Daily Rate Update: March 19th-23rd

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March 23, 2018 – 

The Commerce Department reported on Friday that New Home Sales in February edged lower by 0.6% from January to an annualized rate of 618,000, just below the 620,000 expected. This was the third straight monthly decline. However, New Home Sales were up 0.5% from February 2017 to February 2018. Sales increases were seen in the Northeast and South with declines in the Midwest and West. The median sales price of new homes sold in February was $326,800. There was a 5.9-month supply of new homes for sale on the market, which is near the 6-month supply that is considered normal.

Freddie Mac released its Outlook for March showing that rising home prices are providing many homeowners to build equity though it is making it difficult for first-time homebuyers to purchase a home. Freddie Mac said that home loan rates have been increasing and it expects that trend to continue with the 30-year fixed-rate mortgage averaging 4.9% in the fourth quarter of this year. The GSE went on to say that since the end of the Great recession in 2009, home prices have soared 37% nationwide.

The Senate passed a $1.3T spending bill last night, averting tonight’s government shutdown with Bond prices under pressure on the notion that it now has to be funded. But hold on – there is a chance President Trump might just veto this bill. Mr. Trump is considering a veto due to the fact that the DACA situation wasn’t addressed in the bill along with the border wall.

Courtesy of Mortgage Market Guide

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March 22, 2018 – 

As expected, yesterday the Federal Reserve raised the short-term Fed Funds Rate by 0.25% bringing it to a range of 1.50 to 1.75%. The statement and Fed Chairman Jerome Powell’s first press conference offered no surprises. The Fed is forecasting at least two more rate hikes in 2018, with three more hikes in 2019, up from the two predicted in December. The Fed went on to say that Gross Domestic Product will average 2.7% in 2018, up from the previous forecast of 2.5% back in December.

Mortgage rates are essentially unchanged this week remaining near four-year highs though still historically low. Freddie Mac reports that that 30-year fixed-rate mortgage is at 4.45% today with an average 0.5 in points and fees. Freddie Mac says the U.S. housing markets remain resilient in the face of higher mortgage rates and that momentum is carrying through into spring. Last year the rate was 4.23%.

Home prices edged higher in January as reported by the Federal Housing Finance Agency (FHFA). Housing prices rose 0.8% month over month from December to January, up 7.3% from January 2017 to January 2018. The FHFA monthly Housing Price Index is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. The FHFA regulates Fannie Mae, Freddie Mac and the 11 Federal Home Loan Banks.

Courtesy of Mortgage Market Guide

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March 21, 2018 – 

The National Association of REALTORS® (NAR) reported on Wednesday that Existing Home Sales rose 3 percent in February from January to an annual rate of 5.54 million annualized units, above the 5.42 million expected. The NAR said that despite low inventories of homes for sales on the market and faster price growth, sales bounced back after two straight months of declines. Gains were seen in the South and West with declines in the Northeast and Midwest.

The NAR went on to report that Existing Home Sales are up 1.1 percent from a year ago. Unsold inventory is at a 3.4-month supply, well below the 6-month supply that is seen as normal. The median existing home price in February was $241,700, up 5.9 percent from February 2017 ($228,200). February’s price increase marks the 72nd straight month of year-over-year gains. Lawrence Yun, NAR chief economist says, “The very healthy U.S. economy and labor market are creating a sizable interest in buying a home in early 2018.”

Mortgage rates remained steady in the latest week near four-year highs though still historically low. The Mortgage Bankers Association reports that the 30-year fixed-rate conforming mortgage rate ($453,100 or less) was unchanged at 4.68% in the latest survey. The rate comes with an average 0.46 point added on top. A year ago the rate was 4.20%. Within the report it showed that the refinance index fell 5%, purchase index rose 1%.

Courtesy of Mortgage Market Guide

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March 20, 2018 – 

In D.C. news, the Washington Post reports that the Trump Administration is getting ready to announce a $60B tariff plan for Chinese imports. In addition, there is now talk out of Capitol Hill of “Phase Two” of the U.S. tax plan, which may look to make individual cuts permanent. Newly appointed Fed Chairman Jerome Powell will preside over his first Fed meeting today where it is expected that the Fed Funds Rate will rise by 0.25% when the monetary policy statement is released at 2:00 p.m. ET tomorrow.

U.S. Stock markets are rebounding today after yesterday’s steep sell-off. Yesterday’s plunge was touched off by lower shares of Facebook after a report from the New York Times confirmed that voter profiling company Cambridge Analytica had gathered data on over 50 million Facebook users. The news touched off a big decline in the technology sector which spread to the broader market. The Dow lost 335 points for the day. Shares of Facebook are lower again this morning.

Yet another school shooting took place today in Great Mills, Maryland. Reports reveal that three people were hurt, including the shooter and the incident is now contained. The incident occurred at Great Mills High which has 1,600 students and comes after last week’s high school rallies around the nation calling for action against gun violence in schools.

Courtesy of Mortgage Market Guide

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March 19, 2018 –

Government-sponsored entity Fannie Mae released its March Economic and Housing Outlook on Friday showing that 2018 and 2019 economic growth outlooks upgraded on the stimulus passage. Fannie reports that it has raised its full-year 2018 GDP growth to 2.8% and 2.5% in 2019, both up slightly from February. On housing, home sales began the year lower due in part to “persistent challenges of the inventory shortage.” However, strong price gains are welcome news to existing homeowners.

Fitch Ratings reported today that rising mortgage rates are not likely to end the path of higher U.S. home prices overall, though the rate of home price growth is likely to slow in some markets. However, there are still overheated markets which include Nevada, Oregon and Idaho. Fitch says that fixed rate mortgages are now at 2014 highs and are likely to rise further in 2018.

The Fed will kick off its two-day Federal Open Market Committee meeting tomorrow and will end Wednesday with the release of the monetary policy statement. Fed Chair Powell will then hold a press conference at 2:30 p.m. ET for questions and answers. The Fed is expected to raise the short-term Fed Funds Rate by 0.25% to 1.75% bringing the Prime Rate to 4.75%. Fed Funds Rate (1.75%) + 3 points = Prime Rate of 4.75%. The markets most likely have the increase already baked in. The big question is the amount of rate hikes this year. More on the Fed meeting in Wednesday morning’s Update.

Courtesy of Mortgage Market Guide

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