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Mortgage Mirror

The Fed keeps a steady hand

The September meeting of the Federal Reserve Board came and went without a move. The Fed had hoped to raise rates at least four times in 2017, but ended up limiting upward motion to only two quarter-point increases. They chose to stop raising rates when inflation remained below their target range of 2 percent even with low unemployment. In addition to a more dramatic rate increase, the Fed had hoped to start selling some of their $4.5-trillion balance sheet. The balance sheet started below $1 trillion back when the Fed began buying bonds in early 2009. They did this in ...

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Beware of mortgage fraud!

Sadly, there are many types mortgage fraud but the one that I would like to focus on this month is mortgage servicing fraud. What is mortgage servicing fraud? That’s when scammers send out a letter informing borrowers that their mortgages have been sold to another lender. The letter directs the recipients to mail their checks to a different company and address. Most borrowers don’t think anything of it because transfers like that are normal in our industry and they begin making payments to this so-called new lender. The borrowers don’t find out they’ve been scammed until at least a month ...

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The upside to chaos

Chaos in Washington is keeping a lid on mortgage rates, which contributes to affordability. The firing of FBI director Comey and the ongoing Russia probes have put pressure on the Trump administration, which in turn has added a touch of volatility to the market. Stocks suffered their worse one-day decline in May, dropping more than 300 points. The drop in equities has helped mortgage bonds/rates, which have ticked down to some of the best levels of 2017. Shortly after the election, the 30-year fixed rate moved up to approximately 4.5 percent, but now has moved down into the low 4s. ...

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Hold your horses!

  Just when we think that higher mortgage rates are in the bag, we receive some game-changing news. Lackluster economic data, geopolitical disruptions and comments from President Trump regarding the Fed have us wondering what will come next. On the first Friday in April, the jobs report showed a disappointing 98,000 jobs created, far less than the 180,000 that were expected. Adding to that, the February and January jobs numbers were also revised down. The actual unemployment number came down from 4.7 to 4.5 percent, but those figures are the result of a household survey. I find the jobs-creation number ...

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The Fed does the expected, but what’s next?

Mid-March marked the first time that the Federal Reserve raised its rate in 2017. In bumping the rate up .25 percent, they noted that the economy is doing well and that we are approaching full employment. The bond market’s reaction to the move was surprisingly positive. We saw treasury and mortgage rates go down slightly that day, which is contrary to what we would have expected. Experts say that happened because the interest-rate increase was widely expected by the markets and it also signaled that the Fed is staying ahead of the inflation curve. When Chairwoman Janet Yellen was asked ...

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Adjustable Rate Mortgages are back

ARMs, or adjustable rate mortgages (mortgages that do not have a fixed rate), can be scary, but if you stay within your time line, it can save borrowers a lot of money when rates are on the rise. The most popular adjustable rate mortgages are the 5/1 ARM with 5/2/5 Caps, Margin 2.25, and the 7/1 ARM with 5/2/5 caps, Margin 2.25. What his means is that the payment will be spread over 30 years but the rate will be fixed for the first 5 or 7 years. Once the fixed time frame is over, the mortgage will adjust annually ...

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Rates rise with consumer confidence

  Jan. 25, 2017, was a historic day in the equity markets. The Dow Jones Industrial Average broke the 20,000 mark for the first time in history, and all that optimism has put upward pressure on mortgage and treasury rates. Since the election, mortgage rates have jumped by almost 1 percent. The markets (both stock and bond) are expecting great results from what the new administration will bring to the table. Rates have moved up because of better-than-expected economic news and the potential of higher wages and higher inflation, both of which are needed to sustain real estate prices increase. ...

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The Fed “busts a move”

For the second time in nearly a decade, the Federal Reserve raised short-term interest rate, this time by .25 percent. The move was widely expected, as the futures markets had predicted in the last few weeks that there was a 100 percent probability that the Fed would raise rates. The bond market was not happy about Fed Chair Janet Yellen’s comments after the move. Bonds were caught off guard because the Fed changed their forecast for raising rates in 2017 from two increase to three. Although Yellen stated that any future moves would be data dependent, the market was caught ...

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Mortgage rates jump after Trump victory

  Mortgage rates jumped by more than half a percent in the wake of the win by President-Elect Donald Trump. On the night of the election, as it became more and more apparent that Mr. Trump was going to win, the stock futures, an indicator of where the Dow Jones might open the next, was down 800 points, which indicated that rates would also drop. When the market opened the day after the election, the market started out flat and ended the day up over 250 points. This was almost a 1,100 swing relative to the projections. Mortgage and treasury ...

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All eyes are on the Fed this December

    December seems to be the month the Fed is most comfortable with. They raised short-term rates in December 2015 for the first time since 2006 and now it looks almost certain that they will raise them again in December 2016. Last year was interesting in that all rates moves up prior to the Fed raising rate in December but in the months following the hike, mortgage and treasury rates actually fell. Mortgage and treasury rates move up or down based on economic reports. The months following last year’s hike showed that economic indicators were average at best and ...

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