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Daily Rate Update: March 22nd-26th

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Friday – March 26, 2021

Inflation remained tame in February as the markets look for any signs of higher prices. The annual February Core PCE slipped to 1.4% from 1.5% in January while the monthly rate rose 0.1%. The runaway inflation fears could be somewhat over-hyped given that so many Americans are still out of work. This is one reason why inflation may not be a huge problem anytime soon. The Fed continues to pound the table that any rise in inflation will be transitory or temporary. Personal Spending fell 1% while Personal Incomes dropped by 7.1% which was expected.

Americans are feeling more secure about the U.S. economy and the job market at the end of March. The final March Consumer Sentiment Index rose to 84.6 from 76.8 in February and was the best reading since the 89.1 seen in March 2020. Also, the direct checks and better than anticipated vaccine progress. The positive recent economic data and jobs numbers clearly points towards robust increases in consumer spending in the coming months.

Courtesy of Mortgage Market Guide 

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Thursday – March 25, 2021

Home borrowing costs continued to rise this week but remain at historically low levels. Freddie Mac reports that the 30-year fixed-rate mortgage rose to 3.17% from 3.09% 0.7 in points and fees. A year ago at this time, the rate was not much higher at 3.50%. It is up from 2.65% on January 7 of this year. Sam Khater, Freddie Mac’s Chief Economist said, “During the course of the pandemic, ‘home’ has become more important than ever. As a result, strong purchase demand continues—but buyers also outnumber the sellers.”

First-time unemployment claims fell to their lowest level in a year but remain stubbornly high. Weekly Initial Jobless Claims fell to 684,000 from 781,000 for the week ended March 13, 2021. To put it into perspective the week of March 14, 2020 claims were 282,000. The week of March 21, 2020 they skyrocketed to 3.3 million as lockdowns took hold. Continuing claims, or those receiving benefits for at least two weeks straight, fell to 3.87 million from 4.134 million. With more and more states reopening their economies, many unemployed Americans should be able to go back to work.

Due to the lockdowns in 2020, economic growth fell by the worst levels not seen since WWII. Gross Domestic Product rose 4.3% in the final three months of 2020 but for the year it fell 3.5%. It was the largest decline since the decline of 11.6% in 1946 after the U.S. was demobilizing from the war. However, growth should quickly rebound in the first quarter of 2021. With many states reopening and with pent-up consumer demand, GDP is expected to range between gains of 5% to 10%.

Courtesy of Mortgage Market Guide 

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Wednesday – March 24, 2021

Mortgage rates inched higher in the latest survey but remain at historically low levels. The MBA reports that the 30-year fixed-rate mortgage rose eight basis points to 3.36% with 0.42 in points for the week ended March 19, 2021. The Market Composite Index, a measure of total mortgage loan application volume, fell 2.5% while the Purchase Index increased 2.5%. The Refinance Index declined by 5.1%. Spokesperson Joel Kan said, “Inadequate housing inventory continues to put upward pressure on home prices. As both home-price growth and mortgage rates continue this upward trend, we may see affordability challenges become more severe if new and existing supply does not significantly pick up.”

After the recent rise since the beginning of the year, gas prices at the pumps leveled out this week. Easing demand along with an increase in demand are a few factors that are slowing the increase. The national average price for a regular gallon of gasoline is $2.88. A month ago the price was $2.66 while it was seen at $2.10 a year ago. AAA went on to say that in the week ahead, motorists can expect fluctuation at the pump. However, large jumps are not likely for the majority of consumers.

Courtesy of Mortgage Market Guide 

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Tuesday – March 23, 2021

Harsh weather across the nation coupled with declining home inventories sent a chill across the new home sale market last month. The U.S. Census Bureau reports that New Home Sales fell by 18.2% in February from January to an annual rate of 775,000 versus the 867,000 expected. Sales were up 8.2% year over year in February. Sales fell across the four major U.S. regions. Inventories were at a 4.8-month supply, below 6 months that is seen as normal. The median price fell 1% from January to $349,400. Look for a bounce-back in March.

Treasury Secretary Yellen and Fed Chair Powell will be in front of the House Financial Services Committee today at Noon ET testifying on the government’s pandemic relief efforts. The markets will look for more signs from Ms. Yellen on fiscal support. In his prepared remarks, Mr. Powell continued the same rhetoric that that economy depends on the course of the pandemic and that it and the job market continues to improve. Mr. Powell made no mention of inflation in his prepared remarks.

Dallas Fed President Robert Kaplan was speaking early Tuesday saying his economic forecast has improved meaningfully and that he is among policymakers expecting a rate hike in 2022. The Federal Reserve sees the next rate hike in 2024 – but four members, like Kaplan, see a hike next year and seven see a rate hike in 2023. The final decision usually comes down to the Fed Chair as we are reminded to always listen to Mr. Powell, as what he says will go. Right now he remains all in with no hikes and continued QE.

Courtesy of Mortgage Market Guide 

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Monday – March 22, 2021

The National Association of REALTORS® reports that February Existing Home Sales fell by 6.6% from January to an annual rate of 6,220,000 units versus the 6,500,000 expected. Sales were up 9.1% annually. The median sales price was up nearly 16% from last year to $313,000. Inventories remain at record lows with 2 month supply. Properties typically sold in 20 days, also a record low. “Despite the drop in home sales for February – which I would attribute to historically-low inventory – the market is still outperforming pre-pandemic levels,” said Lawrence Yun, NAR’s chief economist.

Freddie Mac released its March Research report showing that confidence in the housing market is high as concerns about finances linger. The report said that while many are still reporting an economic fallout from the pandemic, those numbers have improved and are down from the all-time highs in October and November 2020. The survey said that confidence in the housing market ranged between 48% (April/2020) and 69% (October/2020) but remained high overall, averaging 60% in all of 2020. As of February 2021, confidence has improved to 66%. Spokesperson Donna Corley said, “To date, we have helped hundreds of thousands of borrowers get and stay current on their mortgage, and we continue to work with our conservator and industry partners to offer ongoing support.”

Courtesy of Mortgage Market Guide 

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