Friday – January 15, 2021
Consumer spending fell in December as a rise in virus cases kept shoppers away from stores. Retail Sales fell 0.7% versus the 0.2% loss expected in December after losses seen in October and November. This comes after it was reported that 500,000 workers lost their jobs in restaurants and bars, hotels, concert halls, theaters and sports arenas last month. Sales were up nearly 3% from December 2019.
Incoming president-elect Biden unveiled a $1.9T stimulus plan last night. The proposal seeks direct checks of $1,400 for most Americans, enhanced unemployment insurance of $400 a week, money for schools to reopen, a possible $15 nationwide minimum wage along with aid for state and local communities. There has been talk on Capitol Hill that this plan is just the first installment in a series of stimulus proposals.
Consumer Sentiment edged lower in early January falling to 79.2 from 80.7 in December. Political turmoil along with rising COVID-19 cases have dampened sentiment. “Consumer sentiment posted trivial declines in early January despite the horrendous rise in COVID-19 deaths, the insurrection, and the impeachment of Trump,” University of Michigan Surveys of Consumers Chief Economist Richard Curtin said in a statement.
Courtesy of Mortgage Market Guide
-CHECK US OUT ON SOCIAL-
Thursday – January 14, 2021
Home borrowing costs spiked higher in the latest week but remain at historically low levels. Freddie Mac reports that the 30-year fixed-rate mortgage rose 14 basis points to 2.79% this week with 0.7 in points and fees. A year ago at this time, the rate averaged 3.65%. Sam Khater, Freddie Mac’s Chief Economist said, “While mortgage rates are expected to increase modestly in 2021, they will remain inarguably low, supporting homebuyer demand and leading to continued refinance activity. Borrowers are smart to take advantage of these low rates now and will certainly benefit as a result.”
Americans filing for first-time unemployment benefits jumped in the latest week to 965,000 from 784,000. Continuing claims, or those receiving benefits for at least two weeks straight, rose to 5,271,000 from 5,072,000. The lockdowns in several states have increased and are contributing to the uptick in new benefits. There was an additional 285,000 who filed for unemployment benefits through the Pandemic Unemployment Assistance program, up 100,000 from the previous week. Those are self-employed or gig workers, who aren’t covered under regular benefits.
Recent comments from Fed members had suggested that the Fed’s $120B per month purchase program of Mortgage-Backed and Treasury securities may be due for tapering in 2021. But Vice Fed Chair Clairda and Fed Governor Brainard laid those fears to rest on Wednesday affirming that QE policy is a long way from being adjusted. Ms. Brainard said, “The U.S. economy remains “far away” from the Fed’s goals and as a result, the bond-buying program will likely continue for “quite some time.”
Fed Chair Powell will be speaking this afternoon around 12:30 p.m. ET and may also reiterate the need for asset purchases for some time to come.
Courtesy of Mortgage Market Guide
-CHECK US OUT ON SOCIAL-
Wednesday – January 13, 2021
Mortgage rates remained at record lows in the latest survey but have inched higher in the past week. The MBA reports that the 30-year fixed-rate mortgage rose two basis to 2.88% with 0.33 in points for the week ended January 8, 2021. The Market Composite Index, a measure of total mortgage loan application volume, rose 16.7%, the Purchase Index was up 8% while the Refinance Index jumped 20%. The 30-yr fixed-rate mortgage increased 2bp to 2.88% with 0.33 in points for the week ended January 8, 2021. Spokesperson Joe Khan said, “Even with the rise in mortgage rates, refinancing did not slow to begin the year, with the index hitting its highest level since last March.
Consumer prices rose in December fueled by a rise in gasoline prices as well as the cost of food. The inflation reading Consumer Price Index (CPI) for December rose 0.4% from November’s 0.2% gain while rising 1.4% annually, up from 1.2% in November. Core CPI, which strips out volatile food and energy, was also inline at 0.1%, up 1.6% year over year. Many in the forecasting business see inflation on the rise mid-to-late this year.
The MBA also reported this week that in its latest Forbearance and Call Volume Survey it showed loans now in forbearance fell to 5.46% from 5.53% as of January 3, 2021. The MBA estimates there are 2.7 million homeowners in forbearance plans. As for Fannie Mae and Freddie Mac, forbearance declined 3.19% from 3.24%. Ginnie Mae loans in forbearance fell to 7.85% from 7.92%. Mike Fratantoni, MBA’s Senior Vice President and Chief Economist said, “The data show that those homeowners who remain in forbearance are more likely to be in distress, with fewer continuing to make any payments and fewer exiting forbearance each month.”
Courtesy of Mortgage Market Guide
-CHECK US OUT ON SOCIAL-
Tuesday – January 12, 2021
The NFIB Small Business Optimism Index fell 5.5 points in December to 95.9 and below the average Index value since 1973 of 98. Nine of the 10 Index components decreased with one improving. NFIB Chief Economist Bill Dunkelberg said, “Small businesses are concerned about potential new economic policy in the new administration and the increased spread of COVID-19 that is causing renewed government-mandated business closures across the nation.”
The MBA reports that mortgage credit availability remained tight in December. The Mortgage Credit Availability Index (MCAI) in December was 122.1 and above August’s 118.6 which was the tightest credit conditions since February 2014. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The Conventional MCAI fell by 2.8%, while the Government MCAI rose by 2.1%.
Commodity prices continue to push higher. After hitting -$40.32/barrel back in April, WTI oil has risen to $52.79. As more economies strengthen, the oil demand will increase along with the price. Oil is in many products – this is just another inflationary measure. With oil prices increasing, gas prices have been on the rise. The national average price for a regular gallon of gasoline is at $2.33, up from $2.16 a month ago.
Courtesy of Mortgage Market Guide
-CHECK US OUT ON SOCIAL-
