Daily Rate Update: July 18th-22nd

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Thursday – July 21, 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 rose to 5.54% this week from 5.51% last week with an average of 0.8 in points and fees. A year ago the rate was 2.78%. The 15-year rose to 4.75% from 4.67% last week with a 0.8 point. A year ago that 15-year was 2.12%. Sam Khater, Freddie Mac’s Chief Economist said, “Consumer concerns about rising rates, inflation and a potential recession are manifesting in softening demand. As a result of these factors, we expect house price appreciation to moderate noticeably.”

In economic news, Weekly Initial Jobless Claims rose 7,000 to 251,000 versus the 240,000 expected. The unemployment line is slowly getting longer but the numbers are still historically low. The Philly Fed Index in July fell 12.1 from -3.3 in June and below the -2.5 expected. Disappointing earnings released today are weighing on the stock markets with the closely watched Dow Jones Industrial Average down 200 points heading into the afternoon.

Rising borrowing costs and economic uncertainty put a dent in Americans looking to purchase homes in June. The MBA reports that June mortgage applications for new home purchases decreased 12% from a year ago, down 10% monthly from May. The average loan size of new homes declined from $430,855 in May to $426,966 in June. “Higher mortgage rates and heightened economic uncertainty cooled borrower demand in June, leading to new-home purchase applications declining to the lowest level since April 2020,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.

Courtesy of Mortgage Market Guide 

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Wednesday – July 20, 2022

Existing Home Sales in June fell 5.4% from May to an annual rate of 5.12 million units versus the 5.38 million expected. Year over year sales declined 14.2%. Annual sales fell in all four regions of the U.S. The median price rose 13.4% from June 2021 to a fresh record high of $416,000. Unsold inventory inched higher to a 3-month supply. “Falling housing affordability continues to take a toll on potential home buyers,” said NAR Chief Economist Lawrence Yun. “Both mortgage rates and home prices have risen too sharply in a short span of time.”

Mortgage rates rose in the MBA’s latest survey with borrowing costs up 44% from a year ago. The 30-year fixed-rate mortgage increased to 5.82% from 5.74% with 0.65 points for the week ended July 15, 2022, reports the MBA. Within the data it showed that the Market Composite Index, a measure of total mortgage application volume, fell 6.3% to its lowest level in 22 years. The Refinance Index dropped 4% and the Purchase Index declined 7%. Spokesperson Joel Kan said, “The decline in recent purchase applications aligns with slower homebuilding activity due to reduced buyer traffic and ongoing building material shortages and higher costs.”

Courtesy of Mortgage Market Guide 

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Tuesday – July 19, 2022

In housing news, June Housing Starts fell 2% from May to an annual rate of 1.559 million units versus 1.580 million expected. Building Permits, a sign of future construction, fell 0.6% to 1.685M versus 1.650M expected. Starts were down 6.3% from June 2021 while Permits were up 1.4%. Single-family starts fell 8.1% monthly to an annual rate of 982,000 and were down 15.7% from a year ago. Multi-dwelling units were up 15% monthly and up 16.4% annually.

After a reversal lower yesterday for stocks, the Dow Jones Industrial Average is up 500 points today as solid earnings data roll in. Wall Street was sensing a recession on the horizon but those fears are somewhat easing. The major U.S. indices are down 20% so far this year on worries over surging inflation and rising borrowing costs. If earnings data continue to be positive, it could support prices going forward.

The Federal Open Market Committee meeting will convene next week on Tuesday and ends Wednesday with the release of the monetary policy statement on Wednesday at 2:00 p.m. ET. It is expected that the Federal Reserve will raise the benchmark Fed Funds Rate, currently at 1.75% by 75 basis points to 2.50% to stave off inflation. Fed Chair Powell will hold a press conference immediately following the statement release at 2:30.

Courtesy of Mortgage Market Guide 

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Monday – July 18, 2022

Higher building costs and run away inflation dented home builder optimism this month, reports the National Association of Home Builders (NAHB). The NAHB Housing Market Index plunged 12 points this month from June versus the 67 expected. It was the lowest reading since May 2020 and the largest single-month drop in the history of the index, except for the 42-point plunge in April 2020. NAHB Chairman Jerry Konter said, “In another sign of a softening market, 13% of builders in the HMI survey reported reducing home prices in the past month to bolster sales and/or limit cancellations.”

Redfin reports that a record share of homebuyers relocated in the second quarter of 2022 as high prices and high mortgage rates push them toward more affordable areas. The technology-powered real estate brokerage went on to report that a near 33% of Americans looked to move from one metro to another in the second quarter, from 32.3% in the first quarter and above the 26% seen before the pandemic. Desired less expensive areas are seen in Tampa, Florida and San Antonio, Texas.

Courtesy of Mortgage Market Guide 

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