mkt expectations (all else equal).

Yep.

12/20/23 10-yr = 3.85%

4/11/24 10-yr = 4.57%

I think we end the year around 3.50%

So pray tell what is it you know that the market doesn't?

Futures contracts tied to the federal-funds rate show traders see rates ending the year around 5%, according to FactSet, implying just one or two quarter-point cuts this year. Entering January, traders had expected the Fed to cut interest rates six or seven times.

Source: 4/11/24 WSJ

I am talking about 10 year Treasury rates, not Fed Funds rate

Um. They are positively correlated .

The entire reason the 10-yr dropped so much in the first place since last Nov/Dec was because of anticipated rate cuts from the Fed.

Regardless, what's your rationale for the 10-yr dropping almost 110 bps in eight months?

I expect growth and inflation will slow and apply downward pressure on interest rates. If we have a hard landing with a recession the 10 year could fall as low as 2.50%. If growth is strong I see it at 4% year end. However, the likely outcome is around 3.50% at year end. The labor market and wage costs have started to slow and I expect that to continue.

And in all those slowdown scenarios there is 99.9% certainty the Fed will cut the Fed Funds rate as a response.

So basically you're just saying the current market view about future rate cuts is wrong (because "growth and inflation" expectations are exactly the factors driving those as well).

Nothing inherently bad about being different, just it would be more convincing if it came with some economic links to back it up or it's just a random prediction.

No, I think we see 50-75 basis points of rate cuts this year. That is in line or a little short of expectations.

Well in that case the 10-year won't move. Because the 50 bps of future cuts is already priced into the current 10-yr rate of 4.6%. It won't go to 3.5% as you predict without new information that significantly changes existing economic expectations. That's how markets work.

The only reason the 10-yr rates have backed up from December is because expectations of the Fed Funds rate have changed. It's right there in my first post in bold underline.

I am very versed in how markets work, I have been managing money over 20 years. I don't disagree with you that rates have backed up with some inflation numbers coming in hotter than expected. I just see that changing and I will agree to disagree with you.

Go find any current yield curve. Look at the rate 10 yrs and 8 months from now. It's approx 4.6%. That's a proxy for what investors currently expect the 10-yr to be yielding at the end of the year absent any new information. 3.5% is dead wrong and therefore simply represents one random individual's prediction with no backup provided whatsoever. But thanks for the conversation.

US Treasury Yield Curve

An app for exploring historic interest rates

www.ustreasuryyieldcurve.com

This is a friendly discussion. Disagree and have a discussion and state your case for what you believe. But dial the dead wrong shtick way back. Thanks.

 

[Schmeabs]

UBS came out this morning and increased their year end forecast of the 10 year Treasury from 3.50% to 3.75%. This is based on the recent stickyness of inflation data and they now predict 50 basis points in reduction this year of fed funds rate starting in September. Like I said before, expectations may change based on new data.

 

[Stoneworker]

On April 12, 2023, the 10-yr Treasury yield was 3.45%.

On the same day, UBS published a note forecasting the 10-year Treasury would fall even further from that point...and end 2023 at 3.25%

In actuality, the 10yr Treasury ended 2023 right at 4%...and of course is currently at 4.5%+

Looks like rates didn't fall as predicted by UBS in April 2023 and in fact they rose significantly. Best of luck in April 2024

"...we continue to think the 10-year will end [2023] near 3.25%"

Fixed income: Carry conscious

While the UBS Chief Investment Office (CIO) maintains the overall up-in-quality bias within their portfolio, they do not believe rates will move materially lower, given the easing priced in and rising recession expectations over the near term, to mitigate the loss in yields between loans and IG...

www.ubs.com

 

[Stoneworker]

UBS is kind of like the weather...if you don't like today's forecast...just wait a few days and it'll change.

...UBS now sees a growing possibility that inflation fails to decline to the Fed’s target, spurring a pivot back to hikes and sparking a deep selloff in bonds and stocks.

“If the expansion remains resilient and inflation gets stuck at 2.5% or higher, there would be real risk the FOMC resumes raising rates again by early next year, reaching 6.5% Fed Funds by mid-next year,” said UBS strategists

UBS has already tempered an aggressive view for 275 basis points of US cuts this year, to now forecast just 50 basis points.

Source: Fed Hiking to 6.5% is "Real Risk" for UBS Strategists - 4/16/24 Bloomberg/Yahoo Finance

 

[Stoneworker]

For technical analysis enthusiasts...

Additionally, the daily chart for the 10-year Treasury yield shows the 50-day and 200-day moving averages have created a “golden cross” pattern, signaling the confirmation of an uptrend and the possibility of further increases, with the next resistance level now projected at 5%.

 

[Schmeabs]

UBS is kind of like the weather...if you don't like today's forecast...just wait a few days and it'll change.

...UBS now sees a growing possibility that inflation fails to decline to the Fed’s target, spurring a pivot back to hikes and sparking a deep selloff in bonds and stocks.

“If the expansion remains resilient and inflation gets stuck at 2.5% or higher, there would be real risk the FOMC resumes raising rates again by early next year, reaching 6.5% Fed Funds by mid-next year,” said UBS strategists

UBS has already tempered an aggressive view for 275 basis points of US cuts this year, to now forecast just 50 basis points.

Source: Fed Hiking to 6.5% is "Real Risk" for UBS Strategists - 4/16/24 Bloomberg/Yahoo Finance

That article is stating what would happen in a worst case scenario, one that they view as a not very likely scenario. UBS base view is still for the 10 year to be at 3.85% at year end and that bonds are attractively valued right now. They have not wavered on that.

