Tucson Mortgages Home Loan News 8-13-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of August 6, 2018
  • Economic Calendar – week of August 13, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

Another wave of trade disputes ignited by a somewhat unusual situation unsettled the stock and currency markets late in the week.  In a dispute with Turkey over that country’s jailing of an American pastor, President Trump announced the U.S. would be doubling its tariffs on steel and aluminum imports from Turkey.  This led to a significant currency decline in the Turkish lira which spilled over into other emerging market currencies.  This in turn led to lower equity markets in the U.S. and elsewhere globally.  Furthermore, the trade “war” between the U.S. and China continued to escalate with China announcing new tariffs on $16 billion worth of U.S. imported goods.  These geopolitical trade events promoted a modest “flight to safety” in U.S. Treasuries on Friday to push the yield on the 10-year Treasury note down to its lowest level in almost a month.

Meanwhile, second-quarter corporate earnings reports continue to be mostly better than expected among analysts.  According to the latest data from FactSet Research Systems, a financial data and software company catering to investment professionals, earnings for S&P 500 Index companies have grown 24.6% over the same quarter a year ago while keeping pace with the first quarter’s results which were the best earnings growth in nearly eight years.

In housing, the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey revealed last Wednesday showed a decrease in mortgage applications.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) fell 3.0% during the week ended August 3, 2018.  The seasonally adjusted Purchase Index decreased 2.0% from the week prior while the Refinance Index decreased by 5.0% from a week earlier to its lowest level since December 2000.

Overall, the refinance portion of mortgage activity decreased to 36.6% from 37.1% of total applications from the prior week.  The adjustable-rate mortgage share of activity decreased to 6.3% from 6.4% 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 4.84% with points remaining unchanged at 0.45.

For the week, the FNMA 4.0% coupon bond gained 14.1 basis points to close at $101.813 while the 10-year Treasury yield decreased 7.95 basis points to end at 2.873%.  The Dow Jones Industrial Average lost 149.44 points to close at 25,313.14.  The NASDAQ Composite Index added 27.09 points to close at 7,839.11.  The S&P 500 Index fell 7.07 points to close at 2,833.28.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 2.40%, the NASDAQ Composite Index has advanced 13.55%, and the S&P 500 Index has added 5.97%.

This past week, the national average 30-year mortgage rate declined to 4.64% from 4.72%; the 15-year mortgage rate fell to 4.13% from 4.18%; the 5/1 ARM mortgage rate dropped to 3.95% from 4.00% while the FHA 30-year rate fell to 4.37% from 4.42%.  Jumbo 30-year rates eased to 4.40% from 4.48%.

Economic Calendar – for the Week of August 13, 2018

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

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

The FNMA 30-year 4.0% coupon bond ($101.813, +14.1 bp) traded within a narrow 39.0 basis point range between a weekly intraday low of 101.516 on Wednesday and a weekly intraday high of $101.906 on Friday before closing the week at $101.813 on Friday.  Mortgage bond prices dipped slightly lower mid-week before turning higher toward resistance levels to end the week.  While the bond is no longer “oversold,” there is room for prices to run higher before becoming “overbought.”  So, we could likely see prices push higher this coming week to challenge resistance levels at the 25-day, 50-day and 100-day moving averages which are in close proximity to one another.  Bottom line, the technical chart continues to suggest there will be stable to slightly improved mortgage rates this coming week.

 

Tucson Mortgages Home Loan News 8-6-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of July 30, 2018
  • Economic Calendar – week of August 6, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market posted modest gains this past week, as did mortgage bonds, while the 10-year Treasury yield pulled back on Thursday and Friday after hitting the 3% mark intraday on Wednesday.  This resulted in relatively stable equity, bond, and mortgage markets for the week.

There were a significant number of economic reports released during the week headlined by the Federal Reserve’s monetary policy decision on Wednesday and the Labor Department’s latest Employment Situation Summary on Friday.

As widely expected, Fed officials left interest rates unchanged to keep their target range from 1.75% to 2.00%.  The Fed’s policy statement characterized the economy as “strong,” suggesting the Fed remains on course to raise interest rates two additional times this year.  The Fed Funds Futures market is projecting the next rate hike will likely arrive at September’s policy meeting with a current probability of 93.6%.

On the job creation front, the Labor Department released a “not too hot, not too cold Goldilocks” jobs report revealing a below-forecast increase in nonfarm payrolls of 157,000 new jobs vs. a consensus forecast of 190,000 jobs.  However, June’s jobs number was upwardly revised to 248,000 from 213,000 while the three-month average of new job formation is trending noticeably higher.  Average Hourly Earnings increased 0.3% matching expectations, and the year-over-year increase in Earnings held steady at 2.7%.  The Unemployment Rate fell to 3.9%.  Overall, the financial markets were pleased with this report.

In housing, the National Association of Realtors reported Monday a week ago that Pending Home Sales edged higher for the month of June by 0.9%.  This was a slightly better number than analyst expectations of 0.5%, but was 2.5% lower year-over-year.  However, home inventory levels increased by 0.5% year-over-year, the first increase in three years, suggesting greater opportunities for future sales as many potential buyers are “waiting in the wings” to purchase a home.

The latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey released on Wednesday showed a decrease in mortgage applications.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) fell 2.6% during the week ended July 27, 2018.  The seasonally adjusted Purchase Index decreased 3.0% from the week prior while the Refinance Index decreased by 2.0% from a week earlier.

