Tucson Mortgages Home Loan News 12-11-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of December 4, 2017
  • Economic Calendar – week of December 11, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The song remains the same.  The stock market again ended “mixed” this past week with the Dow Jones Industrial Average and S&P 500 Index setting new all-time highs.   Meanwhile, the NASDAQ Composite Index stumbled very slightly to close the week seven and a half points lower.  The optimism seen in the equity markets began when the markets opened on Monday after the U.S. Senate passed their version of a tax reform bill over the weekend.  The final bill is presently undergoing a reconciliation process between the House and Senate with expectations for passage on or before December 22.

Economic news was generally supportive for the financial markets with the Employment Situation Summary (Jobs Report) for November showing there were 228,000 new jobs created during the month.  While this was higher than the consensus forecast of 190,000 jobs, a smaller-than-expected increase in average hourly earnings (+0.2% vs. forecast of +0.3%) helped to support the bond market.  The key takeaway here is job growth remains strong while wages, which are positively correlated with inflation, continue to be checked.  This scenario can be beneficial for both stocks and bonds as it suggests there can be stable economic growth without the inflationary fears that normally go along with such growth.

In housing, mortgage application volume increased during the week ending December 1.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) increased 4.7%.  The seasonally adjusted Purchase Index increased 2.0% from the prior week while the Refinance Index increased by 9.0%.

Overall, the refinance portion of mortgage activity increased to 51.6% of total applications from 48.7% in the prior week.  The adjustable-rate mortgage share of activity decreased to 5.7% of total applications from 6.2%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance fell to 4.19% from 4.20% with points increasing to 0.40 from 0.34.

For the week, the FNMA 3.5% coupon bond gained 15.7 basis points to close at $102.813.  The 10-year Treasury yield increased 1.45 basis points to end at 2.3778%.  The major stock indexes ended the week “mixed” with the Dow and S&P 500 both moving higher while the NASADQ Composite Index slightly declined.

The Dow Jones Industrial Average added 97.57 points to close at 24,329.16.  The NASDAQ Composite Index lost 7.51 points to close at 6,840.08 and the S&P 500 Index gained 9.28 points to close at 2,651.50.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 23.1%, the NASDAQ Composite Index has advanced 27.1%, and the S&P 500 Index has added 18.4%.

This past week, the national average 30-year mortgage rate fell to 3.97% from 3.98%; the 15-year mortgage rate decreased to 3.31% from 3.32%; the 5/1 ARM mortgage rate increased to 3.21% from 3.20% and the FHA 30-year rate remained unchanged at 3.60%.  Jumbo 30-year rates decreased to 4.14% from 4.16%.

 Economic Calendar – for the Week of December 11, 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 ($102.81, +15.70 bp) traded within a 51.5 basis point range between a weekly intraday high of $102.984 on Thursday and a weekly intraday low of $102.469 on Monday before closing the week at $102.813 on Friday.

After opening -18.7 basis points lower on Monday as stocks rallied, the bond strongly recovered to post a 3.2 basis point gain on the day.  Positive movement continued on Tuesday and Wednesday as the bond powered above multiple resistance levels, closing above the 25-day and 50-day moving averages.  These levels now become a zone of support.  Although the bond then slipped lower on Thursday and Friday, it remains at support.  There was a new buy signal last Tuesday and with the bond trading at support but not “overbought,” we could see a bounce higher off of support toward resistance located at $103.03.  Should this occur as the chart suggests it could result in slightly lower mortgage rates.

 

Tucson Mortgages Home Loan News 12-4-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of November 27, 2017
  • Economic Calendar – week of December 4, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market ended “mixed” this past week while showing greater volatility although the major indexes once again set new all-time highs during the week.  The Dow Jones Industrial Average and S&P 500 rallied almost 1% on both Tuesday and Thursday on increasing investor sentiment optimism that the Senate will soon pass their version of a tax-reform bill.

However, an increase in volatility showed up on Friday to trim weekly market gains when it was reported that President Trump’s former national security advisor, Mike Flynn, made a plea bargain to testify about possible Russian interference in the 2016 election.  This news should be “taken with a grain of salt” as much of the news reporting on supposed collusion by the Trump campaign with Russia has so far been disingenuous.

Economic news for the week was encouraging.  Third-quarter GDP was upwardly revised to 3.3% showing the strongest period of economic growth in three years.  Personal Income increased 0.4% in October as wages and salaries increased by 0.3%.  Personal Spending also increased by 0.3%, as forecast.  On a year-over-year basis, real disposable personal income was up 1.6%.  Inflation remained tame with the PCE Price Index up 0.1%, as expected, leaving it 1.6% higher year-over-year, versus up 1.7% in September.  The core PCE Price Index, which excludes food and energy, increased 0.2%, as expected.  Housing data continued to show strong growth.

