Portland Mortgage Market Update — August 9, 2024

The news is reporting year-low interest rates! The news is wrong! Yes, I know last week I got a little excited about rates dropping but I also said "there will be ups and downs". After the stock market fell out and rates improved last Friday, the week opened with a global sell off and rates worsened steadily all week. If that is the case, how is the news reporting that rates are at their lowest level all year? Every news outlet reporting this (and this means 99.99% of the news outlets) is basing the information on a weekly report issued by Freddie Mac call their Primary Mortgage Market Survey. In this survey, Freddie Mac gathers rate information from lenders across the country from Monday to Wednesday, then they release the report on Thursday. While rates were at their lowest last Friday, they were still quite good earlier in the week so the news is reporting data that is almost a full work-week old. This is important to convey to your buyers that their best and most accurate rate representation will come from their loan provider (who should be available all weekend… wink, wink)

So what led to rates worsening? Basically once the world figured out the US economy might not be as strong as led to believe, it panicked. Global markets tanked on Monday and usually when stock markets get bad it is good for mortgage rates, but when it is REALLY bad it is bad for everything. Currently the 10 treasury yield (which when this goes up, so do rates) is finding resistance at the 4.00 level so we are right where we started last Friday, with some big inflation news coming out next week in the CPI report which could help us lower rates come this time next week.

New-ish product alert! Well, not new but one that has come up quite a bit in the past couple of weeks. I am talking about DSCR loans. A Debt Service Coverage Loan is one that uses the appraisal rent schedule to determine if the investment property being purchased can cash flow. If it can, the loan works with little, if any documentation from the borrower. Pricing is not too far off from normal conforming loans either! So if you have any investor clients that may have taken a hit on income over the past year but still want to buy or refinance a rental property, have them give me a call!