Overall, the refinance portion of mortgage activity increased to 37.1% from 36.8% of total applications from the prior week.  The adjustable-rate mortgage share of activity increased to 6.4% from 6.3% of total applications.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased to 4.84% from 4.77% with points remaining unchanged at 0.45.

For the week, the FNMA 4.0% coupon bond gained 10.9 basis points to close at $101.672 while the 10-year Treasury yield decreased 0.55 basis points to end at 2.9525%.  The Dow Jones Industrial Average gained 11.52 points to close at 25,462.58.  The NASDAQ Composite Index added 74.60 points to close at 7,812.02.  The S&P 500 Index advanced 21.53 points to close at 2,840.35.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 3.01%, the NASDAQ Composite Index has advanced 13.16%, and the S&P 500 Index has added 6.24%.

This past week, the national average 30-year mortgage rate remained unchanged at 4.72%; the 15-year mortgage rate fell to 4.18% from 4.19%; the 5/1 ARM mortgage rate remained unchanged at 4.00% while the FHA 30-year rate was also unchanged at 4.42%.  Jumbo 30-year rates eased to 4.48% from 4.50%.

Economic Calendar – for the Week of August 6, 2018

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

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

The FNMA 30-year 4.0% coupon bond ($101.672, +10.9 bp) traded within a narrow 37.5 basis point range between a weekly intraday low of 101.313 on Tuesday and a weekly intraday high of $101.688 on Friday before closing the week at $101.672 on Friday.  Mortgage bonds remain “oversold” while trading in a familiar sideways pattern between resistance and support.  The chart continues to suggest there will be stable to slightly improved mortgage rates this coming week.

 

Tucson Mortgages Home Loan News 7-30-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of July 23, 2018
  • Economic Calendar – week of July 30, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

Mortgage bond prices slipped lower and the 10-year Treasury yield moved modestly higher this past week while the major stock market indices put in a mixed performance.  While the Dow Jones Industrial Average and the S&P 500 saw some decent gains, the technology-heavy NASDAQ Composite Index took it on the chin following social media giant Facebook’s 19% plunge on Thursday.  Facebook’s dive marked the largest-ever one-day drop in market value for a U.S.-listed company to the tune of -$119.1 billion.

In economic news, the preliminary reading for 2nd Quarter GDP showed an annualized increase of 4.1%.  This matched most analyst forecasts although there were those hoping for a more robust number closer to 5%.  This was the best GDP reading since the third quarter of 2014, driven mostly by consumer spending which increased 4.0% and contributed 2.69 percentage points to the GDP total.

In political news, President Trump scored a promising trade deal with European Commission President Jean-Claude Juncker on Wednesday.  President Trump procured trade concessions from the European Union (EU) whereby the EU would import more soybeans and natural gas from the U.S. and improve market access for U.S. medical devices.  Future negotiations will be taking place on auto tariffs.

In housing, the National Association of Realtors reported sales of Existing Homes edged 0.6% lower in June to a seasonally adjusted annual rate of 5.38 million.  This was slightly below the consensus forecast of 5.45 million and also below a downwardly revised 5.41 million in May.  Compared with a year earlier, sales in June fell 2.2% and have now fallen year-over-year for four straight months.

The median existing home price for all housing types increased 5.2% to an all-time high of $276,900 – the 76th straight month of year-over-year gains.  The median existing single-family home price was 5.2% higher from a year ago reaching $279,300.  The inventory of existing homes for sale at the end of June increased 4.3% to 1.95 million while unsold inventory is at a 4.3-month supply at the current sales rate.  Overall, low housing supply continues to act as a burden on overall sales in addition to high prices on available inventory hindering affordability, especially for first-time buyers seeing home prices rise faster than income.

Last Wednesday, the Commerce Department reported sales of New Homes declined 5.3% from May through June to a seasonally adjusted annual rate of 631,000, the weakest rate in eight months possibly indicating the housing market is cooling off.  This was the slowest pace for new-home sales since October.  Plus, the three-month average for new home sales was 646,000 for the three months ending in June, the lowest average since the period that ended in February.

The median sales price decreased 4.2% year-over-year to $302,100 while the average sales price decreased 2.0% to $363,300.  With the current sales rate, the inventory of new homes for sale increased to a 5.7-months’ supply compared to 5.3 months in May and 5.3 months in the year-ago period.  One thing to worry about is the June swoon took place despite a decline in median and average selling prices.

The latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey released on Wednesday showed a decrease in mortgage applications.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) fell 0.2% during the week ended July 20, 2018.  The seasonally adjusted Purchase Index decreased 1.0% from the week prior while the Refinance Index increased by 1.0% from a week earlier.

Overall, the refinance portion of mortgage activity increased to 36.8% from 36.5% of total applications from the prior week.  The adjustable-rate mortgage share of activity increased to 6.3% from 6.1% 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 4.77% with points decreasing to 0.45 from 0.46.

For the week, the FNMA 4.0% coupon bond lost 25.0 basis points to close at $101.563 while the 10-year Treasury yield increased 6.49 basis points to end at 2.9580%.  The Dow Jones Industrial Average gained 392.94 points to close at 25,451.06.  The NASDAQ Composite Index fell 82.78 points to close at 7,737.42.  The S&P 500 Index advanced 16.99 points to close at 2,818.82.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 2.96%, the NASDAQ Composite Index has advanced 12.08%, and the S&P 500 Index has added 5.43%.

