Daily Rate Update: July 25th-29th

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Thursday – July 28, 2022

Negative economic growth was reported for the second quarter of 2022 and comes after a negative print in the first quarter. The Bureau of Economic Analysis reports that the first read on Gross Domestic Product (GDP) in Q2 came in at -0.9% versus the +0.5% expected and after the -1.6% print in Q1. The common definition of a recession is two straight quarters of negative GDP. GDP measures the value of the final goods and services produced in the United States. Changes in GDP are the most popular indicator of the nation’s overall economic health.

Home borrowing costs fell this week and 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 fell to 5.30% from 5.54% last week with an average of 0.8 in points and fees. A year ago the rate was 2.80%. The 15-year declined to 4.58% from 4.75% last week with a 0.8 point. A year ago that 15-year was 2.10%. Sam Khater, Freddie Mac’s Chief Economist said, “Purchase demand continues to tumble as the cumulative impact of higher rates, elevated home prices, increased recession risk, and declining consumer confidence takes a toll on homebuyers,” said Sam Khater, Freddie Mac’s Chief Economist.

Americans filing for first-time unemployment benefits inched low in the latest week as the cockeyed labor market continues to raise questions. Weekly Initial Jobless Claims fell 5,000 to 256,000 and above the 253,000 expected. Continuing claims were 1,359,000 during the week ending July 16, a decline of 25,000 from the previous week’s unrevised level of 1,384,000. There are currently 11.5 million jobs available with 6.5 million unemployed while 47% of small business owners recently reported job openings that could not be filled.

Courtesy of Mortgage Market Guide 

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Wednesday – July 27, 2022

Mortgage rates fell in the MBA’s latest survey with borrowing costs up 44% from a year ago. The 30-year fixed-rate mortgage fell to 5.74% from 5.82% with 0.61 points for the week ended July 22, 2022. Within the data it showed that the Market Composite Index, a measure of total mortgage application volume, fell 1.8%, the Refinance Index dropped 4% and the Purchase Index declined 1%. Spokesperson Joel Kan said, “A potential silver lining for the housing market is that stabilizing mortgage rates and increases in for-sale inventory may bring some buyers back to the market during the second half of the year.”

Pending Home Sales plunged in June from May as homes are 80% more expensive than in June 2019. Pending Home Sales fell 8.6% last month, below the -1.5% expected. Sales declined across all four major regions, with the West seeing the biggest monthly decline. NAR Chief Economist Lawrence Yun said, “There are indications that mortgage rates may be topping or very close to a cyclical high in July. If so, pending contracts should also begin to stabilize.

It’s Fed day! Fed members will deliver the monetary policy statement today at 2:00 p.m. ET where it is expected that the short-term Fed Funds Rate will increase by 0.75% to 2.50%. At 2:30, Fed Chair Powell will hold a press conference which could be a market mover. The Fed now has to walk a tightrope by trying to stave off inflation by raising rates and not sending the U.S. economy into a recession. Tomorrow, Q2 2022 Gross Domestic Product will be released to gauge if the economy has suffered two negative quarters of negative growth.

Courtesy of Mortgage Market Guide 

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Tuesday – July 26, 2022

The U.S. Census Bureau reports that New Home Sales fell 8.1% from May to an annual rate of 590,000 units versus 660,000 expected. Sales 17.4% from June 2021. The median sales price of a new home rose 7.4% from a year earlier, to $402,400 but down from $457,000 seen in April. Sales fell in the Northeast, South and West with gains seen in the Midwest. There was a 9.3-month supply on the market, up from 8.4 in May.

Home price gains inched lower in the somewhat backward looking numbers for May though they remain at frothy levels. The S&P Case-Shiller 20-City Home Price Index rose 20.5% from May 2021 to May 2022 and just below the 20.6% rise expected. Prices were up 1.5% monthly from April to May. The National Index, covering all nine U.S. census divisions, jumped 19.7% annually in May, down from 20.6% in April. “Housing data for May 2022 continued strong, as price gains decelerated slightly from very high levels,” said Craig J. Lazzara, Managing Director at S&P DJI.”

Consumer Confidence fell for the third straight month in July due to concerns over high gas and food prices along with 40-year high inflation. The Conference Board’s Consumer Confidence Index fell to 95.7 this month from 98.4 in June and below the 97.2 expected. Within the report it revealed that the closely watched Present Situation Index, based on consumers’ assessment of current business and labor market conditions, fell to 141.3 from 147.2 last month. Lynn Franco, Senior Director of Economic Indicators at The Conference Board said the Expectations Index held relatively steady, but remained well below a reading of 80, suggesting recession risks persist. Concerns about inflation, rising gas and food prices, in particular, continued to weigh on consumers.”

Courtesy of Mortgage Market Guide 

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Monday – July 25, 2022

As the week kicks off, investors will be awaiting the two-day Fed meeting, Core PCE inflation data, the first read on Q2 Gross Domestic Product along with a boatload of Treasury supply are a few obstacles that the markets will be dealing with this week. Fed members will kick off their meeting on Tuesday and end Wednesday at 2:00 p.m. ET with the release of the monetary policy statement followed by Fed Chair Powell’s press conference at 2:30. It is expected that the Fed Funds Rate will increase by 0.75% to 2.50%. More on the subject tomorrow and Wednesday morning.

Data out of Europe continues to be weak with Germany on the cusp of a recession. Here in the states, the first read on Q2 2022 GDP will be released on Thursday with estimates at a meager +0.4%. The Atlanta Fed’s GDPNow module shows a contraction of 1.6% after the similar decline in Q1. Also, housing data will be released this week along with Consumer Confidence. And throw in the biggest week for corporate earnings and the markets are looking at big risk event headlines.

Courtesy of Mortgage Market Guide 

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