I noticed you still have not made your prediction on where the 10 year rate is at year end. I wonder why that is?

 

[Stoneworker]

The average rate on the standard 30-year fixed mortgage jumped by nearly a quarter percentage point to 7.1%, according to a survey of lenders released Thursday by mortgage-finance giant Freddie Mac. That is the highest level since late 2023 and the largest weekly increase in nearly a year.

Existing home sales in March, meanwhile, posted their biggest monthly drop in more than a year, the National Association of Realtors said Thursday. The 4.3% decrease from February was the largest percentage decline on a monthly basis since November 2022, NAR said.

A persistently low supply of homes for sale is also pushing prices higher. The national median existing-home price rose 4.8% in March from a year earlier to $393,500, NAR said.

The costs of buying a home are also outpacing the increases in rent, making it relatively cheaper to rent. The average monthly new mortgage payment was 38% higher in the U.S. than the average apartment rent at the end of 2023...that premium has been in the double digits for two years.

Source: 4/18/24 WSJ

 

[Chadstroma]

US inflation cools in May, boosting hopes of Fed rate cut​

Story by Lucia Mutikani

WASHINGTON (Reuters) - U.S. monthly inflation was unchanged in May as a modest increase in the cost of services was offset by the largest drop in goods prices in six months, drawing the Federal Reserve closer to start cutting interest rates later this year.

The report from the Commerce Department on Friday also showed consumer spending rose marginally last month. Underlying prices advanced at the slowest pace in six months, raising optimism that the U.S. central bank could engineer a much-desired "soft landing" for the economy in which inflation cools without triggering a recession and a sharp rise in unemployment.

Traders raised their bets for a Fed rate cut in September.

"This was a very Fed-friendly report that should keep the September rate cut in play, while at the same time increasing investor confidence that moderate economic growth can be maintained even as rates stay higher for longer," said Scott Anderson, chief U.S. economist at BMO Capital Markets. "The sharp slowdown in core inflation is just what the doctor needed to see to keep the economy on the soft-landing glide-path."

The flat reading in the personal consumption expenditures (PCE) price index last month followed an unrevised 0.3% gain in April, the Commerce Department's Bureau of Economic Analysis said. It was the first time in six months that PCE inflation was unchanged. Goods prices fell 0.4%, the biggest drop since November.

There were big declines in prices of recreational goods and vehicles as well as furnishings and durable household equipment.

The price of gasoline and other energy goods dropped 3.4%, the biggest slide in six months. Clothing and footwear were also cheaper, while food prices rose marginally.

The cost of services increased 0.2%, lifted by higher prices for housing and utilities as well as healthcare. Financial services and insurance costs declined 0.3% after rising for five straight months. These costs, together with housing, have been among the major drivers of services inflation.

In the 12 months through May, the PCE price index increased 2.6% after advancing 2.7% in April. Last month's inflation readings were in line with economists' expectations.

Inflation is receding after spiking in the first quarter as 525 basis points worth of rate hikes from the Fed since 2022 cool domestic demand. Inflation, however, continues to run above the central bank's 2% target.

Financial markets saw a roughly 68% chance that the Fed's policy easing would start in September compared to about 64% before the data, though policymakers recently adopted a more hawkish outlook. The U.S. central bank has maintained its benchmark overnight interest rate in the current 5.25%-5.50% range since last July.

Economists were divided on whether the Fed would still reduce borrowing costs twice this year amid solid wage growth. The release of the U.S. employment report for June next Friday could shed more light on the monetary policy outlook.

Stocks on Wall Street were trading largely higher. The dollar was little changed against a basket of currencies. U.S. Treasury prices were mixed.

SPENDING RISES MODERATELY

Excluding the volatile food and energy components, the PCE price index edged up 0.1% last month, the smallest gain since November. That followed an upwardly revised 0.3% rise in April.


The so-called core PCE price index was previously reported to have climbed 0.2% in April. Core inflation increased 2.6% on a year-on-year basis in May, the smallest advance since March 2021, after rising 2.8% in April.

It rose at a 2.7% annualized rate over the past three months, slowing from a 3.5% pace in April.

The Fed tracks the PCE price measures for its inflation target. Monthly inflation readings of 0.2% over time are necessary to bring inflation back to target.

PCE services inflation excluding energy and housing also ticked up 0.1% last month after advancing 0.3% in April. This measure is being watched by policymakers to measure progress in lowering price pressures.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.2% last month after rising 0.1% in April, the report also showed. Spending was supported by a 0.3% gain in services, mostly outlays on hospital care, housing and utilities as well as air transportation. Services spending increased 0.4% in April.


Goods spending rebounded 0.2%, lifted by outlays on prescription medication, recreational goods and vehicles, and clothing and footwear. Spending on goods fell 0.5% in April.

Inflation fatigue, higher borrowing costs as well as the exhaustion of excess savings accumulated during the COVID-19 pandemic are holding back spending. Nonetheless, consumer spending remains underpinned by a resilient labor market, which continues to generate strong wage gains. Personal income increased 0.5% after climbing 0.3% in April. Wages shot up 0.7%, which some economists said could concern policymakers.

Income at the disposal of households after accounting for inflation and taxes rose a solid 0.5%. Consumers saved more, lifting the saving rate to 3.9% from 3.7% in April.

Spending adjusted for inflation rebounded 0.3% after slipping 0.1% in April. The rise in the so-called real consumer spending left growth in consumption this quarter on track to match the first quarter's 1.5% pace.


The Atlanta Fed is currently estimating gross domestic product to rise at a 2.2% rate in the second quarter. The economy grew at a 1.4% pace in the first quarter.

