Friday – June 18, 2021
A negative reaction from a Fed member quickly reversed sentiment in the U.S. financial markets this morning. “Inflation is more intense than expected while upside risk of inflation is okay since that is what the Fed was hoping to achieve,” said St. Louis Fed President James Bullard. So another knee jerk reaction in the bond markets and comes just after Wednesday’s fireworks from the Fed. And you can see that Mr. Bullard also tempered his words. So was it another overreaction? It could be due to the fact that after the Federal Reserve on Wednesday the 10-year yield hit 1.61% and fell to 1.46% early this morning. Bond prices have already improved from the post-Bullard lows.
The Mortgage Bankers Association reports that mortgage applications for new home purchases in May fell 5.9% from a year ago. By product type, conventional loans made up nearly 74% of loan applications, FHA loans 14.8%, RHS/USDA loans 0.9%t and VA loans composed 10.4%. The average loan size of new homes rose from $377,434 in April to $384,323 in May. “Mortgage applications to purchase a new home decreased in May for the second straight month, while the average loan size, at $384,000, increased for the fourth consecutive month and reached a new survey high,” said MBS spokesperson Joel Kan.
Gas prices continue to steadily increase as the summer driving season gets into full swing. Motor club AAA reports that the national average price for a regular gallon of gasoline is at $3.07 up from $3.04 a month ago and from $2.11 a year ago. The underlying commodity behind gasoline is oil and that price also continues to rise.
Courtesy of Mortgage Market Guide
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Thursday – June 17, 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 to 2.93% this week from 2.99% last week with 0.7 in points and fees. A year ago at this time, the rate was 3.13%. It is up from 2.65% on January 7 of this year. Sam Khater, Freddie Mac’s Chief Economist said, “While mortgage rates are low, purchase demand has weakened over the last couple of months, primarily due to affordability constraints stemming from high home prices. With inventory tight, the slowdown in demand has yet to impact prices, meaning the summer will likely remain a strong seller’s market.”
First-time unemployment claims rose last week for the first time in seven weeks as the labor market continues to get back to full strength. Weekly Initial Jobless Claims rose to 412,000 for the week ended June 12, 2021, from 375,000 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, were at 3.518 million from 3.517 million. With all U.S. having reopened their economies, many unemployed Americans should be able to go back to work with nine million jobs available across the nation.
Courtesy of Mortgage Market Guide
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