Daily Rate Update: September 3rd-6th

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Friday – September 6, 2019

Job growth slowed a bit in August though the overall market is still in good shape. The Bureau of Labor Statistics reports that non-farm payrolls rose 130,000 last month, below the 171,000 expected while June and July were revised lower by a total of 20,000. Within the report, the unemployment rate remained at 3.7% while the participation rate, or share of working people in the labor force, rose to 63.2%, up a 1/2 a point in the past year. Lastly, average hourly earnings rose 0.4% versus the 0.2% expected while annual wage growth increased 3.2%. Both were positive numbers.

A recent survey by the Bank of America shows that nearly all homebuyers surveyed are happy they stopped renting. The B of A report read that 93% percent of people who have bought a home are happier because of it, and 83% say they wouldn’t go back to renting. Most credit their happiness to an emotional attachment to their home, as well as the improved lifestyle and variety of hobbies that come with owning. The survey went to reveal that a staggering 88% of homeowners agree that buying a home is the best decision they have ever made, and 79% believe that owning a home has changed them for the better.

Courtesy of Mortgage Market Guide

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Thursday – September 5, 2019

Labor market news continued strong today with private payroll growth surpassing expectations in August. ADP Private Payrolls rose 195,000 last month, well above the 150,000 expected while July was revised lower to 142,000 from 156,000. It was the largest gain in four months. Within the numbers it showed that small business hiring rose 66,000, a four-month high, midsized added 77,000 while large companies added 52,000. The data signals that the market remains strong despite a slowdown in manufacturing.

Home loan rates continued to decline in the latest survey though they may have edged up since the survey numbers were collected. Freddie Mac reports that the 30-year fixed-rate mortgage fell nine basis points to 3.49% with an average 0.5 in points and fees. Freddie Mac says, “Going forward, the combination of low mortgage rates, a tight labor market, and strong consumer confidence will offset declining business sentiment. These factors will set the stage for continued improvement in the housing market heading into the fall.”

A recent rental report showed prices increased modestly in September nationally, though prices edged lower in the three top markets that include New York, San Francisco and Boston. Rental prices rose 0.1% for a one-bedroom and 0.5% for a two-bedroom, according the Zumper’s National Rent Report. The average median cost for a one-bedroom is at $1,250 while a two-bedroom rose to $1,493. The Zumper National Rent Report analyzes rental data from over 1 million active listings across the country.

Courtesy of Mortgage Market Guide

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Wednesday – September 4, 2019

Mortgage rates edged lower in the latest week and are now at three-year lows, reports the Mortgage Bankers Association (MBA). The 30-year fixed-rate mortgage fell seven basis points in the week ended August 30, 2019 to 3.87% with points decreasing to 0.34 from 0.38. In addition, the Market Composite Index, a measure of total mortgage loan application volume, decreased 3.1%, while the Refinance Index fell 7% with the Purchase Index up 3.6%. The survey covers over 75% of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.

US stocks are bouncing back today after the Dow Jones Industrial Average suffered a 300-point loss yesterday. Simmering tensions in Hong Kong, strong economic data out of China and the People’s Bank of China hinting at additional stimulus to stimulate its economy are giving global stocks a boost. The Dow hit an all-time high of 27,359 back on July 15, 2019 and is currently at 26,282 after suffering losses in August.

The September Federal Open Market Committee meeting will take place next week on the 17th and 18th. It is expected that the benchmark Fed Funds Rate (FFR) will be cut by twenty-five basis points to 2.0%. The FFR is the interest rate at which banks or other depository institutions lend money to each other, usually on an overnight basis. Banks set their prime rates to the FFR by adding three points to the current FFR. The current FFR is 2.25% and by adding three points, the current prime rate is 5.25%. The prime rate is the interest rate that banks charge their preferred customers, or those with the highest credit ratings. It is used to determine borrowing costs on many short-term loan products.

Courtesy of Mortgage Market Guide

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Tuesday – September 3, 2019

CoreLogic reports that home prices rose 3.6% from July 2018 to July 2019 while there was a 0.5% increase month-over-month from June to July. Home prices are expected to increase by 5.4% from July 2019 to July 2020. “Sales of new and existing homes this July were up from a year ago, supported by low mortgage rates and rising family income,” said Dr. Frank Nothaft, chief economist at CoreLogic. “With the for-sale inventory remaining low in many markets, the pick-up in buying has nudged price growth up. If low interest rates and rising income continue, then we expect home-price growth will strengthen over the coming year.”

National manufacturing across the US contracted in August due in part to the trade issues between the US and China. The ISM Manufacturing Index fell to 49.1 last month, down from 51.2 in July. A reading above 50 indicates that the manufacturing economy is generally expanding; below 50 indicates that it is generally contracting. The 49.1 number was the lowest reading since January 2016, when the index registered 48. Within the report, it showed that the employment component also fell into contraction, after 34 consecutive months of employment growth.

US stocks are plunging on the first day of the month and the kickoff to the fourth quarter of 2019 on continued trade woes. New tariffs went into effect September 1 on $110 billion worth of imports from China into the US while the two sides are struggling to decide on when to schedule the September talks. The closely watched S&P 500 stock index fell 1.8% in August, for only the second monthly decline in 2019. The losses came in response to the trade issues along with inverted yield curve/recession fears.

Courtesy of Mortgage Market Guide

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