Mortgage in America

Daily Rate Update: July 19th-23rd

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Thursday – July 22, 2021

Home borrowing costs fell this week and remain at historically low levels. Freddie Mac reports that the 30-year fixed-rate mortgage fell ten basis points to 2.78% last week with 0.7 in points and fees. A year ago at this time, the rate was 3.01%. It is up from 2.65% on January 7 of this year. Sam Khater, Freddie Mac’s Chief Economist said, “While the economy continues to mend, Treasury yields have decreased, and mortgage rates have followed suit. Unfortunately, many homebuyers are unable to take advantage of low rates due to low inventory and high prices.”

First-time unemployment claims rose in the latest week as the sector continues to move to greener pastures. 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 419,000 for the week ended July 17, 2021, from 368,000 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 3.236 million from 3.265 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.

Existing Home Sales rose 1.4% in June from may to an annualized rate of 5.86 million units and below the 5.90 million expected. The number includes single-family homes, townhomes, condominiums and co-ops. Sales were up marginally in the Northeast, Midwest and West with flat sales seen in the South. Total sales were up nearly 23% from a year ago. Inventory sits at a 2.6-month supply, from 3.9 months in June 2020. Unsold inventories of six months is seen as normal. “Supply has modestly improved in recent months due to more housing starts and existing homeowners listing their homes, all of which has resulted in an uptick in sales,” said Lawrence Yun, NAR’s chief economist. “Home sales continue to run at a pace above the rate seen before the pandemic.”

Courtesy of Mortgage Market Guide 

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Wednesday – July 21, 2021

Home borrowing costs were essentially unchanged last week and remain at historically low levels. The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage rose two basis points to 3.11% with 0.43 in points for the week ending July 16, 2021. The Market Composite Index, a measure of total mortgage loan application volume, fell 4%, the Purchase Index declined 6% while the Refinance Index decreased by 3%. Spokesperson Joel Kan said, “Refinance activity fell over the week, but because rates have stayed relatively low, the pace of applications was close to its highest level since early May.”

Fannie Mae released its July Commentary revealing that historically high home price growth is expected to moderate but add to overall inflation pressure. The GSE was expecting home price growth to increase by 8% in 2021 but now it has surged to near 5% this year. However, home price growth will cool in 2022 increasing by 5.1%. Fannie Mae reports that 2021 mortgage originations are now forecast at $4.2 trillion, up from last month’s forecast of $4.1 trillion, with both purchase and refinance origination activity projected to be higher. On the economic front, Gross Domestic Product this year is estimated to rise 7%.

Courtesy of Mortgage Market Guide 

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Tuesday – July 20, 2021

Cash is king!? A large portion of homebuyers has paid cash at closing seeing percentages not seen in seven years. Redfin reports that cash buyers have made up 30% of total purchases in 2021, up from 25.3% for all of 2020. That is the highest percentage since 2014. One big factor has been the recent record highs in the U.S. stock markets which have ballooned trading as well as bank accounts over the past year. Redfin defines an all-cash purchase as one in which no mortgage information is included on the home deed.

The MBA reports that mortgage applications to purchase a new home fell nearly 24% from a year ago and down monthly from May by 3%. The MBA estimates new single-family home sales will come in at an annual rate of 704,000 units in June 2021, when the report is released on July 26. “Homebuilders are encountering stronger headwinds of late, as severe price increases for key building materials, rising regulatory costs, and labor shortages impact their ability to raise production. This has dampened new home sales and quickened home-price growth,” said spokesperson Joel Kan.

Gas prices at the pump continue to inch higher as more drivers take to the roads over the summer. Couple that with the rise in oil prices and drivers could continue to see prices increase. The national average price for a regular gallon of gasoline is $3.17, up from $3.07 a month ago. “It’s a cruel summer at the gas pump with prices showing little signs of relief,” said Jeanette McGee, AAA spokesperson. “However, the more expensive prices aren’t stopping motorists from filling-up based on strong gasoline demand numbers.”

Courtesy of Mortgage Market Guide 

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Monday – July 19, 2021

U.S. stock investors are looking for the exit signs in today’s trading session due in part to COVID Delta fears coupled with plain old profit-taking. The Dow was down by 900 points at its lowest point after hitting a record high last week. Oil stocks are leading the drop after OPEC said it will begin to produce more oil with West Texas Intermediate down almost $5 to $67/bbl. Markets don’t go straight up or straight down and given the recent record numbers for the Dow, S&P and NASDAQ, the market was ripe for a decline.

The FHFA announced last Friday that Fannie Mae and Freddie Mac will eliminate the Adverse Market Refinance Fee for loan deliveries effective August 1, 2021. Lenders will no longer be required to pay Fannie and Freddie a 50-basis point fee when they deliver refinanced mortgages. The fee was designed to cover losses projected as a result of the COVID-19 pandemic.Sandra L. Thompson of the FHFA said that the action ‘furthers FHFA’s priority of supporting affordable housing while simultaneously protecting the safety and soundness of Fannie and Freddie.

Courtesy of Mortgage Market Guide 

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