Daily Rate Update: July 16th-20th

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Friday – July 20, 2018

Home purchase loan closings rose in June while refinancing activity declined, reports Ellie Mae. Ellie Mae’s Origination Insight for June revealed that 71% of all loans in June represented home purchases, up from 70% in May and a new high since the report began in 2011. Refinance closings fell to 29% from 30%, as home loan rates have pushed higher since the end of 2017. Times to close all loans rose slightly to 42 days from 41 days with the breakdown being 44 days for purchases, 37 days for refinancing.

President Trump spoke to CNBC yesterday saying that he is “not thrilled” with interest rate hikes. “I’m not thrilled,” President Trump said. “Because we go up and every time you go up they want to raise rates again. I don’t really – I am not happy about it. But at the same time, I’m letting them do what they feel is best.” One thing we don’t ever want is the Fed’s independence challenged. The Fed is likely going to hike the short-term Fed Funds Rate in September but may pause after that, as the U.S. dollar continues to strengthen against global currencies.

The Mortgage Bankers Association recently reported that new home purchase applications fell year over year. Builders remained constrained due in part to a shortage of workers, and rising costs, particularly lumber costs. The MBA Builder Application Survey for June 2018 fell nearly 9% from June 2017. “Applications for new home purchases fell in June, both compared to last year at this time and relative to May, which fits the seasonal pattern. So far this year, new home applications are up 2.5% relative to the first 6 months of 2017,” said Mike Fratantoni, MBA Chief Economist and Senior Vice President of Research and Industry Technology.

Courtesy of Mortgage Market Guide

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Thursday – July 19, 2018

The number of Americans filing for first-time unemployment benefits fell to the lowest levels in more than 48 years as the labor market continues to gain strength. Weekly Initial Jobless Claims fell by 8,000 to 207,000, below the 220,000 expected, in the week ended July 14. It was the lowest level since early December 1969. In a recent report from the Labor Department, it showed that there were 6.6 million unfilled jobs in May, signaling that companies cannot find qualified workers.

Mortgage rates were essentially unchanged in the latest week as manufacturing output and consumer spending showed improvements, but construction activity was a disappointment, Freddie Mac reports. Freddie says this meant that there was no driving force to move mortgage rates in any meaningful direction. The 30-year fixed-rate mortgage is at 4.52% this week with an average 0.4 in points and fees. Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage.

Fannie Mae released its July 2018 Economic and Housing Outlook on Wednesday revealing that economic growth is estimated to have picked up strongly in the second quarter of 2018 despite rising trade tensions. Fannie Mae forecasts Gross Domestic Product (GDP) or economic growth will rise 2.8% for the full year in 2018. Fannie sees second quarter 2018 GDP at 4.2%, up from 2% in the first quarter. On the housing front, Fannie Mae says the same inventory constraints continue to haunt affordability and sales, with demand outstripping supply and home prices continuing to rise at a fast clip as a result.

Courtesy of Mortgage Market Guide

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Wednesday – July 18, 2018

U.S. home builders broke ground on fewer homes than expected in June, due in part to higher costs for lumber, a lack of available land to build on and a shortage of construction workers. June Housing Starts fell 12.3% in June from May to an annual rate of 1.173 million units versus the 1.318 million expected. Starts were down 4.2% from June 2017. This was their lowest level since September 2017, as Housing Starts fell in all four major regions of the country.

Within the housing report it also showed that single-family starts, which make up the bulk of residential housing, fell 9.1% from May, while essentially unchanged from a year ago. Multi-family dwelling fell 20.2% month over month, down 15.3% year over year. Building Permits, a sign of future construction, declined 2.2% from May to an annual rate of 1.273 million, below the 1.330 million expected.

Mortgage rates were essentially unchanged in the latest week and remain historically low. The Mortgage Bankers Association (MBA) reports that the 30-year fixed-rate mortgage rose to 4.77% in the latest week, just above the 4.76% seen in the previous week. That rate carries an average 0.46 in points. The report also read that the MBAs refinance index rose 2% while the purchase index fell 5% from one week earlier.

Courtesy of Mortgage Market Guide

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Tuesday – July 17, 2018

Foreclosure activity continues to decline and is down significantly from the peak seen in early 2010. ATTOM Data Solutions reports that there were 362,275 properties with foreclosure filings, default notices, scheduled auctions or bank repossessions in the first half of 2018, down 15% from the same period last year. In addition, foreclosure filings are down a whopping 78% from the 1,654,634 filed in the first six months of 2010. The report went on to reveal that properties foreclosed in the second quarter of 2018 took an average of 720 days from the first public foreclosure notice to complete the foreclosure process.

Builder confidence remained elevated in July for newly-built single-family homes, reports the National Association of Home Builders (NAHB). The NAHB Housing Market Index was unchanged this month at 68 where any number over 50 indicates that more builders view conditions as good rather than poor. “Consumer demand for single-family homes is holding strong this summer, buoyed by steady job growth, income gains and low unemployment in many parts of the country,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La.

Fed Chair Powell is testifying on the state of the U.S. economy this morning in front of the Senate Banking Committee. Mr. Powell says that that gradual increases to the Fed Funds Rate is necessary while second quarter 2018 economic growth is considerably stronger than the first quarter. Mr. Powell sees solid economic growth abroad and U.S. unemployment declining further. Wage growth has been trending higher, but is not causing high inflation.

Courtesy of Mortgage Market Guide

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Monday – July 16, 2018

The July 2018 NABE (National Association for Business Economics) Business Conditions Survey indicates strong sales and steady profit margins in the second quarter of 2018, as well as increasing materials costs and wages. The survey revealed that additional investment and job gains are expected. In addition, the report said that labor market conditions are tight, with skilled labor shortages driving firms to raise pay, increase training, and consider additional automation.

The Commerce Department reported that Retail Sales rose 0.5% in June from May, in line with estimates, while May was revised higher to 1.3% from 0.8%. From June 2017 to June 2018, sales rose 6.6%. Consumers spent their hard-earned dollars at health and personal care stores, motor vehicle and parts dealers, gasoline stations, nonstore retailers, and food services and drinking places. The Retail Sales report is a measure of the total receipts of retail stores from samples representing all sizes and kinds of businesses in retail trade throughout the nation.

The U.S. Government Accountability Office (GAO) issued a report on 6/21/18 on the “Nation’s Fiscal Health.” The analysis, 60 pages long, describes our country’s “likely fiscal future if policies don’t change.” The study concluded our government’s “current fiscal path is unsustainable” and that the longer “action is delayed, the greater and more drastic the changes will have to be.” The total debt of the USA was $21.2 trillion as of July 12, 2018, up from $9.5 trillion of debt on July 12, 2008.

Courtesy of Mortgage Market Guide

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