Thursday – May 12, 2022
Home borrowing costs inched higher last week and are up big from a year ago. Freddie Mac reports that the 30-year fixed-rate mortgage rose to 5.30% this week from 5.27% last week with an average of 0.9 in points and fees. A year ago the rate was 2.94%. The 15-year fell to 4.48% from 4.52%, also with a 0.9 point. A year ago the 15-year was 2.26%. Sam Khater, Freddie Mac’s Chief Economist said, “Homebuyers continue to show resilience even though rising mortgage rates are causing monthly payments to increase by about one-third as compared to a year ago.”
The wholesale inflation reading Producer Price Index (PPI) for April rose 0.5%, inline and well below 1.6% seen in March. Year over year, PPI rose 11% versus 10.7% expected and down from 11.5% in March. When stripping out food and energy, the Core CPI was up 0.4% monthly below the 0.6% estimated and down from 1.2% in March. The Core was up 8.8% year over year, below the 8.9% expected and down from 9.6%.
The number of Americans filing for first-time unemployment benefits continued to hover just above historic lows last week while the number of jobs available is more than double of those unemployed. Weekly Initial Jobless Claims came in at 203,000. In the current jobs market, there are now a record 6.5 million more job openings than unemployed people in the U.S. The latest JOLTS report revealed that there were 11.5 million job openings in February, about 5 million more than the level of unemployed workers.
Courtesy of Mortgage Market Guide
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Wednesday – May 11, 2022
The inflation reading Consumer Price Index (Consumer Price Index) for April rose 0.3% month over month versus the 0.2% expected and well off the 1.2% month over month gain seen in March. Year over year, CPI rose 8.3% versus 8.1% expected and down from 8.5% in March. Food prices are up nearly 10% annually while energy is up 30%. When stripping out food and energy, the Core CPI jumped 0.6% monthly from the 0.4% estimated and up from 0.3% in March. The Core was up 6.2% year over year, above the 6% expected and down from 6.5%.
Mortgage rates resumed their upward trend last week and have been pushing higher since the beginning of the year. The 30-year fixed-rate mortgage rose to 5.53% from 5.36% with 0.73 points for the week ended May 6, 2022, reports the MBA. Within the data it showed that the Market Composite Index, a measure of total mortgage application volume, rose 2%, the Refinance Index fell 2% and the Purchase Index saw a gain of 4.5%. Spokesperson Joel Kan said, “Despite a slow start to this year’s spring home buying season, prospective buyers are showing some resiliency to higher rates. Purchase activity has now increased for two straight weeks.”
Realtor.com reports that the low housing inventory environment could be ready to turn the corner after several years of scant homes for sale on the market. In April, the supply of active listings registered the smallest year-over-year drop (-12.2%) since the end of 2019, led by gains in the share of mid-sized homes. “April data suggests a positive turn of events is on the horizon for weary buyers: If the trends we’re seeing now hold true, we could potentially see year-over-year inventory growth within the next few weeks,” said Danielle Hale, Chief Economist for Realtor.com®.
Courtesy of Mortgage Market Guide
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Tuesday – May 10, 2022
The New York Federal Reserve Bank reports that total household debt in the first quarter of 2022, increasing by $266 billion (1.7%) to $15.84 trillion. Balances now stand $1.7 trillion higher than at the end of 2019, before the COVID-19 pandemic. Mortgage balances rose by $250 billion in Q2 2022 and stood at $11.18 trillion at the end of March. Mortgage originations were at $859 billion in the quarter, representing a decline from the high volumes seen during 2021, yet still $197 billion higher than in Q1 2020, right before the pandemic hit the United States.
Small business owners continue to feel the impact of soaring inflation citing that it is the number one problem in the current environment. The National Federation of Independent Business (NFIB) Small Business Optimism Index was unchanged in April at 93.2 and the fourth consecutive month below the 48-year average of 98. The NFIB said that small business expectations for better business conditions are at a record 48-year low. The survey also revealed that 32% of small business owners reported that inflation is their single most important problem, the highest reading since Q4 1980.
The MBA reports that mortgage credit availability decreased in April for the second month in a row. The Mortgage Credit Availability Index (MCAI) fell by 3.2% to 121.2 in April. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. “Mortgage credit availability fell for the second month in a row, as lenders reacted to the jump in mortgage rates over the past two months,” said spokesperson Joel Kan.
Courtesy of Mortgage Market Guide
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Monday – May 9, 2022
Redfin reports that more sellers of homes are dropping their prices, but buyers find little relief. Redfin, “Homebuying is as competitive and costly as ever as soaring mortgage rates make the market less inviting for many would-be sellers.” The share of home sellers who lowered asking prices surged to a six month high of 15% for the four weeks ending May 1. That’s up from 9% a year earlier, and represents the largest annual gain on record in Redfin’s weekly housing data backthrough 2015.
After a brief respite from rising gas prices, the cost to fill your gas tank is now back at record highs. The national average price for a regular gallon of gasoline is at $4.33 This matced the all-time high hit back on March 11 which is 20 cents more than a month ago, and $1.36 more than a year ago. The main reason is that the price of oil hit $95/bbl but hit $110 last week. “With the cost of oil accounting for more than half of the pump price, more expensive oil means more expensive gasoline,” said Andrew Gross, AAA spokesperson.
Consumer sentiment toward housing hits its lowest level in two years while affordability constraints mount as mortgage rates and home prices continue to rise, reports Freddie Mac. The Fannie Mae Home Purchase Sentiment Index fell 4.7 points to 68.5 in April, its lowest level since May 2020, as surveyed consumers expressed heightened concerns about housing affordability and rising mortgage rates. Also, 73% of respondents expect mortgage rates to continue their recent ascent over the next 12 months, also a survey high. A spokesperson said, “The current lack of entry-level supply and the rapid uptick in mortgage rates appear to be adversely impacting potential first-time homebuyers.”
Courtesy of Mortgage Market Guide
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