Daily Rate Update: January 14th-18th

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Friday – January 18, 2019

The partial government shutdown, tariffs, unstable financial markets and fears of a global economic slowdown sent Consumer Sentiment lower this month. The University of Michigan’s Consumer Sentiment Index fell to 90.7 from 98.3 in December and below the 96 expected. It was the lowest reading since October 2016. The report went on to say that the details do not yet indicate the start of a sustained downturn in economic activity.

U.S. Stocks continue building on the gains in 2019 boosted by the strong December Jobs Report reported on January 4 while a possible pause in interest rate hikes has been signaled by the Federal Reserve. The closely watched S&P 500 is up 12% since the lows seen on Christmas Eve after the correction seen in December. Stocks are higher today on optimism surrounding trade talks with China.

Courtesy of Mortgage Market Guide

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Thursday – January 17, 2019

The Mortgage Bankers Association (MBA) reports that applications to purchase new homes declined for the second month in a row in December. The MBAs Builder Application Survey fell 6.1% from a year ago while applications declined by 13% compared to November. Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting said, “Looking ahead, if mortgage rates remain low, housing inventory rises, and home-price growth continues to steady, we expect to see a rebound in purchase activity this spring.”

Mortgage rates held steady in the latest survey after declining for six consecutive weeks. Freddie Mac reports that the 30-year fixed-rate mortgage was unchanged at 4.45% with an average 0.40 in points and fees. However, Freddie Mac said, “Consumer mortgage demand and homebuilder construction sentiment are on the mend, which indicates that lower interest rates are beginning to have a positive impact on some segments of the economy.

Courtesy of Mortgage Market Guide

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Wednesday – January 16, 2019

Declining mortgage rates lifted home builder confidence in January while low unemployment, strong job growth should support housing demand in the coming months, reports the National Association of Home Builders (NAHB). The NAHB Housing Market Index rose two points this month from December to 58, above the 56 expected. NAHB Chief Economist Robert Dietz said, “Lower interest rates that peaked around 5% in mid-November and have since fallen to just below 4.5% will help the housing market continue to grow at a modest clip as we enter the new year.”

Low mortgage rates also contributed to a surge in mortgage application volumes in the latest week. The Mortgage Bankers Association (MBA) reports that its market Composite Index, a measure of total mortgage loan application volume, rose 13.5% in the week ended January 11. The Refinance Index jumped nearly 19% while the Purchase Index rose 9.1%. “The spring home buying season is almost upon us, and if rates stay lower, inventory continues to grow, and the job market maintains its strength, we do expect to see a solid spring market,” said Mike Fratantoni, MBA Vice President and Chief Economist.

Solid earnings from Bank of America and Goldman Sachs lifted U.S. stocks to four-week highs in today’s session and well above the lows seen on Christmas Eve. The closely watched S&P 500 Index has risen 11% from the December 24 low of 2,351 to the current level of 2,615. A signal from the Fed that rate hikes may be on hold, a solid U.S. economy, strong labor market and plain old fashioned bargain hunting are a few reasons behind the recent advance in the equity markets.

Courtesy of Mortgage Market Guide

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Tuesday – January 15, 2019

Inflation at the wholesale level declined in December due in part to a drop in energy costs. The December Producer Price Index (PPI) fell 0.2% versus the -0.1% expected while the Core rate declined 0.1%, below the +0.2% expected. The tame PPI report comes after last week’s tame Consumer Price Index, reinforcing the notion that overall inflation remains contained. This is good for long-term rates, like mortgages.

Business activity grew slightly in January and well below what was seen in December. The January Empire Manufacturing Index fell to 3.9 from 11.5 in December and well below the 12.2 expected. It was the lowest reading in over a year and the forecast read that the firms surveyed were less optimistic about the six-month outlook than they were last month. Within the data it showed that labor market indicators pointed towards a modest increase in employment and hours worked.

The biggest bank by assets in the U.S. reported mixed earnings in the latest quarter’s data with its mortgage banking numbers taking a hit. JPMorgan Chase reports that revenues slid further in the fourth quarter but were up from the same period last year. The banks home lending sector dropped 8% driven lower by a decline in net production and lower volumes.

Courtesy of Mortgage Market Guide

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Monday – January 14, 2019

U.S. stocks are lower to begin the week after reports that Chinese exports slowed to their lowest pace in two years, solidifying slowing global growth. Questions regarding tomorrow’s Brexit vote are also weighing on Stocks around the globe. Throw in the lingering government shutdown here in the U.S. and there are a few hurdles for Stocks to begin the week. Earnings season kicks off slowly this week with Citigroup’s numbers missing expectations. JPMorgan and Bank of America will report later in the week but the bulk of the numbers takes place next week.

There are no economic reports due for release today. As far as economic data for the week, Retail Sales, Housing Starts and Building Permits have been knocked off the calendar due to the government shutdown as it enters its 24th day, its longest on record. More than 800,000 federal workers have been impacted by the shutdown with many of those workers deemed essential and are working without pay.

Gas prices at the pumps continue to run on the low end of the scale for the past few months due in part to oversupply and less demand during the winter months. The national average price for a regular gallon of gasoline is at $2.25, up a meager penny this week after declining for 12 weeks in a row, reports motor club AAA. “As the global crude market continues to be oversupplied, oil prices are dropping, continuing last week’s trend,” said Jeanette Casselano, AAA spokesperson. “This is good news for motorists filling up at the pump.”

Courtesy of Mortgage Market Guide

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