Thursday – March 10, 2022
After a brief pause and slip last week, mortgage rates rose this week as they continue their trek higher. Freddie Mac reports that the 30-year fixed-rate mortgage rose nine basis points to 3.85% with 0.8 in points and fees. The 15-year rose to 3.09% from 3.01% also with 0.8 in points and fees. “Over the long-term, we expect rates to continue to rise as inflation broadens and shortages increasingly impact many segments of the economy. However, uncertainty about the war in Ukraine is driving rate volatility that likely will continue in the short-term.”
Consumer inflation continued to run hot in February as the data shows numbers not seen in 40 years. The February Consumer Price Index (CPI) rose 7.9% year over year, inline with estimates and above the 7.5% recorded in January. Monthly, the CPI rose 0.8%, inline and up from 0.6% in January. Higher food and energy costs fueled the rise. Core CPI, which strips out food and energy, jumped 6.4% annually, above the 5.9% expected and up from 6% in January. This Core CPI reading has flown under the radar of the media … 6.4% is ridiculously high and nearly three times what the Fed is looking for in 2%.
The MBA reports that mortgage credit availability increased in February. The MCAI rose to 126 as credit availability rose to its highest level since May 2021. The index was benchmarked to 100 in March 2012. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. “Credit availability increased to its highest level since May 2021, driven by growth in jumbo loan programs, as well as those that include allowances for ARMs and expanded credit score and LTV requirements,” said MBA spokesperson Joel Kan.
Courtesy of Mortgage Market Guide
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Wednesday – March 9, 2022
For the first time in 12 weeks, home borrowing costs declined, reports the MBA. The 30-year fixed-rate mortgage fell six basis points to 4.09% with 0.44 in points for the week ending March 4. Within the data it showed that the Market Composite Index rose 8.5%, the Refinance Index increased 8.5% and the Purchase Index gained 8.6%. An MBA spokesperson said, “Looking ahead, the potential for higher inflation amidst disruptions in oil and other commodity flows will likely lead to a period of volatility in rates as these effects work against each other.”
Fannie Mae recently released a paper asking what are the biggest costs of homeownership. Here are the findings. The largest contributors to housing costs are consistently non-mortgage ongoing costs, which collectively are about half of total borrower costs over the ownership period. The largest non-mortgage expenses for all borrowers are utilities, property taxes, and home improvement expenses. Transaction costs at purchase and sale comprise roughly 20% of total costs, with the broker fees at sale standing out as the largest such expense. The typical mortgage accounts for roughly 30% of total cost of housing over a typical seven-year homeownership cycle. Guaranty fees comprise approximately 4% of the total cost of homeownership. Private mortgage insurance is also a small component of costs, ranging from 1% to 3% of total costs.
Job openings across the nation remained elevated in January reports the Labor Department in its JOLTS data. There were 11.3 million open positions on the last business day of January. That is nearly 5 million more than the number of available workers. Those quitting jobs in January were 4.3 million, down from the record 4.5 million recorded in November 2021. Finding qualified workers to fill positions has become a major project for small, medium and large-sized companies.
Courtesy of Mortgage Market Guide
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Tuesday – March 8, 2022
Optimism in the small business sector slipped in February as owners cited inflation as among their top problems. The NFIB Small Business Optimism Index fell by 1.4 points to 95.7, the second consecutive month below the 48-year average of 98 as 26% of owners reported that inflation was their single most important problem in running their business. Within the report, it showed that the net percent of owners raising average selling prices increased seven points to a net 68%, highest in 48 years. “Inflation continues to be a problem on Main Street, leading more owners to raise selling prices again in February,” said NFIB Chief Economist Bill Dunkelberg.
Inflation continues to gather momentum and is becoming deep-rooted in the U.S. economy. And with the inflation reading February Consumer Price Index on tap Thursday, investors, Wall Street as well as the Fed will be eagerly awaiting the numbers. In the meantime, lumber prices have risen to $1,456 after falling to $470 in September 2021, gold and silver prices are up and of course, oil has surged to $130/bbl. The national average price for a gallon of gas has hit an all-time high of $4.17 today. In California, prices were seen near $8 a gallon! Wheat prices have hit an all-time high.
Courtesy of Mortgage Market Guide
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Monday – March 7, 2022
Fannie Mae’s Home Purchase Sentiment Index (HPSI) reveals that more consumers expect mortgage rates and home prices to rise even further. Fannie said that on net, the ‘Good Time to Buy” component remains near its recently established record low. The report went on to say that respondents continue to cite high home prices as the primary impediment to purchasing. Consumers did report a substantially improved sense of job security, but a much greater share indicated that they expect mortgage rates to move even higher. The HPSI improved by 3.5 points in February to 75.3 and is down 1.2 points year over year.
Black Knight’s January Mortgage Monitor shows that total 2021 originations rose to a record high of $4.3 trillion with purchase lending also a record at $1.7 trillion. Overall refinance originations fell 34% from last year to $2.7 trillion, with rate/term refis declining 60%. Cash-out refis rose to $1.2 trillion (the most since 2005) increasing 13% from last year due in part to soaring home values. The $80 billion in equity tapped in Q4 2021 was the largest quarterly volume in 15 years. Spokesperson Ben Graboske said, “Though American homeowners are tapping their homes’ equity via cash-out refinances at the highest level since 2005, they are doing so judiciously, at roughly half the rate seen back then. Tapping their homes’ equity via cash-out refinances at the highest level since 2005, they are doing so judiciously, at roughly half the rate seen back then.”
Volatility continues to grip the U.S. financial markets as the conflict in Eastern Europe continues. Today, oil prices have hit 14-year highs to $130/bbl, stocks are lower while the bond markets have recovered most the early pricing losses. Gas prices continue to push higher with the national average for a regular gallon of gas at $4.06, up from $3.61 a week ago. Freddie Mac reports that the 30-year fixed-rate mortgage was 3.76% last week.
Courtesy of Mortgage Market Guide
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