Interest rates poised to decline – Weekly report for June 12, 2020

Mortgage interest rates for buying a home on the Palos Verdes Peninsula are expected to decline slightly next week . The following are excerpts from the newsletter on interest rates published by HSH Associates :

“While people looking to buy houses have been in the market for much of the spring despite challenges, homeowners really haven’t much paid attention to opportunities to refinance. That was, at least until the week ending June 5; overall applications for new mortgages rose 9.3%, according to the Mortgage Bankers Association, where a two-month string of rising applications for purchase-money mortgages (+5.3% in the latest week) was finally joined by an pick up in applications for refinancing, which posted an 11.4% jump. Mortgage rates haven’t really moved around much of late, and certainly underwriting standards haven’t loosened appreciably, but perhaps the news that rates were again holding near all-time lows finally got some notice by homeowners.

Adding a dim Fed outlook to a series of increasing worries took the wind out of the stock market, which dropped a bit on Wednesday after the meeting closed but fell precipitously on Thursday before finding its feet again on Friday. As far as bond yields were concerned, the more pessimistic outlook chopped off the spike in yields that had accompanied some better news last week, including a surprisingly-strong hiring report and diminishing unemployment claims. Already trending down, the influential yield for the 10-year U.S. Treasury shed another 10 basis points or so, closing the week nearly a 20 basis points below where it began. The early-week drift down helped curtail our expected increase in mortgage rates for the week, and the late-week decline should help set the stage for next week’s move.

While there’s no scheduled market-moving event for next week, we will get some clues as to how manufacturing is doing in a couple regions of the country, and will also get some sense of what’s happening in the new home market. We’ll also see if consumer spent some of their stimulus funds in May as things began re-opening; it would be hard for retail sales not to rebound at least a little after April’s unprecedented decline. We’ll also get a look at a couple of other items, too, and it would be hard not to consider any improvement anywhere to be relative “green shoots”, but even those only start to fill in the economic hole caused by the pandemic.

With investors a bit more chastened this week, and influential yields re-settling, mortgage rates are poised to settle back, too. We think that by the time next Thursday morning rolls around, the average offered rate for a conforming 30-year FRM (fixed rate mortgage) as reported by Freddie Mac will retreat by six basis points, or perhaps even a tick more. Anything more than six would set a new record low. Refinance, anyone?”

The following are interest rate quotes from John Alvin of American California Financial Services: