Daily Rate Update: January 7th-11th

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Friday – January 11, 2019

Consumer inflation remained subdued in December due in part to declining energy prices, reports the Bureau of Labor Statistics. The Consumer Price Index (CPI) fell 0.1%, the first decline in nine months and inline with expectations. The Core CPI, which strips out volatile food and energy, was also inline rising 0.2%. On an annual basis, the headline CPI fell to 1.9% from 2.2% while the Core rate was unchanged at 2.2%. The Federal Reserve will take the tame inflation data into consideration when setting monetary policy later this month.

After their recent decline in December, Stocks have surged back so far in the new year after Fed Chair Powell assured the markets that the Fed would be patient on interest rate hikes. The closely watched S&P 500 Stock Index, is up 10% from the low seen on the Christmas Eve meltdown. U.S. Stocks are lower this morning as the week draws to a close. The S&P 500 is a stock market index based on the market capitalizations of 500 large companies listed on the NYSE or NASDAQ.

Courtesy of Mortgage Market Guide

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Thursday – January 10, 2019

Freddie Mac reports that mortgage rates fell to their lowest levels in nine months after the big rise seen in 2018 up until mid-November. The 30-year fixed-rate mortgage fell six basis points to 4.45% with an average 0.50 in points and fees. Freddie Mac said, “In response (to low rates), mortgage applications jumped more than 20%. Lower mortgage rates combined with continued income growth and lower energy prices are all positive indicators for consumers that should lead to a firming of home sales.”

Refinancing mortgages is becoming more attractive to Americans now that rates have crept lower in the past two months. At the end of December, a report from Black Knight stated that 2.4 million borrowers could qualify to reduce their interest rates by 0.75% by refinancing. However, while this represents a 29% rise from what was a 10-year low, the total number of refinance candidates is down 50% from last year.

A recent survey by ATTOM Data Solutions revealed that home prices are rising faster than wages in 80% of the markets covered. The result is that renting is becoming more affordable option for Americans. “With rental affordability outpacing home affordability in the majority of U.S. housing markets, and home prices rising faster than rental rates, the American dream of owning a home, may be just that … a dream, “said Jennifer von Pohlmann, director of content and PR at ATTOM Data Solutions.

Courtesy of Mortgage Market Guide

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Wednesday – January 9, 2019

Mortgage rates continued to edge lower in the latest week to levels not seen since the spring of last year. The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage fell 10 basis points to 4.74% with 0.47 in points. “This drop in rates spurred a flurry of refinance activity – particularly for borrowers with larger loans – and pushed the average loan size on refinance applications to the highest in the survey (at $339,800),” said Joel Kan, MBA’s Associate Vice President.

Home price gains are beginning to ease back to more normal levels after the big increases seen since the housing market recovery began. Black Knight reports that home price growth has slowed in 33 states and in 71 of the 100 largest markets. Black Knight said the West saw the most deceleration with California the hardest hit. Gains of +7% or more year-over-year couldn’t last forever.

The Fed minutes from the December meeting will be released today at 2:00 p.m. ET. The minutes are sort of in the rear view mirror after Fed Chair Powell spoke last Friday and sparked a rally in the U.S. stock markets with his dovish remarks on monetary policy. Fed Fund Futures show a zero percent chance of a rate hike at least through the first half of this year and maybe none at all in 2019, given the current low inflation environment. A dovish tone means that Fed members favor looser, more accommodating interest rate policies. A hawkish policy is the opposite.

Courtesy of Mortgage Market Guide

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Tuesday – January 8, 2019

The NFIB Small Business Optimism Index was essentially unchanged in December just below record highs at 104.4. The NFIB said that unfilled jobs and the lack of skilled qualified applicants continue to be the primary driver of the frothy index, with job openings setting a record high and job creation plans strengthening. “Optimism among small business owners continues to push record highs, but they need workers to generate more sales, provide services, and complete projects,” said NFIB President and CEO Juanita D. Duggan.

The JOLTS report (Job Openings and Labor Turnover Survey) showed that there were 6.9 million job openings at the end of November, just below the record high of 7.1 million set back in August, strengthening the data from the NFIB. Job openings increased in transportation, warehousing, and utilities while declines were seen in other services and construction. The December Jobs Report showed a whopping 312,000 new workers were hired as the labor market continues to move to greener pastures.

Courtesy of Mortgage Market Guide

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Monday – January 7, 2019

Online real estate company Zillow reports that the total value of the U.S. housing market rose $1.9 trillion in 2018 to $33.3 trillion, a 6.2% increase. That is up $10.9 billion since the market bottom in 2012, a third of the gains seen in California. New York comes in number one with the highest amount of total value of all homes at $3 trillion, accounting for 9.1% of the country’s total hosing value. To put it in perspective, the $33.3 trillion in total U.S. housing value is equivalent to the combined Gross Domestic Products of the U.S. ($19.4 trillion), China ($12.2 trillion) and Canada ($1.7 trillion).

Fannie Mae reports that housing confidence deteriorated in December as more Americans believe it’s a bad time to buy a home. The Fannie Mae Home Purchase Sentiment Index fell 2.7 points in December from November to 83.5. The index has resumed its downward trend after a slight increase in November. The report read that the net share of Americans who say it is a good time to buy a home fell 12 percentage points from last month to 11%. This component is down 13 percentage points from the same time last year. “Looking ahead, consumers expect the pace of home price growth to slow over the course of 2019, which may temper growing concern over housing affordability,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.

Gas prices at the pumps continue to edge lower due in part to oversupply and less demand during the winter months. The national average price for a regular gallon of gasoline is at $2.24 and has declined 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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