Mortgage in America

Daily Rate Update: July 12th-16th

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Friday – July 16, 2021

Consumer spending surprisingly rebounded in June signaling Americans continue to spend which is boosting the U.S. economy. Sales were brisk across the board with services leading the way. June Retail Sales rose 0.6% from May and well above the -0.4% expected. When stripping out autos, sales jumped 1.1% vs the +0.3% expected. The control number, which gets factored into GDP, rose 1.1%, triple expectations. In August we will see how back-to-school shopping goes after last year’s pull-back in sales with many across the country still in remote learning.

Mortgage credit availability fell in June declining for the first time in six months. The MBA reports that its Mortgage Credit Availability Index fell 8.5% in June to 118.8, meaning lending standards tightened. Spokesperson Joel Kan said, “Mortgage credit has not recovered since the sharp downturn in the first half of 2020. The reduction in credit availability came as a result of GSE policy changes – which reduced the availability of high LTV refinance loans, impacting both conforming loans and GSE-eligible high balance loans.”

The shortage of homes for sale on the markets continues to be a thorn in the side of the sector. Low supply and high demand are as simple as “Economics 101” … prices have to go up. Forbes reports that the U.S. built on average 276,000 fewer homes per year between 2001 and 2020 compared to the period between 1968 and 2000, covered originally by the Wall Street Journal. And as we know the U.S. population was smaller years ago than the 330 million Americans in the country now. The NAHB and the NAR are joining forces to urge Congress to address the housing inventory crisis. “Over the past decade, the residential construction industry has underbuilt and not kept pace with demand due to several supply-side constraints,” said NAHB President CEO Jerry Howard.

Courtesy of Mortgage Market Guide 

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Thursday – July 15, 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 two basis points to 2.88% last week with 0.7 in points and fees. A year ago at this time, the rate was 2.98%. It is up from 2.65% on January 7 of this year. Sam Khater, Freddie Mac’s Chief Economist said, “The summer swoon in mortgage rates continues as the 30-year fixed-rate mortgage fell for the third consecutive week.”

First-time unemployment claims fell to a post-shutdown low in the latest week. At present, there are 9.2 million jobs available across the nation, according to the Bureau of Labor Statistics. Weekly Initial Jobless Claims came in at 360,000 for the week ended July 10, 2021, from 386,000 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, fell to 3.241 million from 3.367 million. With all U.S. states having reopened their economies, many unemployed Americans should be able to go back to work as the enhanced unemployment benefits are set to expire in September.

Courtesy of Mortgage Market Guide 

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Wednesday – July 14, 2021

Home borrowing costs declined in the latest week and remain at historically low levels. The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage fell six basis points to 3.09% with 0.37 in points for the week ending July 9, 2021. The Market Composite Index, a measure of total mortgage loan application volume, jumped 16%, the Purchase Index rose 8% while the Refinance Index surged by 20%. Spokesperson Joel Kan said, “We continue to see ebbs and flows as housing demand remains strong but for-sale inventory remains low. However, lower rates may be helping some home buyers close on their purchases, especially first-time home buyers.”

In his prepared speech ahead of testimony in front of Congress, Fed Chair Powell said that the Job market ‘still a ways off’ from progress needed to begin taper.” That line sums up Mr. Powell’s stance on any tapering in the near future. Mr. Powell did say that members will be discussing tapering in the next few meetings which are late this month and in September. The speech went on to read that the Fed will alter monetary policy only if inflation is persistently on a higher path. Also, inflation is likely to remain elevated in the coming months before easing.

Courtesy of Mortgage Market Guide 

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Tuesday – July 13, 2021

Consumer prices saw their largest monthly gain since 2008 due in part to a surge in used auto prices while increases were seen across the board. The June Consumer Price Index (CPI) rose 0.9% from May and almost double the gain of 0.5% expected. From June 2020 to June 2021, the number jumped 5.4% versus the gain of 4.9% estimated. When stripping out food and energy, the monthly number rose 0.9% and above the rise of 0.5% while the year-over-year number jumped 4.5% versus the 4% expected.

Gas prices are now at seven-year highs as demand surges to a record high. The national average prices for a regular gallon rose to $3.14, a dollar more than last year this time and up $0.40 from this time in 2019. Oil prices are now at multi-year highs and are a dominant factor in how high prices at the pumps will go. Motor Club AAA reports that it sees oil prices pushing higher as demand increases which in turn will push gas prices higher.

Courtesy of Mortgage Market Guide 

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Monday – July 12, 2021

Big event week on tap for the financial markets this week. Fed Chair Powell will be on Capitol Hill on Wednesday in front of the House around noon ET testifying on the state of the U.S. economy. The key inflation reading Consumer Price Index for June will be released on Tuesday as investors look for any signs of continued heated inflation. The monthly number will be closely watched. Retail Sales for June will also be delivered this week and will measure consumer spending.

Quarterly earnings season kicks off to gauge the health of corporate America. If they do express weakness or uncertainty about the future, which would validate recent spookiness, stocks could get hurt to the benefit of bonds. The opposite is true. JPMorgan and Goldman will report results on Tuesday, Bank of America, Citigroup and Wells Fargo on Wednesday and Morgan Stanley on Thursday. Average quarterly earnings per share are estimated to surge 116% annually for these six top banks, according to analyst forecasts compiled by FactSet.

Courtesy of Mortgage Market Guide 

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