Daily Rate Update: August 8th-12th

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Thursday – August 11, 2022

Home borrowing costs rose this week but seem to be stabilizing after the surge in borrowing costs in the past 12 months. Freddie Mac reports that the 30-year fixed-rate mortgage increased to 5.22% from 4.99% last week with an average of 0.7 in points and fees. A year ago the rate was 2.87%. The 15-year jumped to 4.59% from 4.26% last week with a 0.7 point. A year ago that 15-year was 2.15%. Sam Khater, Freddie Mac’s Chief Economist said, “Although rates continue to fluctuate, recent data suggest that the housing market is stabilizing as it transitions from the surge of activity during the pandemic to a more balanced market.”

Wholesale inflation cooled in July and comes after yesterday’s softer-than-expected CPI report. The Producer Price Index (PPI) fell 0.5% versus a gain of 0.2% expected in July. This brings the year-over-year number rate to 9.8% from 11.3% in June. The Core PPI rose 0.2% in July and down from 0.4% in June while the annual number fell to 7.6% from 8.4%. Most of the declines were due to declining energy prices. The price of a barrel of oil hit $130 in March and recently fell to $87 before the current price of $92.

Americans filing for first-time unemployment benefits continues to inch higher after hitting record lows in recent months. The Labor Department reports that Weekly Initial Jobless Claims rose 14,000 to 262,000 versus the 263,000 expected. Last week, the JOLTS report showed that there are 10.7 million jobs available across the nation, down from the recent number of 11.5 million as the job market is starting to flow. However, there are still 1.8 open jobs per available worker with almost 6 million Americans unemployed.

Courtesy of Mortgage Market Guide 

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Wednesday – August 10, 2022

Consumer prices came in softer than expected last month and is sending a sigh of relief over the markets after inflation was running at a 41-year high. The Consumer Price Index was unchanged in July from June versus the 0.2% expected and down from 1.3% last month. The year-over-year number fell to 8.5% from 9.1% and below the 8.7% expected. The closely watched Core CPI fell to 0.3% from 0.7% on a month-over-month basis and below the 0.5% expected, year-over-year was unchanged from June at 5.9%.

Mortgage rates inched higher in the MBA’s latest survey though borrowing costs seem to be topping out near current levels. The 30-year fixed-rate mortgage fell to 5.47% from 5.43% with 0.80 points for the week ended August 5, 2022. Within the data it showed that the Market Composite Index, a measure of total mortgage application volume, rose 0.2%, the Refinance Index increased 4.0% and the Purchase Index fell 1%. Spokesperson Joel Kan said, “The purchase market continues to experience a slowdown, despite the strong job market. Activity has now fallen in five of the last six weeks, as buyers remain on the sidelines due to still-challenging affordability conditions and doubts about the strength of the economy.”

Courtesy of Mortgage Market Guide 

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Tuesday – August 9, 2022

The NFIB Small Business Optimism Index was nearly unchanged at 89.9 in July, the sixth consecutive month below the 48-year average of 98. The report revealed that 37% of small business owners said that inflation was their biggest problem in trying to run a business, up three points from June and the highest level since Q4 1979. “The uncertainty in the small business sector is climbing again as owners continue to manage historic inflation, labor shortages, and supply chain disruptions,” said Bill Dunkelberg, NFIB Chief Economist.

Mortgage credit availability fell for the third month in a row as lenders streamlined their loan offerings in this declining volume environment, reports the MBA. The Mortgage Credit availability Index (MCAI) fell 9% in July to 108.8, the lowest level since My 2013. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012.

The New York Federal Reserve Bank reports that inflation expectations show marked decline at the short-, medium-, and long-term horizons in its July Survey of Consumer Expectations. Median one- and three-year-ahead inflation expectations both declined sharply in July, from 6.8% and 3.6% in June to 6.2% and 3.2%, respectively. Both decreases were broad-based across income groups, but largest among respondents with annual household incomes under $50,000.

Courtesy of Mortgage Market Guide 

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Monday – August 8, 2022

Fannie Mae reports that consumer sentiment toward housing is at the lowest level in a decade. The Fannie Mae Home Purchase Sentiment Index fell 2.0 points in July to 62.8, its lowest level since 2011 and well below the all-time high set in 2019. Surveyed consumers continue to express pessimism about homebuying conditions, with only 17% of respondents reporting it’s a good time to buy a home. Meanwhile, the percentage of consumers believing it’s a good time to sell has begun ticking downward in recent months, falling from 76% in May to 67% in July.

Lower home prices, declining mortgage rates and more homes available on the market have increased demand for housing in July. Redfin reports that its Homebuyer Demand Index, a measure of requests for home tours and other home-buying services, increased seven points during the last week of July, and mortgage purchase applications were up for the first time in five weeks. “Homebuyers may catch a break this month as rates have come down nearly a point from the recent high on fears of a recession,” said Redfin Deputy Chief Economist Taylor Marr. “There are deals to be had on some homes that have been sitting on the market with reduced prices. General economic uncertainty may continue to keep a lid on homebuyer demand and keep mortgage rates volatile, but the labor market remains a beacon of strength in the economy and the housing market in particular.”

The closely watched inflation reading Consumer Price Index (CPI) will be released on Wednesday and the Producer Price Index for July on Thursday and will be closely watched for signs of improvement or even higher numbers. CPI is currently running at a 41-year high of 9.1% as prices for goods and services have surged over the past 12 months. The CPI is a measure of the average change over time in the prices paid by consumers for consumer goods and services.

Courtesy of Mortgage Market Guide 

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