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Daily Rate Update: March 2nd-6th

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Friday – March 6, 2020

And the survey says … 273,000 jobs created in February, well above the 170,000 expected. Adding to the good news, December and January were revised higher by a total of 85K. The three-month average of job growth was a lofty 243K. The Unemployment Rate inched lower to 3.5%, a 50-year low, while the Labor Force Participation Rate was unchanged at 63.4% with the U6 number, or total unemployed, is at 7%.

Within the report it showed that average hourly earnings rose 0.3% month over month with a 3% gain annually. The closely watched food services and drinking places saw solid gains while gains were seen across most sectors, including our world – real estate. Total employed is 158.8 million, right near its December 2019 record. This was a monster report and speaks to the strength of the U.S. economy as the country enters an uncertain time with coronavirus and its economic impact.

Courtesy of Mortgage Market Guide

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Thursday – March 5, 2020

Uncertainty surrounding the coronavirus has cast a spell of uncertainty over the U.S. financial markets which has caused extreme volatility along with wild swings in the major U.S. stock indexes. Freddie Mac reports that the 30-year fixed-rate mortgage fell sixteen basis points this week to 3.29% with an average 0.7 in points and fees. It was the lowest rate in the near 50-year history of the survey. “Mortgage applications increased 10% last week from one year ago and show no signs of slowing down,” said Sam Khater, Freddie Mac’s Chief Economist. “Given these strong indicators in rates and sales, as well as recent increases in new construction, it’s clear the housing market continues to be a positive force for the broader economy.”

Americans filing for first-time unemployment benefits continue to remain at 50-year lows with no fallout yet from the coronavirus. Weekly Initial Jobless Claims fell by 3,000 this week to 216,000. The four-week moving average of initial claims, which irons out seasonal abnormalities, rose 3,250 to 213,000 last week. The data comes ahead of Friday’s Non-Farm Payrolls report where it is expected that employers added 170,000 new workers in February.

Planned job cuts by U.S. employers declined in February from January, despite the widespread concern over the coronavirus. Outplacement firm Challenger Gray & Christmas reports that planned job cuts fell 16.4% in February to 56,660 from January’s 67,735. February’s total is 26.3% lower than the 76,835 cuts announced in February of 2019. “Despite widespread concerns about COVID-19, it has yet to impact job cut announcements. This may change if the supply side remains dormant, as companies grapple with whether to keep operations open without product. It could also impact Retail, Hospitality, and Travel companies, if concerns keep people at home,” said Challenger.

Courtesy of Mortgage Market Guide

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Wednesday – March 4, 2020

Mortgage rates continued to decline in the latest week which fueled a big push to refinance current mortgages. The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage fell 16 basis points to 3.57% with 0.26 in points. The rate is the lowest in more than seven years. The Market Composite Index, a measure of total mortgage loan application activity jumped 15%, the Refinance Index surged 26% while the Purchase Index fell 2.7%. The survey covers over 75% of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.

The service sector of the U.S. economy continued to run on all cylinders in February rising to a one-year high. The Institute of Supply Management (ISM) reports that its ISM Service Index rose to 57.3 last month, above the 54 expected and represents continued growth in the non-manufacturing sector, at a faster rate. Most respondents to the survey reported that they do remain positive about business conditions and the overall economy.

Private payroll job growth was solid in February as the labor market continues to be a bright light for the U.S. economy. ADP reports that private payrolls rose by 183,000 last month, above the 165,000 expected. The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis. “The labor market remains firm, as private-sector payrolls continued to expand in February,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Job creation remained heavily concentrated in large companies, which continue to be the strongest performer.”

Courtesy of Mortgage Market Guide

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Tuesday – March 3, 2020

CoreLogic reports that home prices, including distressed sales, rose 4% from January 2019 to January 2020, matching the annual gain seen in December. On a monthly basis, prices were up 0.1% from December to January. Looking ahead, CoreLogic is forecasting that prices will rise by 5.4% from January 2020 to January 2021. “January marked the third consecutive month that annual home price growth accelerated in our national index, as low mortgage rates and rising income supported home sales. In February, mortgage rates fell to the lowest level in more than three years, which likely will spur additional home shopping activity and price appreciation,” said Dr. Frank Nothaft, Chief Economist for CoreLogic.

The Federal Reserve lowered its benchmark Fed Funds Rate today due in part to the economic risks associated with the coronavirus. The Fed went on to say that the fundamentals of the U.S. economy remain strong. “The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity. In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate by 1/2 percentage point, to 1 to 1‑1/4 percent. The Committee is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy.”

Housing supplies continue to be a thorn in the side of potential homebuyers as half of the states in the U.S. face a supply shortage. Freddie Mac reports that years of underbuilding has created a large deficit, particularly for states with strong economies that attracted people from other states. The construction deficit in these states has partly led to Americans moving to more affordable interior states, which led to the need to build more housing units in order to accommodate their growing populations. Simply put, new housing supply is not keeping up with rising demand. We estimate that the housing market is undersupplied by 3.3 million units, and the shortage is rising by about 300,000 units a year,” said Sam Khater, Freddie Mac’s Chief Economist.

Courtesy of Mortgage Market Guide

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Monday – March 2, 2020

A strong labor market in 2019 helped Americans to pay their bills on time in 2019 while the average credit score hit an all-time high. Experian reports that the average U.S. FICO score hit a record 703 with the share of Americans above the 700 level at 59%. Scores above 700 are considered the maker of good credit by many lenders. “Americans are making better credit decisions,” said Shannon Lois, Experian’s head of analytics, consulting and operations. “Which is an indication of consumers being more educated about their credit.”

Economic activity in the manufacturing sector increased in February while the overall U.S. economy grew for the 130th consecutive month, in the latest ISM Manufacturing Report. The ISM Index came in at 50.1 down from the 50.9 in January. Most components within the report declined while the employment dta showed a modest increase. Comments from those surveyed were generally positive, with sentiment cautious compared to January.

Courtesy of Mortgage Market Guide

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