Daily Rate Update: May 20th-24th

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Thursday – May 23, 2019

Sales of new homes declined from March to April though the numbers in March were revised higher. The Census Bureau reports that new home sales fell nearly 7% in April from March though were above the 665,000 expected. Sales rose by 7% from April 2018 to April 2019. Sales losses were seen across the country except for the Northeast, which saw sold gains of 11.5%. However, demand for housing will remain supported by low mortgage rates along with a strong job market. Inventories of homes for sale on the market was 5.9 months while the median new home price rose 8.8% from a year ago to $324,200 in April.

Mortgage rates remained near 16-month lows this week as bond prices rose. Yields pushed lower due in part to the uncertainty surrounding the US/China trade issues. Freddie Mac reports that the 30-year fixed-rate mortgage is 4.06% this week with an average 0.5 in points and fees. Freddie Mac said, “The drop in mortgage rates is causing purchase demand to rise and the mix of demand is skewing to the higher end as more affluent consumers are typically more responsive to declines in rates.”

The New York Fed recently revealed a survey that showed 65% of those surveyed think it is a good time to purchase a home. The survey went on to reveal that households expect home prices to rise at a somewhat slower pace relative to last year. The New York Fed went on to say that renters perceive that access to mortgage credit has loosened somewhat, after tightening in 2018.

Courtesy of Mortgage Market Guide

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Wednesday – May 22, 2019

Low mortgage rates along with seasonal increases in home sales continued to boost prepayments in April, reports Black Knight. After a slow start to the year, the national delinquency rate declined in April by 5% from March to 3.47%, the lowest level since record keeping began in 2000. The report went on to reveal that serious delinquencies, loans 90 or more days past due, but not yet in foreclosure, fell to 474,000, a 12-year low and a 124,000 year-over-year decline.

Mortgage rates continued to decline in the latest week which led to a jump in refinancing activity, reports the Mortgage Bankers Association (MBA). The 30-year fixed-rate mortgage fell to 4.33% from 4.4% for the week ending May 17, 2019 with an average 0.43 in points. The MBA also reports that its Market Composite Index, a measure of total mortgage loan application volume, rose 2.4%. The Refinance Index jumped 8% while the Purchase Index declined by 2%. Those potential borrowers who remain on the fence may look to take advantage of the low rate environment in the near future.

The MBA also recently reported that April mortgage applications for new home purchases surged nearly 16% from a year ago. On a month-over-month basis, applications rose 3%. The MBA said that it estimates that new single-family home sales were at an annual rate of 722,000 units in April 2019. “There was a healthy increase in new home purchase activity in April, boosted by the strong economic and employment conditions seen in the first quarter of 2019,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.

Courtesy of Mortgage Market Guide

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Tuesday – May 21, 2019

The National Association of REALTORS® (NAR) reports that existing-home sales declined 0.4% in April from March to an annual rate of 5.19 million units versus the 5.35 million expected. Sales were lower by 4.4% from April 2018 to April 2019. Sales declined in the Northeast and South with gains seen in the West and flat sales in the Midwest. Inventories of homes for sale on the market continued to rise with a 4.2-month supply, up from 3.8 months in March.

Lawrence Yun, NAR’s chief economist, said he is not overly concerned about the 0.4% dip in sales and expects moderate growth very soon. “First, we are seeing historically low mortgage rates combined with a pent-up demand to buy, so buyers will look to take advantage of these conditions,” he said. “Also, job creation is improving, causing wage growth to align with home price growth, which helps affordability and will help spur more home sales.”

Some household debt numbers from the New York Fed: Total household debt rose for the 19th consecutive quarter in 2019 by $124 billion to $13.67 trillion. Mortgage balances rose by $120 billion, to $9.2 trillion. Mortgage originations declined to $344 billion from $401 billion, the lowest level seen since the third quarter of 2014. Outstanding student loan debt increased by $29 billion, to $1.49 trillion. Newly originated auto loans totaled $139 billion, continuing a long-running growth trend. Credit card balances fell slightly, to $848 billion from $870 billion.

Courtesy of Mortgage Market Guide

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Monday – May 20, 2019

Fannie Mae released its May Economic & Housing Outlook last week saying that strong demand along with improved affordability points to a rebound in the housing market in 2019. Fannie Mae went on to say, “Pending sales and purchase mortgage applications are trending upward, while the lower mortgage rate environment and builders’ renewed focus on modestly sized homes are likely to support affordability.”

On the economic front, Fannie Mae is forecasting full-year 2019 growth at 2.3%, after the strong, though likely unsustainable first-quarter growth of 3.2%. Fannie Mae does not expect the Federal Reserve to raise interest rates within its two-year horizon due to low inflation, the Fed’s recent patient stance on monetary policy and a lack of optimism of a growth-inducing trade deal with China.

From Fannie Mae’s website: Fannie Mae helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of Americans. It partners with lenders to create housing opportunities for families across the country. Fannie Mae drives positive changes in housing finance to make the home buying process easier, while reducing costs and risk.

Courtesy of Mortgage Market Guide

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