The Commerce Department reported New Home Sales in October rose 6.2% for the month to a seasonally adjusted annual rate of 685,000, the fastest pace in a decade.  This was significantly greater than the economic consensus forecast of 629,000, and easily surpassed September’s downwardly revised rate of 645,000.  The median sales price increased 3.3% year-over-year to $312,800 while the average sales price jumped 13.6% to $400,200.  Based on the current sales rate, the inventory of new homes for sale dropped to a 4.9-months’ supply versus 5.2 months in September and the year-ago period.  Regionally, large increases in the Northeast (+30.2%) and Midwest (+17.9%) led the sharp increase in overall sales.

Furthermore, the National Association of Realtors (NAR) reported Pending Home Sales in October rose by 3.5%, the most in eight months, led by a rebound in Southern regions affected by hurricanes.  The consensus forecast had called for only a 0.6% increase.  The NAR’s chief economist, Lawrence Yun, stated “Home shoppers had better luck finding a home to buy in October, but slim pickings and consistently fast price gains continue to frustrate and prevent too many would-be buyers from reaching the market.  Until new home construction climbs even higher and more investors and homeowners put their home on the market, sales will continue to severely trail underlying demand.”

As for mortgages, mortgage application volume decreased during the week ending November 24.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) decreased 3.1%.  The seasonally adjusted Purchase Index increased 2.0% from the prior week while the Refinance Index decreased by 8.0%.

Overall, the refinance portion of mortgage activity decreased to 48.7% of total applications from 49.9% in the prior week.  The adjustable-rate mortgage share of activity decreased to 6.2% of total applications from 6.5%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance held steady at 4.20% with points decreasing to 0.34 from 0.42.

For the week, the FNMA 3.5% coupon bond lost 12.5 basis points to close at $102.656.  The 10-year Treasury yield increased 2.32 basis points to end at 2.3633%.  The major stock indexes ended the week “mixed” with the Dow and S&P 500 both moving higher while the NASADQ Composite Index retreated.

The Dow Jones Industrial Average rose 673.60 points to close at 24,231.59.  The NASDAQ Composite Index lost 41.57 points to close at 6,847.59 and the S&P 500 Index gained 39.80 points to close at 2,642.22.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 22.6%, the NASDAQ Composite Index has advanced 27.2%, and the S&P 500 Index has added 18.0%.

This past week, the national average 30-year mortgage rate rose to 3.98% from 3.96%; the 15-year mortgage rate increased to 3.32% from 3.30%; the 5/1 ARM mortgage rate increased to 3.20% from 3.17% and the FHA 30-year rate remained unchanged at 3.60%.  Jumbo 30-year rates increased to 4.16% from 4.15%.

 Economic Calendar – for the Week of December 4, 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 ($102.656, -12.5 bp) traded within a 53.1 basis point range between a weekly intraday high of $102.953 on Tuesday and a weekly intraday low of $102.422 on Thursday and Friday before closing the week at $102.656 on Friday.

After moving higher on Monday and Tuesday just above a couple of nearby resistance levels, the bond pulled back below several of these levels while displaying an increase in volatility on Thursday and Friday.  The bond is now beneath four resistance levels shown as a Resistance Zone between 102.73 and 102.86 on the chart.  This zone could prove to be a formidable area of resistance for the bond to overcome, and it appears the path of least resistance is a move lower toward support.  A new sell signal formed last Wednesday, and the bond is not yet “oversold” so we could see a continuing move lower to test support levels.  Such a move would result in slightly worse mortgage rates.

 

Tucson Mortgages Home Loan News 11-27-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of November 20, 2017
  • Economic Calendar – week of November 27, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The major stock market indexes traded to new all-time highs during a holiday shortened week characterized by light trading volumes.  The week’s economic data were mixed, but strong housing data reported on Tuesday from the latest Existing Home Sales report helped spark a market rally.

Existing Home Sales increased 2.0% month-over-month in October to a seasonally adjusted annual rate of 5.48 million compared to a consensus forecast of 5.42 million and a downwardly revised 5.37 million reading for September.  The median existing home price for all housing types increased 5.5% to $247,000 while the median price for single-family homes climbed 5.4% from a year ago to $248,300.  October was the 68th consecutive month of year-over-year gains.

The inventory of existing homes for sale at the end of October fell 3.8% to 1.80 million and is 10.4% lower than the year ago period.  The inventory of existing homes for sale has now dropped year-over-year for 29 consecutive months.  At the current sales pace, unsold inventory is at a 3.9 month supply compared to 4.4 months a year ago.  This continues to be considerably lower than the 6.0-month supply typically seen in a more balanced market.  First-time home buyers were responsible for 32% of the sales in October, up from 29% in September but down from 33% a year ago.

In other news, Weekly Initial Jobless Claims were reported near historic lows at 239,000 to match the consensus estimate, but October Durable Goods Orders weakened by 1.2% for the month, failing to reach the consensus forecast calling for a 0.4% gain.  Wednesday afternoon, the minutes from the Federal Reserve’s last monetary policy meeting were released in what was viewed by Fed watchers as a “dovish” report.  The minutes indicated several Fed officials were concerned about the persistence of below-target inflation, and this triggered a sharp rally in bond prices as inflation erodes the value of fixed bond returns.  The prospect of persistently low inflation preserves the value of bonds.

