Tucson Mortgages Home Loan News 8-21-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review:  week of August 14, 2017
  • Economic Calendar – week of August 21, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

Volatility returned to the stock market this past week as geopolitical events exerted noticeable influence on traders.  Concerns about a potential military conflict with North Korea subsided to spark a rally in stocks last Monday that led the S&P 500 Index to record its largest one-day gain in almost four months.  However, these gains were entirely erased on Thursday with the S&P 500 Index’s largest decline in three months following protestor violence in Charlottesville, VA in addition to new terrorist attacks in Spain.  Investors are becoming increasingly worried that President Trump’s ability to move forward on economic and tax policy is being derailed by the constant criticisms voiced by opposing politicians and most of the so-called mainstream media.

The week’s economic data were mixed.  Retail Sales were reported stronger than expected and despite numerous negative headlines for retailers over the past several months, July’s Retail Sales were up 0.6% versus a +0.3% forecast.  Further, revisions in the data showed a +0.3% increase in June rather than the originally reported -0.2% decline.  For the trailing 12-month period, Retail Sales were 4.2% higher and near the five-year average.

In housing, July’s new Housing Starts and Building Permits were both more than 4% lower than June’s numbers with Starts declining by 4.8% to a seasonally adjusted annual rate of 1.155 million versus 1.217 million expected.  Permits fell by 4.1% to a seasonally adjusted annual rate of 1.223 million compared to expectations for 1.247 million.  Although Housing Starts were 5.6% lower than July of last year, the total for the first seven months of 2017 are about 2.5% ahead of 2016’s pace.  Also, July’s home builder sentiment was four points higher, recovering from an eight-month low in June.

As for mortgages, mortgage application volume increased minimally during the week ending August 11.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) rose 0.1%.  The seasonally adjusted Purchase Index declined 2.0% from the prior week while the Refinance Index increased 2%.  

Overall, the refinance portion of mortgage activity increased to 47.8% of total applications from 46.7% in the prior week.  The adjustable-rate mortgage share of activity decreased to 6.6% of total applications from 6.8%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance declined to 4.12% from 4.14% with points unchanged at 0.38.

Following this past week’s political turmoil and economic news, the Fed Funds futures market now points to either the May or June 2018 FOMC meetings as the most likely time for the next rate-hike announcement with an implied probability of 50.4% for May and 59.9% for June.  Last week, the market expected the next rate hike to occur in June 2018 with an implied probability of 57.5%.

For the week, the FNMA 3.5% coupon bond lost 1.6 basis points to close at $103.281.  The 10-year Treasury yield increased 0.69 basis points to end at 2.1974%.  The major stock indexes ended the week lower.

The Dow Jones Industrial Average fell 183.81 points to close at 21,674.51.  The NASDAQ Composite Index dropped 40.03 points to close at 6,216.53 and the S&P 500 Index lost 15.77 points to close at 2,425.55.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 9.67%, the NASDAQ Composite Index has advanced 15.48%, and the S&P 500 Index has risen 8.34%.

This past week, the national average 30-year mortgage rate fell to 3.94% from 3.96%; the 15-year mortgage rate decreased to 3.22% from 3.24%; the 5/1 ARM mortgage rate was unchanged at 3.17% and the FHA 30-year rate was also unchanged at 3.60%.  Jumbo 30-year rates decreased to 4.22% from 4.24%.

Economic Calendar – for the Week of August 21, 2017

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Mortgage Rate Forecast with Chart – FNMA 30-Year 3.5% Coupon Bond

The FNMA 30-year 3.5% coupon bond ($103.28, -1.60 bp) traded within a 42 basis point range between a weekly intraday low of $103.00 on Tuesday and Wednesday and a weekly intraday high of $103.42 on Friday before closing the week slightly lower at $103.28 on Friday.

Following a week of increased volatility in the financial markets the bond ended the week very nearly where it began with a loss of less than two basis points.  Technically, not much has changed since the last newsletter.  The next level of overhead resistance remains at $103.53.  It will take a further stock market correction for the bond to reach this target as the bond continues to be extremely “overbought” and susceptible to a turn lower.  With an expansion in the range between support and resistance as identified in the chart below, the bond could continue to be range-bound in the coming week.  Mortgage rates should hold at relatively stable levels in the coming.

 

Tucson Mortgages Home Loan News 8-14-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review:  week of August 7, 2017
  • Economic Calendar – week of August 14, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

It was risk-off trading this past week for stocks with the major indexes negatively influenced by some disappointing corporate earnings reports in the retail sector, and threatening rhetoric between North Korea and the U.S. that increased concerns about a possible military conflict on the Korean Peninsula.  As a result, the bond and precious metals markets received capital inflows with 10-year Treasury yields falling to 2.19%.

On Friday, the Bureau of Labor Statistics reported the latest inflation readings as measured by the Consumer Price Index (CPI) rose by only 0.1% in July when most economists were forecasting an increase of 0.2%.  The Core CPI, which strips out volatile food and energy costs, also was less than consensus expectations of 0.1% versus a forecast of 0.2%.  Over the past 12 months, consumer prices have increased 1.7%, which remains below the Federal Reserve’s 2% inflation target.  The subdued CPI data reduced the likelihood of a Fed rate hike with the Fed funds futures now showing just a 37.4% probability of a rate hike at the December FOMC meeting followed by probabilities of 38.8% and 45.7% for the January and March FOMC meetings respectively.

