Blog - Insignia Mortgage

Insignia Mortgage ranked #1 and 2 in the top 5 of the $150MM Club Mortgage Professional America (MPA) in 2018

Posted on April 9, 2019 by Damon Germanides

MPA Mag, the magazine of American mortgage professionals, has just published their e-zine featuring the top grossing mortgage originators nationwide for 2018. These professionals were nominated by their peers and then substantiated by documentation. Insignia principals Chris Furie and Damon Germanides each earned a spot on this prestigious list of highly accomplished originators for another year.

Both men cracked the top 5 in average volume, with Damon at #1 and Chris comes in at #2 this year, each with an average loan volume of over $1.9 million.

See the full 2018 MPA rankings here.

Market Commentary 4/5/19

Posted on April 5, 2019 by Damon Germanides

The highly watched Monthly Jobs Report put to rest concerns about a slowing economy as the report beat estimates with 196,000 jobs created versus 177,000 expected.

This data should put to rest for now fears on a looming recession and thus help boost stocks and slightly lower bond yields. Unemployment remained at a multi-decade low of 3.80% and hourly earnings rose to 3.20% year over year from February (which is bond-friendly as wage inflation remains tame). The Labor Force Participation Rate (LFPR) remained unchanged at 63.20%.

In other good news, the yield curve steepened. The potential flattening of the curve was a major concern just a few weeks ago, as that would be a sign of impending recession. However, a positive sloping yield curve is an indicator of a healthy outlook for the economy. Also, China and U.S. trade talks appear to be going well for the moment which has also helped stocks move higher. However, concerns remain as global economic growth has slowed in Europe, China, and Japan as central bankers continue to provide massive stimuli to their respective economies to spur growth. Finally, a Brexit deadline is looming in what is turning out to be a very complicated matter. So far, the markets have not been spooked by a no-deal Brexit, but that could change as the deadline approaches.

Here in the U.S., low rates have spurred home buying and refinances. We recommend taking advantage of the low interest environment because if the U.S. economy continues to surge, the Fed rate hike conversation will be back on the table. With this thought in mind, we remain biased toward locking-in interest rates at these very attractive levels, especially with the strong jobs report confirming no recession and the positive chatter regarding U.S. and China relations coming out of Washington.

Market Commentary 3/29/19

Posted on March 29, 2019 by Damon Germanides

Declining mortgage rates have spurred refinance activity, as well as increased the probability of a strong spring home buying season. With inflation in check and the Fed on pause, interest rates should remain attractive for the foreseeable future. However be on the alert as rates may have bottomed and hit resistance in moving lower after rallying greatly since the beginning of the year.

Fears of global economic activity slowing continue to weigh on bonds. The recent drop in rates has pushed several wealthy nations debt to trade at zero % or below. In the U.S., the 10-year Treasury bond briefly dropped below 2.4% this week and the 3 month to 10-year Treasury yields inverted, a potential ominous signal of a looming recession should the inversion hold. An inverting yield curve has predicted most recessions and the inversion is the result of fears of economic growth globally as well as a lack of inflation. These fears will keep investors on their toes and may create a more volatile rate environment in the coming months.

Given that we believe most of the concerns we’ve mentioned are priced in, we are biased toward locking in rates at these very attractive levels. Any unexpected good news could move rates up higher quickly.

Market Commentary 3/22/19

Posted on March 22, 2019 by Damon Germanides

The highly anticipated Fed meeting this past Wednesday did not disappoint. The Fed went “max dovish” in their policy statement by stating no more rate hikes for 2019 and possibly only one rate hike in 2020. Many market watchers actually believe the next Fed move in interest rate policy will be lower, a far cry from just this past December where the Fed believed that two more rate hikes were likely for 2019. Less understood but equally important was the Fed’s timeline on the end of the balance sheet run-off, which will be ending later in the year.

Bonds responded as expected as both government and mortgage bond yields fell precipitously. Stocks responded with caution, falling Wednesday, rallying Thursday, and as of the time of this post, falling hard on Friday.

What’s next? The big question being asked is what does the Fed see that others don’t with such a quick shift in policy. Low rates will help borrowers buy new homes, cars, refinance debt, and also aid corporations, but the return of low rates due to the fear of either a brewing U.S. recession or quickly slowing European, Japanese, and the Chinese economies is quite worrisome. Longer-dated German bunds have gone negative for the first time in quite a while, and our own 10-year U.S. Treasury bond is trading at 2.45%, well below the 3.25% seen just a couple of months ago.

