Daily Rate Update: August 5th-9th

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Friday – August 9, 2019

Fannie Mae reports that due to improving job and mortgage rate expectations, its housing sentiment survey hit a fresh high in July. The Home Purchase Sentiment Index rose 2.2 points in July to 93.7, a new survey high. Five of the six components increased in July with a big jump in the “Confidence about not losing a job” category. The net share of Americans who say it is a good time to buy a home increased 3 percentage points to 26%. “Consumers appear to have shaken off a winter slump in sentiment amid strong income gains. Therefore, sentiment is positioned to take advantage of any supply that comes to market, particularly in the affordable category,” said Doug Duncan, Senior Vice President and Chief Economist of Fannie Mae.

In the news, the currency manipulation issues with China’s yuan have eased a bit with no fresh news from the trade front. This morning, the July Producer Price Index, or wholesale inflation data, confirmed what the markets have been seeing for a decade: muted inflation and as a result, little market reaction. The yield on the 10-year Treasury note is near unchanged at 1.71% up a bit from Wednesday’s low of 1.59%. US stocks are lower after yesterday’s big gains. The Dow gained back nearly 1,000 points from the 25,440-low seen on Wednesday to yesterday’s close of 26,007. Next week, the economic calendar heats up as the markets may continue to deal with both currency and trade issues with China.

Courtesy of Mortgage Market Guide

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Thursday – August 8, 2019

Continued uncertainty surrounding the US/China trade and currency issues sent bond prices higher late last week and early this week which pushed mortgage rates to lows seen in November 2016. Freddie Mac reports that the 30-year fixed-rate mortgage fell to 3.60% early this week from 3.75% last week. That rate does carry an average 0.6 in points and fees. Sam Khater, Freddie Mac’s chief economist, says, “Consumer sentiment remains buoyed by a strong labor market and low rates that will continue to drive home sales into the fall.”

ATTOM Data Solutions released its Midyear 2019 US Foreclousre Market Report showing that foreclosure filings in the first six months of 2019 are down nearly 18% from a year ago. In the first half of 2019 there were 296,458 US properties with foreclosure filings, and as mentioned, this number was down 18% from the same period last year and down a whopping 82% from the peak of 1,654,634 in the first six months of 2010. “Our midyear 2019 foreclosure activity helps to show an overall view on how foreclosure activity is trending downward,” said Todd Teta, chief product officer at ATTOM Data Solutions.

Americans filing for first-time unemployment benefits declined in the latest week and remain near 50-year lows. Weekly Initial Jobless Claims fell by 8,000 in the latest week to 209,000 as the labor market continues to run at strong levels. The four-week moving average, which irons out seasonal abnormalities, rose moderately from 211,500 to 212,250. A strong labor market coupoed with solid consumer spending will keep recesssion fears on the shelf for the foreseeable future.

Courtesy of Mortgage Market Guide

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Wednesday – August 7, 2019

Mortgage rates continued to edge lower in the latest week due in part to slowing global growth along with trade fears. The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage fell seven basis points to 4.01% in the latest week with an average 0.37 in points. It is the lowest rate since November 2016. Within the report it showed that the Market Composite Index, a measure of total mortgage loan application volume, rose 5.3%. The Refinance Index increased 12% while the Purchase Index fell 2%.

The US bond market is trading higher once again as global yields continue to decline and drag US yields lower. The 10-year Note price is soaring to the tune of 103 basis points while Mortgage Bonds are up, though the gains are far less. Weak economic data out of Germany, slowing growth fears coupled with three more global central banks cutting interest rates today has sparked this flight-to-safety trade into the US dollar and US bond market. The German 10-yr Bund has fallen to an all-time low of -0.60% while the US 10-yr yield has fallen to 1.62%, a near three-year low. Investors are looking for positive yielding “safe” assets, like here in the US.

Courtesy of Mortgage Market Guide

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Tuesday – August 6, 2019

CoreLogic reports that home prices, including distressed sales, rose 3.4% from June 2018 to June 2019, down from 3.6% in May as home price gains have cooled off a bit. Looking ahead, CoreLogic is forecasting a 5.2% increase in prices from June 2019 to June 2020. “With incomes up and current mortgage rates about 0.8 percentage points below what they were one year ago, home sales should have a better sales pace in the second half of 2019 than a year earlier, leading to a quickening in price growth over the next year,” said Dr. Frank Nothaft, Chief Economist for CoreLogic.

Low mortgage rates have spurred on the ability for mortgage holders to refinance their current loans. Black Knight reports that there are now 8.2 million refinance candidates in the market, 66% more than in May when borrowers would have been applying for loans driving June prepayment numbers. At 3.75%, the 30-year fixed-rate mortgage is at multi-year lows, resulting in the most refinance incentive in the market since late 2016. Black Knight went to report that if rates decreased by an eighth, refinance candidates would rise by 1.5 million to 9.7 million, an 18% rise.

Job openings continued to run at high rates across the US in June topping 7 million for the 15th month in a row signaling the strongest labor market in decades. The Bureau of Labor Statistics reports that there were 7.34 million job openings in June, just below the 7.38 million in May, which was revised higher from 7.26 million. The job openings level increased in real estate and rental and leasing as well as state and local government education. The quits rate was unchanged at 2.3%, which is at 10-year highs and is a sign that workers remain confident about their ability to find a new job in this strong job market.

Courtesy of Mortgage Market Guide

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Monday – August 5, 2019

News that China has devalued or let its yuan slip below a key level has sent global stock markets lower while US Treasury prices soar. The yield on the 10-year T Note has fallen to a three-year low of 1.77%, though above earlier levels, as global investors seek the ultra-safe haven of the US dollar and the higher yields of US Treasury markets. The Dow Jones Industrial Average was down over 500 points in early trading.

The only economic report released today was the July ISM Service Index which came in at 53.7, down from 55.1 in June. This is the index’s lowest reading since August 2016, when it registered 51.8. Within the data it showed that employment component increased. A reading above 50% indicates the non-manufacturing sector economy is generally expanding; below 50% indicates the non-manufacturing sector is generally contracting.

Courtesy of Mortgage Market Guide

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