In housing, Mortgage application volume increased during the week ending August 4.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) rose 3.0%.  The seasonally adjusted Purchase Index gained 1.0% from the prior week while the Refinance Index increased 5%.  

Overall, the refinance portion of mortgage activity increased to 46.7% of total applications from 45.5% in the prior week.  The adjustable-rate mortgage share of activity increased to 6.8% of total applications from 6.6%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance declined to 4.14% from 4.17% with points increasing to 0.38 from 0.36.

For the week, the FNMA 3.5% coupon bond gained 12.5 basis points to close at $103.297.  The 10-year Treasury yield decreased 7.32 basis points to end at 2.1905%.  The major stock indexes ended the week lower.

The Dow Jones Industrial Average fell 234.49 points to close at 21,858.32.  The NASDAQ Composite Index dropped 95.00 points to close at 6,256.56 and the S&P 500 Index lost 35.51 points to close at 2,441.32.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 10.60%, the NASDAQ Composite Index has advanced 16.23%, and the S&P 500 Index has risen 9.04%.

This past week, the national average 30-year mortgage rate fell to 3.96% from 3.99%; the 15-year mortgage rate decreased to 3.24% from 3.29%; the 5/1 ARM mortgage rate decreased to 3.17% from 3.18%; and the FHA 30-year rate fell to 3.60% from 3.65%.  Jumbo 30-year rates decreased to 4.24% from 4.28%.

Economic Calendar – for the Week of August 14, 2017

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Mortgage Rate Forecast with Chart – FNMA 30-Year 3.5% Coupon Bond

The FNMA 30-year 3.5% coupon bond ($103.297, +25.0 bp) traded within a 44 basis point range between a weekly intraday low of $103.03 on Tuesday and a weekly intraday high of $103.47 on Thursday before closing the week higher at $103.297 on Friday.

The FNMA 30-year 3.5% coupon bond was able to move above resistance at $103.20 during the week on a flight to safety trade and this level now becomes nearest technical support.  The next level of overhead resistance is found at $103.53, and it will likely take a continuing decline in the stock market for the bond to reach this target as the bond remains extremely “overbought” and susceptible to a turn lower.  However, the bond could become range-bound between support and resistance as identified in the chart below and remain “overbought” for an extended period of time.  Regardless, mortgage rates should hold at relatively stable levels in the coming week unless there is a significant sell-off in stocks which would drive bond prices higher and yields and rates lower.

 

Tucson Mortgages Home Loan News 8-7-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review:  week of July 31, 2017
  • Economic Calendar – week of August 7, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

Although the stock market once again ended the week in a “mixed” fashion, the Dow Jones Industrial Average continued its march higher by setting consecutive new all-time highs during the week.  In fact, the Dow has set new all-time highs during each of the last eight trading days while crossing another 1,000 point milestone at 22,000 to close the week at 22,092.81.  Bond prices also gained some ground to send Treasury yields marginally lower.

The financial markets continue to be buoyed by mostly favorable economic data.  This past week Personal Income was reported unchanged at 0.0% for July versus a consensus forecast of a 0.3% increase, while Personal (consumer) Spending ticked higher by 0.1% in June after an upwardly revised 0.2% gain in May.  On the inflation front, the Core Personal Consumption Expenditures (PCE) Price Index, which excludes food and energy, increased by 0.1% in June to match expectations while the 12-month reading recorded a 1.5% increase.

Although the July ADP Employment data was weaker than expected with a reading of 178,000 new jobs created compared to 187,000 predicted by economists, the Employment Situation Summary (Jobs Report) for July was better than economic forecasts.  The Labor Department reported Non-farm Payrolls at 209,000, which was higher than the 181,000 expected.  The Unemployment Rate fell back to 4.3% from June’s reading of 4.4% to matching the reading for May, its lowest rate in 16 years.  Average Hourly Earnings rose 0.3% or by 9 cents to $26.36 to match the consensus forecast and is now up by 2.5% on the year.  Overall, both stock and bond participants liked what they saw in the jobs data with the strong job creation while wage inflation remained restrained.  The jobs data resulted in a slight increase in rate hike expectations for the Fed’s December FOMC meeting with the fed funds futures market now showing a 48.0% likelihood of a rate hike in December.  This is up from last Thursday’s closing reading of 46.8%.

In housing, the National Association of Realtors (NAR) reported their Pending Home Sales Index (PHSI) snapped a three month losing streak by posting a 1.5% gain in June to reach a reading of 110.2, up from May’s level of 108.6.  Lawrence Yun, chief NAR economist, remarked “The first half of 2017 ended with a nearly identical number of contract signings as one year ago, even as the economy added 2.2 million net new jobs.  “Market conditions in many areas continue to be fast-paced, with few properties to choose from, which are forcing buyers to act almost immediately on an available home that fits their criteria.  Low supply is an ongoing issue holding back activity. Housing inventory declined last month and is a staggering 7.1% lower than a year ago.  It appears the ongoing run-up in price growth in many areas and less homes for sale at bargain prices are forcing some investors to step away from the market.  Fewer investors paying in cash is good news as it could mean a little less competition for the homes first-time buyers can afford.”

Mortgage application volume decreased during the week ending July 28.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) fell 2.8%.  The seasonally adjusted Purchase Index fell 2.0% from the prior week while the Refinance Index decreased 4%.  

Overall, the refinance portion of mortgage activity decreased to 45.5% of total applications from 46.0% in the prior week.  The adjustable-rate mortgage share of activity decreased to 6.6% of total applications from 6.8%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance were unchanged at 4.17% with points decreasing to 0.36 from 0.40.