In the realm of mortgages, mortgage application volume increased very slightly during the week ending November 17.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) increased 0.1%.  The seasonally adjusted Purchase Index increased 5.0% from the prior week while the Refinance Index decreased by 5.0%.

Overall, the refinance portion of mortgage activity decreased to 49.9% of total applications from 51.3% in the prior week.  The adjustable-rate mortgage share of activity increased to 6.5% of total applications from 6.4%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased to 4.20% from 4.18% with points increasing to 0.42 from 0.40.

For the week, the FNMA 3.5% coupon bond gained 7.8 basis points to close at $102.781.  The 10-year Treasury yield decreased 0.51 basis points to end at 2.3401%.  The major stock indexes ended the week higher.

The Dow Jones Industrial Average rose 199.75 points to close at 23,557.99.  The NASDAQ Composite Index gained 106.37 points to close at 6,889.16 and the S&P 500 Index advanced 23.57 points to close at 2,602.42.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 19.20%, the NASDAQ Composite Index has advanced 27.98%, and the S&P 500 Index has added 16.24%.

This past week, the national average 30-year mortgage rate fell to 3.96% from 3.97%; the 15-year mortgage rate was unchanged at 3.30%; the 5/1 ARM mortgage rate decreased to 3.17% from 3.21% and the FHA 30-year rate remained unchanged at 3.60%.  Jumbo 30-year rates decreased to 4.15% from 4.16%.

 Economic Calendar – for the Week of November 27, 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 ($102.781, +7.8 bp) traded within a 36 basis point range between a weekly intraday high of $102.891 on Wednesday and a weekly intraday low of $102.531 on Monday before closing the week at $102.781 on Friday.

After pulling away lower from the 25-day moving average last Monday, mortgage bond prices rebounded on Tuesday and Wednesday to break above multiple resistance levels, only to pull back to these levels during an abbreviated trading session on Friday.  The bond is now sitting at resistance, but is not oversold while remaining on a buy signal from last Wednesday.  With a number of potential catalysts coming in the way of economic news, we could see the bond continue to advance to challenge further resistance at the 50 and 100-day moving averages resulting in stable to slightly improved mortgage rates this week.

 

Tucson Mortgages Home Loan News 11-20-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review:  week of November 13, 2017
  • Economic Calendar – week of November 20, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The major stock market indexes traded mostly flat to modestly lower to end the week “mixed” with the Nasdaq Composite Index managing to record a gain while the Dow Jones Industrial Average and the S&P 500 Index saw small losses.  Trading volumes began to shrink as the week progressed as market participants turned their attention toward the pending Thanksgiving holiday season.

There was one record worth mentioning.  The S&P 500 Index had a 50-day run of avoiding a daily decline of greater than 0.50% heading into last Wednesday when it was ended with a 0.55% decline.  This was the longest such streak since 1965.

The week’s economic reports were mostly favorable for the markets.  Retail Sales increased by a greater than expected 0.2% in October while Housing Starts and Permits recorded unexpectedly stronger than forecast gains, rising 13.7% and 5.9%, respectively.  The October Producer Price Index increased 0.4% in October, more than the 0.1% expected by economists.  However, the Consumer Price Index only increased by 0.1% for October with the core rate (excluding food and energy prices) rising 0.2% to match expectations.

As far as mortgages were concerned, mortgage application volume increased during the week ending November 10.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) increased 3.1%.  The seasonally adjusted Purchase Index increased 0.4% from the prior week while the Refinance Index increased 6.0%.

Overall, the refinance portion of mortgage activity increased to 51.3% of total applications from 49.0% in the prior week.  The adjustable-rate mortgage share of activity decreased to 6.4% 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 remained unchanged at 4.18% with points increasing to 0.40 from 0.38.

For the week, the FNMA 3.5% coupon bond gained 26.5 basis points to close at $102.703.  The 10-year Treasury yield decreased 5.68 basis points to end at 2.3452%.  The major stock indexes ended the week “mixed.”

The Dow Jones Industrial Average fell 63.97 points to close at 23,358.24.  The NASDAQ Composite Index gained 31.85 points to close at 6,782.79 and the S&P 500 Index lost 3.45 points to close at 2,578.85.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 18.19%, the NASDAQ Composite Index has advanced 26.00%, and the S&P 500 Index has added 15.19%.

This past week, the national average 30-year mortgage rate fell to 3.97% from 4.01%; the 15-year mortgage rate decreased to 3.30% from 3.31%; the 5/1 ARM mortgage rate increased to 3.21% from 3.20% and the FHA 30-year rate remained unchanged at 3.60%.  Jumbo 30-year rates decreased to 4.16% from 4.18%.

Economic Calendar – for the Week of November 20, 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 ($102.703, +26.5 bp) traded within a 42 basis point range between a weekly intraday high of $102.841 on Wednesday and a weekly intraday low of $102.42 on Monday before closing the week at $102.703 on Friday.

