Daily Rate Update: January 27th-31st

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Wednesday – January 29, 2020

Low inventories of affordable homes for sale on the market impacted lower sales in December. The National Association of REALTORS® reports that Pending Home Sales fell nearly 5% in December from November. Each of the nation’s four major regions suffered losses. Sales were up 4.6% compared to last year. “The state of housing in 2020 will depend on whether home builders bring more affordable homes to the market,” said Lawrence Yun, NAR’s chief economist. “Home prices and even rents are increasing too rapidly, and more inventory would help correct the problem and slow price gains.”

Mortgage rates continued to hover just above all-time lows in the latest week, reports the Mortgage Bankers Association (MBA). Fears of the coronavirus outbreak sent a chill throughout global stock markets while investors rushed into the safe haven of the bond markets. The 30-year fixed-rate mortgage fell by six basis points to 3.81 with 0.28 in points in the week ending January 24, 2020. The MBA’s Market Composite Index, a measure of total mortgage loan application volume rose 7.2%, the Purchase Index increased 5.4% while the Refinance Index was up 7.5%.

It’s Fed day! The Federal Reserve will release its monetary policy statement at 2:00 p.m. ET this afternoon where there is no chance of a change in the short-term Fed Funds Rate. The Fed will most likely reiterate that the economy is in a good place right now and monetary policy will be on a wait-and-see stance while inflation remains low. The Fed may talk of balance sheet tuning and how to scale back on its $60B in Treasury purchases each month. Fed Chair Powell will hold a press conference immediately following the release at 2:30 p.m. ET.

Courtesy of Mortgage Market Guide

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Tuesday – January 28, 2020

Home prices continue to increase at a moderate pace across the U.S. with a stable housing market in November. The S&P Case-Shiller 20-City Home Price Index rose 2.6% annually up from the 2.2% gain seen in October. The national index increased 3.5% annually from 3.2% in October. The housing market has gained momentum since November as we are almost now in February for this backward-looking report.

A report out today shows that consumers will continue to drive growth and prevent the U.S. economy from slowing in early 2020. The Conference Board reports that its Consumer Confidence Index surged to 131.6 this month from 126.5 in December and above the 128.0 expected. Within the report, it showed that business conditions increased while the job component increased. Lynn Franco, Senior Director, Economic Indicators, at The Conference Board said, “Optimism about the labor market should continue to support confidence in the short-term and, as a result, consumers will continue driving growth and prevent the economy from slowing in early 2020.”

Courtesy of Mortgage Market Guide

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Monday – January 27, 2020

The Commerce Department reports that New Home Sales slipped by 0.4% in December from November to an annual rate of 694K units, below the 725K expected. November was revised lower to 697K from 719K. For all of 2019, New Home Sales increased 10.3% to 681,000 units, the highest since 2006. The median new house price rose to $331,400, up 0.5% from a year ago while inventories were at 5.7 months. The New Home Sales report shows the number of newly constructed homes with a committed sale during the month.

U.S. stocks are plunging on the coronavirus headlines as investors look to book some profits with the Dow, S&P and NASDAQ near all-time highs. Stock markets hate uncertainty and in the absence of a cure or swift containment, this virus dilemma will continue to weigh on stocks. The uncertainty surrounding the coronavirus outbreak is sending investors into the safe haven of U.S. Treasury securities with the 10-year yield falling sharply to 1.61%. China has confirmed almost 3,000 cases of the virus and the death toll has risen to 81 people.

In the news this week will be a big heaping of economic data. In addition to this morning’s New Home Sales, Durable Orders, additional housing data, the Core PCE, consumer spending, Q4 Gross Domestic Product with Consumer Confidence and Sentiment later in the week. The heart of earnings season will also take place this week. In addition, the two-day Fed meeting kicks off tomorrow and ends Wednesday with the 2:00 p.m. release of the Fed’s monetary policy statement. There is a zero percent chance of a change to the Fed Funds Rate but the meeting always carries headline risk. Fed Chair Powell will hold a press conference immediately following the release at 2:20 p.m. ET.

Courtesy of Mortgage Market Guide

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