"There was no inflation in May, but there was also no indication of the kind of soft demand - undermined by slower income growth - the Fed believes necessary to keep inflation on a low track," said Chris Low, chief economist at FHN Financial.

 

[Buckna]

Interestingly, I bought 4 months ago at 6.99% (house opened up in the neighborhood my wife and I love, turned the old house at sub 3% into a rental.) Just got an offer today from the lender to refi at 6.5%, the catch was the 1 point and closing costs rolled back into the loan, would have been a 2.5 year break even at the reduced rate. Passed for now as I think rates will be lower eventually (not 3% of course but maybe low 6’s, high 5’s), hopefully this is an anecdotal sign that rates are finally softening somewhat

The last week or so has been a downward trend. Expectations is that will continue based on data coming out that drives rates.

When you go to refi, send me your locked Loan Estimate with that lender. I can tell you if you are solid with them or if we can save you more.

Moving this over from the personal finance thread, got an updated marketing email from my lender today. Down to 6.35% on a refi offer, not sure on the points but definitely lower than the previous email, payback period dropped from 2.5 to 1.5 years. Certainly getting closer to pulling the trigger. Just started a kitchen and flooring remodel yesterday though, so i’d need a drive-by appraisal (or wondering if they would reuse the same appraisal from Closing if less than 6 months old?)

 

[Chadstroma]

Interestingly, I bought 4 months ago at 6.99% (house opened up in the neighborhood my wife and I love, turned the old house at sub 3% into a rental.) Just got an offer today from the lender to refi at 6.5%, the catch was the 1 point and closing costs rolled back into the loan, would have been a 2.5 year break even at the reduced rate. Passed for now as I think rates will be lower eventually (not 3% of course but maybe low 6’s, high 5’s), hopefully this is an anecdotal sign that rates are finally softening somewhat

The last week or so has been a downward trend. Expectations is that will continue based on data coming out that drives rates.

When you go to refi, send me your locked Loan Estimate with that lender. I can tell you if you are solid with them or if we can save you more.

Moving this over from the personal finance thread, got an updated marketing email from my lender today. Down to 6.35% on a refi offer, not sure on the points but definitely lower than the previous email, payback period dropped from 2.5 to 1.5 years. Certainly getting closer to pulling the trigger. Just started a kitchen and flooring remodel yesterday though, so i’d need a drive-by appraisal (or wondering if they would reuse the same appraisal from Closing if less than 6 months old?)

What kind of loan do you have? Conventional, FHA, VA, USDA, jumbo, misc?

 

[Buckna]

Interestingly, I bought 4 months ago at 6.99% (house opened up in the neighborhood my wife and I love, turned the old house at sub 3% into a rental.) Just got an offer today from the lender to refi at 6.5%, the catch was the 1 point and closing costs rolled back into the loan, would have been a 2.5 year break even at the reduced rate. Passed for now as I think rates will be lower eventually (not 3% of course but maybe low 6’s, high 5’s), hopefully this is an anecdotal sign that rates are finally softening somewhat

The last week or so has been a downward trend. Expectations is that will continue based on data coming out that drives rates.

When you go to refi, send me your locked Loan Estimate with that lender. I can tell you if you are solid with them or if we can save you more.

Moving this over from the personal finance thread, got an updated marketing email from my lender today. Down to 6.35% on a refi offer, not sure on the points but definitely lower than the previous email, payback period dropped from 2.5 to 1.5 years. Certainly getting closer to pulling the trigger. Just started a kitchen and flooring remodel yesterday though, so i’d need a drive-by appraisal (or wondering if they would reuse the same appraisal from Closing if less than 6 months old?)

What kind of loan do you have? Conventional, FHA, VA, USDA, jumbo, misc?

Conventional 30 yr.

 

[Chadstroma]

Interestingly, I bought 4 months ago at 6.99% (house opened up in the neighborhood my wife and I love, turned the old house at sub 3% into a rental.) Just got an offer today from the lender to refi at 6.5%, the catch was the 1 point and closing costs rolled back into the loan, would have been a 2.5 year break even at the reduced rate. Passed for now as I think rates will be lower eventually (not 3% of course but maybe low 6’s, high 5’s), hopefully this is an anecdotal sign that rates are finally softening somewhat

The last week or so has been a downward trend. Expectations is that will continue based on data coming out that drives rates.

When you go to refi, send me your locked Loan Estimate with that lender. I can tell you if you are solid with them or if we can save you more.

Moving this over from the personal finance thread, got an updated marketing email from my lender today. Down to 6.35% on a refi offer, not sure on the points but definitely lower than the previous email, payback period dropped from 2.5 to 1.5 years. Certainly getting closer to pulling the trigger. Just started a kitchen and flooring remodel yesterday though, so i’d need a drive-by appraisal (or wondering if they would reuse the same appraisal from Closing if less than 6 months old?)

What kind of loan do you have? Conventional, FHA, VA, USDA, jumbo, misc?

Conventional 30 yr.

Unless you get an appraisal waiver then it will be a full appraisal. Appraisal waivers are not something the lender decides on. The lender puts in the information into AUS (automated underwriting system) for Fannie and Freddie and then it will tell them if there is or is not. Someone good (like me) knows a few tricks to help switch it over at times to get the waiver. Also, some MLO's will only run AUS on Fannie and not Freddie because they are not they don't know better or lazy because it is possible to get one one Fannie and not Freddie and vice versa. The only thing I can tell you is that you would want to show as much assets as you can (which then you will need to provide statements for) so checking, savings, retirement, investment, etc. The more assets the higher probability of getting a waiver.

