Mortgage in America

Daily Rate Update: June 28th-July 2nd

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Friday – July 2, 2021

The Bureau of Labor Statistics reports that there were 850,000 jobs created in June, above the 725,000 expected, while May was revised higher to 583,000 from 559,000. Here are some of the other details within the report. The Unemployment Rate ticked up to 5.9% from 5.7% while the U6 number, or total unemployed, fell to 9.8% from 10.2% in May. As expected, leisure and hospitality saw the biggest job growth adding 343,000 positions. However, the sector is still down 2.4 million jobs from February 2020.

Within the data it showed that the Labor Force Participation Rate (LFPR) was unchanged at 61.6 and a little concerning given the 9 million jobs available across the nation. The LFPR measures the percentage of the population that is either working or actively looking for work. A big bond-friendly component was Average Hourly Earnings rising 0.3% from May and below the gain of 0.4% expected. Year over year earnings jumped 3.6%, below the 3.7% expected and up from 2% in April. Overall, a Goldilocks report.

Just some 4th of July stats: 74 million Americans are planning to grill out on the 4th and plan to spend $7.5 Billion on food. 150 million hot dogs to be consumed. 750 million pounds of chicken to be sold. Corn (41%), potatoes (41%), other veggies (32%) are the most popular grilled side dishes. Sales of beer and wine are expected to hit $1.4 billion. 43.6 million Americans are expected to hit the roads over the holiday weekend with 48 million traveling 50+ miles from home for the holiday.

Courtesy of Mortgage Market Guide 

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Thursday – July 1, 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 four basis points to 2.98% last week with 0.6 in points and fees. A year ago at this time, the rate was 3.07%. It is up from 2.65% on January 7 of this year. “Economic growth remains steady and is bolstering more segments of the economy,” said Sam Khater, Freddie Mac’s Chief Economist. “Although low and stable mortgage rates have kept the housing market booming over recent months, a deterioration in affordability and for-sale inventory has led to a market slowdown.”

First-time unemployment claims inched lower in the latest week as the labor market continues to get back to full strength. At present, there are 9.3 million jobs available across the nation, according to the Bureau of Labor Statistics. Weekly Initial Jobless Claims fell to 364,000 for the week ended June 26, 2021, from 415,000 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, increased to 3.469 million from 3.413 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 – June 30, 2021

Home borrowing costs inched higher in the latest week and remain at historically low levels. The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage rose two basis points to 3.20% with 0.39 in points for the week ending June 25, 2021. The Market Composite Index fell 7%, the Purchase Index declined 5% while the Refinance Index decreased 8%. Spokesperson Mike Fratantoni said, “Mortgage rates were volatile last week, as investors tried to gauge upcoming moves by the Federal Reserve amidst several divergent signals, including rising inflation, mixed job market data, strong consumer spending, and a supply-constrained housing market that has led to rapid home-price growth.”

The job market continues to improve as all states across the country are now fully reopened. ADP Private Payrolls in June rose by 692,000 versus the 600,000 expected. May was revised lower to 886,000 from 978,000. The hospitality sector saw the biggest gain of 322,000, which was expected. The report comes ahead of the government’s Jobs Report on Friday, where nearly 700,000 jobs are expected to be created in both the private and government sector.

Just some stats from the first half of 2021. The Dow and NASDAQ are up 12% while the closely watched S&P 500 is up 14%. The 10-yr yield, currently at 1.44%, is up from .91% on December 31, 2020. The FNMA 30-yr 2% coupon closed at $103.88 on December 31, 2020, now at $101.16. The 30-yr fixed-rate mortgage was 2.65% on January 7, 2021, now at 3.02%.

Courtesy of Mortgage Market Guide 

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Tuesday – June 29, 2021

In housing news, the sorta backward-looking Case-Shiller 20-City Home Price Index report for April showed prices jumped nearly 15% annually from 13.4% in March. Same story, ultra-low inventories and scorching demand continues to drive prices higher. The current pace is unsustainable and a slowing from the torrid pace during the summer months feels like it is in the cards. A pullback or pause from the current price appreciation pace would be healthy and present new opportunities.

Consumer Confidence rose to 127.3 in June and was the highest level since February 2020, before the shutdowns began, reports the Conference Board. Within the numbers, it showed that current business and labor market conditions rose from 148.7 to 157.7. The expectations index, based on consumers’ short-term outlook for income, business, and labor market conditions, increased to 107.0 from 100.9 in May. Spokesperson Lynn Franco said, “Consumers’ assessment of current conditions improved again, suggesting economic growth has strengthened further in Q2. Consumers’ short-term optimism rebounded, buoyed by expectations that business conditions and their own financial prospects will continue improving in the months ahead.”

The FHFA’s House Price Index shows prices were up 1.8% nationwide in April from March and were up 15.7% from April 2020 to April 2021. The house price index measures changes in single-family home values. “House prices recorded another monthly and annual record in April,” said the FHFA’s Dr. Lynn Fisher. “This unprecedented price growth persists due to strong demand, bolstered by still-low mortgage rates, and too few homes for sale.”

Courtesy of Mortgage Market Guide 

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Monday – June 28, 2021

The jobs market continues to get back on solid footing after the shutdowns decimated the sector. ADP Private Payrolls will be released on Wednesday where it is expected that 400,000 jobs were created. The government’s Jobs Report on Friday where it is expected that there were 680,000 new jobs in June. The numbers will be closely watched by the Federal reserve in its future decisions on rates and its balance sheet. It is estimated that employment is about 7.6 million jobs below its peak in February 2020. Many unemployed may come back into the workforce when the enhanced unemployment benefits expire in September.

Fannie Mae recently reported that both new and existing home sales fell in the latest readings. It could be some easing demand as prices continue to rise. However, the slowdown is more likely due to the lack of existing homes on the market for sale and the continued lack of building materials facing homebuilders with regards to new home sales. There was an increase in new homes for sale in the latest report and suggests that builders will be able to generate higher sales going forward if the supply constraints ease.

With the Fourth of July coming this year on a Monday, it means an extended driving period for the weekend and the week is also typically one of the biggest vacation weeks of the summer. So what are gas prices doing heading into the holiday weekend? Motor Club AAA reports that a record-breaking 43.6 million Americans will hit the road for the holiday getaway. Currently, the national average price for a regular gallon of gasoline is $3.09, up from $3.04 a month ago. AAA sees the price rising another nickel this week ahead of the weekend. This year’s Independence Day weekend is defined as Thursday, July 1 – Monday, July 5. Jeanette McGee, AAA spokesperson said, “Road trippers will pay the most to fill up for the holiday since 2014.”

Courtesy of Mortgage Market Guide 

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