Daily Rate Update: July 1st-5th

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Wednesday – July 3, 2019

The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage was essentially unchanged in the latest week at 4.07% with 0.38 in points and fees. Rates are at lows seen in September 2017. The Labor Department reports that Americans filing for first-time unemployment benefits fell by 8,000 in the latest week to 221,000, and are at 50-year lows. Low rates and a solid job market should continue to support the home purchase market.

On the lighter side, here are a few stats for Independence Day from the National Retail Federation. Americans are expected to spend $6.7 billion on cookouts and other celebrations on the 4th with 86% of the population planning to celebrate the 4th. Cookouts, barbecues, and picnics continue to be the most popular activity (61%), followed by fireworks and community celebrations (40%). Americans will spend $1 billion on beer alone for the 4th and another $600 million on wine. Americans are expected to eat 150 million hot dogs just on July 4, according to the National Hot Dog and Sausage Council. Have a happy and safe Independence Day!

Courtesy of Mortgage Market Guide

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Tuesday – July 2, 2019

CoreLogic reports that home prices nationwide, including distressed sales, rose annually by 3.6% in May 2019 from May 2018 and were up month-over-month by 0.9% in May 2019 compared with April 2019. The year-over-year 3.6% gain is a fraction of what gains were in the previous year, but at healthier levels and at equilibrium with wage gains. “Interest rates on fixed-rate mortgages fell by nearly one percentage point between November 2018 and this May. This has been a shot-in-the-arm for home sales,” said Dr. Frank Nothaft, Chief Economist for CoreLogic.

Continued slowing Eurozone economic growth is pushing global yields lower this morning while the US 10-year Note teeters on a psychological level. On the trade front, the US is threatening to slap tariffs on $4B worth of goods on imported EU goods. In addition, President Trump said that US/China trade talks have resumed but he can’t accept a 50-50 deal. In response to the weak Eurozone economic data, the German 10-year Bund yield has fallen to a record low of -0.36% while yields in Spain and Portugal hit record lows. Australia’s central bank cut its benchmark interest rate while the ECB will most likely cut in September. The US Federal Reserve is fully expected to cut the Fed Funds Rate by 25 basis points at its July 31 Fed meeting.

Courtesy of Mortgage Market Guide

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Monday – July 1, 2019

The US and China reached a trade truce at the G-20 Summit in Japan over the weekend with both sides agreeing on reopening the talks. The US will also ease restrictions on China’s tech giant Huawei while China and hold off on any additional tariffs while China has agreed to stop sanctioning US soy purchases. The headlines lifted the closely watched S&P 500 Stock Index to a record intraday high.

The US economy is slowing a bit midyear even as the US stock market has reached new highs. The Commerce Department reports that construction spending in the US declined in May as investment in private construction fell to its lowest level in nearly 2 1/2 years. Overall construction spending fell by 0.8% in May from April, the largest drop since November while the year-over-year numbers saw a 2.3% decline from May 2018 to May 2019.

The closely watched non-farm payrolls report will be released on Friday as the markets look for the numbers to rebound from the weak data reported in May where there were 75,000 new jobs created. The job market has been a stand out for the US economy for several years now as the unemployment rate is now at 51-year lows. This is the tightest labor market I can remember. Unemployment is at a 50-year low and wage growth is at 3.2%,” said Jed Kolko, chief economist for Indeed.com, an online job seeker search engine.

Courtesy of Mortgage Market Guide

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