 

[Buckna]

Interestingly, I bought 4 months ago at 6.99% (house opened up in the neighborhood my wife and I love, turned the old house at sub 3% into a rental.) Just got an offer today from the lender to refi at 6.5%, the catch was the 1 point and closing costs rolled back into the loan, would have been a 2.5 year break even at the reduced rate. Passed for now as I think rates will be lower eventually (not 3% of course but maybe low 6’s, high 5’s), hopefully this is an anecdotal sign that rates are finally softening somewhat

The last week or so has been a downward trend. Expectations is that will continue based on data coming out that drives rates.

When you go to refi, send me your locked Loan Estimate with that lender. I can tell you if you are solid with them or if we can save you more.

Moving this over from the personal finance thread, got an updated marketing email from my lender today. Down to 6.35% on a refi offer, not sure on the points but definitely lower than the previous email, payback period dropped from 2.5 to 1.5 years. Certainly getting closer to pulling the trigger. Just started a kitchen and flooring remodel yesterday though, so i’d need a drive-by appraisal (or wondering if they would reuse the same appraisal from Closing if less than 6 months old?)

What kind of loan do you have? Conventional, FHA, VA, USDA, jumbo, misc?

Conventional 30 yr.

Unless you get an appraisal waiver then it will be a full appraisal. Appraisal waivers are not something the lender decides on. The lender puts in the information into AUS (automated underwriting system) for Fannie and Freddie and then it will tell them if there is or is not. Someone good (like me) knows a few tricks to help switch it over at times to get the waiver. Also, some MLO's will only run AUS on Fannie and not Freddie because they are not they don't know better or lazy because it is possible to get one one Fannie and not Freddie and vice versa. The only thing I can tell you is that you would want to show as much assets as you can (which then you will need to provide statements for) so checking, savings, retirement, investment, etc. The more assets the higher probability of getting a waiver.

Thanks for the peak behind the curtain!

 

[Chadstroma]

If any of ya'll know anyone who has purchased a home in the last two years or so using VA or FHA, get them in touch with me ASAP. I just talked to a vet that bought about 9 months ago where I am able to get him a rate 100 bps lower than what he has currently (that is 1% lower).

 

[BassNBrew]

If any of ya'll know anyone who has purchased a home in the last two years or so using VA or FHA, get them in touch with me ASAP. I just talked to a vet that bought about 9 months ago where I am able to get him a rate 100 bps lower than what he has currently (that is 1% lower).

Just heard a radio ad yesterday where someone was claim they could refinance these loans with no income verification, no appraisal, no fees.

 

[Chadstroma]

If any of ya'll know anyone who has purchased a home in the last two years or so using VA or FHA, get them in touch with me ASAP. I just talked to a vet that bought about 9 months ago where I am able to get him a rate 100 bps lower than what he has currently (that is 1% lower).

Just heard a radio ad yesterday where someone was claim they could refinance these loans with no income verification, no appraisal, no fees.

Basically yes.

VA IRRRL and FHA Streamline rate and term refinance. No income verification or appraisal. There are fees but the lender with the ad is giving lender credits to cover them (in exchange for a higher rate than you could otherwise get). VA has a funding fee and FHA a UFMIP but those can and usually are financed.... so no fees is not really true but also not really false either.

This was the reason I asked @Buckna what kind of loan he had before answering previously.

 

[BassNBrew]

If any of ya'll know anyone who has purchased a home in the last two years or so using VA or FHA, get them in touch with me ASAP. I just talked to a vet that bought about 9 months ago where I am able to get him a rate 100 bps lower than what he has currently (that is 1% lower).

Just heard a radio ad yesterday where someone was claim they could refinance these loans with no income verification, no appraisal, no fees.

Basically yes.

VA IRRRL and FHA Streamline rate and term refinance. No income verification or appraisal. There are fees but the lender with the ad is giving lender credits to cover them (in exchange for a higher rate than you could otherwise get). VA has a funding fee and FHA a UFMIP but those can and usually are financed.... so no fees is not really true but also not really false either.

This was the reason I asked @Buckna what kind of loan he had before answering previously.

They actually advertised that if you're paying 6.5% or more to give them a call. I personally thought that was kind of cool that they did that.

 

[Chadstroma]

For that upcoming refi boom....

Mortgage borrowers could save up to $1,500 on a refinance with the FHFA's new title insurance pilot

The FHFA has launched a new pilot program that waives title insurance on certain mortgage refinances, lowering closing costs for eligible borrowers.

www.businessinsider.com

 

[BeTheMatch]

For that upcoming refi boom....

Should be here any decade now.

 

[Chadstroma]

For that upcoming refi boom....

Should be here any decade now.

Already got a mini one with FHA and VA that have been done in the last year or two.

 

[Chadstroma]

For that upcoming refi boom....

Should be here any decade now.

Already got a mini one with FHA and VA that have been done in the last year or two.

And speaking of which.... 55 bps improvement on rates this morning from last night.

 

[DevilDog919]

For that upcoming refi boom....

Should be here any decade now.

Already got a mini one with FHA and VA that have been done in the last year or two.

And speaking of which.... 55 bps improvement on rates this morning from last night.

So what is a VA IRRL rate at right now? Got a 6.75 VA last year and looking to refinance at 5.5 and then again at 4, if we get that low.

 

[Schmeabs]

10 year now at 3.82%. Just as I posted earlier a slow down in growth, jobs and inflation has pushed down long term rates. Expect the Fed to cut rates in September.

 

[Chadstroma]

For that upcoming refi boom....

Should be here any decade now.

Already got a mini one with FHA and VA that have been done in the last year or two.

And speaking of which.... 55 bps improvement on rates this morning from last night.

So what is a VA IRRL rate at right now? Got a 6.75 VA last year and looking to refinance at 5.5 and then again at 4, if we get that low.

DM me... might be there.

 

[Instinctive]

@Chadstroma bat signal time

I have two acquaintances who own a rental property (or 4 in one case) and we've discussed for a couple years now the idea of investing in a few together to scale more quickly. I've recently reached the point where I feel we have enough liquid assets to put ~$50k into something like this with them and not get hurt too badly if it went downhill.

As a mortgage broker...

• How much does the rate and down payment % needed change if you buy the property in an LLC vs as a joint mortgage?
• If I just bought a house that I intend to rent out, can I as an individual get a conforming mortgage, or is it an investment mortgage?
• Would joint mortgages have worse rates than an individual mortgages if i have the best credit?

 

[Chadstroma]

@Chadstroma bat signal time

I have two acquaintances who own a rental property (or 4 in one case) and we've discussed for a couple years now the idea of investing in a few together to scale more quickly. I've recently reached the point where I feel we have enough liquid assets to put ~$50k into something like this with them and not get hurt too badly if it went downhill.

As a mortgage broker...

• How much does the rate and down payment % needed change if you buy the property in an LLC vs as a joint mortgage?
• If I just bought a house that I intend to rent out, can I as an individual get a conforming mortgage, or is it an investment mortgage?
• Would joint mortgages have worse rates than an individual mortgages if i have the best credit?

I got ya.
"Scale more quickly" equals DSCR loans. The short of it about DSCR is that the qualifying income is based on the property and not your income. We wouldn't even collect W2s, paystubs, tax returns, etc. This means that how many properties you can acquire is all about how much capital you have to use in the down payment. I published an article on Linkedin that explains DSCR in more detail: https://www.linkedin.com/pulse/maxi...rs-jvzac/?trackingId=HuWQYoxBRfa9g7xmT2Plhg== this is opposed to a conventional mortgage where your income is the qualifying income. Rents are used as income but at 75% of the actual rent or rental comps.

It really doesn't impact rate/down payment if we close in a LLC or individual. If you did a conventional investment loan for the purchase, the loan can not close in an LLC but you can deed it to an LLC. With a DSCR, some of my lenders will close the loan in LLC as well as deed.

Your options on the mortgages are really conventional investment property purchase or DSCR....... or other speciality products but for buying and renting this is pretty much your two options.

For mortgages, the lowest credit score of all on the application is used to qualify and price the loan. So, if you have a 800 score and your friend has 795 and your third friend has 700.... the score used would be the 700.

Feel free to DM me to get into more details etc.

 

[FreeBaGeL]

@Chadstroma bat signal time

I have two acquaintances who own a rental property (or 4 in one case) and we've discussed for a couple years now the idea of investing in a few together to scale more quickly. I've recently reached the point where I feel we have enough liquid assets to put ~$50k into something like this with them and not get hurt too badly if it went downhill.

As a mortgage broker...

• How much does the rate and down payment % needed change if you buy the property in an LLC vs as a joint mortgage?
• If I just bought a house that I intend to rent out, can I as an individual get a conforming mortgage, or is it an investment mortgage?
• Would joint mortgages have worse rates than an individual mortgages if i have the best credit?

Are these long term rentals or short term? If short term there is a lot of fudging you can do to get very near conventional loan terms. That would be not in an LLC though.

 

[Instinctive]

@Chadstroma bat signal time

I have two acquaintances who own a rental property (or 4 in one case) and we've discussed for a couple years now the idea of investing in a few together to scale more quickly. I've recently reached the point where I feel we have enough liquid assets to put ~$50k into something like this with them and not get hurt too badly if it went downhill.

As a mortgage broker...

• How much does the rate and down payment % needed change if you buy the property in an LLC vs as a joint mortgage?
• If I just bought a house that I intend to rent out, can I as an individual get a conforming mortgage, or is it an investment mortgage?
• Would joint mortgages have worse rates than an individual mortgages if i have the best credit?

Are these long term rentals or short term? If short term there is a lot of fudging you can do to get very near conventional loan terms. That would be not in an LLC though.

Long term for sure. No desire to figure out short term which seems pretty crowded/not great in our areas of understanding.

 

[Chadstroma]

@Chadstroma bat signal time

I have two acquaintances who own a rental property (or 4 in one case) and we've discussed for a couple years now the idea of investing in a few together to scale more quickly. I've recently reached the point where I feel we have enough liquid assets to put ~$50k into something like this with them and not get hurt too badly if it went downhill.

As a mortgage broker...

• How much does the rate and down payment % needed change if you buy the property in an LLC vs as a joint mortgage?
• If I just bought a house that I intend to rent out, can I as an individual get a conforming mortgage, or is it an investment mortgage?
• Would joint mortgages have worse rates than an individual mortgages if i have the best credit?

Are these long term rentals or short term? If short term there is a lot of fudging you can do to get very near conventional loan terms. That would be not in an LLC though.

DSCR can do both short term and long term rentals, at least with some lenders.
For conventional, I believe you have to have a years worth of rent to use short term rental income so you can not buy a property using expected short term rental income. But I would need to double check that as I am going off memory and not fully confident in that answer.

 

[Chadstroma]

Recap of rates the last few days...

Friday, large drop
Monday morning, slightly even better
Mid Monday, pricing worsens
Tuesday, pricing worsens

 

[BeTheMatch]

Recap of rates the last few days...

Friday, large drop
Monday morning, slightly even better
Mid Monday, pricing worsens
Tuesday, pricing worsens

I appreciate you getting me in on Monday morning for our refi!