This past week, the national average 30-year mortgage rate climbed to 4.72% from 4.63%; the 15-year mortgage rate rose to 4.19% from 4.13%; the 5/1 ARM mortgage rate increased to 4.00% from 3.96% while the FHA 30-year rate rose to 4.42% from 4.37%.  Jumbo 30-year rates remained unchanged at 4.50%.

Economic Calendar – for the Week of July 30, 2018

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

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

The FNMA 30-year 4.0% coupon bond ($101.563, -25.0 bp) traded within a narrow 37.5 basis point range between a weekly intraday high of 101.84 on Monday and a weekly intraday low of $101.47 on Friday before closing the week at $101.563 on Friday.  After taking a step lower below technical support last Monday, mortgage bonds continued to trade mostly in a sideways direction.  They are now deeply “oversold” and could take a turn higher this coming week on either disappointing economic news or a faltering stock market.  If mortgage bonds do turn higher they will face a stiff, multiple layer of overhead resistance as shown on the chart below.  The chart suggests there will be stable to slightly improved mortgage rates this coming week.

 

Tucson Mortgages Home Loan News 7-23-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of July 16, 2018
  • Economic Calendar – week of July 23, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

This past week was the second week of earnings season resulting in a roughly flat finish for the stock market with bonds edging modestly lower.  So far, approximately 20% of corporations have reported their second quarter earnings and they have mostly exceeded expectations as the economy continues to build strength.  Evidence of the economy humming right along included the latest release of the Federal Reserve’s Beige Book reporting “Economic activity continued to expand across the United States, with 10 of the 12 Federal Reserve Districts reporting moderate or modest growth.”  Plus, the Philadelphia Fed Manufacturing Index rose to 25.7 from 19.9 and that was 4.2 points better than expected.

Furthermore, the June Case Freight Index reported “The Cass Freight Shipments and Expenditures Indices are clearly signaling that the U.S. economy, at least for now, is ignoring all of the angst coming out of Washington D.C. about the trade war.  Demand is exceeding capacity in most modes of transportation by a significant margin.  In turn, pricing power has erupted in those modes to levels that continue to spark overall inflationary concerns in the broader economy.”  This hasn’t gone unnoticed by the Fed.  Fed Chair Jerome Powell gave Congress his semiannual update on the economy and monetary policy, speaking before both the Senate Banking and the House Financial Services Committees.  Mr. Powell’s testimony strengthened the view that improving economic conditions should allow the Fed to continue to gradually raise short-term interest rates.  Rate hike odds are now showing about a 60% chance for two more hikes this year with the next likely one coming in September.

In housing, the Commerce Department reported homebuilding fell to a nine month low during June with housing starts dropping 12.3% to a seasonally adjusted annual rate of 1.173 million units.  Economists had been expecting 1.318 million starts.  Single-family homebuilding, accounting for the largest share of the housing market, fell 9.1% to a rate of 858,000 units.  Meanwhile, building permits fell for the third consecutive month to a rate of 1.273 million units – a 2.2% decline to their lowest level since September 2017.  The consensus forecast called for 1.301 million permits.  Permits for single-family units increased a modest 0.8% to 850,000.  The data from this report is somewhat surprising as it shows weakness at a time when there should be strength.  This weakness reveals the difficulties builders are having finding adequate labor in addition to the challenges they are facing from higher labor, land, and materials costs.

The latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey released on Wednesday showed a decrease in mortgage applications.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) fell 2.5% during the week ended July 13, 2018.  The seasonally adjusted Purchase Index decreased 5.0% from the week prior while the Refinance Index increased by 2.0% from a week earlier.

Overall, the refinance portion of mortgage activity increased to 36.5% from 34.8% of total applications from the prior week.  The adjustable-rate mortgage share of activity decreased to 6.1% from 6.3% of total applications.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased to 4.77% from 4.76% with points increasing to 0.46 from 0.43.

For the week, the FNMA 4.0% coupon bond lost 17.1 basis points to close at $101.813 while the 10-year Treasury yield increased 6.23 basis points to end at 2.8931%.  The Dow Jones Industrial Average gained 38.71 points to close at 25,058.12.  The NASDAQ Composite Index fell 5.78 points to close at 7,820.20.  The S&P 500 Index added 0.52 of one point to close at 2,801.83.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 1.37%, the NASDAQ Composite Index has advanced 13.28%, and the S&P 500 Index has added 4.80%.

This past week, the national average 30-year mortgage rate was unchanged at 4.63%; the 15-year mortgage rate rose to 4.13% from 4.12%; the 5/1 ARM mortgage rate increased to 3.96% from 3.95% while the FHA 30-year rate rose to 4.37% from 4.35%.  Jumbo 30-year rates decreased to 4.50% from 4.54%.

Economic Calendar – for the Week of July 23, 2018

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

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

The FNMA 30-year 4.0% coupon bond ($101.813, -17.1 bp) traded within a narrow 28.2 basis point range between a weekly intraday high of 102.063 on Thursday and a weekly intraday low of $101.781 on Monday and Friday before closing the week at $101.813 on Friday.  Mortgage bonds continued to trade within a narrow range between resistance and support levels ending the week between the 25-day and 50-day moving averages which serve as short-term support levels.  Trading has been in a consolidating, “sideways” direction for several consecutive weeks now and it appears this “sideways” pattern could continue this coming week.  Unless an unforeseen market-moving “catalyst” such as a major geopolitical or economic event comes along to shake up the financial markets this coming week, bond prices are likely to continue trading in a tight trading range resulting in relatively stable mortgage rates.