For the week, the FNMA 3.5% coupon bond gained 25.0 basis points to close at $103.17.  The 10-year Treasury yield decreased 2.69 basis points to end at 2.2637%.  Stocks ended the week mixed with the NASDAQ Composite Index edging lower while the S&P 500 Index and Dow Jones Industrial Average moved higher.

The Dow Jones Industrial Average gained 262.50 points to close at 22,092.81.  The NASDAQ Composite Index fell 23.12 points to close at 6,351.56 and the S&P 500 Index added 4.73 points to close at 2,476.83.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 11.96%, the NASDAQ Composite Index has advanced 19.13%, and the S&P 500 Index has risen 11.67%.

This past week, the national average 30-year mortgage rate fell to 3.99% from 4.04%; the 15-year mortgage rate decreased to 3.29% from 3.33%; the 5/1 ARM mortgage rate increased to 3.18% from 3.17%; and the FHA 30-year rate fell to 3.65% from 3.75%.  Jumbo 30-year rates decreased to 4.28% from 4.33%.

Economic Calendar – for the Week of August 8, 2017

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Mortgage Rate Forecast with Chart – FNMA 30-Year 3.5% Coupon Bond

The FNMA 30-year 3.5% coupon bond ($103.17, +25.0 bp) traded within a 51.5 basis point range between a weekly intraday low of $102.81 on Tuesday and a weekly intraday high of $103.328 on Thursday before closing the week higher at $103.17 on Friday.

Bond prices ended notably higher on Tuesday and Thursday before giving back some of the gains on Friday in reaction to the Jobs Report.  Still, the bond was able to break above a couple of resistance levels before falling back below resistance at the $103.20 level on Friday.  Friday’s reactionary trading resulted in a Hanging Man candlestick.  The Hanging Man is a bearish signal appearing in an uptrend and is a warning of a potential trend reversal lower.  However, the long lower shadow or wick of the Hanging Man is also a potentially a bullish signal, indicating that demand for the bond forced the price into the upper third of the price range for the day.  Therefore, confirmation of a trend reversal should be watched for.  Confirmation would be Monday’s candlestick closing below the real body of Friday’s Hanging Man candlestick.

Also, the bond is showing a sell signal from a negative stochastic crossover while extremely “overbought.”  This suggests the next move is lower toward support, and we could see a slight deterioration in mortgage rates this coming week.

 

Tucson Mortgages Home Loan News 7-31-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review:  week of July 24, 2017
  • Economic Calendar – week of August 1, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market ended the week “mixed” although the Dow Jones Industrial Average, the NASDAQ Composite Index, and the S&P 500 Index all reached new all-time highs during the week.  Bond prices ended the week a little lower with yields modestly rising.

Although there were several significant economic reports released during the week including the latest monetary policy statement from the Federal Reserve (FOMC), the financial markets largely shrugged off these news events.  The Fed’s latest policy directive kept the fed funds target range between 1.00% and 1.25% as widely expected.

More importantly though, the Fed signaled its intentions of beginning to reduce its bloated balance sheet by reducing its holdings of mortgage-backed securities and longer-dated Treasury notes “relatively soon.”  Most analysts took this to mean the Fed would begin this process in September or October resulting in upward pressure on long-term interest rates.  Anyone in the real estate market looking to buy a home should be aware of this as it appears mortgage rates may be heading higher in the not too distant future.

As a result of the Fed’s FOMC meeting last Wednesday, the fed funds futures market suggests the January FOMC meeting as next most likely time for another 25 basis point rate-hike announcement with an implied probability of 50.1%.

The week’s economic data were “mixed” with July Consumer Confidence reaching a higher than forecast reading of 121.1 versus 116.8 expected.  Manufacturing was less encouraging as June Durable Goods Orders excluding transportation came in at 0.2% when economists were expecting a reading of 0.5%.  Moreover, the first release of 2nd Quarter GDP disappointed with an annualized economic growth rate of 2.6% when economists had predicted an expansion of 2.8%.

In housing, the Federal Housing Finance Agency (FHFA) reported their seasonally adjusted monthly House Price Index (HPI) increased 0.4% in May with housing prices up by 6.9% on an annual basis.  Additionally, the S&P CoreLogic Case-Shiller U.S. National Home Price Index increased 5.6% in May to match the same increase as April.  

David Blitzer, S&P Dow Jones Indices managing director and chairman of the index committee, remarked “Home prices continue to climb and outpace both inflation and wages.  Housing is not repeating the bubble period of 2000 to 2006: price increases vary across the country unlike the earlier period when rising prices were almost universal; the number of homes sold annually is 20% less today than in the earlier period and the months’ supply is declining, not surging.  The small supply of homes for sale, at only about four months’ worth, is one cause of rising prices.  New home construction, higher than during the recession but still low, is another factor in rising prices.”

Meanwhile, Existing Home Sales fell 1.8% in June to a seasonally adjusted annual rate of 5.52 million versus 5.58 million forecast, largely due to low inventories.  The median existing home price increased 6.5% to $263,800, the 64th straight month of year-over-year gains.  The homes for sale inventory is now 7.1% lower than the same period a year ago with unsold inventory at a 4.3-month supply at the current sales rate.  First-time buyers were 32% of sales in June, down from 33% in May.