Mortgage bond prices successfully tested support on Monday and continued higher during the week to test overhead resistance on Wednesday before pulling back on Thursday and Friday.  The bond is not yet overbought and is positioned to make another run higher to further test nearby resistance at $102.77 and $102.806.  If the bond can manage to break above the dual levels of resistance it should lead to a slight improvement in mortgage rates.  If the bond is turned away from resistance, the bond would likely trade between the resistance and support levels identified on the chart resulting in relatively stable mortgage rates this coming week.

 

 

Tucson Mortgages Home Loan News 11-13-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review:  week of November 6, 2017
  • Economic Calendar – week of November 13, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The major stock market indexes reached new record highs on Monday and Wednesday before ending the week modestly lower to snap an eight week winning streak.  There was some profit taking on Thursday and Friday to coincide with Thursday’s release of the Senate’s version of a tax reform bill that seemed to depress investor sentiment.

The Senate’s version of tax reform called for a one year delay in cutting the corporate tax rate to 20% from 35% and maintained deductions related to mortgages and state and local property taxes.  While the House and Senate versions are now headed toward a reconciliation process to hammer out their differences, uncertainty surrounding the ability of Congress to do just that created a cloud over the financial markets.

Investors are now more doubtful about the prospects for real tax reform.  The House version tries to offset the steep cuts in the corporate tax rate by limiting the mortgage deduction and deductibility of state and local property taxes, and these proposals are proving to be highly controversial.  Here’s a thought – pay for the tax cuts by cutting federal spending.

The economic calendar was very light with little in the way of data to influence the markets.  As far as mortgages were concerned, mortgage application volume was unchanged during the week ending November 3 from the prior week.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) remained unchanged.  The seasonally adjusted Purchase Index increased 1.0% from the prior week while the Refinance Index decreased 1.0%.

Overall, the refinance portion of mortgage activity increased to 49.0% of total applications from 48.7% 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 decreased to 4.18% from 4.22% with points decreasing to 0.38 from 0.43.

For the week, the FNMA 3.5% coupon bond lost 56.2 basis points to close at $102.438.  The 10-year Treasury yield increased 6.95 basis points to end at 2.4020%.  The major stock indexes ended the week lower for the first time in eight weeks.

The Dow Jones Industrial Average fell 116.98 points to close at 23,422.21.  The NASDAQ Composite Index dropped 13.50 points to close at 6,750.94 and the S&P 500 Index lost 5.54 points to close at 2,582.30.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 18.52%, the NASDAQ Composite Index has advanced 25.41%, and the S&P 500 Index has added 15.34%.

This past week, the national average 30-year mortgage rate rose to 4.01% from 3.96%; the 15-year mortgage rate increased to 3.31% from 3.27%; the 5/1 ARM mortgage rate increased to 3.20% from 3.18% and the FHA 30-year rate remained unchanged at 3.60%.  Jumbo 30-year rates increased to 4.18% from 4.15%.

Economic Calendar – for the Week of November 13, 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 ($102.438, -56.2 bp) traded within a 75.0 basis point range between a weekly intraday high of $103.141 on Tuesday and a weekly intraday low of $102.391 on Friday before closing the week at $102.438 on Friday.

Mortgage bond prices continued higher at the beginning of last week, moving above the 100-day moving average resistance level last Monday and Tuesday before being turned away by resistance at the 50-day moving average on Wednesday.  The bond then continued lower to fall below several support levels including the 25-day and 100-day moving averages along with the 38.2% Fibonacci retracement level.  These now become technical resistance levels.  New support levels have been identified at $102.428 and $102.17.  A sell signal was generated last Wednesday on a negative stochastic crossover, and since the bond is not yet “oversold” a continuing decline toward secondary support at $102.17 could occur.

Therefore, we could see the bond continue to move lower to test support levels, and a move below these levels would lead to slightly higher mortgage rates.

 

Tucson Mortgages Home Loan News 11-6-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review:  week of October 30, 2017
  • Economic Calendar – week of November 6, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The major stock market indexes once again recorded new all-time highs during the week while bond prices also recorded modest gains to send yields slightly lower.  

Political events during the week seemed to create crosscurrents within investor sentiment.  

An announcement of a couple of indictments and a conviction last Monday by Special Prosecutor Robert Mueller in his investigation into Russian interference in the 2016 presidential election seemed to dampen investor sentiment, but this was offset by the release of the “Tax Cuts and Jobs Act” by Republican House leaders.   This bill calls for an immediate cut in the top corporate tax rate to 20% which should stimulate the economy and create more jobs.  Additionally, President Trump announced last Thursday he was nominating Federal Reserve Governor Jerome Powell to succeed Janet Yellen as the next chairman of the Federal Reserve.  Powell is viewed more as a monetary policy “dove” than a “hawk” will likely have a carefully measured approach to rate increases and this news was well received by the bond market.

