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Daily Rate Update: April 12th-16th

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Friday – April 16, 2021

The FNMA 30-year 2% coupon hit 99.38 on March 30 and rose to a high of 101.09 yesterday. That’s a near 20% increase in the price of the security in 12 trading days. At the same time, the 10-year yield went from 1.78% to yesterday’s low of 1.52% as inflation fears eased a bit and as foreign buyers swooped in for a higher return on investments. The 10-year is currently at 1.59%.  The 10-year is in a range between 1.50% and 1.75%.

Stocks are modestly higher after the Dow (34,035.99) and the S&P (4,170.42) hit fresh record highs yesterday after a rash of economic data hit the wires.

Adding to the positive vibe this morning, March Housing Starts jumped nearly 20% from February while Building Permits saw a near 5% gain. Single-family starts, which make up the bulk of the market, surged 15%. However, the market is still being plagued by low inventories and with the labor market continuing to improve, there could be more buyers on the scene in the months ahead. Remember, jobs buy houses.

The Fed will be purchasing up to $5.33B in mortgage-backed-securities. There are two operations from 11:30 – 11:50 a.m. ET and 1:00 – 1:20 p.m. ET. The FNMA 30-yr 2.0% and 2.5% coupons will see the bulk of the buying. Next week the Fed plans to purchase up to $32B.

Technically, after recently trading near multi-year lows, Mortgage Bonds have pushed higher but we could be seeing signs of them topping out here in the near term – especially after such a quick rise.  We still like the 10-year yield holding beneath 1.75% and the 30-year bond yield well beneath 2.50% (now at 2.28%). We continue to like how bonds are trading but don’t get complacent.

Courtesy of Mortgage Market Guide 

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Thursday – April 15, 2021

Home borrowing costs fell for the second straight week and remain at historically low levels. Freddie Mac reports that the 30-year fixed-rate mortgage declined from 3.13% last week to 3.04% this week with 0.7 in points and fees. A year ago at this time, the rate was 3.31%. It is up from 2.65% on January 7 of this year. Sam Khater, Freddie Mac’s Chief Economist said, “Despite the pause in mortgage rates recently, we expect them to increase modestly for the remainder of this year.”

First-time unemployment claims fell to the lowest level since the shutdowns began last year. Weekly Initial Jobless Claims decreased to 576,000 for the week ended April 10, 2021, from 767,000 in the previous week. To put it into perspective, the week of March 14, 2020 claims were 282,000. The week of March 21, 2020, they skyrocketed to 3.3 million as lockdowns took hold. Continuing claims, or those receiving benefits for at least two weeks straight, were essentially unchanged at 3.73 million from 3.72 million. With more and more states reopening their economies, many unemployed Americans should be able to go back to work.

Pent-up consumer demand surged in March due in part to aid from D.C. March Retail Sales soared 9.8% due in part to stimulus checks that were sent out during the month. That was well above the gain of 5.3% expected and up from the -2.7% in February. Stripping out autos, sales jumped 8.4%, nearly double the 4.9% anticipated. The Empire State Index rose to 26.3 versus the 23 expected while the Philly Fed soared to 50.2, above the 35 expected.

Courtesy of Mortgage Market Guide 

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Wednesday – April 14, 2021

Home borrowing costs fell in the latest week and remain at historically low levels. The MBA reports that the 30-year fixed-rate mortgage declined nine basis points to 3.27% with 0.33 in points for the week ended April 9, 2021. The Market Composite Index, a measure of total mortgage loan application volume fell 3.7% while the Purchase Index declined by 1.4. The Refinance Index fell 5% and is down 31% from a year ago.

Spokesperson Joel Kan said, “Last week’s Refinance Index level was the lowest in over a year, as mortgage rates continue to trend higher. Many borrowers have either already refinanced at lower rates or are unwilling – or unable – to refinance at current rates.” Freddie Mac released its quarterly forecast report today signaling that as ‘the economy recovers, the housing market remains healthy while mortgage rates move up.’

Freddie Mac went on to say that hurdles for potential homebuyers are low inventories and rising rates. The numbers: 30-year fixed-rate mortgage to average 3.2% in 2021, 3.7% in 2022. Home price growth to rise 6.6% in 2021 and decline to 4.4% in 2022. Total originations are expected to be $3.5% trillion in 2021, $2.4 trillion in 2022. Purchase originations $1.7 trillion in 2021 and $1.6 trillion in 2022. Refinance originations are expected at $1.8 trillion in 2021 and $770 billion in 2022. Homes sales should reach 7.1 million this year and 6.7 million next year.

Courtesy of Mortgage Market Guide 

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Tuesday – April 13, 2021

The housing market continues to be a beacon of light for the U.S. economy as the pool of potential buyers continues to grow. Redfin reports that for the 4-weeks ending April 4, nearly 60% of homes that went under contract had an accepted offer within the first two weeks on the market, an all-time high. Also, for the 7-day period ending April 4, 58% of homes sold in two weeks or less. In conclusion, the median home-sale price rose 17% annually $338,225 … an all-time high.

Consumer inflation heated up in March, as expected, due in part to rising gas prices. The March Consumer Price Index jumped 0.6% versus the gain of 0.5% expected as gas prices jumped nearly 10% during the month. The annual rate increased to 2.6% from a rise of 1.7% in February. The Core CPI, which strips out volatile food and energy, was up 0.3% monthly and rose 1.6% annually.

Small business optimism rose in March as pandemic restrictions continued to ease. The NFIB Small Business Optimism Index rose 2.4 points to 98.2 and the index is now back to its average historical reading. The NFIB said its uncertainty index rose as owners are concerned about if it’s a good time to expand their businesses. “Main Street is doing better as state and local restrictions are eased, but finding qualified labor is a critical issue for small businesses nationwide,” said NFIB Chief Economist Bill Dunkelberg.

Courtesy of Mortgage Market Guide 

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Monday – April 12, 2021

There are no economic reports today but the calendar is full this week. The closely watched inflation reading Consumer Price Index will be released tomorrow. The week also features housing and manufacturing data along with Retail Sales for March. The Retail Sales number will be closely watched after the $1,400 stimulus checks were released last month. Also, earnings season kicks off this week where expectations are very high for solid numbers.

Fannie Mae recently released its Home Purchase Sentiment Index (HPSI) for March revealing that housing sentiment jumped on consumers’ selling and personal finance optimism. The Index rose 5.2 points to 81.7 with four of the six components increasing for the month. The percentage of respondents who say it is a good time to buy a home increased from 48% to 53% while respondents who say it is a good time to sell a home increased from 55% to 61%. “The significant increase in the HPSI in March reflects consumer optimism toward the housing market and larger economy as vaccinations continue to roll out and the spring homebuying season began – perhaps with even more intensity this year, since 2020’s spring homebuying season was limited by virus-related lockdowns,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist.

After a swift rise since the beginning of the year, gas prices have leveled off the past few weeks as oil prices decline while refinery utilization is on the rise. AAA Motor Club reports that the national average prices for a regular gallon of gasoline was unchanged this week at $2.87 and just slightly higher than the $2.83 seen a month ago. A year ago the price was $1.86. Jeanette McGee, AAA spokesperson. “Cheaper crude oil prices will likely help to keep price fluctuation low this week.”

Courtesy of Mortgage Market Guide 

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