Mortgage Strategy

Apache is functioning normally

Mortgage rates fell to an all-time low on Thursday, according to the daily average tracked by Optimal Blue. The direction of interest rates this week will have a lot to do with what Federal Reserve Chairman Jerome Powell says at the end of the central bank’s policymaking meeting on Wednesday.

Powell is the man who has the most power over mortgage rates at the moment. In mid-March, he restarted a bond-buying program last used during the financial crisis to stimulate demand for Treasuries and mortgage-backed securities. The primary goal was to grease the wheels of markets locked up with investor fears about the economic fallout of the coronavirus. It also resulted in cheaper rates.

“The Fed has been dominating mortgage rates since the middle of March and what they do on Wednesday is going to be a continuation of that,” said Walt Schmidt, FTN Financial’s head of mortgage strategy. “I don’t think it’s possible to contemplate we’d be anywhere near this low in mortgage rates if it weren’t for the Fed.”

The likely scenario for Wednesday is the Fed will provide forward guidance that either reiterates its pledge to buy MBS “for as long as it takes,” or becomes even more accommodating as a new surge in COVID-19 infections slams the economy, Schmidt said.

Rates have tumbled almost a percentage point since the Fed began buying Treasuries and MBS in mid-March. The initial pledge made on March 15 to buy $500 billion in Treasury bills and $200 billion of mortgage-backed securities wasn’t enough to unfreeze the markets. The daily average mortgage rate hit a two-month high of 3.84% on March 19, as measured by Optimal Blue.

It’s what happened the following Monday that did the trick: In an announcement posted on the Fed’s website at 8 a.m., before the opening of U.S. stock markets, Powell said the central bank would make “unlimited” purchases of MBS – that’s when rates began falling.

In June, the Fed pledged to keep buying Treasuries and MBS to the tune of about $120 billion a month.

There are other factors in play, including the question of whether the Senate will act to extend the beefed-up unemployment benefits set to expire on Friday. The extra $600 has helped to keep jobless Americans current on their bills, including mortgage payments.

If forbearances or delinquencies begin to rise, it will exert upward pressure on mortgage rates as lenders add a “risk premium” that will counteract the Fed’s bond-buying efforts.

“The Senate is not expected to send its version to the House of Representatives until next week,” Diane Swonk, chief economist of Grant Thorton, said in a note to clients on Monday. “Some worry that Congress will not come up with a plan before the recess scheduled for Aug. 7. This is the rare time when I actually hope election-year politics and Congressional propensity to spend dominate the agenda.”

The House passed the Heroes Act in May that extended the unemployment benefits through January, increased funds for testing, and supplied monetary relief to states and communities hard-hit by expenses related to battling the pandemic. The Senate went on a two-week vacation before the July 4 holiday without debating it or negotiating its own COVID-19 relief legislation.

Source: housingwire.com

Apache is functioning normally

Rates for a 30-year and 15-year fixed mortgage fell to all-time lows this week as a resurgence in the pandemic caused investors to buy more bonds, including mortgage-backed securities.

The average rate for a 30-year fixed mortgage was 3.03%, down from 3.07% last week. That marks the lowest in a data series that goes back to 1971, Freddie Mac said in a statement Thursday. The average 15-year rate fell to 2.51%, the lowest in almost 30 years of data, according to the mortgage financier.

Mortgage rates fell as investors reacted to news of a record-setting COVID-19 resurgence in some of the nation’s biggest states. The surges erased optimism from last month’s economic reports showing the jobs market recovering quickly from the virus-induced recession.

The low mortgage rates will boost demand for housing, but it’s a delicate balance, said Sam Khater, chief economist of Freddie Mac. Bad economic news pushes mortgage rates down. However, if states are forced to close businesses again and job losses mount, it will eat into the reservoir of people eligible to purchase properties.

“The summer is heating up as record low mortgage rates continue to spur homebuyer demand,” Khater said. “However, it remains to be seen whether the demand will continue if COVID cases rise to the point that it hinders economic growth.”

The resurgence in the pandemic has “already been much worse than we anticipated, and further restrictions will likely be required in some states to bring the virus under control,” the economists led by Goldman Sachs Chief Economist Jan Hatzius said in a report issued on Saturday.

Mortgage rates have fallen as bond investors’ concerns about a surge in forbearances in April and May has subsided. If layoffs spike, those numbers will mount again, said Joel Naroff, president of Naroff Economics.

The beefed-up unemployment provision in the CARES Act, which adds $600 a week to state payouts in an effort to fully replace salaries, is set to expire on July 31.

“If you’re a middle-income household with a job loss, that $600 a week could mean the ability to pay your mortgage and if it goes away it could put pressure on the housing market in terms of either mortgages or rents,” Naroff said.

The Federal Reserve, which rescued the bond markets in March and April by restarting a fixed-asset-buying program used during the 2008 financial crisis, is still purchasing about $4.5 billion of mortgage-backed securities a day, said Walt Schmidt, FTN Financial’s head of mortgage strategy.

“If it weren’t for the Fed, mortgage rates would be a lot higher,” Schmidt said. “The Fed buying MBS is keeping rates low. The Fed can’t control Fannie Mae and Freddie Mac, but it’s controlling what it can.”

Source: housingwire.com

Apache is functioning normally

Payroll connectivity platform Argyle announced this week that it has grown the number of its consumer verifications 100% year over year and has welcomed over 35 new customers so far in 2023.

The company offers direct-source data portability tools for mortgage, lending, banking, background and tenant screening, and other use cases.

“We’ve packaged five years of learning and innovation into our next-gen platform to continue automating critical workflows, reducing business risk, and providing exceptional experiences. The growth of our company over the past year echoes the demand for real-time access to reliable, direct-source data,” Argyle CEO and Founder Shmulik Fishman said.

Argyle 2.0, the latest platform launch, revolutionizes how businesses retrieve and operationalize income and employment data.

The Argyle platform includes updates to Argyle Link, Console, and API. Argyle Link is the front-end interface that enables consumers to connect their payroll or employer accounts instantly to share income and employment data with service providers in real-time, completing the onboarding process effortlessly without leaving the provider’s offering.

Argyle’s technology has helped numerous businesses to streamline their income and employment verification processes. Some of the businesses that have recently turned to Argyle include:  

  • Checkr 
  • Draper & Kramer 
  • Georgia United Credit Union 
  • iThink Financial Credit Union 
  • Lake Michigan Credit Union 
  • Lane Health 
  • Lenders One 
  • Regional Finance 
  • TrueWork  
  • VGM 

​​​”Time and accuracy are critical when processing member applications. We chose Argyle as our verification solution to ensure we receive the correct, real-time income and employment data as efficiently as possible,” said John Harpst, VP of mortgage strategy at Lake Michigan Credit Union. “With Argyle, we are confident we receive a complete income picture for the member without the concern that we missed important information that could affect the outcome of their loan approval.”

Argyle will exhibit at Fintech Nexus in New York City at the Javits Center from May 10-11. Fishman will be featured on the panel, “The Key Role Payroll Connections Play in Advancing Financial Inclusion,” on May 10th at 4:20 p.m. ET.

This content was generated using AI, and was edited and fact-checked by HousingWire’s editors.

Source: housingwire.com

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