Happy New Year and I hope you have an amazing 2015!! The mortgage bond market closed 2014 with a nice 5 day rally and is starting off 2015 on a good note - currently up 23 basis points - thanks to some economic data that came in below expectations (although still strong). The ISM manufacturing index came in at 55.5 (anything above 50 shows growth) which was below expectations of 57.6 and last month's reading of 58.7. Construction spending was also disappointing with a reading of -.3 vs. expectations of +.3 and previous of +1.2.
In general, I expect rates to trend up this year for a number of reasons, most importantly due to an improving economy which will entice investors to move from the safe haven of bonds to more growth-oriented investments like stocks. Additionally, experts are saying that there will likely be growth in the home-buying market as millenials decide to purchase homes and with more homeowners having equity in their homes, the move-up market is also likely to increase. This increase mortgage demand will have an upward influence on rates as well. Finally, the Fed has stated that they intend to begin increasing the Fed Funds rate later this year which, while it's a short term (overnight) rate, will influence a rise in rates. Here's today's chart:
If you have a loan closing within 30 days, I would take advantage of the fantastic rates right now. Bond prices are as high as they've been in quite a while so we could see some profit taking which would be bad for rates.
My goal this year is to write these posts a minimum of two times a week with a preference of 3-5 times per week. If you want to stay up on what rates are doing and why, please subscribe to my blog and feel free to share it with friends, associates, clients, etc. I also welcome any input you may want to share in the comments section. If I can help you or a client with a mortgage, I would be honored - 702-812-1214. Make 2015 the best year of your life.