Furthermore, New Home Sales for June were reported at a seasonally adjusted annual rate of 610,000 to match the consensus forecast.  The median sales price fell 3.4% to $310,800 for the month, but average sales price rose 4.2% to $379,500.  The new homes for sale inventory now stands at a 5.4-months’ supply with the June sales rate with homes priced under $400,000 accounting for 69% of new homes sold during the month of June.

Mortgage application volume increased during the week ending July 21.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) gained 0.4%.  The seasonally adjusted Purchase Index fell 2.0% from the prior week while the Refinance Index increased 3%.  

Overall, the refinance portion of mortgage activity increased to 46.0% of total applications from 44.7% in the prior week.  The adjustable-rate mortgage share of activity increased to 6.8% of total applications from 6.7%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance fell to 4.17% from 4.22% with points increasing to 0.40 from 0.31.

For the week, the FNMA 3.5% coupon bond lost 10.9 basis points to close at $102.92.  The 10-year Treasury yield increased 5.31 basis points to end at 2.2906%.  Stocks ended the week mixed with the NASDAQ and S&P 500 indexes slipping marginally lower while the Dow Jones Industrial Average marched higher.  However, all three of these major indexes reached new all-time highs during the week.

The Dow Jones Industrial Average rose 250.24 points to close at 21,830.31.  The NASDAQ Composite Index dropped 13.07 points to close at 6,374.68 and the S&P 500 Index lost 0.44 points to close at 2,472.10.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 10.46%, the NASDAQ Composite Index has advanced 18.42%, and the S&P 500 Index has risen 10.42%.

This past week, the national average 30-year mortgage rate rose to 4.04% from 4.00%; the 15-year mortgage rate increased to 3.33% from 3.29%; the 5/1 ARM mortgage rate decreased to 3.17% from 3.18%; and the FHA 30-year rate rose to 3.75% from 3.65%.  Jumbo 30-year rates increased to 4.33% from 4.29%.

Economic Calendar – for the Week of August 1, 2017

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Mortgage Rate Forecast with Chart – FNMA 30-Year 3.5% Coupon Bond

The FNMA 30-year 3.5% coupon bond ($102.92, -10.9 bp) traded within a 53 basis point range between a weekly intraday low of $102.50 on Wednesday and a weekly intraday high of $103.03 on Monday before closing the week lower at $102.92 on Friday.

Bond prices fell Monday and Tuesday before bouncing back the remainder of the week.  The initial move lower sent the bond below several close-by support levels that were reclaimed by week’s end.  A new buy signal was triggered by Friday’s trading action, and the bond is not yet overbought, so we could see a test of overhead resistance at the 50-day moving average.  A move above this level should result in a slight improvement in mortgage rates, but if the bond is turned away from this level, we could see a slight deterioration in rates.  Market direction may not be fully determined until Friday with the arrival of the week’s most significant economic report – the July Employment Situation Summary (Jobs) report.

 

 

Tucson Mortgages Home Loan News 7-24-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of July 17, 2017
  • Economic Calendar – week of July 24, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market continued its advance with the NASDAQ Composite and S&P 500 Indexes reaching new all-time highs during the week while the Dow Jones Industrial Average slipped slightly lower.  Favorable earnings reports among technology and internet companies helped to boost the NASDAQ while a rally in crude oil prices aided energy sector stocks.

The bond market enjoyed moderate price increases with falling yields despite some favorable economic reports.  Initial jobless claims fell by 15,000 during the week ending July 15 to 233,000 to reach their lowest level in two months, suggesting continuing strength in the labor market.  Also, there were a couple of strong reports from the housing sector including the latest report on Housing Starts and Building Permits.

The Commerce Department surprised economists by reporting a rebound in homebuilding during June as Housing Starts surged 8.3% to a seasonally adjusted annual rate of 1.215 million units, the highest level since February.  Both single-family and multi-family construction increased.  Economists had forecast an increase in June Housing Starts to 1.160 million units from May’s upwardly revised reading of 1.122 million.  Although this was a welcome sign after seeing three straight months of declining Starts, construction activity remains constrained by rising lumber prices and land and labor shortages.  Meanwhile, Building Permits increased 7.4% to a seasonally adjusted annual rate of 1.254 million to exceed the consensus forecast of 1.196 million.

Mortgage application volume increased during the week ending July 14.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) gained 6.3%.  The seasonally adjusted Purchase Index increased 1.0% from the prior week while the Refinance Index increased 13%.

Overall, the refinance portion of mortgage activity increased to 44.7% of total applications from 42.1% in the prior week.  The adjustable-rate mortgage share of activity was unchanged at 6.7% of total applications.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance remained unchanged at 4.22% with points decreasing to 0.31 from 0.40.

For the week, the FNMA 3.5% coupon bond gained 40.6 basis points to close at $103.03.  The 10-year Treasury yield decreased 9.44 basis points to end at 2.2375%.  Stocks ended the week mixed with the NASDAQ and S&P 500 indexes modestly higher while the Dow slipped slightly lower.

The Dow Jones Industrial Average fell 57.67 points to close at 21,580.07.  The NASDAQ Composite Index advanced 75.28 points to close at 6,387.75 and the S&P 500 Index gained 13.27 points to close at 2,472.54.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 9.20%, the NASDAQ Composite Index has advanced 18.66%, and the S&P 500 Index has risen 10.44%.

This past week, the national average 30-year mortgage rate fell to 4.00% from 4.06%; the 15-year mortgage rate decreased to 3.29% from 3.34%; the 5/1 ARM mortgage rate decreased to 3.18% from 3.22%; and the FHA 30-year rate fell to 3.65% from 3.75%.  Jumbo 30-year rates decreased to 4.29% from 4.35%.

