Mortgage Rates Rise on Fed Watch: Is the Housing Market Hurting?

If there is one sentence to sum up what mortgage rates have been going through over the past several months, here it is (courtesy of CNBC):

“Ongoing anxiety about a possible imminent scaling back of the Federal Reserve’s massive stimulus program roiled markets worldwide.”

Readers of our column here and our website will recognize the theme. Rates are guided by investor’s daily feelings… about the Federal Open Market Committee daily feelings… about the economy.

Rates are higher in part due to “possible imminent” movement (thanks for the careful verbiage CNBC), and borrowers currently buying or refinancing a home are paying a bit more monthly as the “Fed watch” anticipates the tapering of “quantitative easing” (QE).

On the other hand, mortgage rates were bound to rise eventually. The bond market received a massive influx of demand (read: cash) with monthly QE bond purchases of $85 billion (to see how rates move with the bond market, click here).

Furthermore, major events effecting global financial security have been relatively quiet this summer. Remember the European debt situation? The U.S. fiscal cliff? These types of “uncertain” events push investors to “safer havens” such as the U.S. Treasury market. In this case, it pushed them en masse.

With less demand for safety, the U.S. bond market was bound to drop, thus increasing yields and mortgage rates.

The market hasn’t received any major negative jolts recently. Stocks have just finished their first four-day losing streak of 2013, but this was more due to Fed-watching than anything else. The Dow and S&P 500 trundle along after breaching record-high levels earlier in the year. The U.S. economy is growing – albeit slowly – but this is in part due to “austerity” measures that have cut government spending.

As things have calmed, the primary market mover left to watch is the Federal Reserve. Investors made a large preliminary exodus from bonds to avoid getting stuck with low-yield, expensive bonds when the Fed leaves the market.

Though Fed chairman Ben Bernanke has given indications that the Fed will reduce QE when the economy is strong enough, he hasn’t concretely said what that threshold looks like. What we do know, though, is that tapering won’t suddenly erase all $85 billion in monthly bond purchases from the market. The decline will be gradual, which will give time for markets to adjust.

Here we are. Rates are higher, but how much is this really hurting the housing market?

Rob Chrisman, author of the widely-followed Daily Mortgage News & Commentary blog notes that, “Yes, it is certain that higher rates will put a damper on lending – but the question is when. For now, housing inventory, sales, and prices, are still showing strength.”

Refinance activity is down, but most people who wanted to refinance and catch the lowest rates on record were able to do so. Ultimately, higher rates may reduce demand for home purchases, but we haven’t seen the evidence of such a decline quiet yet.

In other housing news, construction activity continues to gain momentum.  Housing starts rose by 5.9% in July over the previous month and 20.9% over the previous year. Permits rose 2.4% monthly and 12.4% yearly.

This week, watch for data on existing home sales (Wednesday) and new home sales (Friday) to further gauge how the market is reaction to higher rates.

This week, mortgage rates begin on the upswing. See HERE for our complete rate update. Updated with New Look and Tools

If you haven’t noticed it already, our main site has a new look. In addition, we introduced our Market Indicators, which give a nice quick visual on trends in the local market.

We also  fixed the percent change calculation on the price change report.

We have another tool we’re getting ready to add to the site in the week or so!

p.s. I’ll be on the Mortgage Matters radio show tomorrow morning at 10 AM on KVEC (920 AM).

New Listing! 4844 Caballeros, San Luis Obispo


This extraordinary 11 acre property, just outside the City limits, is a must
see! Two homes, barn, riding arena, pasture, pool, a seasonal creek,
vineyard/hill views, and room to play! The unique main home is built around two
silos and features rustic wood floors and two brick fireplaces. The family room
opens to a beautiful, private pool. The second home features 2 bedrooms, 1 bath,
and a full kitchen. Bring your horses and enjoy the large riding arena, pasture,
and 2-stable barn. Authentic country living minutes from downtown San Luis

New Listing! 340 Acres – 7 View Parcels Vineyard Drive, Paso Robles


Paso Robles Westside Wine Country 340 acres with access via Vineyard Drive.
Property in 7 parcels ranging from 36 to 66 acres with Approved Subdivision Map
and Current DRE Report. Many possibilities for this stunning property with a
sought after location among charming wineries and sweeping vineyards. Located
midway between LA and the Bay Area, the weather with its coastal influences and
the thriving wine and food scene make this a world class destination. Enjoy a
healthy and relaxed lifestyle with peace and privacy. The views from the estate
building sites are outstanding in every direction. Make this your wine country
ranch estate or use as development opportunity to sell parcels individually. See
attached Public Report/Receipt. All offers to include Receipt for Public Report.
Call agent for more information Check with County for uses.