For those who qualify, low rates are another bite at the apple, which will help boost the spring buying season, as well as spur refinances, which will result in more savings or more disposable cash flow to buy other items, so in that sense we are grateful to the Fed.

Should the U.S. avoid recession (keep an eye on the flattening yield curve), rates at today’s levels are very attractive, but should the U.S. slip into a recession, expect rates to fall lower. At the moment, we are in a wait-and-see mode on rate direction and would not be surprised if rates were headed lower.

Market Commentary 3/15/19

Posted on March 15, 2019 by Damon Germanides

Easing global monetary policy continues to provide the tailwinds pushing mortgage rates lower and equity prices higher. Recent confirmation from the February PPI and CPI also confirmed that inflation remains in check. As stocks have gained back most of the losses from late last year, risk is back in vogue.

Reduced mortgage rates have arrived just in time to boost what has been a slowing new market for the new and resale housing market. Recent stories on the glut of high-end homes (those over $10 million) have brought back the conversation as to whether and when housing will reset much lower. Our view is that a glut is unlikely given the strict underwriting guidelines that banks continue to follow. If anything, the return of low-interest rates may ignite a better than expected spring buying season in housing.

However, fears remain in the highly leveraged first world economies, especially in the corporate and government debt markets. As previously mentioned, QE has created absurdly low rates around the world and true price discovery is difficult to attain. Geopolitical events such as China trade talks, Brexit, and Italian debt levels are also worrisome, as well as the slowing of the global economy. Low rates work as a tonic in addressing these issues and central banks realize that.

With the 10-year Treasury dipping below 2.600%, locking is not a bad idea. However, given where European and Japanese bonds are trading, rates in the U.S. may go lower. Be careful what your wish for, as lower rates may mean trouble ahead. For now, all looks to be OK and borrower appear to be taking advantage of renewed low rates for both purchases and refinance. We continue to be cautious and are biased on locking-in interest rates at these levels.

Market Commentary 3/8/19

Posted on March 8, 2019 by Damon Germanides

The highly watched monthly non-farms payroll report was a bit of shocker at first blush with only 20k new jobs created in February versus economists’ estimates of 180k jobs. However, other details within the jobs report were positive with the unemployment rate dropping to 3.8% and a decline in the U-6 number (total unemployed) falling to 7.3% from 8.1%, which was the largest decline ever. The Labor Force Participation Rate (LFPR) remained unchanged at 63.2%. We will await revisions on this month’s report to see if the new jobs created are revised higher. Our hunch is that there were more jobs created then stated in this report as evidenced by the bond market’s muted reaction to the report. Stocks initially sold off but recovered most of the losses by day’s end.

Other big news this week was concerns over Europe and China’s slowing economy and the ECB reinstating stimulus. We are concerned about how long the U.S. can expand its economy in the face of global economic deceleration. Global bond yields have fallen again, and the Fed has also stalled on normalizing monetary policy which has capped interest rates globally for the moment. The fear is that with rates already so low (many bonds yield negative rates in Europe and Japan), central bankers have limited tools to in their toolkit to deploy should the world economy slow further. Keep an eye on the flattening yield curve in the U.S., especially the short-term treasury bills to 10-year Treasury spread. While a flattening yield curve does not mean a recession is near, an inversion of the yield curve is an ominous sign and has often properly predicted a recession.

Not all of this gloom and doom is bad for the consumer, as low-interest rates have spurred home refinances and purchases of both commercial and residential real estate. With home prices dipping a bit, it appears as if sales are starting to pick up into the spring buying season.

Given that the 10-year Treasury yield is below 2.62%, we remain biased toward locking-in interest rates, especially on purchase transactions.

Market Commentary 3/1/19

Posted on March 1, 2019 by Damon Germanides

The U.S. economy grew at the best clip in almost a decade even in the face of a slowing global economy, China-US trade tensions, and political uncertainty in Europe. The strong job market and tax reform helped spur consumer spending and on-going positive business investment. Fourth quarter GDP closed the year out at 2.6%. With the White House gunning for 3% economic growth and the Fed pausing on interest rate hikes, the good times look likely to roll on at least for a while.

