Daily Rate Update: February 4th-8th

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Friday – February 8, 2019

Higher household incomes in January pushed home purchase sentiment higher during the month, reports Fannie Mae. The Home Purchase Sentiment Index rose 1.2 points to 84.7 last month though it lower by 4.8 points compared with the same time last year.

Fannie Mae’s report revealed that there was an 8-percentage point increase in the net share of Americans who reported higher household income from January 2018. “Overall, these results are in line with our forecast that, amid improving affordability conditions, home sales should stabilize in 2019 after declining last year for the first time in four years,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.

Consumer credit in the U.S. hit a record high in December due in part to low unemployment and steady income growth, reports the Federal Reserve. Consumer credit rose $16.6 billion in December to an all-time high of $4 trillion. That’s trillion! In December, the report showed that credit card debt rose 2% while auto and student loans were up 6%. Mortgage loan data is not included in the report.

Courtesy of Mortgage Market Guide

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Thursday – February 7th, 2019

Mortgage rates continued to decline this week and are at the lows seen in April 2018. Freddie Mac reports that the 30-year fixed-rate mortgage fell five basis points to 4.41% with an average 0.40 in points and fees. Sam Khater, Freddie Mac’s chief economist, says, “Mortgage rates are essentially similar to a year ago, but today’s buyers have a larger selection of homes and more consumer bargaining power than they did the last few years.”

For the first time in four months, mortgage credit availability rose in January. The increase was due in part to investors and lenders adding more programs for lower credit score borrowers along with new relief refinance programs. The Mortgage Credit Availability Index (MCAI) rose 2.3% to 179.0 in January. 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.

A big merger in the banking sector was announced today as BB&T will purchase SunTrust in an all-stock deal worth $66 billion. The merger will create the sixth-largest U.S. bank in an effort to compete with the country’s biggest banks. The new company will operate under a new name that hasn’t been decided on yet. The new bank will have $442 billion in assets, $301 billion in loans and $324 billion in deposits with the deal closing later this year.

Courtesy of Mortgage Market Guide

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Wednesday – February 6, 2019

The Mortgage Bankers Association (MBA) reports that its Market Composite Index, a measure of total mortgage loan application volume, fell 2.5% in the week ended February 1, 2019. The MBA said the refinance index was near unchanged while the purchase index declined 5%.

Mortgage rates edged lower in the latest week to the lowest levels since April 2018. The 30-year fixed-rate mortgage fell seven basis point to 4.69% with an average 0.45 in points. Joel Kan, the MBAs Associate Vice President of Industry Surveys and Forecasts said, “Moderating price gains and the strong job market, including evidence of faster wage growth, should help purchase growth going forward.”

U.S. stocks are taking a breather today after the big gains. The closely watched S&P 500 Stock Index is up 16% since the low of 2,351 at the close on December 24. The index is now just 6% below its all-time closing high of 2,930 hit back on September 20 of last year. The recent gains are due in part to a reversal in the Fed’s monetary policy outlook from hawkish to dovish along with solid readings from the labor markets.

Courtesy of Mortgage Market Guide

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Tuesday – February 5, 2019

CoreLogic reports that home prices, including distressed sales, rose 4.7% from December 2017 to December 2018. It was the slowest year-over-year growth since August 2012 as price gains fall back down to more normal levels. Looking ahead, CoreLogic is forecasting a 4.6% gain in prices from December 2018 to December 2019. Frank Nothaft, Chief Economist at CoreLogic said, “Higher mortgage rates slowed home sales and price growth during the second half of 2018. Annual price growth peaked in March and averaged 6.4% during the first six months of the year. In the second half of 2018, growth moderated to 5.2%.”

The recent decline in mortgage rates has set up some homeowners for refinancing in the months to come. Black Knight reports that there are now 2.9 million homeowners with mortgages that could qualify for a refinance by at least 0.75%, the largest number since January 2018. Within the report it also revealed that delinquencies, serious delinquencies and active foreclosures ended 2018 below 2000-2005 pre-recession averages for the first time since the financial crisis.

The service sector of the U.S. economy grew for the 108th consecutive month in January, reports the Institute for Supply Management (ISM). The ISM Service Index registered 56.7 last month versus the 57 expected. The government shutdown did cause a bit of a slowdown in certain areas, but on the whole the report was positive. 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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Monday – February 4, 2019

U.S. home sellers across the country put more money in their pockets when they sold their homes in 2018 with the big gains seen along coasts. The ATTOM Data Solutions 2018 U.S. Home Sales Report, home sellers in 2018 realized an average home price gain since purchase of $61,000, up from $50,000 last year and up from $39,500 two years ago in 2016 to the highest level since 2006, which was a 12-year high. Todd Teta, chief product officer at ATTOM Data Solutions said, “The effects of last year’s tax cuts are wearing off as limits on homeowner tax deductions are in place and mortgage rates are ticking up ever so slowly, so this could dampen the potential for home price gains in 2019.”

Freddie Mac recently released its Economic and Housing Research Forecast for 2019 showing that mortgage rates may not move much higher than current levels in 2019. Freddie Mac forecasts that the 30-year fixed-rate mortgage will average 4.70% in 2019 and increase marginally to 4.9% in 2020. Home sales should increase to 6.09 million in 2019 and 6.14 million in 2020. In addition, total single-family mortgage originations are expected to increase 2.1% to $1.68 trillion in 2019. Lastly, Gross Domestic Product is estimated to have slowed a bit in 2019 to 2.5% and 1.8% in 2020.

Courtesy of Mortgage Market Guide

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