 

[Chadstroma]

As mentioned above... Aug 2nd so a big drop in rates which was largely an expectation of rate drops with a following of this week mostly going back up though still lower than what it has been for most of the last couple of years. It is a great example of how the Fed rate decisions do not have a direct power on rates but do have an indirect influence. As I told more than a couple of clients over last weekend wondering if they should refi or if they should wait for the cuts, my feel was that the drop on Friday priced in those cuts already and perhaps more. That if things remained roughly the same, mortgage rates would go up or down not due to rate cuts but what the expectation was for the future from the point of time of the actual rate cuts.

It appears that I was right with the market adjusting and giving some of that pricing back. There is no doubt we are on a downward trend now and there is going to be a significant refi boom (though not like the last one for sure, still there has been $1.1 trillion in new mortgages for just the first three quarters of 2023. They will be a couple of trillion worth of refinances to be done as rates continue that downward trend. How much and how fast is really the million.... or trillion dollar question.

 

[Payne]

Looking to borrow some equity. Now a good time to do that?

 

[Chadstroma]

Looking to borrow some equity. Now a good time to do that?

Assuming you have an ultra low rate, you can do a HELOC, and since most (pretty much every one I have seen) are pegged to the Prime Rate, you can ride the rates down. If your current rate doesn't start with a 4 or lower, it might make sense to do a cash out refi depending on the specifics of everything.

 

[Payne]

Looking to borrow some equity. Now a good time to do that?

Assuming you have an ultra low rate, you can do a HELOC, and since most (pretty much every one I have seen) are pegged to the Prime Rate, you can ride the rates down. If your current rate doesn't start with a 4 or lower, it might make sense to do a cash out refi depending on the specifics of everything.

My current mortgage is a 15 year at 2.66%

 

[Chadstroma]

Looking to borrow some equity. Now a good time to do that?

Assuming you have an ultra low rate, you can do a HELOC, and since most (pretty much every one I have seen) are pegged to the Prime Rate, you can ride the rates down. If your current rate doesn't start with a 4 or lower, it might make sense to do a cash out refi depending on the specifics of everything.

My current mortgage is a 15 year at 2.66%

Yea, you want to look for a HELOC. A good credit union or small bank would be your best bet. I can do them but generally decline to do them since my deals are not as good as what you can get from them. The only equities I do are ones that CU's and banks won't do... higher CLTV, low credit score, high DTI, 2nd or investment home, etc.

 

[Softballguy]

Looking to do some larger scale upgrades to our house... adding a patio, new windows, new siding. Expecting around 100k to cover most of it. We owe 84k on our current mortgage which is at 4%. I talked to the bank, but the women I spoke with kept talking about a HELOC loan, which to me seems like an awful idea. Is a Home Equity Loan the way to go? Refinance the current loan, knowing the interest rate will be higher but it would still leave me with just one loan? Wife and I both have >800 credit score if that matters.

 

[-OZ-]

Looking to do some larger scale upgrades to our house... adding a patio, new windows, new siding. Expecting around 100k to cover most of it. We owe 84k on our current mortgage which is at 4%. I talked to the bank, but the women I spoke with kept talking about a HELOC loan, which to me seems like an awful idea. Is a Home Equity Loan the way to go? Refinance the current loan, knowing the interest rate will be higher but it would still leave me with just one loan? Wife and I both have >800 credit score if that matters.

hell would freeze over before I’d refinance right now.

But in your case it seems you’ll borrow more than the amount left on your mortgage. So, napkin math, if the average of the 4% mortgage rate plus the HELOC (7%?) averages more than the refi, I guess a refinance works for you. Plus HELOC isn’t a locked rate iirc.

 

[Chadstroma]

Looking to do some larger scale upgrades to our house... adding a patio, new windows, new siding. Expecting around 100k to cover most of it. We owe 84k on our current mortgage which is at 4%. I talked to the bank, but the women I spoke with kept talking about a HELOC loan, which to me seems like an awful idea. Is a Home Equity Loan the way to go? Refinance the current loan, knowing the interest rate will be higher but it would still leave me with just one loan? Wife and I both have >800 credit score if that matters.

I am in a rush right now so can add more soon but...

First, consideration is what rate will you have one a HELOAN? What payment?
Second, what would be the blended rate of the combined $184K with that HELOAN and current loan and then versus a cash out refi.
Third, one thing to consider is that in the future rates will be in a downward trend. You can refi again. If you have a 1st and 2nd then that would be a cash out refi which is a little more expensive than a rate and term. If you refi cash out now, then a future refi would be rate and term.

Essentially- more info is needed. I can definitely help walk you through this if you want to DM me. I will have time tonight after football practice to dive into it with you.

 

[Chadstroma]

Looking to do some larger scale upgrades to our house... adding a patio, new windows, new siding. Expecting around 100k to cover most of it. We owe 84k on our current mortgage which is at 4%. I talked to the bank, but the women I spoke with kept talking about a HELOC loan, which to me seems like an awful idea. Is a Home Equity Loan the way to go? Refinance the current loan, knowing the interest rate will be higher but it would still leave me with just one loan? Wife and I both have >800 credit score if that matters.

hell would freeze over before I’d refinance right now.

But in your case it seems you’ll borrow more than the amount left on your mortgage. So, napkin math, if the average of the 4% mortgage rate plus the HELOC (7%?) averages more than the refi, I guess a refinance works for you. Plus HELOC isn’t a locked rate iirc.

HELOCs typically are not fixed rate, tied to prime with a margin but HELOANs typically are fixed rate.