Further supporting keeping interest rates on hold was the Fed’s favorite measure of inflation, Personal Consumption Expenditure (PCE), which came in at 1.9%, as expected. Low inflation readings cap bond yields and force investors to invest in riskier but higher-yielding assets classes.

Stocks continue to climb the wall of worry and are re-approaching all-time highs. Market risk-taking is back in vogue even in the face of a decline in earnings. A return to low rates has triggered increases in mortgage refinances and have certainly helped on-the-fence home buyers jump into the housing market.

With Europe and China slowing, and the Fed being very careful about its next move, we can see interest rates remaining low for the next several months. With the 10-year Treasury yield under 2.67%, we advise locking rates except for those borrowers willing to play the market in search of a marginally better deal.

Market Commentary 2/22/19

Posted on February 22, 2019 by Damon Germanides

U.S. Treasuries and major equity markets continue to trade benevolently as investors adjust to a more a “risk on” environment. A December wash-out in stocks and subsequent dovish commentary out of the Fed stoked this move upward in stocks and a move downward in interest rates. For the moment, Mr. Market has moved aside global growth concerns, some weak earnings guidance from analysts, and the fear of Brexit and Italian bond defaults. Positive talks with China are encouraging and have helped ease the markets. No less important is the fact that low interest rates spur risk-taking in equities and have arrived just in time for the spring buying season. Refinance volume has also improved amongst other debt-related activities.

The Fed pausing on their rate hike forecasts does raise some concerns given the supposed strength of our economy and near all-time highs in the stock market. Historically, the Fed mandate was to watch over employment and inflation, but it is clear that supporting equity and asset valuations is no less important in today’s world. Low rates have probably distorted true price discovery and the Fed will need to be very careful about how to move rates as December’s vicious stock market decline is evidence of what one misstep can bring on.

Next week will be an important week for Fed-related news. We believe they will be very careful with policy statements and promote their “patience” policy to Congress.

We are grateful for the low interest rates and continue to advise clients to be cautious with respect to floating rates. One quickly forgets how fast stocks and bonds can move against you should the market have a change of heart. A 10-year U.S. Treasury bond trading under 2.700% was not forecasted by many this time last year.

Market Commentary 2/15/19

Posted on February 15, 2019 by Damon Germanides

U.S. equities traded well again this week in response to positive headlines that China and the U.S. will continue to negotiate tariffs, as well as the anticipation of an agreement on a new spending bill which will be signed today, and tame inflation readings. Even with some concerns about slowing global earnings growth, the threat of a global slowdown and or recession, and a poor reading of domestic retail sales for the fourth quarter, for the moment equities continue to push these worries aside. We think a lot of the excitement about equities has to do with the Fed’s pause in both rate hikes and balance sheet reduction. Risk on trading is now in full effect as market participation works under the assumption short-term interest rates will remain low both domestically and abroad. Home buyers are returning to the marketplace enticed by low interest rates and price declines. By all accounts, the U.S. economy is robust as mortgage applications rebound and consumers continue to feel good about their future prospects. With bonds, too much good news is bad, and we continue to feel compelled to advise clients that with the 10-year Treasury under 2.700%, we believe locking-in is advisable.

Market Commentary 2/8/19

Posted on February 8, 2019 by Damon Germanides

Global yields continue to move lower benefitting borrowers in a significant way. Domestically, the so-called “Powell Put” has helped equities rise as traders have greater confidence in bidding on riskier investments.

The 10-year Treasury is trading under 2.65% which is making mortgage rates ultra attractive again and from what we can see, increased loan volume greatly. While our domestic rates are low, rates are even lower across the pond. In fact, there are hints that the European Central Bank might soon lower short rates in the face of a slowing European economy, Brexit confusion, and looming Italian debt concerns. Add a deflationary Japan and a slowing China economy to the mix, and therein lies the reason our domestic rates while low are actually quite high in relation to the rest of the developed world.

No big economic news this week, but next week will be important with multiple inflation reports coming out. If inflation remains tame, we could see rates move lower. Should we get a surprise higher on inflation, rates will adjust quickly. The Fed calmed markets late last month as they confirmed rates increases and the Fed balance sheet reduction was not on auto-pilot. A hot inflation reading could challenge those statements, especially with a booming U.S. economy, and historically low unemployment.

Home buyers are taking advantage of these low rates, and with a drop in home prices, we are seeing greater activity from buyers. We remain biased toward locking-in rates at these low levels (to be fair, levels we thought we would not revisit again for quite some time).