 

Tucson Mortgages Home Loan News 7-16-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of July 9, 2018
  • Economic Calendar – week of July 16, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

Trade tensions and inflation data dominated investor sentiment creating increased volatility in the stock market.  Stocks got off to a good start last Monday primarily due to a lack of any bad news over the prior weekend.  Stocks then fell on Wednesday when trade tensions surfaced on news the U.S. would continue its plan to enact an additional $200 billion worth of tariffs on a variety of Chinese goods to begin a few months from now.  However, this threat was not met with an immediate response from China and investors viewed this as a positive sign helping the stock market to recover on Thursday.  In fact, the technology laden NASDAQ Composite Index set a new all-time high on Thursday and Friday.

Inflation data came in a little hotter than expected with the Producer Price Index rising 0.3% in June following a 0.5% increase in May.  On an annualized basis, Producer Prices have increased 3.4%, their fastest increase in almost seven years.  Increased costs for steel and aluminum were noticeable suggesting the tariffs recently put in place by the Trump administration for these metals are beginning to drive input costs higher for manufacturers.

Also, inflation at the consumer level edged higher but was within the consensus forecast.  The headline Consumer Price Index (CPI) in June increased 0.1% with the Core CPI rising 0.2%.  However, consumer prices have risen 2.9% over the past year for its highest rate in six years.  This year-over-year rate more than offsets the 2.7% increase in average annual wages over the same time period leading to growing inflation concerns.   These concerns have shown up in the latest Consumer Sentiment report from the University of Michigan where it was noted “The primary concerns expressed by consumers were a decline in the future pace of economic growth and an uptick in inflation.”

In housing, the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey released on Wednesday showed an increase in mortgage applications.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) rose 2.5% during the week ended July 6, 2018.  The seasonally adjusted Purchase Index increased 7.0% from the week prior while the Refinance Index decreased by 4.0% from a week earlier to its lowest level since December 2000.

Overall, the refinance portion of mortgage activity decreased to 34.8% from 37.2% of total applications from the prior week.  The adjustable-rate mortgage share of activity decreased to 6.3% from 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 decreased to 4.76% from 4.79% with points increasing to 0.43 from 0.41.

For the week, the FNMA 4.0% coupon bond lost 7.9 basis points to close at $101.984 while the 10-year Treasury yield increased 0.068 of one basis point to end at 2.8308%.  The Dow Jones Industrial Average gained 562.93 points to close at 25,019.41.  The NASDAQ Composite Index advanced 137.59 points to close at 7,825.98.  The S&P 500 Index added 41.49 points to close at 2,801.31.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 1.21%, the NASDAQ Composite Index has advanced 13.36%, and the S&P 500 Index has added 4.78%.

This past week, the national average 30-year mortgage rate decreased to 4.63% from 4.65%; the 15-year mortgage rate fell to 4.12% from 4.13%; the 5/1 ARM mortgage rate decreased to 3.95% from 3.99% while the FHA 30-year rate fell to 4.35% from 4.37%.  Jumbo 30-year rates decreased to 4.54% from 4.59%.

Economic Calendar – for the Week of July 16, 2018

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

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

The FNMA 30-year 4.0% coupon bond ($101.984, -7.9 bp) traded within a narrower 26.6 basis point range between a weekly intraday high of 102.016 on Friday and a weekly intraday low of $101.750 on Wednesday and Thursday before closing the week at $101.984 on Friday.  Mortgage bonds traded within a narrow range between resistance and support levels ending the week close to resistance located at $101.988 on Friday.  A weak sell signal on Tuesday was followed by a weak buy signal on Friday suggesting the bond could continue to consolidate and trade sideways like it did last week.  This should result in stable mortgage rates this coming week.

 

Tucson Mortgages Home Loan News 7-9-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of July 2, 2018
  • Economic Calendar – week of July 9, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

This past holiday-shortened week was good for both the broad stock market indexes and mortgage bonds as both asset classes finished the week moderately higher.  Trading volumes were lower than usual due to the 4th of July holiday, although active investors had to wade through ongoing news of a “trade war” between the U.S. and China; the release of Fed minutes from their latest policy meeting; and data from the June Employment Report.

Thursday, the Fed released the minutes from its June 12-13 policy meeting revealing officials are aware of the possibility that growing trade tensions could have a negative impact on future business sentiment and investment spending.  Friday brought a “not too hot, not too cold” “Goldilocks” employment report featuring solid nonfarm payrolls growth of +213,000 jobs coupled with a restrained 2.7% year-over-year gain in average hourly earnings that kept inflation and aggressive rate-hike worries at arms’ length.  Nevertheless, neither the Fed minutes nor the key jobs data had much of an impact on long-term interest rates, with the yield on the benchmark 10-year Treasury note decreasing slightly for the week.

In housing news, CoreLogic reported Tuesday their Home Price Index (HPI) showed home prices increased by 1.1% in May and by 7.1% on a year-over-year basis.  May’s one-year appreciation of 7.1% was stronger than April’s reading of 6.9% and was the strongest number in four years.  Moving forward, CoreLogic is forecasting homes will appreciate 5.1% in the coming year which is slightly below their forecast of 5.3% last month.