Economic Calendar – for the Week of July 24, 2017

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Mortgage Rate Forecast with Chart – FNMA 30-Year 3.5% Coupon Bond

The FNMA 30-year 3.5% coupon bond ($103.03, +40.6 bp) traded within a 48 basis point range between a weekly intraday low of $102.59 on Monday and a weekly intraday high of $103.08 on Friday before closing the week higher at $103.03.

Bond prices rallied during the week to move above overhead resistance found at the 38.2% Fibonacci retracement level (102.806); the 200-day moving average (102.83); the 25-day moving average (102.84); and the 50-day moving average (102.92).  These levels now revert back to support levels while resistance levels are now found at 103.20 and 103.53.  The chart suggests the bond can continue to rise higher toward resistance as the slow stochastic oscillator shows the bond is not yet overbought.  Should this scenario play out in the coming week as the chart suggests, it should lead to a slight improvement in mortgage rates.

 

Tucson Mortgages Home Loan News 7-17-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of July 10, 2017
  • Economic Calendar – week of July 17, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market resumed its bullish ways to end the week higher on firming oil prices and softer than anticipated inflation news.  The feeble inflation data coupled with disappointing economic news also helped to push Treasury prices higher and yields lower for the week.

Retail Sales for June fell for the second straight month, coming in below expectations at -0.2%. Economists had forecast June sales growth of 0.1%.  This weaker consumer spending will also have a negative influence on upcoming GDP models for the second quarter.  The Atlanta Fed’s GDPNow model forecast moved lower on Friday to 2.4% from 2.6% on Tuesday following the Retail Sales report.  Consumer sentiment is also sliding lower with the preliminary July reading of the University of Michigan’s Consumer Sentiment Index falling to 93.1 when analysts were expecting 95.1.

Core inflation at both the producer and consumer levels was reported below consensus forecasts at 0.1%.  Economists had expected core inflation at 0.2% for both.  This may cause the Federal Reserve to think twice about raising interest rates in December when Fed watchers next expect a rate hike.  In fact, Fed Chair Janet Yellen during her Wednesday testimony before the House Financial Services Committee referred to the recent weakness seen in inflation data by stating “monetary policy is not on a preset course” and “the Committee will be monitoring inflation developments closely in the months ahead.”  Also, Dallas Fed President and FOMC voting member Robert Kaplan stated he wants “greater evidence” of rising inflation before hiking rates again.

There were no economic reports from the housing sector other than the latest mortgage application data.  Application volume decreased during the week ending July 7.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) fell 7.4%.  The seasonally adjusted Purchase Index decreased 3.0% from the prior week while the Refinance Index decreased 13% to its lowest level since last January.

Overall, the refinance portion of mortgage activity decreased to 42.1% of total applications from 44.9% in the prior week.  The adjustable-rate mortgage share of activity decreased to 6.7% of total applications from 7.2%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased to 4.22% from 4.20% with points increasing to 0.40 from 0.31.

For the week, the FNMA 3.5% coupon bond gained 21.9 basis points to close at $102.63.  The 10-year Treasury yield decreased 5.37 basis points to end at 2.3319%.  Stocks ended the week moderately higher.

The Dow Jones Industrial Average rose 223.40 points to close at 21,637.74.  The NASDAQ Composite Index advanced 159.39 points to close at 6,312.47 and the S&P 500 Index gained 34.09 points to close at 2,459.27.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 9.49%, the NASDAQ Composite Index has advanced 17.26%, and the S&P 500 Index has risen 9.85%.

This past week, the national average 30-year mortgage rate fell to 4.06% from 4.13%; the 15-year mortgage rate decreased to 3.34% from 3.38%; the 5/1 ARM mortgage rate increased to 3.22% from 3.20%; and the FHA 30-year rate was unchanged at 3.75%.  Jumbo 30-year rates decreased to 4.35% from 4.40%.

Economic Calendar – for the Week of July 17, 2017

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Mortgage Rate Forecast with Chart – FNMA 30-Year 3.5% Coupon Bond

The FNMA 30-year 3.5% coupon bond ($102.63, +21.9 bp) traded within a 56 basis point range between a weekly intraday low of $102.36 on Monday and a weekly intraday high of $102.92 on Friday before closing the week higher at $102.63.

Bond prices rallied on Wednesday and then attempted a substantial rally on Friday before selling off hard after prices were unable to break above a dual layer of overhead resistance.  Friday’s trading action resulted in a “shooting star” candlestick – a potential bearish reversal signal.  This suggests the bond will likely test technical support before attempting any move higher.  Contrary to this signal is the presence of a positive stochastic crossover buy signal from an oversold position.

The bond is poised to continue a little lower for a test of support at the key 100-day moving average.  If this level holds, mortgage rates should hold steady and may improve slightly in the coming week.  However, if the 100-day moving average is breached to the downside, bond prices would move lower resulting slightly worse mortgage rates.

 

Tucson Mortgages Home Loan News 7-10-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of July 3, 2017
  • Economic Calendar – week of July 10, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market ended the week modestly higher while most bond prices slid lower (yields higher) for seven out of the last eight trading days.  Treasury bond yields rose after Wednesday’s release of the minutes from the Federal Reserve’s June meeting failed to diminish investor expectations that the Fed will announce a third rate hike later this year.  Also weighing on bond prices were the minutes from the recent European Central Bank (ECB) policy meeting showing ECB officials discussing removal of their monetary easing preferences.  Furthermore, the financial markets acted negatively in response to North Korea’s successful intercontinental ballistic missile test and President Trump’s warning that “pretty severe things” could happen as a result of the test.

