Daily Rate Update: September 16th-20th

posted in: Uncategorized | 0

Friday – September 20, 2019

The Federal Reserve cut its benchmark interest rate on Wednesday by 0.25% but there have been a few differing opinions as to what the Fed members should have done. This morning, St. Louis Fed President Bullard said that he wanted a 0.50% rate due to the fact that the manufacturing sector appears to be in a recession while inflation continues to run on the low end of the spectrum.

On the other hand, Boston Fed President Rosengren did not want a rate cut this week and sees no need for additional rate cuts, which could be an inflation risk and encourage households and firms to take on too much leverage. The markets feel more cuts are coming, despite Fed Chair Powell and Rosengren suggesting otherwise. Fed Fund Futures also think another cut is coming as they are pricing in a 66% chance of a cut at the moment by year end.

Oil and gas prices spiked this week due to the turmoil that unfolded in the Mideast last weekend. Two Saudi oil refineries were attacked by drones, which sent oil prices soaring. The average price for a regular gallon of gasoline rose to $2.67 today from $2.57 a week ago and up from $2.60 a month ago. The price of oil rose $8 on Monday to $63/barrel. Typically, gas prices tend to go down in the fall due to fewer drivers on the road. However, Saudi Arabia said the refineries will back to normal capacity within a few weeks, which should push gas prices lower as we enter the fall season.

Courtesy of Mortgage Market Guide

-CHECK US OUT ON SOCIAL-

Facebook

Twitter

YouTube

LinkedIn

Yelp


Thursday – September 19, 2019

The National Association of Realtors (NAR) reports that existing home sales rose 1.3% in August from July to an annual rate of 5.49 million units, above the 5.36 million expected. Overall, sales were up 2.6% from a year ago. The NAR said that buyers are finding it hard to resist the current low mortgage rates. The median home price rose 4.7% from a year ago to $278,200. Inventories of homes for sale on the market fell to a 4.1-month supply, below the normal level of 6 months.

Mortgage rates jumped in the latest survey from Freddie Mac and was the largest gain since October of 2018 though they remain historically low. The 30-year fixed-rate mortgage rose to 3.73% this week from 3.56% last week with 0.5 in points and fees. Last year this time, the rate was 4.65%. Freddie Mac said that it is clear that the housing market is finally improving due to the strong labor market and low mortgage rates.

The Federal Reserve cut the short-term fed funds rate yesterday, as expected, to bring the rate to 2.0%. Not all Fed members were on board with the .25% rate cut. A few preferred not to cut rates while another wanted a bigger .50% cut. Along with the fed rate cut, there were three important takeaways from Fed Chair Powell’s press conference and the monetary policy statement such as, there is no recession in sight, the consumer is also alive and well, and exports have slowed.

Courtesy of Mortgage Market Guide

-CHECK US OUT ON SOCIAL-

Facebook

Twitter

YouTube

LinkedIn

Yelp


Wednesday – September 18, 2019

August housing starts jumped to a 12-year high rising 12% from July to an annual rate of 1.364 million units versus the 1.255 million expected. July was revised higher to 1.215 million from 1.191 million. Housing starts were up nearly 7% year-over-year. Building permits rose 7.5% to an annual rate of 1.419 million. Single-family starts, which account for the biggest share of the housing market, rose 4.4% to a rate of 919,000 units in August, the highest level since January. Multi-family starts soared by 31%.

Fannie Mae released its September 2019 Economic and Housing Outlook this week saying that the US economy is reliant on consumer spending and could be susceptible to downside risks. The report revealed that Fannie Mae has lowered its gross domestic product forecast to 1.9% in the third quarter of 2019. Fannie Mae also reports that mortgage demand remains on solid footing but notes that the lack of existing supply continues to limit home sales even as mortgage rates push new lows. In conclusion, total mortgage originations in 2019 are expected to rise 11.6% year-over-year.

It’s Fed day! The Federal Reserve will release its monetary policy statement this afternoon at 2:00 p.m. ET which will be accompanied by the Summary of Economic Projections. Immediately following the release, Fed Chair Powell will hold a press conference at 2:30. There has been a wrinkle in fed fund futures (FFR) as they now show just a 58% chance of a 25 basis point rate cut, down from 88% last week and nearly 100% from a couple of weeks ago. The decline in FFR is due to the fact that the US economy remains solid, job and wage growth is strong, consumer spending has been strong and there is no chance of a near-term recession. Future rate cuts this year are now up in the air.

Courtesy of Mortgage Market Guide

-CHECK US OUT ON SOCIAL-

Facebook

Twitter

YouTube

LinkedIn

Yelp


Tuesday – September 17, 2019

Average FICO scores have been on the rise since the end of the Great Recession due in part to missed payments on mortgages and credit cards being purged from credit files. FICO (Fair, Isaac and Company) reports that average score has risen to 706, the highest on record compared to the 690 seen at the height of the housing bubble in 2006. “Significant improvement in the overall population’s credit profile has been the key driver of the 20-point increase in national average FICO score over the past decade,” said Ethan Dornhelm, vice president at FICO.

August rental prices have been inching higher across the nation with prices up $47 from August 2018 or 3.3% to $1,472. That is a meager 0.1% increase from July. The numbers signal that there is solid demand for multi-family housing supported by low unemployment and a solid economy here in the US. Markets in New York and California continue to be the most expensive rents in the US.

Home builder confidence hit its highest level in 2019 in September as low interest rates and strong demand continue to boost builder sentiment.The National Association of Home Builders reports that its Housing Market index hit 68 this month with August revised higher to 67 from 66. Low interest rates and solid demand continue to fuel builders’ sentiments even as they continue to grapple with ongoing supply-side challenges that hinder housing affordability, including a shortage of lots and labor,” said NAHB Chairman Greg Ugalde.

Courtesy of Mortgage Market Guide

-CHECK US OUT ON SOCIAL-

Facebook

Twitter

YouTube

LinkedIn

Yelp


Monday – September 16, 2019

Foreclosure activity increased month-over-month from July to August but declined from a year ago. ATTOM Data Solutions reports that that lenders started the foreclosure process for the first time on 27,886 property owners in August, up 7% from July though down 15% from a year ago. Across the nation, one in every 2,554 properties received a foreclosure filing last month.

It’s Fed week! Fed members kick off their two-day Fed meeting on Tuesday and end Wednesday at 2:00 p.m. ET with the release of the monetary policy statement. The statement will be accompanied by the Summary of Economic Projections. In addition, Fed Chair Powell will hold a press conference at 2:30 p.m. ET. It is expected that the short-term Fed Funds Rate will be cut from 2.25% to 2.0%.

Tensions in the Mideast ramped up over the weekend after two Saudi Arabian oil refineries were attacked by drones. The price of West Texas Intermediate oil has gushed higher by $6 to $61/barrel. Sources are pointing to Iran as the culprit behind the attacks. Gas prices at US pumps will most likely inch higher during the week. However, with an overabundance of oil flowing through global pipelines, this event could quickly burn out.

Courtesy of Mortgage Market Guide

-CHECK US OUT ON SOCIAL-

Facebook

Twitter

YouTube

LinkedIn

Yelp