Daily Rate Update: June 24th-28th

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Friday – June 28, 2019

Inflation in the US remained subdued in May which should hold mortgage rates at current low levels for the foreseeable future. The Bureau of Economic Analysis reports that the Core Personal Consumption Expenditure (PCE) was unchanged at 1.6% year-over-year last month. The Core PCE is the Fed’s favorite inflation gauge and strips out volatile food and energy. The Fed has set a target range of 2% and the Core PCE has been running below that level for several years. Within the report it showed that personal spending rose in May while April was revised higher. The consumer is alive and well.

The solid US economy over the past few years has had a positive effect for homeowners keeping up with the mortgage payments. The US Office of the Comptroller of the Currency (OCC) reports that 96.2% of those home loans assessed were current and performing at the end of the first quarter of 2019, up from 95.8% a year earlier. In addition, the report went on to reveal that there was a 26% decline in foreclosure action in the first quarter compared to last year. The strong job market is also helping homeowners to keep current on the home loans or refinancing.

Courtesy of Mortgage Market Guide

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Thursday – June 27, 2019

In economic news, the final reading on Q1 2019 Gross Domestic Product remained at a strong 3.1% while Weekly Initial Jobless Claims hover near 50-year lows rising 10,000 in the latest week to 227,000. The job market has been a beacon of strength for several years and will most likely continue to be strong. The closely watched Core PCE, the Fed’s favorite inflation gauge, will be released on Friday.

Mortgage rates continued to decline this week and hover near the lows seen in September 2017. Freddie Mac reports that the 30-year fixed -rate mortgage fell 11 basis points to 3.73% with an average 0.5 in points and fees. Freddie Mac went on to say that home purchase applications improved by five percentage points compared to the previous month. In the near-term, Freddie Mac expects the housing market to continue to improve from both a sales and price perspective.

Pending home sales rebounded in May by 1.1% in this low mortgage rate environment after the dip seen in April. However, on an annual basis, sales slipped 0.7%, marking the 17th straight month of annual increases. Growth was seen in the Northeast, South and Midwest while the West saw a modest decline. Lawrence Yun, NAR chief economist, said, “Rates of 4% and, in some cases even lower, create extremely attractive conditions for consumers. Buyers, for good reason, are anxious to purchase and lock in at these rates.”

Courtesy of Mortgage Market Guide

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Wednesday – June 26, 2019

Mortgage rates continued their decline the latest week as bond prices rose. Yields declined on the dovish Fed statements at last week’s Federal Open Market Committee meeting. The Mortgage Bankers Association (MBA) reports that the 30-year fixed-rate mortgage fell eight basis points to 4.08% with 0.38 points, the lowest since September 2017. In addition, the MBAs Market Composite Index, a measure of total mortgage loan application volume, rose 1.3%. The Refinance Index rose 3% while the Purchase Index fell 1%.

In economic news, May durable orders fell 1.3% versus the -0.3% expected while April was revised lower to -2.8% from -2.1% though a big chunk of the losses were due to a downtick in orders for aircraft manufacturing. The data had little impact on the markets. Durable orders are higher-priced capital goods with a lifespan of at least three years, such as appliances electronics and the like.

Mixed trade comments from Treasury Secretary Mnuchin and President Trump are boosting stocks and applying some selling pressure on bonds in today’s trading session. Treasury prices are modestly lower while the 10-year yield has risen to 2.01% after closing at 1.99% yesterday. Mr. Mnuchin said that a trade deal was 90% done before the talks stalled in early May while the President said a deal can be made but he’s happy where the US is right now regarding the trade issues. President Trump went on to say that if a deal doesn’t happen and the US does put tariffs on the remaining Chinese imports, the levies could be 10% instead of 25%.

Courtesy of Mortgage Market Guide

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Tuesday – June 25, 2019

Sales of new homes fell by nearly 8% in May from April by to an annual rate of 626,000 units, below the 683,000 expected, reports the Commerce Department. From May 2018 to May 2019, sales declined 3.7%. Inventories are now just above normal rates of 6 months, currently at 6.4 months. The median price of a new home sold in May was $308,000, 2.7% lower than a year ago. New home sales declined in the Northeast and West with gains seen in the Midwest and South.

Trade and tariff tensions sent the Consumer Confidence Index lower in June to 121.5, down from 131.3 in May. In addition, consumers’ assessment of current business conditions and labor market conditions also decreased during the month. Lynn Franco, Senior Director of Economic Indicators at The Conference Board said, “Although the Index remains at a high level, continued uncertainty could result in further volatility in the Index and, at some point, could even begin to diminish consumers’ confidence in the expansion.”

The Federal Housing Finance Agency (FHFA) released its House Price Index for April showing that home prices rose 0.4% from March. From April 2018 to April 2019, prices rose 5.2%. The FHFA House Price Index (HPI) is a broad measure of the movement of single-family house prices. The HPI is a weighted, repeat-sales index, meaning that it measures average price changes in repeat sales or refinancings on the same properties.

Courtesy of Mortgage Market Guide

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Monday – June 24, 2019

Economic data will be abundant this week, but besides the Core PCE, the Fed’s favorite inflation gauge, most reports will take a backseat to the G-20 meeting at the end of the week. At the G-20 meeting, President Trump will meet China’s President Xi to discuss trade issues between the world’s largest economies. The outcome of the talks between the two nations could impact the markets as well as home loan rates. Formed in 1999, the G-20 has a mandate to promote global economic growth, international trade, and regulation of financial markets. The G-20 is a group of finance ministers and central bank governors made up of 19 of the world’s largest economies along with the European Union.

US stocks are mixed ahead of this week’s events and are quiet as the summer doldrums begin to set in.
The S&P closed at an all-time record high last on hopes of interest rate cuts by the US Federal Reserve Bank. The Bond markets are also quiet while the yield on the 10-year T Note remains at two-year lows. Mortgage rates begin the week at the lows seen in September 2017 due in part to low inflation levels along with slowing global economic growth.

Courtesy of Mortgage Market Guide

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