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Daily Rate Update: August 30th-September 3rd

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Thursday – September 2, 2021

First-time unemployment claims fell to a post-shutdown low in the latest week as the sector continues to get back to full strength. At present, there are 10.1 million jobs available across the nation so it should rather easy to land a job. The Bureau of Labor Statistics reports that Weekly Initial Jobless Claims fell 14,000 to 340,000 for the week ended August 28, 2021. 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, also fell to post-shutdown low to 2.748 million from 2.908 million. Many unemployed Americans should be able to go back to work as the enhanced unemployment benefits are set to expire next month.

Home borrowing costs were unchanged this week and remain just above historic lows. Freddie Mac reports that the 30-year fixed-rate mortgage held at 2.87% with 0.6 in points and fees. The record low was 2.65% on January 7 of this year. Sam Khater, Freddie Mac’s Chief Economist said, “Heading into the fall, home purchase demand is stable, home sales remain firm and above pre-pandemic levels, and inventory of unsold homes is tight but improving modestly.”

The Jobs Report for August will be released tomorrow at 8:30 a.m. ET and will garner big attention. Expectations are calling for a gain of 750,000 after 943,000 were created in June for Non-Farm Payrolls (NFP). ADP Private Payrolls for August were a disappointment as were the July numbers. However, July NFP surged. The numbers will be closely watched by the Federal Reserve for decisions on asset purchase tapering along with decisions on interest rates.

Courtesy of Mortgage Market Guide 

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Wednesday – September 1, 2021

Home borrowing costs were unchanged in the latest week and remain just above record lows. The Mortgage Bankers Association (MBA) reports that the 30-year fixed-rate mortgage held steady at 3.03% with 0.29 in points for the week ending August 27, 2021. Within the report it showed that the Market Composite Index fell 2.4%, the Refinance Index declined 3.8% while the Purchase Index was up marginally by 0.6%. Spokesperson Joel Kan said, “Purchase activity hit its highest level since early July, as applications for conventional and government loans increased.”

Private payroll growth in August rose but fell well short of expectations as the labor market continues to get back to more normal levels. ADP Private Payrolls rose by 374,000, well below the 660,000 expected and up from the 326,000 recorded in July. The report measures the change in total nonfarm private employment each month on a seasonally-adjusted basis. Nela Richardson, chief economist, ADP said, “Despite the slowdown, job gains are approaching 4 million this year, yet still 7 million jobs short of pre-COVID-19 levels. Service providers continue to lead growth, although the Delta variant creates uncertainty for this sector. Job gains across company sizes grew in lockstep, with small businesses trailing a bit more than usual.”

Courtesy of Mortgage Market Guide 

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Tuesday – August 31, 2021

Concerns surrounding the Delta variant in early August dented consumer confidence while a slight rise in food prices also contributed towards the decline. The Conference Board reports that the Consumer Confidence Index fell to 113.8 in August from 125.1 in July. Spokesperson Lynn Franco said, “While the resurgence of COVID-19 and inflation concerns have dampened confidence, it is too soon to conclude this decline will result in consumers significantly curtailing their spending in the months ahead.”

Home prices continue to surge due in part to high demand and low inventories. The June S&P Case-Shiller National Index soared 18.6% annually, the largest year-over-year gain in the history of the index. The 20-City Index rose 19.1% annually. On a monthly basis, the National Index rose 2.2% while the 20-City Composite posted an increase of 2.0%. “June 2021 is the third consecutive month in which the growth rate of housing prices set a record, says Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P DJI.

The MBA reports that the number of loans in forbearance was essentially unchanged in the latest week 3.25%. The MBA says that there are 1.6 million homeowners in forbearance plans. The share of Fannie Mae and Freddie Mac loans stood at 1.66%. The share of Ginnie Mae loans in forbearance was unchanged at 3.92%. Mike Fratantoni, MBA’s Senior Vice President and Chief Economist said, “We expect a sharp increase in forbearance exits over the next month as many borrowers reach the 18-month mark and see their forbearance plans end. For those borrowers who have exited in August, the majority either enter deferral plans or obtain modifications.”

Courtesy of Mortgage Market Guide 

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Monday – August 30, 2021

In this unofficial last week of the summer, key economic data will be released that will be closely watched by investors and Federal reserve members. ADP Private Payrolls will be released on Wednesday morning and the Jobs Report on Friday for the August data. The numbers will be especially watched by Fed Chair Powell ahead of the September 21-22 FOMC meeting. Fed Chair Powell kinda smoothed taper fears last week but has always said that any policy change will be due to incoming economic data.

High prices continue to be an obstacle for potential buyers across the nation and put a dent in the housing sector in July. The NAR reports that Pending Home Sales, signed contracts but not yet closed, fell 1.8% from June and below the gain of 0.5% expected. The NAR reported that prices were up 18% annually in July. “The market may be starting to cool slightly, but at the moment there is not enough supply to match the demand from would-be buyers. That said, inventory is slowly increasing and home shoppers should begin to see more options in the coming months,” said spokesperson Lawrence Yun.

The recent spike in gas prices has come to an end in recent weeks despite an increase in demand and a decline in supply. One factor in the halt of prices has been the drop in oil prices going from $74 in early August to the current $68, up from $61 on August 23 for West Texas Intermediate. The national average price for a regular gallon of gasoline is $3.15, unchanged from a month ago and up from $2.23 a year ago. As the fall ushers in, prices should begin to decline a bit given historical lower demand after the summer driving months.

Courtesy of Mortgage Market Guide 

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