Daily Rate Update: May 21st-25th

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Friday – May 25, 2018

Memorial Day marks the unofficial start of summer, and Americans will kick off the season by traveling in near-record numbers. According to AAA, more than 41.5 million Americans will travel this Memorial Day weekend, nearly 5% more than last year and the most in more than a 12 years. About 36 million of those travelers will drive to their holiday weekend destination. – AAA

Gas prices are higher. People will be spending about $6 more for a full tank of gas, but that’s not going to stop people from traveling this Memorial Day. “This is the kick-off for the summer season, the economy is still good, and overall people are ready to roam,” said a AAA spokesperson. The national average price for a gallon of gas is $2.96, up from $2.37 this time last year. – AAA

Just some facts on what Americans will be consuming this Memorial Day weekend: 60% of Americans will be barbecuing this weekend. $1.5 billion of meat and seafood will be sold for the weekend. Hot dogs are consumed every second from Memorial Day to Labor Day (7 billion total). 180+ running races are held each Memorial Day. Memorial Day is the second highest day for beer sales behind July 4.

Courtesy of Mortgage Market Guide

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Thursday – May 24, 2018

Freddie Mac reports that the 30-yr fixed-rate mortgage rose five basis points to 4.66% with an average 0.4 in points and fees, their highest level since May 5, 2011 (4.71%). Freddie Mac went on to say that mortgage rates in 2018 have had the most sustained increase to start the year in over 40 years. Through May, rates have risen in 15 out of the first 21 weeks, which is the highest share since Freddie Mac began tracking this data for a full year in 1972. However, a 4.66% rate is still historically low.

After two straight months of gains, Existing Home Sales fell 2.5 percent in April from March to an annual rate of 5.46 million units, below the 5.57 million expected, reports the National Association of REALTORS®. On an annual basis, Existing Home Sales are down 1.4 percent and have declined year-over-year for two straight months. Across the U.S. sales fell 4.4% in the Northeast, declined 2.9% in the South, dropped 3.3% in the West and were unchanged in the Midwest

Inventories of homes for sale on the market continue to run low with a 4-month supply, below the 6-month supply that is considered normal. The median home price was $257,900, up 5.3 percent from a year ago. Lawrence Yun, the NAR chief economist, says this spring’s staggeringly low inventory levels caused existing sales to slump in April. He explains, “The root cause of the underperforming sales activity in much of the country so far this year continues to be the utter lack of available listings on the market to meet the strong demand for buying a home.”

Courtesy of Mortgage Market Guide

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Wednesday – May 23, 2018

The Commerce Department reported on Wednesday that New Home Sales fell 1.5% in April from May to an annual rate of 662,000 units, below the 677,000 expected. Sales in March were revised lower to 672,000 from 694,000 while January and February were also revised lower. However, sales were up 11.6% from April 2017 to April 2018. On a monthly basis, sales were higher in the Northeast, lower in the West, and near unchanged in both the Midwest and South. Inventory of homes for sale on the market was at a 5.4-month supply, just below the 6-month supply that is considered normal.

Yesterday afternoon, President Trump said the June 12 summit meeting with the U.S. and North and South Korea may not work out. In addition, the President denied there is a current deal with China’s ZTE Corp. and he is not satisfied with trade talks with China. The headlines sent the Dow Jones Industrial Average down 200 points by the close of trading, after spending the morning session modestly higher. This negative talk has spilled into this morning’s trade as U.S. Stocks trade lower.

Mortgage rates continued to edge higher in the latest week and are now at highs seen in April 2011. The Mortgage Bankers Association reports that the 30-year fixed-rate conforming mortgage rose nine basis points to 4.86%, with points increasing to 0.52 from 0.50. With the increase in rates, the refinancing index fell 3.7% and is at its lowest level since December 2000. A strengthening economy has pushed Bond prices, which in turn, increases mortgage rates.

Courtesy of Mortgage Market Guide

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Tuesday – May 22, 2018

The New York Federal Reserve released its Household Debt and Credit Report for the first quarter of 2018 revealing that household debt increased in the first quarter of 2018 for the 15th consecutive quarter. As of March 31, 2018, total household indebtedness was $13.21 trillion, a $63 billion (0.5%) increase from the fourth quarter of 2017.

Mortgage balances, the largest component of household debt, increased somewhat during the first quarter. Mortgage balances shown on consumer credit reports on March 31 stood at $8.94 trillion, an increase of $57 billion from the fourth quarter of 2017. Student loan debt has risen 9.2% annually over the past 10 years to $1.41 trillion.

Just the numbers: From the last trading day of 2017 on December 29, the closely watched S&P 500 is up 2%. The 10-year yield is at 3.07%, it closed at 2.41% on December 29, 2017. WTI oil is trading at $72.46/barrel, up from $60.42/barrel on December 29. The 30-year fixed-rate mortgage was at 3.99% on December 28, 2017, currently at 4.61%.

Courtesy of Mortgage Market Guide

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Monday – May 21, 2018

The National Association of REALTORS® (NAR) released its midyear forecasts revealing that a stronger economy, higher wage growth and a tight labor market are expected to push both home sales and prices higher in 2018. However, low inventories of homes for sale on the market along with falling affordability could cap the rate of increases. The NAR forecasts that the 30-year fixed-rate mortgage will average 4.60% this year and 5% in 2019. As far as Existing Home Sales, the NAR predicts that they will end 2018 at a pace of around 5.6 million, up 1.8% year-over-year and 5.7 million in 2019. U.S. Stocks are surging to begin the week as the trade war tensions between the U.S. and China ease. Over the weekend, Secretary Mnuchin says that the “trade war” is really a “trade dispute” and has been put on hold as both sides have agreed to drop their trade tariff threats and work towards a long-term agreement. The closely watched Dow Jones Industrial Average hit the 25,000 mark today for the first time since the middle of March. With first quarter 2018 earnings season over, the numbers are in and earnings for the reporting companies grew significantly compared to 2017. Standard & Poor reported that the operating earnings per share of the companies in the S&P 500 in the first quarter of 2018 were up nearly 27% on a year-over-year basis when compared to operating earnings from the first quarter 2017. That’s the largest year-over-year increase in earnings since the fourth quarter 2010. The corporate tax cuts enacted by the White House could be one of the reasons for the big gains.

Courtesy of Mortgage Market Guide

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