Thursday – July 14, 2022
Home borrowing costs rose this week fafter the decline seen in the previous week. Freddie Mac reports that the 30-year fixed-rate mortgage rose to 5.51% this week from 5.30% last week with an average of 0.8 in points and fees. A year ago the rate was 2.88%. The 15-year rose to 4.67% from 4.45% with a 0.8 point. A year ago that 15-year was 2.22%. Sam Khater, Freddie Mac’s Chief Economist said, “With rates the highest in over a decade, home prices at escalated levels, and inflation continuing to impact consumers, affordability remains the main obstacle to homeownership for many Americans.”
Soaring energy costs pushed wholesale prices considerably higher last month as businesses as well as consumers deal with higher prices for goods and services. The June headline wholesale inflation number or Producer Price Index (PPI) rose 11.3% year over year, above expectations and up from 10.9% in May. Core PPI eased a bit, up 8.2% annually versus 8.1% expected and down from 8.5% in May. Monthly Core rose 0.4%, below 0.5% estimated and down from 0.6% in May.
Stubbornly high consumer and wholesale inflation, weak earnings kickoff, looming supersized rate hikes and yield inversions are weighing on markets across the board today. U.S. stocks as measured by the closely watched S&P 500 Index, fell for the fifth straight day. JPMorgan and Morgan Stanley unofficially kicked off quarterly earnings on a sour note while JPMorgan’s CEO Jamie Dimon reiterated that an “economic hurricane” is on the horizon.
Courtesy of Mortgage Market Guide
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Wednesday – July 13, 2022
Mortgage rates were unchanged the MBA’s latest survey after the spike in borrowing costs in the first half of this year. The 30-year fixed-rate mortgage remained at 5.74% with 0.65 points for the week ended July 8, 2022, reports the MBA. Within the data it showed that the Market Composite Index, a measure of total mortgage application volume, fell 1.7%, the Refinance Index rose 2.2% and the Purchase Index declined 3.6. Spokesperson Joel Kan said, “After reaching a record $460,000 in March 2022, the average purchase loan size was $415,000 last week, pulled lower by the potential moderation of home-price growth and weaker purchase activity at the upper end of the market.”
The Consumer Price Index (CPI) jumped 9.1% year over year, above the 8.8% expected and up from 8.6% in May. Costs for food, shelter and energy all jumped both monthly and annually. Energy prices were up nearly 42% in the 12 months ended in June while gasoline is up 60.0%. A reminder – energy prices come down in one of two ways either by more supply and an economic slowdown or recession. The monthly CPI rose 1.3% versus 1.1% expected and up from 1% in May. The Core CPI inched lower to 5.9% year over year versus 5.7% estimated and down from 6% in June. Monthly Core was up 0.7% from 0.6% in May and just above the 0.6% expected.
Courtesy of Mortgage Market Guide
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Tuesday – July 12, 2022
After the torrid run-up in rental prices over the past few years, they are starting to ease a bit. Redfin reports that the national median asking rent rose 14% in June from a year earlier, the smallest annual increase since October. Prices were up 0.7% from May to June, the smallest monthly increase since the beginning of the year. “Rent growth is likely slowing because landlords are seeing demand start to ease as renters get pinched by inflation. With the cost of gas, food and other products soaring, renters have less money to spend on housing,” said Redfin chief economist Daryl Fairweather.
Small business optimism continues to decline due in a big way to soaring inflation. The NFIB Small Business Optimism Index fell 3.6 points in June to 89.5, the 6th consecutive month below the 48-year average of 98. The small business expectations for future conditions hit an all-time low in June. The report went on to reveal that 50% of owners reported job openings that could not be filled, down one point from May, but historically very high. NFIB Chief Economist Bill Dunkelberg said, “On top of the immediate challenges facing small business owners including inflation and worker shortages, the outlook for economic policy is not encouraging either as policy talks have shifted to tax increases and more regulations.”
The MBA reports that mortgage credit availability fell in June by 0.3% to 119.6, according to the Mortgage Credit Availability Index (MCAI). A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting said, ‘With higher rates and elevated home prices, more prospective buyers are applying for ARMs, but activity remains below historical averages.”
Courtesy of Mortgage Market Guide
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Monday – July 11, 2022
Redfin reports that home sales are getting canceled at the fastest pace since the beginning of the shutdowns in March/April 20-20 from data collected in June. One big reason has been the surge in borrowing costs as the 30-year fixed rate mortgage hit near 6% before inching lower. There were almost 60,000 home-purchase agreements canceled in June or 14.9% of homes that went under contract last month. That compares with 12.7% a month earlier and 11.2% a year earlier. Redfin Deputy Chief Economist Taylor Marr said, “If rates were at 5% when you made an offer, but reached 5.8% by the time the deal was set to close, you may no longer be able to afford that home or you may no longer qualify for a loan.”
In the news this week … a bunch of headline risks including a big 10-year Treasury note auction on Tuesday, the consumer inflation reading Consumer Price Index for June on Wednesday, several Fed speakers and the unofficial kickoff for quarterly earnings season to name a few. On Wednesday, the housing sector will get the latest read on mortgage rates from the MBA, and on Thursday, Freddie Mac will report its latest data on mortgage rates.
Prices at the pump have declined in the past month though they remain historically high. The national average price for a regular gallon of gasoline is $4.67, down from the record high $5.01 seen last month on June 14. Looking back four years … the national average price was $2.19 on July 11, 2020, $2.47 on July 11, 2019 and $2.53 on July 11, 2018. “Usually, more people buying gas would lead to higher pump prices,” said Andrew Gross, AAA spokesperson. “But the price for oil, the main ingredient in gasoline, has fallen and is hovering around $100 a barrel. Less expensive oil usually means less expensive gas.”
Courtesy of Mortgage Market Guide
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