Weekly Rate & Market Update 1-20-17
Question: What were rates when past Presidents took office?
Answer: This is a question I asked myself this week.
Unfortunately my records for the Weekly Rate & Market Update only go back to 2005 due to a computer melt down in late 2004 that resulted in the loss of a lot of past files at that time.
Fortunately President George W. Bush took office in January of 2005 so we can go back three inaugurations and compare rates. In doing my research I discovered that while the Weekly Rate & Market Update started in 2002, the Question of the Week made its debut on September 26, 2008 with “If I have a loan payment with Washington Mutual what should I do?” This was an inquiry from a few clients that morning since the night before federal regulators pushed/coerced/forced Chase to take over failing WAMU—then and still the biggest bank failure in history. Chase paid the FDIC $1.9 billion for the “right” to acquire WAMUs assets.
Back to rate history.
When George W. Bush, our 43rd President, took the oath of office on January 20, 2005 the 30 year fixed rate was at 5.375% (using same criteria quoted below). In his first year in office the lowest rate was 5.125% in late June and early July, the highest was 6.125% in early November.
When our 44th President, Barrack Obama, placed his hand on the Bible for his first oath on January 20, 2008 the 30 year conforming rate was 4.875%, four years later after his re-election the rate had dropped to near historic lows of 3.375%. During President Obama’s first term the lowest rate was 4.5% in late November 2009 and the high was 5.375% in June. In the first year of his second term the low 3.25%, reached six weeks, and the high was 4.5% in July and September of 2013.
Today when our 45th President Donald Trump swore to preserve, defend and uphold the Constitution the conforming fixed rate is 4.125%.
What will our low and high rates for 2017 be during the first year of Trump’s presidency? If we knew with certainty the answer to that question, and the timing, we would be able to greatly increase our liquid assets.
Regardless of what happens to interest rates the rest of this year, and the next four, it is my sincere hope that the rancor, partisanship and divisiveness shown the past few years is able to be put aside by the overwhelming majority of Americans and their elected representatives. E pluribus unum, out of many, one—always the strength of America, what weakens our nation is when the many choose to remain separate and point out differences instead of joining on commonalities.
Remember, with Dennis it’s not just a mortgage, it’s your complete financial picture.
Presidents come and go but the economy keeps going in one direction or the other. While the world has been focused on Washington D.C. and politics this week, the economic analysts still put out data reflecting where our economy has been and where it may be going. The Consumer Price Index for December showed a 0.2% increase from November and prices are up 2.1% from December 2015—not overly positive nor overly negative for mortgage rates. Energy price increases were balanced with a decline in food prices and the data gives not a lot of support for another increase in the Fed Funds rate, but does not give a lot of support for the Fed to not raise rates again later in the year.
Rates for Friday January 20, 2017: After three weeks of stable rates we saw a bump this week, mostly for technical trading purposes as some investors sold off to secure some profits. Looking ahead I see us in a range between 4.25% at the top and 3.875% at the bottom for the next several weeks for the conforming fixed rate.
FIXED RATE MORTGAGES AT COST OF 1.25 POINTS
30 year conforming 4.125% Up 0.125%
30 year high-balance conforming 4.25% Up 0.125%
30 year FHA 3.50% Flat
30 year FHA high-balance 4.00% Flat
Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down (3.5% for FHA) with 740 FICO score for purchase mortgages.
Now that everything about the election that started almost two years ago most Americans will quickly pivot their interest to one national event, that while divisive also brings us all together: the NFL playoffs and who will be in the Super Bowl in two weeks. With four excellent teams and quarterbacks going at it this weekend sports fans should have two great games on Sunday to select who will play in Houston on February 5th. I have a rooting interest in the Packers based on a year long pool in which they were my first draft pick, but even without that interest I think the playoff experienced Packers will win in Atlanta. As for the game in New England I am also picking the visiting team to win. Yes Brady and the Patriots have more experience than the Steelers, but their defense hasn’t been that great this year and Brady has been really good but not as good as he has been in the past.
I should comment that I don’t really gamble because I am not right enough to make a living at guessing the outcome of sporting contests—regardless of who you root for know that someone who is diametrically opposed to you politically is also rooting for that team, something to build and repair a relationship that may have been dinged or damaged this past year.
Enjoy the games and have a great week,
Dennis
