Daily Rate Update: April 1st-5th

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Friday – April 5, 2019

The Bureau of Labor Statistics reports that payroll growth rebounded in March after the weak reading in February. Nonfarm Payrolls rose 196,000 last month, above the 175,000 expected and above the 33,000 created in February. For January and February, upward revisions totaled 14,000. The unemployment rate remained at 3.8%, near 50-year lows. Hourly earnings rose 3.2% year-over-year, down from 3.4% in February. Overall, a solid report with average job growth at 180,000 for the first three months of 2019.

The MBA reports that its Mortgage Credit Availability Index (MCAI) rose in March from February. A decline in the MCAI indicates that lending standards are tightening, while increases are indicative of loosening credit. The MCAI gained 1.1% in March to 182.1. The MBA said that credit availability rose primarily due to a spike in jumbo mortgage offerings.

Courtesy of Mortgage Market Guide

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Thursday – April 4, 2019

Mortgage rates remained at 14-month lows in the latest survey which has been a boon for mortgage application volume. Low rates should boost the spring home buying season which is currently underway. Freddie Mac reports that the 30-year fixed-rate mortgage rose to 4.08% this week from 4.06% last week with an average point of 0.50. Sam Khater, Freddie Mac’s chief economist, says, “The benefits of the decline in mortgage rates that we’ve seen this year will continue to unfold over the next few months due to the lag from changes in mortgage rates to market sentiment and ultimately home sales.”

Americans filing for first-time unemployment benefits fell to lows seen in the late 1960s in the latest week as the labor market tightened further. The Labor Department reports that Weekly Initial Jobless Claims fell by 10,000 in the latest week to 202,000, the lowest level since December 1969 when the US population was smaller. The four-week moving average of claims, which irons out seasonal abnormalities, fell 4,000 to 213,000. The numbers come ahead of Friday’s Jobs Report for March.

Courtesy of Mortgage Market Guide

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Wednesday – April 3, 2019

Low mortgage rates drove mortgage loan application volumes sharply higher in the latest week as borrowing costs fell to 14-month lows. The Mortgage Bankers Association (MBA) reports that the 30-year fixed-rate mortgage fell to 4.36% from 4.45%, the lowest since January 2018, with an average 0.44 in points. The MBAs Market Composite Index, a measure of total mortgage loan application volume, rose nearly 19% in the latest week. In addition, the refinance index surged 39% while the purchase index saw a 3.4% increase.

Private payroll growth slowed a bit in March as employers worried over a somewhat slowing US economy. ADP reports that private payrolls rose 129,000 in March, below the 178,000 expected while February was revised higher to 197,000 from 183,000. The 129,000 was the slowest private payroll growth since September 2017. The more closely watched government Jobs report will be released on Friday morning.

The service of the economy edged lower in March reports the Institute of Supply Management (ISM). The ISM Service Index fell to 56.1 last month from the 59.7 recorded in February. In the accommodation and food service industry, employers say labor is tight and in short supply. A reading above 50 percent indicates the non-manufacturing sector economy is generally expanding; below 50 percent indicates the non-manufacturing sector is generally contracting.

Courtesy of Mortgage Market Guide

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Tuesday – April 2, 2019

CoreLogic reports that home prices, including distressed sales, rose 4% from February 2018 to February 2019 as gains begin to cool to more normal levels after the 4.4% increase year-over-year seen last month in January. In early 2018, gains were seen in the 7% range. Month-over-month, prices rose 0.7% from January to February. Looking ahead, prices are expected to rise 4.7% from February 2019 to February 2020.

Ahead of two key jobs reports this week, ADP on Wednesday and Non-Farm Payrolls on Friday, the Paychex Small Business Employment Watch saw its first decline in job growth in 2019 last month. However, employers remain challenged in their ability to fill open positions with qualified candidates in a tight labor market. The ability for people to find qualified workers can put more upward pressure on wages, which would be welcome for workers given the stagnation that has taken place in wage gains in previous years.

The government will report jobs data for March this Friday. This comes after the weak reading in February where just 20,000 jobs were created. Most pundits feel that February’s low reading will be revised higher but that remains to be seen on Friday. The labor market continues to be solid on all fronts with employers searching for qualified candidates to fill positions, as referenced by the Paychex data released this week. Key components within the report are hourly earnings and the unemployment rate.

Courtesy of Mortgage Market Guide

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Monday – April 1, 2019

Analytics firm Black Knight reported on Monday that due to the recent steep decline in mortgage rates, there are now nearly 5 million borrowers that could qualify for a refinance which would reduce their rate by 3/4s of a point. The report went on to reveal that the population of refinanceable borrowers is now near a two-year high, after hitting a 10-year low in November.

Both manufacturing and construction spending rose in data released today. The national ISM Manufacturing Index came in at 55.3 in March, above the 54.2 recorded in February and just above the 54.5 expected. The U.S. economy has now grown for the 119th consecutive month. The Commerce Department reported that construction spending rose for a third straight month in February by 1% after January’s upwardly revised increase of 2.5%.

Retail Sales unexpectedly declined in February as consumers pulled back on spending after positive gains were seen in January. Retail Sales fell 0.2% in February from January and rose just 2.2% year-over-year. Americans cut back spending on clothing, furniture, building materials and electronics. The U.S. economy relies on consumer spending for nearly 70% of its economic activity and a continued pullback in spending could slow economic growth even further. But one month does not constitute a pattern. We will have to see the upcoming months data along with possible higher revisions for last month.

Courtesy of Mortgage Market Guide

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