The week’s economic news was mixed.  Personal Spending increased by a more than expected +1.0% in September while the Conference Board reported Consumer Confidence in October reached its highest level in nearly 17 years with a reading of 125.9.  The ISM Manufacturing Index, while strong at 58.7, slightly missed expectations of 59.0.  Employment costs crept higher with the 3rd Quarter Employment Cost Index increasing by a greater than forecast 0.7% while Unit Labor Costs gained a higher than expected 0.5%.  The closely watched Employment Situation Summary for October (Jobs Report) showed fewer jobs (261,000) were created than forecast (300,000), but this was thought to be due to negative effects of the recent hurricanes causing volatility in jobs data.  The unemployment rate fell to 4.1% from 4.2% while October average hourly earnings were flat at 0.0% after increasing 0.5% in September.  Over the last 12 months, average hourly earnings have increased 2.4%, versus 2.9% for the 12 months ending in September.

As for mortgages, mortgage application volume decreased during the week ending October 27.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) fell by 2.6%.  The seasonally adjusted Purchase Index decreased 1.0% from the prior week while the Refinance Index decreased 5.0%.

Overall, the refinance portion of mortgage activity decreased to 48.7% 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 6.4%.  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 4.18% with points increasing to 0.43 from 0.42.

For the week, the FNMA 3.5% coupon bond gained 43.7 basis points to close at $103.00.  The 10-year Treasury yield decreased 8.30 basis points to end at 2.3325%.  The major stock indexes ended the week higher.

The Dow Jones Industrial Average gained 105.00 points to close at 23,539.19.  The NASDAQ Composite Index increased 63.18 points to close at 6,764.44 and the S&P 500 Index advanced 6.77 points to close at 2,587.84.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 19.11%, the NASDAQ Composite Index has advanced 25.66%, and the S&P 500 Index has added 15.59%.

This past week, the national average 30-year mortgage rate fell to 3.96% from 4.06%; the 15-year mortgage rate decreased to 3.27% from 3.34%; the 5/1 ARM mortgage rate dropped to 3.18% from 3.22% and the FHA 30-year rate decreased to 3.60% from 3.75%.  Jumbo 30-year rates decreased to 4.15% from 4.24%.

Economic Calendar – for the Week of November 6, 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 ($103.00, +43.7 bp) traded within a 39.1 basis point range between a weekly intraday high of $103.00 on Friday and a weekly intraday low of $102.609 on Wednesday before closing the week at $103.00 on Friday.

Mortgage bond prices continued to move higher last week following the new buy signal from October 27.  The bond moved above a couple of resistance levels at $102.73 and $102.806 and these levels now revert to support levels.  There isn’t much in the way of economic news this coming week to influence the bond market, so there is greater likelihood for the market to be influenced by technical signals.  Technically, the slow stochastic oscillator indicates the bond is not yet “overbought” so the bond has more time to move higher before reaching an overbought level where it would be more susceptible to a downturn.

Therefore, we should see the bond continue to move higher to challenge a dual layer of resistance at $103.06 and $103.13.  A break above these levels will lead to an improvement in bond prices and mortgage rates.  However, a failure to break above resistance should result in rates remaining close to where they currently are.

 

 

Tucson Mortgages Home Loan News 10-30-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review:  week of October 23, 2017
  • Economic Calendar – week of October 30, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The majority of stock market indexes continued to advance into record territory led by a surge in earnings from technology companies Alphabet (Google), Amazon, Intel, and Microsoft.  Strong 3rd Quarter earnings reports from 3M, Caterpillar, Corning, and General Motors also provided a market boost to the S&P 500 and the overall market.  The week’s economic reports were favorable suggesting a stronger future economy, and this dampened investor sentiment in the bond market with the realization the Federal Reserve might institute more rate hikes next year than currently anticipated.  The probability for a December rate hike is currently 99.9%, up from 93.1% last week.

On Wednesday, the Commerce Department reported Durable Goods Orders increased by a greater than forecast 2.2% in September, the largest gain in three months, versus expectations for a 1.3% increase.  Friday, the Commerce Department released their Advance GDP report for the 3rd Quarter showing the economy had unexpectedly grown at an annualized rate of 3.0% despite the negative impact of two major hurricanes.  This was a surprise as economists had only forecast a 2.4% growth rate.  Although these reports pressured bond prices lower (yields higher), the bond market saw some price relief on Friday following rumors that President Trump was favoring Fed Governor Jerome Powell as the central bank’s next chair.  Powell is viewed more as a monetary policy “dove” by bond market participants and would likely continue Janet Yellen’s measured approach in raising short-term interest rates.

The week’s housing reports were strong overall.  The Census Bureau announced New Home Sales surged higher in September to a seasonally adjusted annual rate of 667,000, a 18.9% month-over-month increase over August’s  rate of 561,000.  The median sales price of new homes sold in September 2017 increased 1.6% year-over-year to $319,700 with the average sales price jumped 5.2% to $385,200.  New home inventory at the end of September stood at 279,000 representing a supply of 5.0 months at the current sales rate.

