Daily Rate Update: October 18th-22nd

Thursday – October 21, 2021

Home borrowing costs inched higher this week and remain just above historic lows. Freddie Mac reports that the 30-year fixed-rate mortgage rose four basis points to 3.09% with 0.7 in points and fees. The record low was 2.65% on January 7 of this year. Sam Khater, Freddie Mac’s Chief Economist said, “Even as the availability of existing homes is improving, prices remain high due to homebuyer demand and limitations on housing starts and permits resulting from the ongoing labor and material shortages. Despite these countervailing forces, we expect the housing market to remain strong as we head into the end of the year.”

First-time unemployment claims fell to lows not seen since before the shutdowns began in late March 2020. At present, there are almost 11 million jobs available across the nation. The Labor Department reports that Weekly Initial Jobless Claims fell 3,000 to 290,000 for the week ended October 16, 2021. Continuing claims, or those receiving benefits for at least two weeks straight, fell to 2.481 million from 2.603 million. The labor market should continue to improve with holiday hiring underway.

The National Association of Realtors reports that Existing Home sales rose 7% in September from August to an annual rate of 6.290 million units, above the 6.05 million expected. Sales were down 2.3% from a year ago. Across the nation, sales were up in the Northeast, South, Midwest and West. Existing Home Sales measures single-family homes, townhomes, condominiums and co-ops. Inventories were down 0.8% from August and down 13.0% from one year ago. Unsold inventory sits at a 2.4-month supply where 6 months is seen as normal. The median existing-home price for all housing types in September was $352,800, up 13.3% from September 2020 ($311,500).

Courtesy of Mortgage Market Guide 

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Wednesday – October 20, 2021

Home borrowing costs increased in the latest week and hit the 2021 highs but remain just above record lows. The Mortgage Bankers Association (MBA) reports that the 30-year fixed-rate mortgage rose five basis points to 3.23% with 0.35 in points for the week ending October 15, 2021. Within the report it showed that the Market Composite Index fell 6.3%, the Refinance Index declined 7% and the Purchase Index saw a 5% loss. A spokesperson said, “Purchase activity declined and was 12% lower than a year ago, within the annual comparison range that it has been over the past six weeks. Insufficient housing supply and elevated home-price growth continue to limit options for would-be buyers.”

Pain at the pumps continues as motorists continue to pay higher prices to fuel their autos due to seven-year highs for oil prices. The national average price for a regular gallon of gasoline has risen to $3.35, up from $3.28 a week ago, from $3.19 a month ago and from $2.16 a year ago. In April of 2020, the price for a barrel of West Texas Intermediate oil hit -$40/bbl and has currently gushed to near $84/bbl. Motor club AAA says typically, softening demand this time of year should result in some easing of pump prices, but the higher cost for crude is blocking this. With oil prices remaining elevated, pump prices will follow suit because the cost of crude oil accounts for more than half of the price of each gallon of gas.

Freddie Mac recently released its quarterly forecast. Here are some numbers:

  • The average 30-year fixed-rate mortgage (FRM) is expected to be 3.0% in 2021 and 3.5% in 2022.
  • House price growth is expected to be 16.9% in 2021, slowing to 7% in 2022.
  • Home sales are expected to reach 6.8 million in 2021, remaining flat in 2022.
  • Total originations are expected to be $4.5 trillion in 2021 slowing to $3.1 trillion in 2022.

Courtesy of Mortgage Market Guide 

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Tuesday – October 19, 2021

New residential construction fell in the latest report as the sector continues to face obstacles. Housing Starts fell 1.5% from August to September to an annual rate of 1.555 million units versus the 1.620 million expected. Building Permits, a sign of future construction, fell 7.5% to 1.589 million, below the 1.670 million expected. Supply constraints and labor shortages are plaguing the sector. The North est saw the biggest loss of nearly 28% in September, the South fell 6.3%, the Midwest was up 7% and the West saw a 20% gain. Multi-family units fell 5.1% monthly and were up 38% annually.

Stocks are being boosted by solid earnings from Walmart, P&G and J&J. Early into the season, 82% of S&P 500 companies that have reported earnings exceeded estimates, according to FactSet, reports CNBC. P&G also reported that it is forecasting higher freight and commodity costs for the remainder of its fiscal year. The supply chain disruption will be something that the nation will deal with for some time.

The number of home loans in forbearance continued to decline across the nation and into loos-mitigation. The MBA reports that the total number of loans still in forbearance fell 34 basis points to 2.28% the week ending Oct. 10, 2021. After the decline, there are now just over a million homeowners still in forbearance. Fannie Mae and Freddie Mac loans decreased to 1.05%.
“Forbearance exits continued at an even more robust pace, resulting in a 34 basis-point decline in the overall forbearance rate. The decline was apparent across all servicer types and investor types,” said Mike Fratantoni, MBA’s chief economist.

Courtesy of Mortgage Market Guide 

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Monday – October 18, 2021

Strong demand for housing pushed home builder optimism higher this month despite continued supply chain disruptions. The NAHB Housing Market Index rose four points this month to 80 for the newly-built single-family home sector. Within the report, it showed that current sales conditions, sales expectations and the measure to chart traffic of prospective buyers all increased. “Although demand and home sales remain strong, builders continue to grapple with ongoing supply chain disruptions and labor shortages that are delaying completion times and putting upward pressure on building material and home prices,” said NAHB Chairman Chuck Fowke.

Fannie Mae released its October 2021 commentary saying economic growth is to be again be revised lower due to supply chain and inflation concerns. Also, mortgage rates are expected to rise slightly in 2022 as Fed gradually removes monetary accommodation. Gross Domestic Product for 2021 is expected to rise 4.9%, down from its previous forecast of 5.4%. On the rate front, mortgage rates are forecasted to average 3.3% in 2022, up from last month’s projection of 3.1 percent due in part to increased inflation expectations and a projected tightening of monetary policy. “While we still view the supply chain disruptions and, to a lesser extent, labor market tightness as largely transitory, we now expect both to last even longer than we’d previously forecast – and also likely longer than the Federal Reserve anticipated,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist.

Courtesy of Mortgage Market Guide 

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