Keith Byrd on Mortgage Matters Radio This Week! (Also, Rates Drop)

Keith Byrd will be joining Central Coast Lending’s radio program Mortgage Matters this Saturday (August 17) on KVEC 920. As a co-host with Central Coast Lending owner Jason Grote, Keith will discuss the local real estate market and the remarkable website ( that he built to track it.

Tune in to KVEC 920 on Saturday, August 17 from 10 a.m. to 11 a.m. to hear more!

Mortgage rates have dropped again to begin the week. Since their price surge through June and early-July, rates have remained quite steady – and have even trended downward in some cases.

According to the weekly Freddie Mac national survey of mortgage rates, the 30-year fixed hit its 2013 peak (4.51%) on July 11. Since then, the average dipped briefly to 3.31%, before rising to 4.39% and 4.40% in consecutive weeks.

Over that same time, the Central Coast Lending 30-year fixed rate reached 4.463% (APR) on June 24, but has since dropped to 4.108% (APR).

The month of July, overall, was fairly kind to mortgage rates, but mortgage application activity has continually dropped since the initial June spike (read more about the spike here). The Mortgage Bankers’ Association’s weekly index of mortgage application activity has slid for three consecutive months.

As rates rose during June and July, we wrote that we expected some sort of easing as markets calmed down. This has been the case – rates have retreated slightly – though not to the extent that we hoped.

Markets have now priced in their concerns about Federal Reserve “tapering”, and until we receive indication from the Fed about the future of their quantitative easing (QE) program, we would be surprised to see any major movement.

The Fed was able to keep rates low with $85 billion per month bond purchases, and although they continue with this action, fear of future “tapering” of the program has kept rates at higher levels. Unfortunately, Chairman Ben Bernanke has offered little in the way of clarity, repeating that the Fed would taper the program as the economy dictates.

To see this week’s rates, click here.

Apple TV vs. Google Chromecast

A few weeks ago, Google announced Chromecast, a $35 device that connects to the HDMI port of a TV so you can broadcast things on your device (tablet, smartphone, laptop) to your HDTV. This is similar to Apple TV. Chromecast sold out of stores in a day but I was able to pick one up off of ebay for a premium price.

I’ve been an Apple TV fan for almost 2 years now. I’ve purchased AppleTVs for my daughters as I now buy movies off of ITunes instead of DVDs. I use ITunes Match which allows all the AppleTVs to access this video library “in the cloud”. The Apple TV also has apps like Netflix, Youtube, Hula Plus, and over a dozen more. It has MLB.TV which I subscribe to so I can watch the SF Giants and it’s a GREAT app. Apple recently added SkyNews which is also a great app since you just see a bunch of videos of current events (some with narration, some not). No video ads playing for 30 seconds before you see the video you want to either! This is the experience I hope other news sites go to.

AppleTV also supports Airplay which lets you “mirror” whatever is on your IPhone or IPAD onto the TV. I assume Mac Powerbooks too, but I’m still a PC laptop guy. PC’s don’t support Airplay though. Now enter Google with their Chromecast device. For $35 (Apple TV is $99), PCs and Android devices can now broadcast to a TV.

There are currently few apps for Chromecast. Youtube and Netflix are the two but you can also broadcast the Chrome web browser on PCs and Androids, but not on IPAD/IPhones.

It was a pain to configure Chromecast since I first tried it using my IPAD. I didn’t know that you needed a special App and the wasn’t any documentation in the Chromecast box, you just turn it on and a screen appears on your TV telling you to go to a particular web address to configure. After some frustration, I decided to try my PC laptop and then I had it configured in minutes.

The browser mirroring feature in Chromecast works pretty well. When I went to play a video on Youtube, it automatically switched the video to full screen on the TV. Pretty cool!

But without the apps, Chromecast is not as good as AppleTV, IMO. Maybe someone will come up with a good application for home searches on TVs (hint hint). Stay tuned! There was another reason I needed a Chromecast to test 🙂

Are The DEALS Gone?

Are the deals and lower priced housing GONE in San Luis Obispo county?  As of today, there are only 29 homes and condos priced under $250,000.  Wow, a far cry from two to three years ago when home inventory was available and prices were at the bottom.  Visit our Dashboards for properties priced by city for more information.

New Listing in Morro Bay! 1210 Bolton Dr


Charming Harbor Tract home in move in condition including fresh paint and like new carpet. Views of Morro Rock and Ocean. Spacious great room with cozy gas log fireplace, vaulted ceilings and open dining area. The kitchen features plentiful tile counter space, breakfast bar and a large pantry. The Master suite has views of Morro Rock and the ocean along with a huge, tiled walk-in shower and two closets. The garage is finished and includes extra storage space. The front yard is low maintenance with drip system, timer and recently revamped.