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Daily Rate Update: May 10th-14th

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Thursday – May 13, 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 2.94% with 0.7 in points and fees. A year ago at this time, the rate was 3.28%. It is up from 2.65% on January 7 of this year. Sam Khater, Freddie Mac’s Chief Economist said, “Low rates offer homeowners an opportunity to lower their monthly payment by refinancing and our most recent research shows that many borrowers who could benefit from refinancing still aren’t pursuing the option.”

First-time unemployment claims fell to the lowest level since the shutdowns began last year. Weekly Initial Jobless Claims decreased to 473,000 for the week ended May 8, 2021, from 507,000 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 3.665 million from 3.700 million. With more and more states reopening their economies, many unemployed Americans should be able to go back to work.

Wholesale inflation surged in April but the lower impact data was easily shrugged off by the markets. The April Producer Price Index (PPI) jumped 0.6% from March which was double expectations. The year-over-year headline number rose 6.2%, an all-time high. The Core PPI, which strips out volatile food and energy, rose 0.7% monthly and was up 4.1% annually. But, investors are more concerned with the Consumer Price Index and the Core PCE when it comes to measuring inflation. April Core PCE will be released at the end of the month.

Courtesy of Mortgage Market Guide 

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Wednesday – May 12, 2021

Home borrowing costs declined in the latest week and remain at historically low levels. The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage fell to 3.11% from 3.18% with 0.32 in points for the week ended May 7, 2021. The Market Composite Index, a measure of total mortgage loan application volume, rose 2.1%, while the Purchase Index saw a small gain of 0.8%. The Refinance Index was up 3% and is down 12% from a year ago. Spokesperson Joel Kan said, “Most markets this spring continue to see robust demand, but activity continues to be constrained by insufficient inventory levels, as well as homebuilder challenges related to the ongoing shortages and price increases for building materials.”

Consumer inflation heated up to its fastest monthly pace since 2009 as pent-up demand surged. The April Consumer Price Index (CPI) jumped by 0.8% from March led by rising prices for used cars and food. The annual CPI jumped by 4.2% from 2.6% in March, well above the 3.6% expected and the highest level since 2008. When stripping out food and energy, the Core CPI rose 0.9% versus the rise of 0.3% expected. Annual Core CPI rose to 3%, the highest in 26 years.

Courtesy of Mortgage Market Guide 

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Tuesday – May 11, 2021

The ongoing labor shortage in parts of the country continues to plague small businesses. The NFIB released its small business optimism report revealing that 44% of owners reported job openings can not be filled. Within the report, it showed that the Small Business Optimism Index rose to 99.8 in April, an increase of 1.6 points from March. Chief Economist Bill Dunkelberg said, “Finding qualified employees remains the biggest challenge for small businesses and is slowing economic growth. Owners are raising compensation, offering bonuses and benefits to attract the right employees.”

Jobs were plentiful at the end of March as most of the country has now reopened. The Bureau of Labor Statistics reports there were a series-high 8.1 million job openings on the last day of March in its Job Openings and Labor Turnover Summary (JOLTS). The job openings series began in December 2000. Job openings increased in several number of industries with the largest increases in accommodation and food services with +185,000.

The cost to fill your tank jumped in the latest week due in part to the recent cyber attack on the Colonial Pipeline, which delivers approximately 45% of all fuel to the East Coast. The national average price for a regular gallon of gasoline rose 6 cents to $2.98 this week and look for prices to creep higher in the coming weeks. A month ago the price was $2.86, a year ago it was $1.84.

Courtesy of Mortgage Market Guide 

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Monday – May 10, 2021

A host of costs contribute to the price of a new single-family but regulation costs are front and center. The NAHB reports that the cost of regulations imposed by all forms of government adds a whopping $93,000 to the cost. The NAHB says that $93,870 is made up of $41,330 is attributable to regulation during development while the $52,540 comes from regulation during construction. “This study illustrates how overregulation is exacerbating the nation’s housing affordability crisis and that policymakers need to take bold steps to reduce or eliminate unnecessary regulations that will help builders increase the production of quality, affordable housing to meet growing market demand,” said NAHB Chairman Chuck Fowke.

Inflation is the new buzzword on Wall Street as consumer prices push higher with most states now fully reopened. Prices for goods and services have been on the rise due in part to pent-up consumer demand. A recent survey conducted by the New York Federal Reserve showed that inflation expectations are to increase in the short-term, remain stable in the medium-term. The median year-ahead inflation expectations increased to 3.4% in April from 3.2% in March, while remaining unchanged at 3.1% at the three-year horizon. The one-year ahead measure is now at its highest level since September 2013. Fed Chair Powell has said that any rise in inflation will be transitory.

Courtesy of Mortgage Market Guide 

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