Dreaming of a house

Daily Rate Update: June 7th-11th

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Thursday – June 10, 2021

Home borrowing costs inched lower this week and remain at historically low levels. Freddie Mac reports that the 30-year fixed-rate mortgage fell three basis points to 2.96% with 0.6 in points and fees. A year ago at this time, the rate was 3.21%. It is up from 2.65% on January 7 of this year. Sam Khater, Freddie Mac’s Chief Economist said, “Despite the stronger economy, the housing market is experiencing a slowdown in purchase application activity due to modestly higher mortgage rates. However, it has yet to translate into a weaker home price trajectory because the shortage of inventory continues to cause pricing to remain elevated.”

First-time unemployment claims fell to the lowest level since the shutdowns began last year. Weekly Initial Jobless Claims decreased to 376,000 for the week ended June 4, 2021, from 385,,000 in the previous week. To put it into perspective, the week of April 4, 2020 claims were over 6 million as the shutdowns took hold. Continuing claims, or those receiving benefits for at least two weeks straight, were at 3.499 million from 3.757 million. With all U.S. having reopened their economies, many unemployed Americans should be able to go back to work.

Consumer prices heated up in May as inflation pressures, as expected, are on the rise. The May Consumer Price Index rose 0.6% from April versus the +0.4% expected while the annual rate jumped to 5%, the highest annual gain since the summer of 2008. The Core rate, which strips out volatile food and energy, rose 0.7% monthly and 3.8% annually, both above expectations.

Courtesy of Mortgage Market Guide 

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Wednesday – June 9, 2021

Home borrowing costs were essentially unchanged last week and remain at historically low levels. The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage slipped to 3.15% with 0.34 in points for the week ending June 4, 2021. The Market Composite Index fell 3.1%, the Purchase Index rose 0.3% while the Refinance Index declined by 5.1%. 30-yr fixed-rate mortgage -2bp to 3.15% with 0.36 in points. Spokesperson Joel Kan said, “With fewer homeowners able to take advantage of lower rates, the refinance share dipped to the lowest level since April.”

After the meteoric rise in lumber prices over the past year, the cost has started to decline much to the delight of homebuilders. It hit $1,700 in May and it closed at $1,167 yesterday. As supply constraints come undone after the pandemic has passed, more products will come to market and could ease the price increases. One commodity that is not falling is the price of oil. West Texas Intermediate oil is at $70.50/barrel, a near three-year high. This has lifted the national average price for a regular gallon of gasoline to $3.06. If this rise continues continues it would serve as a tax on consumers and curtail spending.

Courtesy of Mortgage Market Guide 

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Tuesday – June 8, 2021

Job openings continued to surge in April after a record-high number of openings seen at the end of March. The Bureau of Labor Statistics reports that there were 9.3 million job openings at the end of April after the 8.1 million seen in March. The JOLTS or Job Openings and Labor Turnover Summary showed openings increased in a number of industries with the largest increases in accommodation and food services (+349,000), other services (+115,000) and durable goods manufacturing (+78,000). In addition, the NFIB reports that a record high 48% of business owners have unfilled job openings. On Thursday, the inflation reading Consumer Price Index for May will be released and will be closely watched by both the Fed and the investing community. The 4.2% increase in April was the largest jump over a 12-month period since a 4.9% rise for the year ending September 2008. Most pundits saw an increase in prices in May and June and possibly even July with a decline seen beginning in August through the end of the year. Once again, headline inflation will be much higher than the average 30-year fixed-rate mortgage – something that has not been seen in 50-years and is unsustainable longer-term.

Courtesy of Mortgage Market Guide 

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