In economic news, Friday’s release showing the economy added more new jobs than anticipated helped the stock market to rebound at the expense of Treasury prices.  The Labor Department’s June Employment Situation Report revealed nonfarm payrolls increased by 222,000 versus a consensus forecast of 173,000.  Additionally, the previous two months’ readings were upwardly revised up by a net 47,000 jobs.  However, Average Hourly Earnings moved just 0.2% higher when economists were expecting a 0.3% increase suggesting wage inflation is not accelerating.

In housing, financial services company CoreLogic reported home prices increased 1.2% in May from April and 6.6% on a year-over-year basis.  Furthermore, CoreLogic is forecasting home prices will increase by 5.3% on a year-over-year basis from May 2017 to May 2018 while increasing a projected 0.9% from May 2017 to June 2017 on a month-over-month basis.  Dr. Frank Nothaft, chief economist for CoreLogic, remarked “The market remained robust with home sales and prices continuing to increase steadily in May.  While the market is consistently generating home price growth, sales activity is being hindered by a lack of inventory across many markets. This tight inventory is also impacting the rental market where overall single-family rent inflation was 3.1% on a year-over-year basis in May of this year compared with May of last year. Rents in the affordable single-family rental segment increased 4.7% over the same time, well above the pace of overall inflation.”

CoreLogic President and CEO Frank Martell commented “For current homeowners, the strong run-up in prices has boosted home equity and, in some cases, spending.  For renters and potential first-time homebuyers, it is not such a pretty picture.  With price appreciation and rental inflation outstripping income growth, affordability is destined to become a bigger issue in most markets.”

As for mortgage activity, application volume increased during the week ending June 30.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) rose 1.4%.  The seasonally adjusted Purchase Index increased 3.0% from the prior week while the Refinance Index decreased 0.4%.

Overall, the refinance portion of mortgage activity decreased to 44.9% total applications from 45.6% in the prior week.  The adjustable-rate mortgage share of activity increased to 7.2% of total applications from 7.0%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased to its highest level since May of this year at 4.20% from 4.13% with points decreasing to 0.31 from 0.32.

For the week, the FNMA 3.5% coupon bond lost 26.6 basis points to close at $102.406.  The 10-year Treasury yield increased 8.19 basis points to end at 2.3856%.  Stocks ended the week marginally higher.

The Dow Jones Industrial Average rose 64.71 points to close at 21,414.34.  The NASDAQ Composite Index advanced 12.66 points to close at 6,153.08 and the S&P 500 Index gained 1.77 points to close at 2,425.18.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 8.36%, the NASDAQ Composite Index has advanced 14.30%, and the S&P 500 Index has risen 8.32%.

This past week, the national average 30-year mortgage rate rose to 4.13% from 4.07%; the 15-year mortgage rate increased to 3.38% from 3.32%; the 5/1 ARM mortgage rate increased to 3.20% from 3.16%; and the FHA 30-year rate was unchanged at 3.75%.  Jumbo 30-year rates increased to 4.40% from 4.33%.

Economic Calendar – for the Week of July 3, 2017

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Mortgage Rate Forecast with Chart – FNMA 30-Year 3.5% Coupon Bond

The FNMA 30-year 3.5% coupon bond ($102.41, -26.6 bp) traded within a narrower 44 basis point range between a weekly intraday high of $102.73 on Monday and a weekly intraday low of $102.29 on Friday before closing the week lower at $102.41.

Bond prices have fallen over the past two weeks as a result of mixed economic data, the negative influence from comments made by central bank officials both here and abroad, and volatility in oil prices that impact the holders of energy-related debt.  As a result, mortgage bond prices breached technical support at the 100-day moving average and this level now reverts to resistance.  The next level of support is found at $102.22.  The bond continues to be extremely “oversold” and susceptible to a rebound higher from support levels last seen during May 9-11.  The bond may continue a little lower to bounce off of support levels before turning higher and may become range-bound between the nearest support and resistance levels.  As a result, mortgage rates should remain fairly stable and there shouldn’t be more than a five or six basis point swing in either direction in the coming week based upon what the chart is currently showing.

 

Tucson Mortgages Home Loan News 7-3-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of June 26, 2017
  • Economic Calendar – week of July 3, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

Both the stock and bond markets moved lower while displaying greater volatility and increased trading volumes ahead of an approaching 4th of July holiday-shortened trading week.  Technology stocks in particular came under selling pressure triggered by news the European Union was fining Alphabet (Google) $2.7 billion for supposed antitrust violations.  An additional negative influence on the stock market stemmed from news the U.S. Senate was going to postpone a vote on health care reform resulting in a delay for a bill to overhaul taxes.

Meanwhile, the bond market was punished by comments made by European Central Bank President Mario Draghi on Tuesday suggesting higher eurozone inflation and economic growth will lead to higher interest rates in the not too distant future.  Global bond markets reacted very negatively to Draghi’s comments with yields jumping higher during the remainder of the week.

As far as when the next rate hike may occur here in the U.S., the fed funds futures market is suggesting with an implied probability of 54.4% that the December FOMC meeting on December 13 will be the most likely time for the next rate-hike announcement.