The National Association of Realtors reported Pending Home Sales was unchanged in September at the lowest level since the start of 2016 as Hurricane Irma slowed sales in the southeast while tight inventory levels of available homes for sales limited sales activity elsewhere.  August Pending Home Sales were revised lower by -0.2% to -2.8% from -2.6%.  Lawrence Yun, NAR’s chief economist, said “While most of the country, except for the South, did see minor gains in contract signings last month, activity is falling further behind last year’s pace because new listings aren’t keeping up with what’s being sold.”

As for mortgages, mortgage application volume decreased during the week ending October 20.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) fell by 4.6%.  The seasonally adjusted Purchase Index decreased 6.0% from the prior week while the Refinance Index decreased 3.0%.

Overall, the refinance portion of mortgage activity increased to 49.5% of total applications from 48.6% in the prior week.  The adjustable-rate mortgage share of activity increased to 6.4% of total applications from 6.1%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased to 4.18% from 4.14% with points decreasing to 0.42 from 0.44.

For the week, the FNMA 3.5% coupon bond lost 10.9 basis points to close at $102.563.  The 10-year Treasury yield increased 3.28 basis points to end at 2.4155%.  The major stock indexes ended the week higher.

The Dow Jones Industrial Average gained 105.56 points to close at 23,434.19.  The NASDAQ Composite Index increased 72.21 points to close at 6,701.26 and the S&P 500 Index advanced 5.86 points to close at 2,581.07.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 18.58%, the NASDAQ Composite Index has advanced 24.49%, and the S&P 500 Index has added 15.29%.

This past week, the national average 30-year mortgage rate rose to 4.06% from 3.98%; the 15-year mortgage rate increased to 3.34% from 3.28%; the 5/1 ARM mortgage rate was unchanged at 3.22% and the FHA 30-year rate increased to 3.75% from 3.60%.  Jumbo 30-year rates increased to 4.24% from 4.17%.

Economic Calendar – for the Week of October 30, 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 ($102.563, -10.9 bp) traded within a 62.5 basis point range between a weekly intraday high of $102.797 on Monday and a weekly intraday low of $102.172 on Wednesday before closing the week at $102.56 on Friday.

The bond managed to push just above the key 200-day moving average resistance level last Monday, but was unable to advance as further nearby resistance from the 38.2% Fibonacci retracement level stopped the advance dead in its tracks.  The bond then moved lower during the week until bouncing back on Friday on rumors that President Trump was strongly considering Fed Governor Jerome Powell to replace Janet Yellen as the central bank’s next chair.

Friday’s trading action from a support level triggered a new buy signal from a positive crossover in the slow stochastic oscillator.  If this technical signal proves true, we should see bond prices climb to test the identified resistance levels once more.  A move above the resistance levels would lead to a slight improvement in mortgage rates, while range-bound trading between current support and resistance should maintain rates close to where they currently are.

 

Tucson Mortgages Home Loan News 10-23-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review:  week of October 16, 2017
  • Economic Calendar – week of October 23, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market continued to advance into new record-high territory last week on better than expected third quarter corporate earnings reports.  The Dow Jones Industrials in particular benefited from earnings reports from IBM, Johnson & Johnson, and UnitedHealth that helped send the Dow over 23,000.  Several equity market analysts with a macro view are predicting the stock market will continue to rise with the Dow eventually reaching the 50,000 mark.

Positive economic data during the week and passage of a budget resolution by Congress paving the way for a tax reform package that would further stimulate economic growth through tax cuts also helped stocks to move higher while sending bond prices lower and Treasury yields higher.

Manufacturing remained strong with better than forecast readings from the New York Empire State Manufacturing Index (30.2 vs. 21.0 expected) and the Philadelphia Fed Manufacturing Index (27.9 vs. 20.0 expected).  Furthermore, weekly jobless claims fell to their lowest level since 1973, when the labor force was roughly 60% of its current size.

In housing, the Commerce Department reported Housing Starts for September fell to a one-year low seasonally adjusted annual rate of 1.127 million while economists had estimated a rate of 1.160 million.  Housing Starts were negatively impacted by the disrupting effects to construction of single-family homes in the South by hurricanes Harvey and Irma.  Housing Starts in the Southern Region declined by 15.3% on a month-over-month basis.  Meanwhile, Building Permits declined 4.5% to a seasonally adjusted annual rate of 1.215 million, below the consensus forecast of 1.225 million.  Permits for building multi-family units led the decline with a 16.1% decrease.

A chart from Doug Short, Vice President of Research at Advisor Perspectives, that smooths out monthly volatility in Housing Permits and Starts as a percent of the population provides a longer-term view of the trends in Starts and Permits.

On Friday, The National Association of Realtors reported Existing Home Sales unexpectedly increased 0.7% in September to a seasonally adjusted annual rate of 5.39 million units.  Economists had forecast a more modest rate of 5.29 million units.  Available inventory remains limited and is 6.4% lower than the same period a year ago with only a 4.2 month supply at the current sales rate.  Coupled with an increase of 4.2% in the median existing home prices to $245,100 for all housing types and $246,800 in single-family home prices, affordability continues to be a concern and will inhibit future sales.  Indeed, first-time buyers fell to 29% of sales in September from 31% in August, comprising this group’s lowest portion of existing home sales since September 2015.

