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Daily Rate Update: March 8th-12th

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Friday – March 12, 2021

As the nation continues to reopen and tries to get back to normal, consumer attitudes are beginning to spring. The March Consumer Sentiment Index rose to 83 from 76.8 in February and above the 80 expected. It was the highest print since March 2020. The higher numbers were due in part to the growing number of vaccinations as well as the passing of the latest $1.9 trillion stimulus bill. Within the report it showed that inflation expectations remain elevated.

Wholesale inflation on an annual basis jumped in February as pressures continue to mount. The Producer Price Index rose 0.5% in February from January while the index jumped 2.8% year over year, up from the annual rate of 1.7% in January. When stripping out volatile food and energy, the Core rate rose 0.2%, inline and was up 2.2% annually.

The Food and Agriculture Organization (FOA) reports that its global Food Price Index (FFPI) rose 2.4% in February from January, marking the ninth month of consecutive rises and reaching its highest level since July 2014. Adjusted for inflation, prices are at their highest level since 2014. This past week we saw the February inflation reading CPI rise 0.4% from January, its fastest pace since August.

Courtesy of Mortgage Market Guide 

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Thursday – March 11, 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 3.05% from 3.02% with 0.6 in points and fees. A year ago at this time, the rate was not much higher at 3.36%. It is up from 2.65% on January 7 of this year. Sam Khater, Freddie Mac’s Chief Economist said, “Homebuyer demand is strong and, for homeowners who have not refinanced but are looking to do so, they have not yet lost the opportunity.

First-time unemployment claims remain stubbornly high but fell in the latest week while millions of Americans are still without a job. Weekly Initial Jobless Claims fell to 712,000 from 754,0000 for the week ended March 6, 2021. Continuing claims, or those receiving benefits for at least two weeks straight, fell to 4,144,000 from 4,337,000. With more and more states reopening their economies, many unemployed Americans should be able to go back to work.

The $1.9 trillion COVID relief bill passed through the House yesterday and now heads to the White House to be signed by President Biden. The bill will send $1,400 direct checks to those Americans who qualify, unemployment assistance, small business aid, vaccination funds, state and local government aid, funds for arts and humanities, COVID funds along with aid to Amtrak. This being the fifth relief package since March 2020 and has lifted the U.S. national debt to nearly $30 trillion.

Courtesy of Mortgage Market Guide 

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Wednesday – March 10, 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 three basis points to 3.23% with 0.43 in points for the week ended March 5, 2021. The Market Composite Index, a measure of total mortgage loan application volume, fell 1.3% while the Purchase Index increased 7%. The Refinance Index declined by 5% and is down 43% from a year ago. Spokesperson Joel Kan said, “With the spring buying season at the doorstep, the purchase market had its strongest showing in four weeks, with gains in both conventional and government applications.”

Consumer inflation was mixed in February as the markets look for any signs of upside pressure. The inflation reading Consumer Price Index (CPI) for February rose by 0.4%, inline with expectations while the Core rate, which strips out food and energy, increased 0.1%, below the 0.2% expected. Core CPI rose 1.3% annually, down from 1.4% in January while the headline number was up 1.7% from 1.4%. This hot headline CPI was offset by a soft Core rate which gave a boost to the U.S. stock markets.

Courtesy of Mortgage Market Guide 

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Tuesday – March 9, 2021

Small business optimism inched higher in February after being decimated when businesses were forced to shut down during the pandemic. The NFIB Small Business Optimism Index edged higher to 95.8 in February from 95 in January. The 47-year average is 98. NFIB Chief Economist Bill Dunkelberg said, “The economic recovery remains uneven for small businesses, especially those still managing state and local regulations and restrictions. Congress and the Biden administration must keep small businesses a priority as they plan future policy legislation.”

Stocks are rallying on Wall Street as bond yields decline while vaccinations ramp up and CDC guidelines ease a bit. After its recent correction, the NASDAQ is soaring today led by a big rebound in the tech sector. The NASDAQ is up 400 points in early trading while the Dow and S&P are also showing solid gains. If the recent rise in rates stabilizes, stocks could hit fresh highs but along the way, there will be small corrections, which is healthy.

Gas prices continue to rise due in part to a decrease in refinery activity coupled with the increase in oil prices. Motor Club AAA reports that the national average price for a regular gallon of gasoline is at $2.80, up from $2.46 a month ago. A year ago the price was $2.38. “With crude oil prices back on the rise, we could see the national average climb towards $2.90 this spring with some relief by early summer,” said Jeanette McGee, AAA spokesperson.

Courtesy of Mortgage Market Guide 

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Monday – March 8, 2021

The Mortgage Bankers Association (MBA) is forecasting solid numbers for the industry in 2021 due in part to low rates as well as an improving economy. The MBA is forecasting that total originations will hit almost $3 trillion volume this year, with $1.57 trillion of that in home purchases from 2020s $1.42 trillion. The refinance index is expected to decline to $1.38 trillion this year from $2.27 trillion in 2020. Also, the MBA is sticking with Freddie Mac’s forecast of a 3.5% 30-year fixed-rate mortgage by the end of 2021. Total Existing Home sales are expected to hit 6.5 million in 2021.

Fannie Mae reports that consumer sentiment on housing slipped in February despite growing labor market optimism. The Home Purchase Sentiment Index (HPSI) fell 1.2 points in February to 76.5. The report revealed that four of the six components declined. There was an uptick in optimism regarding job security, as the numbers rose revealed a significantly more positive view of the labor market compared to January. Year over year, the HPSI is down 16.0 points. Spokesperson Doug Duncan said, “We believe there may still be room for improvement in housing and economic attitudes in the coming months, depending in part on the future path of mortgage rates.”

Courtesy of Mortgage Market Guide 

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