Daily Rate Update: October 9th-12th

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Friday – October 12, 2018

Foreclosure activity continues to edge lower across the U.S. due in part to a strengthening economy and a strong labor market. ATTOM Data Solutions reported this week that foreclosure filings in the third quarter of 2018 fell 6% from the previous quarter and are down 8% from a year ago to the lowest level since the fourth quarter of 2005, a nearly 13-year low. Foreclosure filings encompass default notices, scheduled auctions or bank repossessions.

Earnings season kicked off today and the reports will be closely watched by the investing community for any signs of a slowdown since the tariffs recently took effect. JPMorgan Chase, Wells Fargo and Citigroup reported this morning showing solid numbers from the banking sector. The forecast is that earnings per share growth for S&P 500 companies will increase 21% in the third quarter of 2018, following 24% and 26% growth in the first and second quarters.

After a two-day plunge, U.S. Stocks are rebounding today as investors look for some bargains. The closely watched S&P 500 had lost nearly 7% from its all-time high of 2,929.67 on September 21 until yesterday’s close of 2,728.37. The sell-off was due in part to rising yields and fears of higher interest rates. However, the U.S. economy is still strong while the labor market is at or near full employment.

Courtesy of Mortgage Market Guide

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Thursday – October 11, 2018

The consumer inflation reading Consumer Price index (CPI) rose 0.1% in September from August while the Core CPI also increased 0.1%, both below the 0.2% expected. Lower energy costs pushed prices lower. The annual CPI fell to 2.3% from 2.7% in August, down from 2.9% in July. The Core remained at 2.2% year over year. This report will be dissected by the Fed as they ponder the pace in which they will increase the short-term Fed Funds rate.

Mortgage rates continued to push higher this week hitting their highest level since April 11, 2011. Freddie Mac reports that the 30-year fixed-rate mortgage rose 19 basis points to 4.90% with an average 0.5 in points and fees. Freddie Mac says, “While the monthly payment remains affordable due to the still low mortgage rate environment, the primary hurdle for many borrowers today is the down payment and that is the reason home sales have decreased in many high-priced markets.”

Applications to purchase new homes fell in September from August but showed a solid increase year over year. The Mortgage Bankers Association reports that mortgage applications to purchase new homes increased by 8.2% from September 2017 compared to September 2018 while there was a 9% decrease month over month from August to September. Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting said, “Housing demand is still strong even as mortgage rates increase, and as a result, we’re still forecasting for modest growth in purchase origination volume in 2018.”

Courtesy of Mortgage Market Guide

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Wednesday – October 10, 2018

Housing sentiment eased a bit in September due in part to higher home prices and interest rates, reports Fannie Mae. Fannie Mae released its Home Purchase Sentiment for September falling 0.3 points to 87.7, after the increase seen in August. The report shows an increase of those surveyed that now is a good to time to buy a home, while those who said it is a good time to sell was unchanged. In addition, the net share who expect mortgage rates to go down over the next 12 months fell 4 percentage points.

The September Producer Price Index rose for the first time in three months up 0.2%, in line with estimates and up from the -0.1% in August. The Core PPI was also in line at 0.2% month over month. Annually, PPI rose 2.6% from 2.8% in August, while the Core was up 2.5% from 2.3%. The Producer Price Index measures inflation on a wholesale basis. The more closely watched inflation reading Consumer Price Index will be released on Thursday.

Mortgage rates hit their highest level since February 2011, reports the Mortgage Bankers Association (MBA). The recent rise is attributed to a strengthening economy, a strong labor market along with sky-high consumer confidence. The MBA reports that the 30-year fixed-rate conforming mortgage rose to 5.05% in the latest week with an average 0.51 in points. The survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990.

Courtesy of Mortgage Market Guide

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Tuesday – October 9, 2018

Small business optimism continues to hover near all-time highs with employment solid, owners bulked up on inventories while compensation increases set a new record. The NFIB Small Business Optimism Index edged slightly lower to107.9 in September, the third highest ever and just below the all-time of 108.8 hit in August. “This is the longest streak of small business optimism in history, evidence that tax cuts and regulatory rollbacks are paying off for the economy as a whole,” said NFIB President and CEO Juanita D. Duggan. “Our members say that business is booming and prospects continue to look bright.”

Mortgage delinquencies continued to edge lower in July as higher housing prices along with a strong labor market and economy lift all boats. CoreLogic reports that the percentage of mortgages were delinquent by at least 30 days or more was 4.1% in July 2018, down from 4.7% in July 2017. CoreLogic went on to say, “The 30-plus delinquency rate, the most comprehensive measure of mortgage performance, is near a 10-year low.”

Mortgage credit availability decreased in September due to a tightening in the government index offset a gain in conventional credit availability. The Mortgage Bankers Association reports that its Mortgage Credit Availability Index (MCAI) edged lower by 0.8% in September to 182.1. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit.

Courtesy of Mortgage Market Guide

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