In housing, strong levels of home price appreciation continue to be seen even though the latest Case-Shiller Home Price Index showed slight moderation in the 20-City Composite Index for April.  The 20-City Composite Index showed home prices increased 5.7% on a year-over-year basis which was lower than the prior month’s reading of 5.9%, while the broader National Index showed home prices increasing 5.5%, down from 5.7% in March.  After seasonal adjustment however, the National Index recorded a 0.2% month-over-month increase while the 20-City Composite posted a 0.3% month-over-month increase.

Mortgage application volume decreased during the week ending June 23.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) fell 6.2%.  The seasonally adjusted Purchase Index decreased 4.0% from the prior week while the Refinance Index decreased 9.0%.

Overall, the refinance portion of mortgage activity decreased to 45.6% total applications from 46.6% in the prior week.  The adjustable-rate mortgage share of activity decreased to 7.0% of total applications.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance was unchanged at 4.13% with points decreasing to 0.32 from 0.34.

The National Association of Realtors (NAR) reported their Pending Home Sales Index for May slipped 0.8% to record its third-straight monthly decline.  The index forecasts future sales by tracking real estate transactions in which a contract has been signed, but the deal has not yet closed.  The index dropped to 108.5 in May and the April level was revised lower to -1.7% from an initially reported -1.3%. The consensus forecast had been for a 0.5% increase.  NAR chief economist Lawrence Yun noted “Buyer interest is solid, but there is just not enough supply to satisfy demand.  Prospective buyers are being sidelined by both limited choices and home prices that are climbing too fast.”

For the week, the FNMA 3.5% coupon bond lost 57.8 basis points to close at $102.67.  The 10-year Treasury yield increased 15.97 basis points to end at 2.3037%.  Stocks ended the week lower.

The Dow Jones Industrial Average fell 45.13 points to end at 21,349.63.  The NASDAQ Composite Index dropped 124.83 points to close at 6,140.42 and the S&P 500 Index lost 14.89 points to close at 2,423.41.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 8.03%, the NASDAQ Composite Index has advanced 14.07%, and the S&P 500 Index has risen 8.24%.

This past week, the national average 30-year mortgage rate rose to 4.07% from 3.98%; the 15-year mortgage rate increased to 3.32% from 3.26%; the 5/1 ARM mortgage rate increased to 3.16% from 3.07%; and the FHA 30-year rate rose to 3.75% from 3.65%.  Jumbo 30-year rates increased to 4.33% from 4.25%.

Economic Calendar – for the Week of July 3, 2017

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Mortgage Rate Forecast with Chart – FNMA 30-Year 3.5% Coupon Bond

The FNMA 30-year 3.5% coupon bond ($102.67, +9.4 bp) traded within a wider 77 basis point range between a weekly intraday low of $102.56 on Friday and a weekly intraday high of $103.33 on Monday before closing the week lower at $102.67.

Bond prices were driven lower by negative comments from central bankers and mortgage bond prices moved below previous support levels that now become resistance levels.  Mortgage bonds are now deeply “oversold” and will look to bounce back after pulling up from their 100-day moving average support level on Friday.

Economic news, especially the latest job report on Friday, will likely determine market direction in the coming week.  If new job formation exceeds expectations on Friday, we could see bond prices test support levels resulting in slightly worse mortgage rates.  However, if the economic news is favorable for bonds, bond prices should test resistance levels resulting in an improvement in rates.

 

Tucson Mortgages Home Loan News 6-26-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of June 19, 2017
  • Economic Calendar – week of June 26, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market moved modestly higher during the week with intermittent strength shown in the financial, health care, and technology sectors that was countered by considerable weakness in energy sector.  In fact, oil stocks officially entered into a bear market with a decline of 20% from their recent highs to end at 10-month lows.  Bond yields ended the week slightly lower.

The housing sector was prominently featured in the week’s economic news and included the latest mortgage data.  Mortgage application volume increased during the week ending June 16.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) rose 0.6%.  The seasonally adjusted Purchase Index decreased 1.0% from the prior week while the Refinance Index increased 2.0%.

Overall, the refinance portion of mortgage activity increased to 46.6% total applications from 45.4% in the prior week.  The adjustable-rate mortgage share of activity increased to 7.5% of total applications.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance was unchanged at 4.13% with points decreasing to 0.34 from 0.35.

Existing Home Sales during May exceeded analyst expectations, running at a seasonally adjusted annual rate of 5.62 million according to the National Association of Realtors.  May’s sales were 1.1% higher from a downwardly revised April sales rate of 5.56 million and were higher than the consensus forecast of 5.52 million.  May became the 63rd straight month for yearly housing price gains with the median sales price rising to $252,800, a new all-time high and 5.8% higher than a year ago.  The median number of days a property now spends on the market fell to a new low of 27 days.  Supply constraints coupled with robust demand continued to send housing prices higher.  First-time home buyers made up 33% of all buyers in May, down from 34% in April.

Moreover, according to the Federal Housing Finance Agency (FHFA), home prices increased 0.7% in April to match an upwardly revised increase in March to 0.7% from 0.6%.  Year-over-year, from April 2016 to April 2017, house prices have risen 6.8%.

Further, the Commerce Department reported New Home Sales increased 2.9% in May to a seasonally adjusted annual rate of 610,000 to surpass the consensus forecast of 599,000.  New home prices jumped higher with the year-over-year median price rising 16.8% to a record high $345,800 while the average sales price soared 16.1% to $406,400.  This is further evidence of strong demand and constricted inventories in the housing market.  Based on May’s sales rate, the inventory of new homes for sale comprised a 5.3 month supply.