 

[Softballguy]

Looking to do some larger scale upgrades to our house... adding a patio, new windows, new siding. Expecting around 100k to cover most of it. We owe 84k on our current mortgage which is at 4%. I talked to the bank, but the women I spoke with kept talking about a HELOC loan, which to me seems like an awful idea. Is a Home Equity Loan the way to go? Refinance the current loan, knowing the interest rate will be higher but it would still leave me with just one loan? Wife and I both have >800 credit score if that matters.

I am in a rush right now so can add more soon but...

First, consideration is what rate will you have one a HELOAN? What payment?
Second, what would be the blended rate of the combined $184K with that HELOAN and current loan and then versus a cash out refi.
Third, one thing to consider is that in the future rates will be in a downward trend. You can refi again. If you have a 1st and 2nd then that would be a cash out refi which is a little more expensive than a rate and term. If you refi cash out now, then a future refi would be rate and term.

Essentially- more info is needed. I can definitely help walk you through this if you want to DM me. I will have time tonight after football practice to dive into it with you.

Really appreciate the offer, but don't worry about spending much time on me. Big thanks though!

To (try to) answer your questions... the rates at my credit union on an 80k loan look like:
*15 year fixed - 7.75%, $753/mo
*10 year fixed - 7%, $929/mo
HELOC - 8.5%, $567/mo

I clearly have some studying to do... I'm not clear what a blended rate would be or the specifics of a cash out refi. These are thing things I expected the professional I spoke with at the credit union to ask, but she basically just clicked the same buttons on their website that I did and offered little guidance.

 

[Chadstroma]

Looking to do some larger scale upgrades to our house... adding a patio, new windows, new siding. Expecting around 100k to cover most of it. We owe 84k on our current mortgage which is at 4%. I talked to the bank, but the women I spoke with kept talking about a HELOC loan, which to me seems like an awful idea. Is a Home Equity Loan the way to go? Refinance the current loan, knowing the interest rate will be higher but it would still leave me with just one loan? Wife and I both have >800 credit score if that matters.

I am in a rush right now so can add more soon but...

First, consideration is what rate will you have one a HELOAN? What payment?
Second, what would be the blended rate of the combined $184K with that HELOAN and current loan and then versus a cash out refi.
Third, one thing to consider is that in the future rates will be in a downward trend. You can refi again. If you have a 1st and 2nd then that would be a cash out refi which is a little more expensive than a rate and term. If you refi cash out now, then a future refi would be rate and term.

Essentially- more info is needed. I can definitely help walk you through this if you want to DM me. I will have time tonight after football practice to dive into it with you.

Really appreciate the offer, but don't worry about spending much time on me. Big thanks though!

To (try to) answer your questions... the rates at my credit union on an 80k loan look like:
*15 year fixed - 7.75%, $753/mo
*10 year fixed - 7%, $929/mo
HELOC - 8.5%, $567/mo

I clearly have some studying to do... I'm not clear what a blended rate would be or the specifics of a cash out refi. These are thing things I expected the professional I spoke with at the credit union to ask, but she basically just clicked the same buttons on their website that I did and offered little guidance.

I will say for the refi, those are not horrible numbers (keep in mind rate is not the only cost on loans) but generally speaking, CU's- as much as i am a fan of them for other things, are not the best option for mortgage lending. A good one is great for HELOC/HELOAN but mortgages.... not so much. The largest most well known ones are usually priced higher and are absolute trainwrecks in communication and process. The smaller ones just do not have the scale to do mortgage lending well. The smart smaller ones broker, which is what I do. I ran through some pricing with the info you gave and a couple of assumptions (things I don't know but need to put something in to get pricing) and it looks like I most likely have better options on the refi options. I will not get into specific rates for compliance reasons but happy to discuss one on one.

That all being said, your blended rate if you kept the current mortgage and borrowed on the HELOC is about 6.5%. This would also have the benefit of future prime rate decreases when the Fed lowers rates. (assuming the HELOC is like almost all others which is pegged to prime + margin)

I would say that the only route to refi would make sense is if you valued cash flow over interest cost. What I mean by that is that instead of your current mortgage PITI + the $567 a month on the HELOC (I would be willing to be met that that $567 payment is interest only) you could likely lower your monthly liability with a 30 year fixed (my rate would on a 30 is comparable to their 10 yr) and have less of a liability. If you went the route of the HELOC the whole purpose of that is to keep interest cost down which means you absolutely would want to pay more so you can pay down the principal.

Any questions on any of that, let me know

 

[Chadstroma]

July CPI supports disinflation scenario for Sept ease​

Story by Reuters

(Reuters) -U.S. consumer prices rebounded as expected in July, but the trend remained consistent with subsiding inflation and did not change expectations that the Federal Reserve will cut interest rates next month.

The consumer price index increased 0.2% last month after falling 0.1% in June, the Labor Department said on Wednesday. In the 12 months through July, the CPI increased 2.9% after advancing 3.0% in June.

Economists polled by Reuters had forecast the CPI increasing 0.2% on the month and rising 3.0% year-on-year. The government on Tuesday reported a mild increase in producer prices in July.

The odds of a rate cut at the Fed's Sept. 17-18 policy meeting are nearly split between half a percentage point and 25 basis points. On Wednesday futures moved slightly in favor of a 25 bp cut, with odds at 60.5% according to LSEG calculations.

