Daily Rate Update: February 11th-15th

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Friday – February 15, 2019

Consumer sentiment pushed higher in early February due in part to end of the partial government shutdown and after the Federal Reserve signal that it will pause in raising interest rates. The Consumer Sentiment Index rose to 95.5 this month, up from 91.2 in January and above the 94 expected. Within the data it showed that consumers’ long-term inflation expectations fell to the lowest level in the past half century.In addition, consumers expect incomes to rise more than any other time in over 15 years.

In a reversal of fortune or misfortune, from whatever side you look at it, Amazon has scrapped plans to build a headquarters in New York City. Amazon cited opposition from state and local politicians. The new “HQ” was also met with protests while the $3 billion in incentives for the e-commerce giant were also met with criticism. A Quinnipiac poll from December showed strong support for the new campus, with 60% of Queens residents approving of the project and 26% against it.

Business activity in New York State grew modestly in February while the New Orders Index and labor markets both increased. The Empire Manufacturing Index rose to 8.8 in February from 3.9 in January. After slumping last month, indexes assessing the six-month outlook improved noticeably, suggesting firms were fairly optimistic about future conditions.

Courtesy of Mortgage Market Guide

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Thursday – February 14, 2019

Consumers held back on spending their hard-earned dollars in December as sales declined across all sectors in the retail space. Retail Sales fell 1.2% in December versus the +0.1% expected. It was the biggest decline in nine years. Lower prices at the gas pumps were a factor along with a plunge in the Stock markets. After combing through the report, the 3.9% decline in Internet purchases is a big disappointment. The Retail Sales report is a measure of the total receipts of retail stores from samples representing all sizes and kinds of business in retail trade throughout the nation.

Mortgage rates continued to decline in the latest survey the catalyst being low inflation coupled with slowing growth. Freddie Mac reports that the 30-year fixed-rate mortgage fell four basis points this week to 4.37% with an average 0.40 in points and fees, the lowest in 12 months. Freddie Mac said that while housing activity has clearly softened over the last nine months and the lingering effects of higher rates from last year are still being felt, lower mortgage rates and a strong job market should rekindle demand for the spring home buying season.

The Mortgage Bankers Association (MBA) reports that mortgage applications to purchase new homes rose in January though remain unchanged from a year ago. The MBA said that applications rose nearly 30% in January from December, seasonally adjusted. “After two lackluster months, new home sales surged almost 30 percent in January to the fastest pace since our survey began in 2013. The healthy job market, faster wage growth, moderating price gains and lower mortgage rates, all helped home sales recover.” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.

Courtesy of Mortgage Market Guide

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Wednesday – February 13, 2019

Mortgage rates continued to edge lower in the latest week to levels seen a year ago. The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage fell four basis points to 4.65% with an average 0.43 in points. Lower rates didn’t push mortgage application activity higher. The purchase index declined while the refinance index was unchanged. The MBAs Market composite Index, a measure of total mortgage loan application volume, fell 3.7%.

Inflation at the consumer level remained tame in latest report due in part to declining gas prices at the pumps. The Consumer Price Index (CPI) was unchanged in January, reports the Bureau of labor Statistics. Over the last 12 months, CPI increased 1.6% from 1.9% in the previous reading. The gasoline index fell 5.5% during the month. If inflation remains subdued, the Fed will not likely raise the benchmark short-term Fed Funds Rate in 2019.

Gas prices at the pumps remain lower than last year as oil supply is somewhat outpacing demand. The U.S. is now the largest exporter of oil in the world where just a five years ago it was more dependent on foreign imports. The price for a regular gallon of gasoline is at $2.27 and is as low as $2.13 in parts of New Jersey. That is down from $2.56 a year ago and up from $2.24 a month ago. Prices will begin to rise modestly as the late spring and summer driving season kicks off while refineries switch over to the more costly refined summer blends.

Courtesy of Mortgage Market Guide

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Tuesday – February 12, 2019

The January NFIB Small Business Optimism Index (-3.2 points to 101.2) retreated a touch, though above historic averages, as owners expressed concern about future economic growth. However, hiring, hiring plans and job openings remained strong while inventory and capital spending were solid. NFIB President and CEO Juanita D. Duggan said, “One thing small businesses make clear to us is their dislike for uncertainty, and while they are continuing to create jobs and increase compensation at a frenetic pace, the political climate is affecting how they view the future.”

U.S. stocks are higher on headlines that a partial government shutdown will be avoided this Friday night at midnight. Lawmakers have agreed in principle on border security funding that includes $1.3 for a wall or a physical barrier along the southern border. In addition, positive trade talks between the U.S. and China are also helping to buoy the equity markets today.

Private equity firm Thoma Bravo gas agreed to purchase Ellie Mae for a deal worth around $3.7 billion. Ellie Mae is the leading cloud-based provider for the mortgage finance industry. Ellie Mae is expected to remain headquartered in Pleasanton, California with the deal closing in the second or third quarter of this year.

Courtesy of Mortgage Market Guide

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Monday – February 11, 2019

Homes selling above list prices continued to decline in the second half of 2018 and fell to a three-year low in the month of December. This follows many years where prices progressively sold above their listed price. Zillow reports that 19.4% of homes sold above list price in December, the lowest share in almost three years and marked the seventh straight month in which the rate declined. This is in stark contrast to the 24% share that sold above list in May 2018, which was the highest since the housing recovery.

After last week’s slow economic calendar, this week features economic data from the inflation reading Consumer and Producer Price Index, Retail Sales, Consumer Sentiment along with NFIB’s Small Business Optimism Index. There were no reports due for release today. The Job Opening and Labor Turnover Survey will also be released. Throw in lingering Brexit issues and the European economic slowdown, which could spark some volatility. Earnings season will begin to wind down. There will also be several Fed members speaking this week including Fed Chair Powell.

Another government shutdown is looming for this Friday at midnight, says acting White House Chief of Staff Mick Mulvaney. Lawmakers from the House and Senate are scrambling to come up with a bill to present to President Trump this week before a shutdown occurs. Sources say that border wall funding talks have broken down and hopes for a deal is fading quickly. The recent shutdown was the longest in history.

Courtesy of Mortgage Market Guide

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