Daily Rate Update: October 22nd-26th

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Friday – October 26, 2018

The first read on third-quarter Gross Domestic Product (GDP) rose 3.5% versus the 3.3% though down from the frothy 4.2% seen in the second quarter. The 4.2% is very hard to achieve again given the “ideal” rate is usually between 2.5% and 3%. So, the U.S. economy is running above “ideal” levels.

Within the report, it revealed that consumer spending rose 4%, the strongest since the fourth quarter of 2014. Inflation measures within GDP declined. The PCE price index rose 1.6%, down from 2% in Q2. There was a slowdown in business and residential investments. GDP is the value of the goods and services produced in the United States. The growth rate of GDP is the most popular indicator of the nation’s overall economic health.

With the summer driving season behind us, gasoline prices have edged lower as demand eases a bit. Motor club AAA reports that the average price for a regular gallon of gasoline is at $2.83, down from $2.86 a month ago though up from $2.46 a year ago. Jeanette Casselano, AAA spokesperson says, “Prices are falling despite market concerns about global supply and geopolitical tensions, but that could change later this month ahead of the U.S. announcement of imposed sanctions on Iran.”

Courtesy of Mortgage Market Guide

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Thursday – October 25, 2018

Mortgage delinquencies edged high in September, reports Black Knight, a leading provider of integrated software, data and analytics solutions. Mortgage delinquencies jumped 13% in September, the largest single-month increase since November 2008. Hurricane Florence had an impact during the month with delinquencies rising 38% month-over-month, with more than 6,000 borrowers already missing a payment as a direct result of the storm.

Extreme volatility has gripped the U.S. Stock markets with the closely watched S&P 500 now down nearly 10% from its all-time closing high of 2,929 hit back on September 21. The S&P is now in negative territory for 2018 as traders watch the 2,650 level as support of it closed at 2,656 yesterday. Stocks are trying to rebound this morning. Tariff issues, some sluggish outlooks from corporate America, modest weakness in the manufacturing sector, geopolitical headlines along with profit taking have sent equities lower.

Mortgage rates were essentially unchanged in the latest week after the big rise seen since December 2017. Freddie Mac reports that the 30-year fixed-rate mortgage rose just 1 basis point in the week ended October 25 with an average 0.50 in points and fees. Sam Khater, Freddie Mac’s chief economist, says, “We expect rates to continue to rise, which will put downward pressure on homebuying activity. While higher borrowing costs will keep some people out of the market, buyers with more flexibility could take advantage of the decreased competition.”

Courtesy of Mortgage Market Guide

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Wednesday – October 24, 2018

New Home Sales fell for the fourth straight month in September due in part to rising mortgage rates and higher home prices. The Commerce Department reported that New Home sales declined 5.5% in September from August to an annual rate of 553,000 units, below the 625,000 expected. August was revised lower to 585,000 from 629,000. September was the lowest number since December 2016. Sales were down 13.2% year over year. Sales declined in the Northeast, South and West with gains seen in the Midwest. Supply of new homes for sale on the market was 7.1 months, above 6 months that is seen as normal.

The Federal Housing Finance Agency (FHFA) reports that its House Price Index rose 0.3% in August from July, +6.1% from August 2017 to August 2018. The FHFA monthly HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. The FHFA regulates Fannie Mae, Freddie Mac and the 11 Federal Home Loan Banks. These government-sponsored enterprises provide more than $6.2 trillion in funding for the U.S. mortgage markets and financial institutions.

Mortgage rates held steady in the latest week after the big rise seen in 2018. The Mortgage Bankers Association (MBA) reports that the 30-year fixed-rate 30-year mortgage was essentially unchanged at 5.11%, near seven-year highs. That rate carries an average 0.52 in points. The MBA went on to report that the refinance index rose 10% while the purchase index was up 2%.

Courtesy of Mortgage Market Guide

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Tuesday – October 23, 2018

U.S. home prices in September rose at their slowest annual pace in six years while supplies posted the first annual gain in almost three years. Redfin reports that home prices increased 2.1% from September 2017 to September 2017 across the 171 metro markets that Redfin tracks, the smallest increase since February 2012. Inventory growth rose a scant 0.2% year over year after many years of declines.

Global risk-off is the trade today as Stock investors fret over Saudi political concerns, trade issues, lingering Italian debt woes, technical factors along with mixed industrial earnings here in the states. The Dow Jones Industrial Average fell nearly 600 points in early trading before recovering a portion of the losses. Despite the sell off in Stocks, the U.S. economy remains strong with a solid labor market. Former Federal Reserve Chairman Alan Greenspan recently said this is the tightest labor market he has ever seen. Mr. Greenspan is 92 years old.

Courtesy of Mortgage Market Guide

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Monday – October 22, 2018

The Mortgage Bankers Association (MBA) reported last week that it is forecasting $1.24 trillion in purchase mortgage originations in 2019, a 4.2% gain from 2018. In the refinance arena, the MBA predicts a 12.4% decline in 2019 to $395 billion. For 2019, the MBA sees total originations to decrease to $1.63 trillion from $1.64 trillion this year. The MBA expects home purchase originations to increase each year from 2019-2021 and should continue to increase past the forecast horizon, as more millennials look to purchase homes.

There are no economic reports due for release today. The markets are looking ahead to Friday’s release of Q3 2018 first read on Gross Domestic Product (GDP), which is expected to rise 3.3%. That would be down from the frothy 4.2% recorded in Q2, however, when coupled with the past few quarters, it will be running at 3.0% year over year, a figure we have not seen for some time. GDP is the value of the goods and services produced in the United States. The growth rate of GDP is the most popular indicator of the nation’s overall economic health.

U.S. consumers are expected to spend $119.99 billion online during the holiday shopping season in 2018, which unofficially begins on November 1 and ends on December 31. That would be a 15.5% gain from the $103.88 billion online sales in 2017. A few of the catalysts driving online sales this year is sky-high consumer confidence and the fact that more and more consumers are shopping online for the holiday season. Total retail sales are expected to rise 5.5% in 2018 from 2017 to $719.09 billion.

Courtesy of Mortgage Market Guide

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