Daily Rate Update: April 22nd-26th

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Friday – April 26, 2019

The Goldilocks economy lives on in the US after the Gross Domestic Product (GDP) report showed strong growth along with lower inflation. Fears of a slowdown in economic growth here in the US were laid to rest this morning after Gross Domestic Product jumped 3.2% in Q1 2019 in the first of three readings. This was way above the expected range of 2% – 2.8%.

It was the strongest Q1 GDP since the 3.3% seen in Q1 2015. Within the report it showed that the inflation components declined, local and state government spending surged, while consumer spending edged lower. Solid economic data in the past few months along with strong retail sales were a few of the catalysts that lifted growth.

The US homeownership rate in the first quarter of 2019 edged lower from the fourth quarter of 2018. The Census Bureau reports that the homeownership rate of 64.2% in the first quarter of 2019 was virtually unchanged from the first quarter of 2018, but 0.6 percentage points lower from the fourth quarter 2018 rate of 64.8%. “Anemic homeownership rate growth among younger buyers signals the difficulties many of those buyers continue to face in securing a down payment, finding a home in their budget or qualifying for a loan,” said Skylar Olsen, Zillow’s director of economic research.

Courtesy of Mortgage Market Guide

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Thursday – April 25, 2019

Mortgage rates continue to edge higher in the latest survey though still remain at 12-month lows in this low inflationary environment. Freddie Mac reports that the 30-year fixed-rate mortgage rose three basis points to 4.20% with an average 0.50 in points and fees.

Sam Khater, Freddie Mac’s chief economist, says, “Despite the recent rise in mortgage rates, both existing and new home sales continue to show strength – indicating the lagged effect of lower rates on housing demand. This, along with improved affordability, should push housing activity higher in the coming months.”

Next week is shaping up to be a big week for economic data that could impact the markets as well as mortgage rates. Inflation data, manufacturing, job growth numbers, housing and Consumer Confidence will all be released. In addition, Federal Reserve members will meet for the regularly scheduled two-day Federal Open Market Committee meeting which will kick off on Tuesday and ends Wednesday with the release of the monetary policy statement.

Courtesy of Mortgage Market Guide

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Wednesday – April 24, 2019

Mortgage rates continued to inch upward in the latest week and are now 10 basis points higher in the last three weeks and at the highest levels in a month. A strengthening economy coupled with a jump in retail sales have fueled the push higher in rates. The Mortgage Bankers Association (MBA) reports that the 30-year fixed-rate mortgage rose two basis points in the latest week to 4.46% with an average 0.44 in points.

The MBA also reports that both Refinance and Purchase indexes declined in the latest week. “Borrowers remain extremely sensitive to rate changes, which is why there has been a 28% drop in refinance applications over this three-week period. Purchase activity also declined, but remains almost 3% higher than a year ago,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist.

Low inflation numbers out of Australia coupled with weak economic data from Germany are lifting mortgage bond prices today, though they are off their best levels. Inflation around the globe is low and economic growth is soft which should keep interest rates here in the US relatively low for the foreseeable future. The US Federal Reserve Bank has said they are watching the economic slowdown around the globe when considering monetary policy. The two-day Fed meeting will take place next week and with growth around the globe weak and disinflation creeping in – there is virtually zero percent chance of a hike and likely none for quite some time.

Courtesy of Mortgage Market Guide

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Tuesday – April 23, 2019

After recent disappointing numbers from March housing starts and existing home sales, sales of new single-family homes surged in March due in part to lower mortgage rates and home prices. The Commerce Department reports that new home sales rose 4.5% in March from February to an annual rate of 692,000 units, well above the 646,000 expected and the highest level since November 2017. From March 2018 to March 2019, sales rose 3%. Gains on a monthly basis were seen in the Midwest, South and West, with losses in the Northeast.

Home price gains cooled in March from February as prices come back down to more normal levels. The Federal Housing Finance Agency (FHFA) reports that its Home Price Index rose 0.3% from January to February, down from the 0.6% increase in January. Home prices have now risen for 86 consecutive months, but February marked the slowest annual growth in US home prices since January 2015.

Courtesy of Mortgage Market Guide

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Monday – April 22, 2019

Housing data in March disappointed as the spring home buying season kicks off. The weak data comes despite low rates along with rising wages. Housing Starts fell 0.3% in March from February to an annual rate of 1.139 million units versus the 1.247 million expected. The year-over-year numbers were weak declining 14.2% from march 2018. Building permits, a sign of future construction, fell 1.7% to an annual rate of 1.27 million. Single-family starts fell 0.4% month-over-month, down 11% year over year.

The National Association of REALTORS reports that existing home sales fell 4.9% in March from February’s big surge in sales while declining 5.4% year over year. Existing Home Sales include single-family homes, town homes, condominiums and co-ops. The median home prices rose 3.8% from March 2018 to $259,400. Unsold inventory is at a 3.9-month supply, from 3.6 months a year ago. Lawrence Yun, NAR’s chief economist, anticipated waning in the numbers for March. “It is not surprising to see a retreat after a powerful surge in sales in the prior month. Still, current sales activity is underperforming in relation to the strength in the jobs markets. The impact of lower mortgage rates has not yet been fully realized.”

Courtesy of Mortgage Market Guide

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