The highest price gains in metro areas were seen in Denver, Las Vegas, and San Francisco.  CoreLogic Chief Economist Frank Nothaft remarked “The lean supply of homes for sale is leading to higher sales prices and fewer days on market, and the supply shortage is more acute for entry-level homes.

Wednesday, the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey showed a decrease in mortgage applications.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) fell 0.5% during the week ended June 29, 2018.  The seasonally adjusted Purchase Index increased 1.0% from the week prior while the Refinance Index decreased by 2.0% from a week earlier.

Overall, the refinance portion of mortgage activity decreased to 37.2% from 37.6% of total applications from the prior week.  The adjustable-rate mortgage share of activity increased to 6.7% from 6.5% of total applications.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance decreased to 4.79% from 4.84% with points decreasing to 0.41 from 0.42.

For the week, the FNMA 4.0% coupon bond gained 14.1 basis points to close at $102.063 while the 10-year Treasury yield decreased 3.60 basis points to end at 2.824%.  The Dow Jones Industrial Average gained 185.07 points to close at 24,456.48.  The NASDAQ Composite Index advanced 178.09 points to close at 7,688.39.  The S&P 500 Index added 41.45 points to close at 2,759.82.  Year to date on a total return basis, the Dow Jones Industrial Average has lost 1.06%, the NASDAQ Composite Index has gained 11.37%, and the S&P 500 Index has advanced 3.22%.

This past week, the national average 30-year mortgage rate decreased to 4.65% from 4.66%; the 15-year mortgage rate rose to 4.13% from 4.11%; the 5/1 ARM mortgage rate decreased to 3.99% from 4.00% while the FHA 30-year rate fell to 4.37% from 4.38%.  Jumbo 30-year rates decreased to 4.59% from 4.69%.

Economic Calendar – for the Week of July 9, 2018

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

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

The FNMA 30-year 4.0% coupon bond ($102.063, +14.1 bp) traded within a slightly wider 34.4 basis point range between a weekly intraday high of 102.094 on Friday and a weekly intraday low of $101.750 on Tuesday before closing the week at $102.063 on Friday.  Mortgage bonds traded mostly between resistance and support levels during a holiday-shortened week, but did manage to close just above nearest resistance located at $101.988 on Friday.  However, the bond is currently extremely “overbought” and will be susceptible to a slight pull-back or sideways trading this coming week.  With the stock market seemingly “shrugging off” the latest trade news with China on Friday, we could see bond prices consolidate leading to stable or very slightly higher mortgage rates this coming week.

 

Tucson Mortgages Home Loan News 7-2-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of June 25, 2018
  • Economic Calendar – week of July 2, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market ended the week moderately lower on continuing trade tensions primarily between the U.S. and China.  The Energy Sector was a notable exception as oil prices reached new four-year highs following a lower than expected U.S. oil inventory report and news the U.S. State Department would seek to enact powerful sanctions on any countries that don’t cut oil imports from Iran to “zero” by November 4.

The Wall Street Journal reported last Monday that U.S. officials were planning to block Chinese firms from investing in U.S. technology companies plus enacting new limits on U.S. technology exports to China.  Also on Tuesday, the president told a group of White House reporters the government would continue to rely on the Committee on Foreign Investment in the United States (CFIUS) in limiting Chinese investments in U.S. technology.  Blocking Chinese access to certain U.S. technologies is not only seen as a deterrent to intellectual property theft, but also appears to be a negotiating tool to craft a more favorable trade deal with China.

In housing news, the Commerce Department reported last Monday that New Home Sales remained robust for the month of May, selling at a 6.7% pace higher than in April and 14.1% higher year-over-year for a seasonally adjusted annual rate of 689,000.  The median sales price fell 3.3% year-over-year to $313,000 with the average sales price declining 2.6% to $378,400.  Based on the current sales rate, new home inventory declined to a 5.2 months’ supply – down from April’s 5.5 month supply and 5.4 months’ supply from a year ago.  Sales in the Southern Region led the way with 17.9% sales growth with the other regions showing flat to negative sales growth.  The Western Region was lower by 8.7%; the Midwest was flat at 0.0%; and the Northeast was 10% lower.

Wednesday, the National Association of Realtors (NAR) reported their Pending Home Sales Index fell for the fifth straight month on an annualized basis by 0.5% in May.  NAR chief economist Lawrence Yun commented “Pending home sales underperformed once again in May …coming in at the second lowest level over the past year.  Realtors® in most of the country continue to describe their markets as highly competitive and fast moving, but without enough new and existing inventories for sale, activity has essentially stalled.”  Yun is now forecasting sales for existing homes to decrease 0.4% to 5.49 million in 2018 (down from 5.51 million in 2017) with the national median existing-home price expected to increase around 5.0%.

Wednesday, the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey showed a decrease in mortgage applications.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) fell 4.9% during the week ended June 22, 2018.  The seasonally adjusted Purchase Index decreased 6.0% from the week prior while the Refinance Index decreased by 4.0% from a week earlier.

Overall, the refinance portion of mortgage activity increased to 37.6% from 36.8% of total applications from the prior week.  The adjustable-rate mortgage share of activity decreased to 6.5% from 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 increased to 4.84% from 4.83% with points decreasing to 0.42 from 0.48.