As for mortgage data, mortgage application volume increased during the week ending October 13.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) rose by 3.6%.  The seasonally adjusted Purchase Index increased 4.0% from the prior week while the Refinance Index increased 3.0%.

Overall, the refinance portion of mortgage activity decreased to 48.6% of total applications from 49.0% in the prior week.  The adjustable-rate mortgage share of activity decreased to 6.1% 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 decreased to 4.14% from 4.16% with points remaining unchanged at 0.44.

For the week, the FNMA 3.5% coupon bond lost 50.0 basis points to close at $102.672.  The 10-year Treasury yield increased 10.79 basis points to end at 2.3827%.  The major stock indexes ended the week higher.

The Dow Jones Industrial Average gained 456.91 points to close at 23,328.63.  The NASDAQ Composite Index increased 23.25 points to close at 6,629.05 and the S&P 500 Index advanced 22.04 points to close at 2,575.21.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 18.04%, the NASDAQ Composite Index has advanced 23.15%, and the S&P 500 Index has added 15.02%.

This past week, the national average 30-year mortgage rate rose to 3.98% from 3.93%; the 15-year mortgage rate increased to 3.28% from 3.23%; the 5/1 ARM mortgage rate rose to 3.22% from 3.19% and the FHA 30-year rate increased to 3.60% from 3.50%.  Jumbo 30-year rates increased to 4.17% from 4.14%.

Economic Calendar – for the Week of October 23, 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, -50.0 bp) traded within a 53.1 basis point range between a weekly intraday high of $103.125 on Monday and a weekly intraday low of $102.594 on Friday before closing the week at $102.67 on Friday.

An increase in the likelihood of real tax reform passing Congress sent stock prices higher and bond prices lower.  Mortgage bond prices were not immune with the FNMA 30-year 3.5% coupon bond falling below support levels including the key 200-day moving average – a bearish event.  A new sell signal on Wednesday from a negative stochastic crossover led to the downward breach of the 200-day moving average on Friday.  The next support levels are found at $102.50 and $102.30 while the aforementioned 200-day moving average defines nearest overhead resistance.  The overall trend is down, and if bond cannot reclaim the 200-day moving average, it is likely mortgage rates will be pressured slightly higher in the coming week.

 

Tucson Mortgages Home Loan News 10-16-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review:  week of October 9, 2017
  • Economic Calendar – week of October 16, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market continued to advance into new record-high territory, boosted by releases from major third quarter corporate earnings reports.  This past week marked the fifth consecutive weekly gain for both the Dow Jones Industrial Average and the S&P 500 Index despite a number of political and geopolitical anxieties among investors.  

Investor sentiment was influenced by several factors including President Trump’s executive order to revoke certain “Obamacare” regulations allowing health insurance companies to issue less comprehensive and cheaper insurance plans.  Trump’s executive order also put a stop to the former Obama administration’s unconstitutional funding of subsidies that compensated health insurers for reducing premiums for low-income enrollees in state insurance exchanges.  Investors also considered rumors of a potential pullout by the U.S. from the North American Free Trade Agreement (NAFTA), the possibility of another North Korean missile launch, and worried about congressional bungling on tax reform.

However, there were several constructive economic reports during the week advancing both stocks and bonds.  Initial Jobless Claims (243,000) fell sharply and were below the consensus forecast of 255,000.  Retail Sales for September (+1.6%) exceeded expectations of +1.5%, bouncing back following August’s -0.1% decline.  The boost in retail sales may be a reflection of consumers feeling better about the economy as the University of Michigan’s preliminary October reading on Consumer Sentiment reached a 13 year high at 101.1 to easily surpass the consensus forecast of 95.6 and last month’s reading of 95.1.  Furthermore, the latest consumer inflation data remains tame with the Consumer Price Index (CPI) coming in below the consensus forecast of 0.6% with an increase of just 0.5% in the month of September.  On a year-over-year basis, CPI increased 2.2%, which is just below expectations of 2.3%.  The Core CPI, which excludes food and energy prices, increased by 0.1%, which was below the consensus forecast of 0.2%.  The bond-friendly inflation data helped to send bond prices higher and yields lower on Friday.

In housing, mortgage application volume fell during the week ending October 6.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) declined by 2.1%.  The seasonally adjusted Purchase Index decreased 0.1% from the prior week while the Refinance Index fell 4.0%.

Overall, the refinance portion of mortgage activity decreased to 49.0% of total applications from 50.1% in the prior week.  The adjustable-rate mortgage share of activity increased to 6.6% of total applications from 6.0%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased to 4.16% from 4.12% with points decreasing to 0.44 from 0.45.

For the week, the FNMA 3.5% coupon bond gained 23.40 basis points to close at $103.172.  The 10-year Treasury yield decreased 8.59 basis points to end at 2.2748%.  The major stock indexes ended the week higher.

