MORTGAGE WATCH 01/07/22

Happy New Year to you!

Please find 2022 Loan Limit Chart for your toolbox.  It covers maximum loan limits “all counties” for both Conventional & Government mortgages.

Mortgage Rates are on the rise in a significant way.  In fact, Mortgage Bonds and Treasury Bonds have given up the last their last 2 years of gains in the past 11 trading day! Let that sink in for a minute. The weeks Fed Meeting Minutes showed not only a fast exit from purchasing bonds (tapering), but announce intention to sell the balance sheet.  This means all the mortgages the government purchased over the last 2 years will be sold, and this will bring “significant” supply to the market, so we are anticipating more selling and higher rates moving forward.

Today, Nonfarm payrolls came in at 199k versus a median forecast of 400k.  On almost any NFP Friday before the pandemic, this would be worth some positivity in the bond market.  While that may have been the initial reaction in the first minute following the data, bonds quickly reversed course and moved into weaker territory again due to the Fed announcement mentioned above. 

Looking at weekly candlesticks in MBS and Treasuries reinforces the severity of the current sell-off.

Notice in the previous chart that 10yr yields are in the process of challenging the 1.77% technical ceiling.  They’ve made it as high a 1.783 as of this writing, but that has not yet resulted in any massive follow-through.  Attempted breakouts such as this can occasionally prompt value buying as opposed to more selling, but we probably won’t get a clean read on that until next week.

The Bottom Line: if you read my weekly rate watch updates the shift in rates should be no surprise to you.  Be aware is that a very big, very important, and relatively abrupt “repricing” of expectations is taking place.  It has to do both with omicron’s impact and the Fed’s policy outlook.  Batten down the hatches, etc.  Things could get worse before they get better!  I am locking ALL loans as soon as escrow opens.

 

About the Author

Tim Morissette, also known in the community as Mr. Foothill Ranch, offers over 44 years of real estate experience which has given him an established reputation and unmatched market knowledge. He is joined by his wife, Michele and son Matt, as they continue to offer personal service with an emphasis on achieving his clients’ real estate goals.  This unique combination of traits has led to his proven track record of referral and repeat business. This can be witnessed by the trust of homeowners in Foothill Ranch where he has sold twice as many homes and represented three times more buyers than the next-leading real estate agent for the last 25 years.

As residents of Foothill Ranch since 1994, Tim and Michele are actively involved in the community by fundraising for Foothill Ranch Library, Make-a-Wish Foundation, Cancer Society, Homes for Habitat, Relay for Life, South County Outreach, and the local church and schools. Tim enjoys sponsoring community-wide garage sales, as well as sponsors Paper Shredding and E-Waste Recycling events twice a year.

Tim and Michele are dedicated to their family of four sons, daughter-in-laws, and grandchildren. As a family, they enjoy many outdoor activities which include camping, spearfishing, mountain climbing and exploring the miles of hiking and equestrian trails in Foothill Ranch and the Whiting Ranch Wilderness Park. Tim and his sons are also avid snowboarders and enjoy mountain biking and lobster diving. Family is a top priority in the Morissette household. They look forward to helping more families achieve their dreams of homeownership.