For the week, the FNMA 4.0% coupon bond gained 18.8 basis points to close at $101.922 while the 10-year Treasury yield decreased 4.04 basis points to end at 2.8600%.  The Dow Jones Industrial Average lost 309.48 points to close at 24,271.41.  The NASDAQ Composite Index fell 182.52 points to close at 7,510.30.  The S&P 500 Index dropped 36.51 points to close at 2,718.37.  Year to date on a total return basis, the Dow Jones Industrial Average has lost 1.81%, the NASDAQ Composite Index has gained 8.79%, and the S&P 500 Index has advanced 1.67%.

This past week, the national average 30-year mortgage rate decreased to 4.66% from 4.70%; the 15-year mortgage rate fell to 4.11% from 4.15%; the 5/1 ARM mortgage rate increased to 4.00% from 3.99% while the FHA 30-year rate fell to 4.38% from 4.42%.  Jumbo 30-year rates decreased to 4.69% from 4.73%.

Economic Calendar – for the Week of July 2, 2018

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

 

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

The FNMA 30-year 4.0% coupon bond ($101.922, +18.8 bp) traded within a wider 31.3 basis point range between a weekly intraday high of 102.016 on Thursday and a weekly intraday low of $101.703 on Monday before closing the week at $101.922 on Friday.

Mortgage bonds traded in the opposite direction of the stock market, rising into a dual band of overhead resistance at the 76.4% Fibonacci retracement level ($101.988) and the 100-day moving average ($102.023).  A new buy signal showed last Wednesday from a positive stochastic crossover, but it appears it wasn’t strong enough to push bond prices above resistance.

Therefore, we could see some consolidation between the identified resistance and support levels ahead of this coming week’s significant economic news headlined by Friday’s Employment Report.  If the jobs numbers are as or better than expected we could see the stock market rebound and bond prices slip lower.  On the other hand, if the economic news is worse than forecast or trade talk becomes more antagonistic and the stock market continues to stumble, bond prices could continue to improve along with mortgage rates.

 

Tucson Mortgages Home Loan News 6-25-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of June 18, 2018
  • Economic Calendar – week of June 25, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

Although the Nasdaq Composite Index set a new all-time high last Wednesday, the three major stock indexes finished the week lower amid escalating trade tensions primarily between the U.S. and China and the U.S. and the European Union.  The Trump Administration wants to level the playing field when it comes to trade and tariffs by negotiating better deals to protect American workers and the economy.  U.S. tariffs are among the lowest in the world and in our nation’s history.  U.S. trade policy has long favored lower tariffs and fewer restrictions on the movement of goods and services across international borders while our trading partners have been more restrictive.  The U.S. is currently running the following trade deficits:

China – $636 billion traded with a $375 billion deficit.
Mexico – $557 billion traded with a $71 billion deficit.
Japan – $204 billion traded with a $69 billion deficit.
Germany – $171 billion traded with a $65 billion deficit.
Canada – $582 billion traded with an $18 billion deficit.

In response to all of the tariff and trade war talk, longer-term bond yields slipped marginally lower resulting in relatively stable mortgage rates.

There were several housing-related reports released this past week.  Last Monday, the National Association of Home Builders/Wells Fargo Housing Market Index (NAHB) measuring home builder sentiment was reported to have slipped two points to 68 in June.  A reading above 50 is considered to indicate positive sentiment.

Yet, June’s decline was attributed to soaring lumber prices that have added almost $9,000 to the average price of a new single-family home since January 2017.  Robert Dietz, NAHB chief economist, commented “Improved economic growth, continued job creation and solid housing demand should spur additional single-family construction in the months ahead.  However, builders do need access to lumber and other construction materials at reasonable costs in order to provide homes at competitive price points, particularly for the entry-level market where inventory is most needed.”

Tuesday, the U.S. Census Bureau and the Department of Housing and Urban Development reported Housing Starts increased 5.0% month-over-month in May to a seasonally adjusted annual rate of 1.350 million, exceeding the consensus forecast of 1.323 million.  However, Building Permits declined 4.6% to 1.301 million falling below the consensus estimate of 1.343 million.  Permits are a leading indicator of housing market strength and were lower in May for both single-family units (-2.2%) and multi-unit dwellings (-8.8%).  This suggests we may see some weakness in the June Housing Starts report.

Wednesday, the National Association of Realtors reported sales of Existing Homes declined 0.4% month-over-month in May to a seasonally adjusted annual rate of 5.43 million.  This was slightly below the consensus forecast of 5.55 million.  The median existing home price for all housing types jumped 4.9% to an all-time high of $264,800 – the 75th straight month of year-over-year gains.  Existing home inventory for sale at the end of May rose 2.8% to 1.85 million, but this is 6.1% lower than the same period a year ago.  Unsold inventory is currently at a 4.1-month supply at the current sales rate compared to a usual 6.0-month supply associated with a more balanced market.  The song remains the same…limited home inventory coupled with rising prices and mortgage rates is hampering affordability, especially for first-time home buyers.

Wednesday, the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey showed an increase in mortgage applications.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) rose 5.1% during the week ended June 15, 2018.  The seasonally adjusted Purchase Index increased 4.0% from the week prior while the Refinance Index increased by 6.0% from a week earlier.

Overall, the refinance portion of mortgage activity increased to 36.8% from 35.6% of total applications from the prior week.  The adjustable-rate mortgage share of activity increased to 7.0% from 6.8% 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 4.83% with points decreasing to 0.48 from 0.53.

