Nov 15_ AWESOME Jumbo Rates and Mortgage Update

November 15, 2013 Friday Rate Sheet and Market Commentary _ Courtesy Tony Guaraldi VP of Mortgage Lending

As we had hoped the Mortgage Bond markets bounced back this week recovering some of the losses from last Friday’s Jobs Report.  The highly anticipated event for this week was the Confirmation Hearing for our new Fed President Janet Yellen which took place yesterday morning.  She is perceived to be “Dovish” which in our world means likely to continue the stimulus that has been keeping interest rates low and the stock market rising.  In her Q and A session at the hearing she did say as expected that the Fed would continue the bond purchases until the economy improves.  She did also mention that she believes the real unemployment rate is closer to 10% rather than the number from last week’s Jobs report at 7.3%.

CLICK HERE for the November 15 Mortgage Rate Sheet.

Basically the way the government defines someone as “unemployed” enables the report to be artificially lower than the actual number of individuals currently seeking employment in the United States. Interesting to hear the new Fed President address this issue in her Q & A.  Based on this we can assume that she will favor continuing the stimulus until we string a few months together of strong Jobs reports.

The bond markets and stock reacted positively to this news as you can see from the rise in prices below.  If the market will allow us we’d like to see if the rally can continue into next week and make another run at the 200 day moving average.

There are some sweeping changes coming to the Mortgage Industry on January 10th, 2014.  We’re starting to get some direction from the different investors as to what they will be doing to address it.  The biggest change is the definition of a Qualified Mortgage (QM) and the borrower’s ability to repay as defined by the Dodd Frank Act.  It defines the ability to repay as having a maximum debt ratio of 43% among other factors.  In preparation for this we’ve seen Chase cut the debt ratios allowed from 45% to 43% on their Jumbo product already this week.  We’re expecting others to follow suit over the next couple months.  More updates on this as we get them!

CLICK HERE for the complete article and graph.

For more information contact: Tony Guaraldi, m: 408.504.3295

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