The Dow Jones Industrial Average gained 98.05 points to close at 22,871.72.  The NASDAQ Composite Index increased 15.62 points to close at 6,605.80 and the S&P 500 Index advanced 3.84 points to close at 2,553.17.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 15.73%, the NASDAQ Composite Index has advanced 22.71%, and the S&P 500 Index has added 14.04%.

This past week, the national average 30-year mortgage rate fell to 3.93% from 3.99%; the 15-year mortgage rate decreased to 3.23% from 3.27%; the 5/1 ARM mortgage rate fell to 3.19% from 3.22% and the FHA 30-year rate declined to 3.50% from 3.60%.  Jumbo 30-year rates decreased to 4.14% from 4.19%.

Economic Calendar – for the Week of October 16, 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, +23.40 bp) traded within a 43.8 basis point range between a weekly intraday low of $102.734 on Tuesday and a weekly intraday high of $103.172 on Friday before closing the week at $103.172 on Friday.

Mortgage bond prices moved above a couple of resistance levels located at $103 and the 100-day moving average at $103.12 and these now become support levels.  New resistance levels are found at the 25-day and 50-day moving averages at $103.21 and $103.27 respectively.  A new buy signal was triggered on Wednesday with a positive stochastic crossover from an “oversold” position.  The bond is far from “overbought” so we should see prices easily challenge overhead resistance, and a break above the identified resistance levels in the chart would lead to slightly lower mortgage interest rates.

 

Tucson Mortgages Home Loan News 10-9-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review:  week of October 2, 2017
  • Economic Calendar – week of October 9, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market posted another good week of gains resulting in the major indexes reaching a new series of record highs.  Meanwhile, bond yields moved a little higher following better than expected economic data earlier in the week and after Friday’s release of the September jobs report showing strong gains in wage growth with an increase of 0.5% in average hourly earnings.  

Investors showed more concern over possible wage-based inflation than a -33,000 decline in Nonfarm Payrolls for September that was negatively impacted by the effects of hurricanes Harvey and Irma.  Most of the jobs lost were among restaurant and bar workers and many of these will return in future months.  Economists had expected new job growth of 75,000 rather than a loss, but many economists are expecting a rebound in the October payrolls number.

Comments made by Philadelphia Federal Reserve President Patrick Harker also played a role in the rise in bond yields after he stated he had “penciled in” a December rate hike even though inflation readings remain low.  The fed funds futures market is now showing the implied probability of a rate hike occurring in December has increased to 90.6%.

In housing, mortgage application volume fell during the week ending September 29.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) declined by 0.4%.  The seasonally adjusted Purchase Index increased 1.0% from the prior week while the Refinance Index fell 2.0%.

Overall, the refinance portion of mortgage activity decreased to 50.1% of total applications from 50.8% in the prior week.  The adjustable-rate mortgage share of activity decreased to 6.0% of total applications from 6.5%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased to 4.12% from 4.11% with points increasing to 0.45 from 0.40.

For the week, the FNMA 3.5% coupon bond lost 7.80 basis points to close at $102.938.  The 10-year Treasury yield increased 2.17 basis points to end at 2.3607%.  The major stock indexes ended the week higher.

The Dow Jones Industrial Average gained 368.58 points to close at 22,773.67.  The NASDAQ Composite Index increased 94.22 points to close at 6,590.18 and the S&P 500 Index advanced 29.97 points to close at 2,549.33.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 15.24%, the NASDAQ Composite Index has advanced 22.42%, and the S&P 500 Index has added 13.87%.

This past week, the national average 30-year mortgage rate edged higher to 3.99% from 3.97%; the 15-year mortgage rate increased to 3.27% from 3.24%; the 5/1 ARM mortgage rate rose to 3.22% from 3.21% and the FHA 30-year rate was unchanged at 3.60%.  Jumbo 30-year rates increased to 4.19% from 4.17%.

Economic Calendar – for the Week of October 9, 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 ($102.94, -7.80 bp) traded within a 50.0 basis point range between a weekly intraday low of $102.734 on Friday and a weekly intraday high of $103.234 on Wednesday before closing the week at $102.938 on Friday.

Mortgage bond prices fell below the $103 support level on Thursday and subsequently tested the next lower support level of $102.68 on Friday before improving from the intraday low $102.73.  The bond is now significantly “oversold” and poised for a rebound higher to test the nearest resistance level at $103.   Friday’s candlestick is known as a “Hammer.”  The Hammer is a potential bullish reversal pattern that forms after a decline.  Additionally, hammers can mark market bottoms or support levels.  The low of the long lower shadow suggests sellers drove prices lower during the session, but the strong finish indicates buyers regained control to end the session on a strong note.  While this may seem enough to act on, hammers require further bullish confirmation.

A positive close on Monday could provide the bullish confirmation leading to a move higher to test overhead resistance.  A break above resistance levels would lead to a slight improvement in mortgage rates, but a sideways move between support and resistance should result in rates remaining relatively stable.