MARKET REACTION:

STOCKS: U.S. stock index futures extended a slight gain to 0.07% pointing to a steady open on Wall Street BONDS: The 10-year U.S. Treasury yield rose to 3.858% and the two-year yield rose to 3.977%FOREX: The dollar index pared early slippage to -0.068% and the euro pared its early rise to +0.2%

COMMENTS:

TOM GRAFF, CIO, FACET, PHOENIX, MARYLAND

“CPI came in largely in-line with expectations. The monthly Core figure was 0.2%, exactly as expected. The details were slightly more favorable than that though. Almost all of the increase for the month came from shelter. Since this has a somewhat lower weighting in Core PCE, this implies that the Fed's favored inflation measure will come in a bit below the CPI.

“If there had been any doubt before, this certainly seals the argument for a September rate cut from the Fed. However, it does not necessarily add to the argument for a 50 bps cut. The Fed could very well choose to take it slower with their first cut and consider larger cuts later.”

DAVID DOYLE, HEAD OF ECONOMICS, MACQUARIE, TORONTO

"The report isn't quite as favorable for disinflation as what occurred in June, but that report set a very high standard."

"Overall the report provides more reinforcement that the disinflation trend remains intact. It should provide the FOMC with increased evidence that the upturn in underlying inflation that occurred in 1Q24 was temporary and has reversed course."

"There is nothing in here that should prevent the Fed from proceeding with a rate cut in September. The pace of magnitude of easing will depend broadly on incoming data with inflation and employment figures taking on particular importance. Our baseline for a September cut is for this to be 25 bps."

ILYA VOLKOV, CEO, YOUHODLER, LAUSANNE

“The CPI slightly decreased as anticipated, which is positive news for equity markets. The EUR/USD pair will likely continue its upward trend, with the next resistance level in the 1.12-1.13 range. This favorable data could prompt the Fed to consider a 50 basis point rate cut next month. Market sentiment may push the DXY lower, further supporting EUR/USD in the near term.”

GENNADIY GOLDBERG, HEAD OF US RATES STRATEGY, TD SECURITIES, NEW YORK

“The one thing that was surprising here was rent accelerating. I think that's the reason for the market's somewhat disappointed reaction, even though the print actually came in on the weaker side of consensus. I do think the market is reassessing the odds of a 50 basis point rate cut in September. That pricing seems to have dropped from about 39 base points ahead of the reading to 36 basis points now. So I do think that the market is thinking that inflation is a little bit more sticky than the Fed was expecting, and they're penciling out some of that 50 basis point pricing.”

“Other than that, I think this really checks the box for the Fed to go in September. And of course, the big question for the market is going to be 25 or 50, and I suspect that's going to be determined over the next couple of weeks.”

JACK MCINTYRE, PORTFOLIO MANAGER, BRANDYWINE GLOBAL, PHILADELPHIA

"CPI is important but in the hierarchy of economic data, in terms of its market impact, it's probably moved into about the third. You've got payrolls, retail sales, and inflation, so it's not as quite as important."

"Financial assets have done well lately, we had PPI and we had a good reaction to that, so maybe the bar is a little bit higher, but I suspect that when the dust settles, nothing has changed."

"It clearly gives the Fed room to cut rates so it tells you inflation's moving in the right direction and the longer the Fed doesn't do anything, the more restrictive monetary policy is going to be."


"We don't know whether it's going to be 25 or 50, but I don't think inflation's going to determine that. It's going to be the growth-oriented economic statistics, particularly the labor statistics and payrolls."

RUSTY VANNEMAN, CIO, ORION, OMAHA, NEBRASKA

“Consumer price inflation met expectations today, with headline year-over-year CPI slightly better than anticipated, dropping to 2.9% compared to the expected 3.0%. Last month, headline CPI was also at 3.0%. Considering this week's inflation data, including yesterday's PPI numbers, and the decline in both market-based and survey-based short-term inflation expectations to multi-year lows, the strong possibility of a Fed rate cut in September remains on the table.”

GERRIT SMIT, HEAD OF GLOBAL EQUITY MANAGEMENT, STONEHAGE FLEMING INVESTMENT MANAGEMENT, LONDON

"The July US headline inflation of 2.9% is the first reading below 3.0% since March 2021, and lower than consensus expectations."

"This can relax the Fed for a surprise early cut. With this psychological break below 3% investor focus can clearly move on from inflation to economic growth considerations."

Basically unless something crazy happens this data confirms an upcoming Fed easing rates. The real question is by 25 or 50 bps

 

[stbugs]

Looking to borrow some equity. Now a good time to do that?

Assuming you have an ultra low rate, you can do a HELOC, and since most (pretty much every one I have seen) are pegged to the Prime Rate, you can ride the rates down. If your current rate doesn't start with a 4 or lower, it might make sense to do a cash out refi depending on the specifics of everything.

My current mortgage is a 15 year at 2.66%

You’re like me, I’m at 15 years (only 2-3 years in) and 2.375. I took out a HELOC to buy our lake lot at the end of 2022/start of 2023 (plan for semi to permanent in a couple years). Plan was to pay it down quickly because the rate is way higher and we’re about 33% done. We had investments to cover it but I’m glad we didn’t because the market was bad when we closed so everything we left alone went up way more than the HELOC interest. Feels like we are getting to a top so planning to pay another big chunk at the end of the year.

 

[Chadstroma]

Mortgage refinancing surges 35% in one week, as interest rates hit lowest level in over a year​

https://www.cnbc.com/2024/08/14/mortgage-refinancing-surges-35percent-in-one-week-as-interest-rates-hit-lowest-level-in-over-a-year.html?fbclid=IwY2xjawErCNhleHRuA2FlbQIxMQABHQFJptcGJ7ri0IVnkcSBUZpCe73fcjzB3v87hrqlowu1hSvG0xcj7BiJyA_aem_zW3X7wzyVKI4F3-NxRXSOg