Daily Rate Update: October 11th-15th

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Friday – October 15, 2021

The consumer is alive and kicking as we head into the holiday shopping season. September Retail Sales jumped 0.7%, well above the loss of 0.3% expected. August was revised higher to a gain of 0.9% from 0.7%. X-autos, sales were up 0.8% versus the 0.4% expected. Consumers spent on clothing, restaurants and bars as well as online sales but the numbers were fueled by higher prices on most items including energy.

The price of WTI oil has risen to a seven-year high to $82/bbl as demand picks up and after OPEC said it would not ramp up supply. This has caused pain at the pumps across the nation. The national average price for a regular gallon of gasoline has risen to $3.30 from $3.18 a month ago and up from $2.17 a year ago. Prices have been seen at above $5 in New York and California. This is a tax that will have an adverse effect on consumer confidence and spending at some point.

Courtesy of Mortgage Market Guide 

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Thursday – October 14, 2021

Home borrowing costs inched higher this week and remain just above historic lows. Freddie Mac reports that the 30-year fixed-rate mortgage rose six basis points to 3.05% with 0.7 in points and fees. The record low was 2.65% on January 7 of this year. Sam Khater, Freddie Mac’s Chief Economist said, “The 30-year fixed-rate mortgage rose to its highest point since April. As inflationary pressure builds due to the ongoing pandemic and tightening monetary policy, we expect rates to continue a modest upswing.”

First-time unemployment claims fell to lows not seen since before the shutdowns began in late March 2020. At present, there are almost 11 million jobs available across the nation. The Labor Department reports that Weekly Initial Jobless Claims fell 36,000 to 293,000 for the week ended October 9, 2021. Continuing claims, or those receiving benefits for at least two weeks straight, fell to 2.593 million from 2.727 million. The labor market should continue to improve with holiday hiring underway.

Courtesy of Mortgage Market Guide 

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Wednesday – October 13, 2021

Consumer prices remained elevated in September due in part to higher costs for food, energy and rent. Also, costs increased for new vehicles and furniture while prices fell for used autos, airline fares and apparel. The September Consumer Price Index (CPI) rose 0.4%, a slight uptick from 0.3% in July. The annual number rose to 5.4% from 5.3% from July, a 30-year high. The Core CPI was up 0.2% from 0.1% in July. The numbers will be closely watched by members of the Federal Reserve ahead of the November 3 Fed meeting.

Home borrowing costs increased in the latest week and remain just above record lows. The Mortgage Bankers Association (MBA) reports that the 30-year fixed-rate mortgage rose four basis points to 3.18% with 0.37 in points for the week ending October 1, 2021. Within the report it showed that the Market Composite Index fell 0.2, the Refinance Index declined 1% and the Purchase Index saw a 2% gain. A spokesperson said, “The increase in purchase applications was welcome news, but was primarily driven by a 2 percent gain in conventional purchase applications, which kept the average loan size elevated.”

Mortgage credit availability increased in September fueled by an increase in the conventional index. The Mortgage Bankers Association reports that its Mortgage Credit Availability Index (MCAI) was up 1.5% to 125.6 in September. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012.

Courtesy of Mortgage Market Guide 

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Tuesday – October 12, 2021

Available jobs across the U.S. remained jut below record highs as the labor market continues to get back to more normal levels. The Labor Department reports that job openings fell to 10.4 million in August from the record 11.1 million seen in July. Job openings decreased in several industries with the largest decreases in health care and social assistance (-224,000); accommodation and food services (-178,000); and state and local government education (-124,000). Job openings increased in federal government (+22,000). The number of job openings decreased in the Northeast and Midwest regions.

The MBA reports that loans in forbearance fell 27bp in the latest week to 2.62%, the fastest pace in a year as mortgage holders exit COVID-19 programs. The MBA estimates that there are sill 1.3 million homeowners in forbearance plans. Fannie Mae and Freddie Mac loans declined by 17 basis points to 1.21%. “Many borrowers reached the expiration of their forbearance term as we entered October. The pace of exits climbed to the fastest pace in over a year, and the share of loans in forbearance declined at the fastest rate since last October, dropping by 27 basis points,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist.

More pain was seen at the pumps this week as gas prices hit a 7-year high in the latest survey. Motor club AAA reports that the national average price for a regular gallon of gasoline rose to $3.28. The big reason for the continued rise in gas prices is that the price of oil has gushed to $80/bbl, also a 7-year high. Today’s national average of $3.28 is 10 cents more than a month ago, $1.09 more than a year ago, and 63 cents more than pre-pandemic in 2019.

Courtesy of Mortgage Market Guide 

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