For the week, the FNMA 3.5% coupon bond gained 9.4 basis points to close at $103.25.  The 10-year Treasury yield decreased 0.91 basis points to end at 2.144%.  Stocks ended the week modestly higher.

The Dow Jones Industrial Average gained 10.48 points to end at 21,394.76.  The NASDAQ Composite Index rose 113.49 points to close at 6,265.25 and the S&P 500 Index added 5.15 points to close at 2,438.30.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 7.63%, the NASDAQ Composite Index has advanced 14.08%, and the S&P 500 Index has risen 8.18%.

This past week, the national average 30-year mortgage rate fell to 3.98% from 4.00%; the 15-year mortgage rate was unchanged at 3.26%; the 5/1 ARM mortgage rate fell to 3.07% from 3.08%; and the FHA 30-year rate fell to 3.65% from 3.70%.  Jumbo 30-year rates decreased to 4.25% from 4.28%.

Economic Calendar – for the Week of June 26, 2017

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Mortgage Rate Forecast with Chart – FNMA 30-Year 3.5% Coupon Bond

The FNMA 30-year 3.5% coupon bond ($103.25, +9.4 bp) traded within a narrower 25 basis point range between a weekly intraday low of $103.00 on Monday and Tuesday and a weekly intraday high of $103.25 on Friday before closing the week higher at $103.25.  The chart reflects a mostly sideways trading pattern of consolidation as the bond moved back above the 25-day and 200-day moving averages.  Although appearing range-bound between technical support and resistance levels, the bond is neither overbought nor oversold and should be able to move higher toward resistance in the coming week.  Therefore, we should see mortgage rates continue to remain stable and possibly slightly improve, especially if the stock market takes a pause.

 

Tucson Mortgages Home Loan News 6-19-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of June 12, 2017
  • Economic Calendar – week of June 19, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market ended the week in “mixed” fashion with the NASDAQ Composite Index underperforming as investors locked in some profits in high-flying large-cap technology stocks.  Selling was particularly noticeable in the so-called FAANG stocks – Facebook, Amazon, Apple, Netflix, and Google (Alphabet) that represent $2.36 trillion in market capitalization.  Meanwhile, the Dow Jones Industrial Average traded to another new all-time high during the week.

Bond prices moved modestly higher with yields pulling back following the Federal Reserve’s widely expected decision to raise the fed funds target range by 25 basis points to 1.00%-1.25% and on weaker economic data and relatively tame inflation news.  Inflation as measured by the consumer price index was weaker than expected as were retail sales and housing starts and permits.

There were several housing reports released during the week including weekly mortgage data.

Mortgage application volume increased during the week ending June 9.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) rose 2.8%.  The seasonally adjusted Purchase Index decreased 3.0% from the prior week while the Refinance Index increased 9.0%.

Overall, the refinance portion of mortgage activity increased to 45.4% total applications from 42.1% in the prior week.  The adjustable-rate mortgage share of activity was unchanged at 7.4% of total applications with the average loan size for refinance applications reaching their highest level since September 2016 at $274,700.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance fell to 4.13% from 4.14% with points increasing to 0.35 from 0.34.

Moreover, Housing Starts and Building Permits for the month of May were both reported below their consensus forecasts.  Housing Starts in May fell 5.5% to a seasonally adjusted annual rate of 1.092 million from a downwardly revised 1.156 million in April, and were below the consensus forecast of 1.227 million.  The decline in Housing Starts was led by a 9.8% drop in multi-unit housing while single-family unit starts fell 3.9%.  On a year-over-year basis, Starts were 2.4% lower.  Building Permits didn’t fare much better, declining 4.9% month-over-month to a seasonally adjusted annual rate of 1.168 million versus a consensus forecast of 1.250 million.  Permits for single-family units declined 1.9% as compared to April.  Overall, the decline in single-family permits suggests housing supply shortages and affordability concerns are likely to continue within the new home market.

For the week, the FNMA 3.5% coupon bond gained 10.9 basis points to close at $103.156.  The 10-year Treasury yield decreased 4.92 basis points to end at 2.153%.  Stocks ended the week “mixed.”

The Dow Jones Industrial Average gained 112.31 points to end at 21,384.28.  The NASDAQ Composite Index fell 56.16 points to close at 6,151.76 and the S&P 500 Index added 1.38 points to close at 2,433.15.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 8.21%, the NASDAQ Composite Index has advanced 14.28%, and the S&P 500 Index has risen 8.68%.

This past week, the national average 30-year mortgage rate fell to 4.00% from 4.01%; the 15-year mortgage rate was unchanged at 3.26%; the 5/1 ARM mortgage rate rose to 3.08% from 3.05%; and the FHA 30-year rate fell to 3.70% from 3.75%.  Jumbo 30-year rates decreased to 4.28% from 4.29%.

Economic Calendar – for the Week of June 19, 2017

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Mortgage Rate Forecast with Chart – FNMA 30-Year 3.5% Coupon Bond

The FNMA 30-year 3.5% coupon bond ($103.16, +11 bp) traded within a wider 61 basis point range between a weekly intraday low of $102.89 on Tuesday and a weekly intraday high of $103.50 on Wednesday before closing the week higher at $103.16.  The chart shows the bond range-bound between support and resistance levels with the slow stochastic oscillator neither overbought nor oversold suggesting the bond could trade in a sideways direction with mortgage rates remaining relatively stable near current levels for the coming week.