Daily Rate Update: November 4th-8th

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Friday – November 8, 2019

Redfin reports that the luxury housing market stabilized in the third quarter after a weak first half in 2019. The average sale price for luxury homes nationwide rose 0.3% year over year to $1.6 million in the third quarter of 2019. Despite the meager gain, it was the first time luxury prices did not decline after three straight quarters of declines. “Because recession fears peaked over the summer, I expected luxury home prices and sales to dip. But it appears that nerves alone weren’t enough to scare off wealthy homebuyers,” said Redfin chief economist Daryl Fairweather.

US markets are on the quiet side this morning after a few weeks of volatility that saw the 10-year yield rise to almost 2% in yesterday’s trading. Positive trade headlines, strong earnings and an upbeat jobs report for October recently pushed the major US stock indexes to all-time highs. Positive news usually weighs on bond prices, pushed yields higher as investing dollars shift into more riskier assets such as equities and commodities.

Courtesy of Mortgage Market Guide

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Thursday – November 7, 2019

US stocks are trading at fresh record highs today on reports that the US and China are moving closer to a deal that would include rolling back tariffs ahead of the “Phase One” signing in the near future. In addition to the positive trade headlines, solid earnings and a strong labor market are also a few of the catalysts that are lifting the equity markets. The US-China story is the biggest news item to follow and it sure seems something good is coming of it causing global yields to climb for the past few weeks.

Fannie Mae released its Home Purchase Sentiment Index (HPSI) revealing that consumer home purchase sentiment remained robust in October. The HPSI fell 2.7 points to 88.8 from September though up 3.1 points compared to the same time last year. However, despite low mortgage rates, the ‘good time to buy’ component declined while the ‘good time to sell’ also dropped. Doug Duncan, Senior Vice President, and Chief Economist said, “Low mortgage rates and a strong labor market are supporting the index’s overall strength, which is consistent with our expectation for a modest expansion in home purchase activity in the fourth quarter.”

Courtesy of Mortgage Market Guide

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Wednesday – November 6, 2019

Home loan rates edged lower last week but have inched higher this week and remain at historically attractive levels. The Mortgage Bankers Association (MBA) reports that the 30-year fixed-rate mortgage fell seven basis points to 3.98% in the week ending November 1, 2019. That rate does carry 0.37 in points. The Market Composite Index, a measure of total mortgage loan application volume, was near unchanged. The Refinance Index rose 2% while the Purchase Index fell 3%. The survey covers over 75% of all US retail residential mortgage applications and has been conducted weekly since 1990.

TransUnion reports that the housing sector could receive a boost by first-time homebuyers in the next three years. A new report projects that at least 8.3 million first-time homebuyers will enter the mortgage market between 2020 and 2022. That number could rise as high as 9.2 million if economic growth exceeds expectations. Joe Mellman, senior vice president and mortgage business leader at TransUnion said, “We are optimistic that first-time homebuyers will contribute more to homeownership than at any time since the start of the Great Recession.”

Courtesy of Mortgage Market Guide

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Tuesday – November 5, 2019

The service sector of the US economy continues to be a bright spot in the US economy. The Institute for Supply Management (ISM) reports that economic activity in the non-manufacturing sector grew for the 117th consecutive month, said the nation’s purchasing and supply executives. The ISM Service Index registered 54.7 in October, up from the reading of 52.6 in September. Within the data, it showed that the employment index rose 3.3 points to 53.7. A reading above 50 percent indicates the non-manufacturing sector economy is generally expanding; below 50 percent indicates the non-manufacturing sector is generally contracting.

CoreLogic reports that home prices, including distressed sales, rose 3.5% year over year in September 2019 compared to September 2018, up 0.4% monthly from August to September. Looking ahead, CoreLoogic is forecasting a 5.6% increase from September 2019 to September 2020. “Mortgage rates were a full percentage point lower this September compared to a year ago, boosting affordability for first-time buyers and supporting a rise in homeownership. In addition to lower interest rates, personal income grew faster than home prices during the past year. This provided an additional lift for first-time buyer affordability and helped to boost the homeownership rate to the highest level in more than five years.”

The continued rally in US stocks has sent the major major indexes to record highs this week. Positive trade headlines, a largely better-than-expected earnings season along with an upbeat Jobs Report for October are a few of the reasons behind the move higher for equities. Year-to-date, the Dow is up 18%, S&P up 23% while the NASDAQ has gained 27%. If a trade deal can get done between the US and China, stocks could push to new high levels.

Courtesy of Mortgage Market Guide

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Monday – November 4, 2019

Freddie Mac released the Economic & Housing Research Forecast late last week revealing that the housing market remains strong while an economic slowdown looms. Freddie Mac forecasts that 30-year mortgage rates will be 3.7% for the remainder of 2019 and will inch higher to 3.8% in 2020. Also, home sales will rise to 6 million in 2019 before increasing to 6.1 million in 2020. House prices will rise by 3.3% in 2019 and 2.8% in 2020. In conclusion, expect overall annual mortgage origination levels of $2.0 trillion in 2019 and $2.1 trillion in 2020.

Mortgage rates have been edging higher for the past two months. The 30-year fixed-rate mortgage hit 3.49% on September 6 but has recently risen to 3.78% for the week ended November 1. The uptick in rates has cut refi-eligible borrowers from 11.7 million in early September to 6.8 million in the final week of October, reports integrated technology and data analytics firm, Black Knight. The recent positive headlines from the US and China have shifted investing dollars out of the bond markets in into stocks, thus pressuring rates higher. However, despite the pull-backs, the refi-able US population is still almost 60% larger than this time last year, says Black Knight.

On the US-China trade front, Commerce Secretary Wilbur Ross said good progress is being made on the “Phase One” portion of the trade deal. The proposed deal includes licenses for US companies to do business with China’s Huawei and a tariff hike on imports of foreign autos may be lifted. The US/China trade deal continues to move in the right direction and Bonds are not embracing the good news.

Courtesy of Mortgage Market Guide

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