For the week, the FNMA 4.0% coupon bond gained 9.3 basis points to close at $101.734 while the 10-year Treasury yield decreased 2.36 basis points to end at 2.9004%.  The Dow Jones Industrial Average lost 509.59 points to close at 24,580.89.  The NASDAQ Composite Index fell 53.56 points to close at 7,692.82.  The S&P 500 Index dropped 24.78 points to close at 2,754.88.  Year to date on a total return basis, the Dow Jones Industrial Average has lost 0.56%, the NASDAQ Composite Index has gained 11.44%, and the S&P 500 Index has advanced 3.04%.

This past week, the national average 30-year mortgage rate increased to 4.70% from 4.65%; the 15-year mortgage rate rose to 4.15% from 4.11%; the 5/1 ARM mortgage rate increased to 3.99% from 3.95% while the FHA 30-year rate rose to 4.42% from 4.38%.  Jumbo 30-year rates increased to 4.73% from 4.68%.

Economic Calendar – for the Week of June 25, 2018

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

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

The FNMA 30-year 4.0% coupon bond ($101.734, +9.3 bp) traded within a far narrower 28.1 basis point range between a weekly intraday high of 101.859 on Tuesday and a weekly intraday low of $101.578 on Thursday before closing the week at $101.734 on Friday.

The bond traded along a convergence between the 25-day and 50-day moving averages (MAs).  These MAs act as both short-term support and resistance.  Should the 25-day MA cross above the 50-day MA, it would signal market strength and a buy signal likely resulting in a slight improvement in mortgage rates.  However, technical resistance is also found at the 76.4% Fibonacci retracement level at $101.988 so any upward move will have to contend with this layer of resistance plus that from the 100-day MA at $102.087.  These levels may temper any upward move resulting in stable rates.

 

Tucson Mortgages Home Loan News 6-18-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of June 11, 2018
  • Economic Calendar – week of June 18, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

In addition to some generally positive economic news, there were three major events affecting the financial markets this past week.  There was an historic initial summit between the U.S. and North Korea over denuclearizing the Korean peninsula; a 25 basis point rate hike by the Fed; and further threats of a trade war between China and the U.S.  The three major stock indexes ended “mixed” for the week after the Dow Jones Industrials slid lower on Friday erasing its weekly gains.  The Nasdaq Composite Index managed to set a new record high during the week before falling back on Friday while the S&P 500 ended minimally higher.

The stock and bond markets reacted somewhat negatively to the Federal Reserve’s monetary policy meeting on Wednesday.  Fed officials decided to raise the federal funds rate by another 0.25% as widely expected, but the markets retreated after policymakers provided a more hawkish view for future rate hikes with greater expectations for a total of four rate hikes in 2018, rather than three.

Tuesday, the Labor Department reported consumer inflation in May rose 0.2% and had reached 2.8% on a year-over-year basis, its highest level since 2011.  However, most of the increase in inflation is attributed to the rise in oil prices, and core inflation (excluding food and energy costs) remained close to the Fed’s target of 2%.  Thursday, Retail Sales provided an upside surprise with retail sales excluding automobiles increasing 0.9% in May versus expectations for a 0.5% gain.  Friday, the Trump administration declared it would follow through with an earlier warning to implement tariffs on imports of $50 billion worth of goods from China in response to intellectual property theft and forced technology transfers.  China quickly responded with proposed tariffs on

$50 billion worth of U.S. goods including beef, cars, poultry, and tobacco.  Hopefully, these tariff announcements are nothing more than strategizing for a negotiated solution that will avoid a full-blown trade war that would end with negative consequences for the world’s two largest economies.

There were two mortgage-related reports released this past week.  Tuesday, CoreLogic released its monthly Loan Performance Insights Report for March 2018.  The report showed the number of mortgage loans 30 days or more past due declined from 4.8% to 4.3%.  The serious delinquency rate, defined as those loans 90 days or more past due, dropped to 1.9% in March, the lowest delinquency rate for the month of March since 2007 when it was 1.5%.  The serious delinquency rate a year ago for March was 2.1%.

The foreclosure inventory rate, a measure of the share of mortgages in some stage of the foreclosure process, was 0.6% for March – a level that has been holding since August 2017 and the lowest level since June 2007.  Dr. Frank Nothaft, chief economist for CoreLogic, remarked

“Unemployment and lack of home equity are two factors that can lead to borrowers defaulting on their mortgages.  Unemployment is at the lowest level in 18 years, and for the first quarter, the CoreLogic Equity Report revealed record levels of home equity growth with equity per owner up $16,300 on average for the year ending March 2018.”  This is certainly good news for the housing industry.

Wednesday, the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey showed a decrease in mortgage applications.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) fell 1.5% during the week ended June 8, 2018.  The seasonally adjusted Purchase Index declined 2.0% from the week prior while the Refinance Index also decreased by 2.0% from a week earlier.

Overall, the refinance portion of mortgage activity remained unchanged at 35.6% of total applications from the prior week.  The adjustable-rate mortgage share of activity decreased to 6.8% from 7.1% of total applications.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased to 4.83% from 4.75% with points increasing to 0.53 from 0.46.

For the week, the FNMA 4.0% coupon bond gained 4.7 basis points to close at $101.641 while the 10-year Treasury yield decreased 2.6 basis points to end at 2.924%.  The Dow Jones Industrial Average lost 226.05 points to close at 25,090.48.  The NASDAQ Composite Index gained 100.87 points to close at 7,746.38.  The S&P 500 Index added 0.63 of one point to close at 2,779.66.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 1.50%, the NASDAQ Composite Index has added 12.21%, and the S&P 500 Index has advanced 3.96%.

