Daily Rate Update: May 6th-10th

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Friday – May 10, 2019

Consumer inflation rose in April boosted by rising gas prices along with increasing rents and healthcare costs, though underlying inflation remained tame. The Core PCE, the Fed’s favorite inflation gauge, rose 1.6% in the latest report, below the Fed’s target range of 2.0%. The Labor Department reports that the Consumer Price Index (CPI) rose by 0.3% last month, just below the 0.4% expected and down from 0.4% in March. Low inflation levels will continue to keep the US Federal Reserve holding interest rates at current levels, while mortgage rates will remain low in the foreseeable future.

US stocks are extending losses on the last trading day of the week due to concerns of a protracted trade dispute between the US and China. The US has increased tariffs to 25% on $200 billion worth of imported goods coming into the US. The news has sent stock prices lower all week as the closely watched S&P 500 Stock Index has declined by 3.6% from its all-time closing high of 2,945, hit on April 30. Keep in mind that markets don’t go straight up or down, and when at all-time highs, investors look to cash in some profits and look for the next opportunity.

Courtesy of Mortgage Market Guide

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Thursday – May 9, 2019

Mortgage rates edged lower in the latest survey as investors piled into the bond markets due to uncertainty caused by the ongoing trade disputes. Freddie Mac reports that the 30-year fixed-rate mortgage fell by four basis points in the latest week to 4.10% with an average 0.5 in points and fees. Last year this time the rate was 4.55%. Freddie Mac says, “A combination of low mortgage rates, a strong job market and modest wage growth should spur homebuyer interest and also serve as an incentive for homeowners looking to refinance.”

In economic news, tame numbers from the Producer Price Index reinforce the low inflation environment in what many don’t see as “transitory,” as uttered by Fed Chair Powell at his press conference last week. Inflation has been running low for quite some time and as the Fed tells us, will continue to be subdued for several years to come. This will keep home loan rates relatively low longer than most think.

Weekly Initial Jobless Claims hovered near 50-year lows at 228,000 last week as the strong labor market helps to keep the US economy on a solid growth pace. The four-week moving average of claims, which irons out seasonal abnormalities, rose by 7,750 to 220,250. The solid labor market will help potential home buyers or those refinancing with low borrowing costs. Just recently, it was reported that the unemployment rate fell to a 50-year low while job openings across the US hover just below record highs.

Courtesy of Mortgage Market Guide

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Wednesday – May 8, 2019

Mortgage rates held near 12-month lows in the latest week with the spring home buying season is now fully underway. The Mortgage Bankers Association (MBA) reports that the 30-yr fixed-rate mortgage was essentially unchanged in the latest week at 4.41%. Borrowing costs on jumbo loans averaged 4.27% from 4.31%. In addition, the Purchase Index rose 4% while the Refinance Index increased 1%. The MBAs Market Composite Index, a measure of total mortgage loan application volume, rose 2.7%.

US stocks are rebounding today after the three-day decline. US-China trade headlines continue to influence the capital markets with today’s positive slant boosting stocks while weighing on bond prices. China had reneged on virtually all agreement terms previously met over the weekend, which set off the US retaliation of increased tariffs should a deal not be met by Friday. The Vice Premier of China is coming to the US tomorrow to hopefully strike a deal good for all parties and the globe.

Courtesy of Mortgage Market Guide

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Tuesday – May 7, 2019

The labor market continues to reach new heights in the US as demand for workers remains robust. The Bureau of Labor Statistics reports that there were 7.5 million job openings on the last day of March from 7.14 million in its Job Openings and Labor Turnover Survey. It was the fourth highest rate in the series history. The largest increases were seen in transportation, warehousing, utilities, construction and real estate and rental and leasing.

Home price gains continued to cool in March though still in an upward trend, reports CoreLogic. The Home Price Insights Report showed that home prices, including distressed sales, rose 3.7% in March 2019 compared to March 2018 with a 1% increase month over month from February 2019 to March 2019. Looking ahead, Corelogic predicts home prices will rise 4.8% from March 2019 to March 2020. “The U.S. housing market continues to cool, primarily due to some of our priciest markets moving into frigid waters,” said Ralph McLaughlin, Deputy Chief Economist for CoreLogic.

Uncertainty surrounding the US- China trade talks are pushing US stocks lower for the second straight session today. The “sell in May and go away” may be taking place though the month is just underway. The Dow Jones Industrial Average was down nearly 400 points at the lows of the day though the major indices hover just below all-time highs. US-China trade officials are meeting in Washington later this week to try and hammer out a deal by Friday night’s deadline when higher tariffs will be imposed on China imports into the US.

Courtesy of Mortgage Market Guide

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Monday – May 6, 2019

US stocks are plunging as the new week kicks off due to renewed US-China trade wars. The White House is threatening to increase tariffs on $200 billion worth of imports from China to 25% from 10% which is raising fears of a continued global slowdown and breaking the calm that has presided over the markets for the past month or so. The Dow Jones Industrial Average fell nearly 500 points when the equity markets opened, though it has recovered some of those losses.

After last week’s risk-filled-events, this week looks to be on the quiet side as far as economic reports and major events are concerned. The upcoming week will feature the inflation reading Consumer Price Index (CPI). Inflation continues to run low and there should not be a spike higher from the CPI data. Earnings season will just about come to end in the upcoming week with most of the big-name companies having already reported. As of last Thursday, 74.7% of the S&P 500 companies that reported have exceeded earnings estimates.

Courtesy of Mortgage Market Guide

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