This past week, the national average 30-year mortgage rate decreased to 4.65% from 4.68%; the 15-year mortgage rate was unchanged at 4.11%; the 5/1 ARM mortgage rate increased to 3.95% from 3.94% while the FHA 30-year rate fell to 4.38% from 4.42%.  Jumbo 30-year rates decreased to 4.68% from 4.70%.

Economic Calendar – for the Week of June 18, 2018

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

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

The FNMA 30-year 4.0% coupon bond ($101.641, +4.7 bp) traded within a wider 53.1 basis point range between a weekly intraday high of 101.797 on Friday and a weekly intraday low of $101.266 on Wednesday before closing the week at $101.641 on Friday.

The bond fell to its secondary support level at $101.234 during the first half of the week before bouncing and moving higher just above primary short-term support at $101.586 by the end of the week.  There was a new buy signal on Thursday from a slow stochastic crossover plus the bond is neither overbought nor oversold so we should see prices rise into overhead resistance levels this coming week.  If the bond is able to break above overhead resistance, it should lead to stable to slightly lower mortgage rates in the coming week.

 

Tucson Mortgages Home Loan News 6-11-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of June 4, 2018
  • Economic Calendar – week of June 11, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

The major stock market indexes made a solid advance during the week amid strong jobs and economic data resulting in lower bond prices and rising yields.  Tuesday, the ISM Non-manufacturing Index showed a greater than forecast expansion in the services sector with a reading of 58.6 in May from 56.8 in April.  This increase matched the rise in the ISM Manufacturing Index for May, suggesting second quarter GDP growth will show a noticeable increase over GDP growth in the first quarter.

Also on Tuesday, the monthly Job Openings and Labor Turnover Survey (JOLTS) showed there were 6.698 million job openings available in April with only 6.4 million available workers to fill them.  This is the second month in a row where there were more job vacancies than available hires, a phenomenon the American economy has never experienced before until March and April of this year.  Although this situation should create a demand for higher wages, average hourly earnings only increased 2.7% annualized in May, up one-tenth of a point from April.  However, you can bet the Fed will be keeping a close eye on wage growth going forward, and there is no doubt that they will raise interest rates for the second time this year when they announce their rate-hike decision this Wednesday.

There was one housing related report released this past week.  Tuesday, CoreLogic reported their latest Home Price Index (HPI) and Forecast for April 2018 showing home prices increased by 1.2% month-over-month in April and by 6.9% year-over-year from April 2017.

CoreLogic is forecasting their national HPI will continue to increase 5.3% on a year-over-year basis from April 2018 to April 2019 and will rise another 0.2% for May 2018.  Frank Nothaft, CoreLogic Chief Economist, remarked “The best antidote for rising home prices is additional supply.  New construction has failed to keep up with and meet new housing growth or replace existing inventory.  More construction of for-sale and rental housing will alleviate housing cost pressures.”

Analyzing home values in the country’s 100 largest metropolitan areas based on housing inventory indicated 40% of metropolitan areas had an overvalued housing market, 28% were undervalued, and 32% were considered at value as of April 2018.  When evaluating only the top 50 markets, 52% were overvalued, 14% were undervalued and 34% were at-value.

From the mortgage industry, the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey showed an increase in mortgage applications.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) increased 4.1% during the week ended June 1, 2018.  The seasonally adjusted Purchase Index rose 4.0% from the week prior while the Refinance Index also increased by 4.0% from a week earlier.

Overall, the refinance portion of mortgage activity increased to 35.6% from 35.3% of total applications from the prior week.  The adjustable-rate mortgage share of activity increased to 7.1% from 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 decreased to 4.75% from 4.84% with points decreasing to 0.46 from 0.47.

For the week, the FNMA 4.0% coupon bond lost 34.4 basis points to close at $101.594 while the 10-year Treasury yield increased 4.8 basis points to end at 2.950%.  The three major stock indexes advanced during the week.

The Dow Jones Industrial Average gained 681.32 points to close at 25,316.53.  The NASDAQ Composite Index added 91.18 points to close at 7,645.51.  The S&P 500 Index added 44.41 points to close at 2,779.03.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 2.42%, the NASDAQ Composite Index has added 10.75%, and the S&P 500 Index has advanced 3.94%.

This past week, the national average 30-year mortgage rate increased to 4.68% from 4.60%; the 15-year mortgage rate rose to 4.11% from 4.04%; the 5/1 ARM mortgage rate increased to 3.94% from 3.93% while the FHA 30-year rate climbed to 4.42% from 4.38%.  Jumbo 30-year rates increased to 4.70% from 4.66%.

Economic Calendar – for the Week of June 11, 2018

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

Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond

The FNMA 30-year 4.0% coupon bond ($101.594, -34.4 bp) traded within a narrower 42.2 basis point range between a weekly intraday high of 101.938 on Monday and a weekly intraday low of $101.516 on Thursday before closing the week at $101.594 on Friday.

The bond fell from its position sitting on the 50-day moving average (MA) and continued to slide lower during the week to end just below the 25-day MA.  Technically, the last sell signal from May 31 is still in effect and since the bond is still not “oversold,” there is some continuing risk for further mortgage bond price erosion this week.  A continuing price move toward the next support level will result in a slight increase in mortgage rates in the coming week.