Tucson Mortgages Home Loan News 5-14-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of May 14, 2018
  • Economic Calendar – week of May 21, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

The three major stock market indexes plus mortgage bonds ended the week modestly lower after strong economic data elevated fears of higher interest rates.  The week’s solid economic data sent the yield on the benchmark 10-year Treasury note up to 3.12% on Thursday, its highest level in seven years.

In economic news, the Commerce Department reported retail sales increased by 0.3% in April.  Although this figure matched the consensus forecast, the government revised the sales data from February and March significantly higher.  With current labor market trends driving up wage income at an annualized rate of about 4.5%, retail spending growth should continue to trend higher over the coming months.  Furthermore, the New York Empire State and Philadelphia Fed Manufacturing Indexes for May both showed significantly more manufacturing growth than expected.

There were several housing related reports released this past week.  Tuesday, the National Association of Home Builders (NAHB) Housing Market Index (HMI), a gauge of builder opinion on the relative level of current and future single-family home sales, came in with a reading of 70 for May, slightly higher than the consensus forecast of 69 and April’s downwardly revised reading of 68.  NAHB Chairman Randy Noel remarked “The solid May report shows that builders are buoyed by growing consumer demand for single-family homes.  However, the record-high cost of lumber is hurting builders’ bottom lines and making it more difficult to produce competitively priced houses for newcomers to the market.”

Wednesday, the U.S. Census Bureau and the Department of Housing and Urban Development reported new Housing Starts in April reached a seasonally adjusted annual rate of 1.287 million.  This was a decline of 3.7% from the upwardly revised March pace of 1.336 million but was an increase of 10.5% compared with the April 2017 rate of 1.165 million.  The consensus forecast called for a rate of around 1.325 million for April.  Meanwhile, the seasonally adjusted rate of new Building Permits fell to 1.352 million, down 1.8% from the upwardly revised February rate of 1.377 million, but 7.7% higher than the April 2017 rate.

In the single-family home category, housing permits rose month over month in April from a revised annual rate of 851,000 in March to a seasonally adjusted annual rate of 859,000.  The rate rose 7.9% year over year.  Danielle Hale, chief economist for Realtor.com, had this to say about the report:  “We saw 894,000 single-family housing starts in April, a slight step up from an upwardly revised March figure.  We remain significantly behind a normal level of 1.2 million starts.  In fact, if single-family starts continue at the strong yearly growth rate we saw in April, it will be fall 2019 before annual single-family starts break the 1 million mark consistently — which is still 17 percent lower than normal.”

From the mortgage industry, the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey showed a drop in mortgage applications.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) decreased 2.7% during the week ended May 11, 2018.  The seasonally adjusted Purchase Index fell 2.0% from the week prior while the Refinance Index decreased by 4.0% to its lowest level since August 2008.

Overall, the refinance portion of mortgage activity fell to 35.9% from 36.3% of total applications from the prior week, its lowest level since September 2008.  The adjustable-rate mortgage share of activity was unchanged at 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 4.77% from 4.78% with points decreasing to 0.35 from 0.36.

For the week, the FNMA 4.0% coupon bond lost 39.0 basis points to close at $101.266 while the 10-year Treasury yield increased 9.05 basis points to end at 3.06%.  The three major stock indexes ended lower for the week.

The Dow Jones Industrial Average fell 116.08 points to close at 24,715.09.  The NASDAQ Composite Index dropped 48.54 points to close at 7,354.34.  The S&P 500 Index lost 14.75 points to close at 2,712.97.  Year to date on a total return basis, the Dow Jones Industrial Average has dropped 0.02%, the NASDAQ Composite Index has gained 6.53%, and the S&P 500 Index has advanced 1.47%.

This past week, the national average 30-year mortgage rate increased to 4.78% from 4.65%; the 15-year mortgage rate rose to 4.21% from 4.05%; the 5/1 ARM mortgage rate increased to 4.00% from 3.84% while the FHA 30-year rate rose to 4.50% from 4.45%.  Jumbo 30-year rates increased to 4.80% from 4.68%.

Economic Calendar – for the Week of May 21, 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 ($101.266, -39.0 bp) traded within a wider 98.1 basis point range between a weekly intraday high of 101.641 on Monday and a weekly intraday low of $100.66 on Thursday before closing the week at $101.266 on Friday.  The bond had a positive bounce off of support on Thursday and Friday from a deeply oversold position resulting in a positive stochastic crossover buy signal.  From a technical perspective, the bond should trade up for a test of overhead resistance in the coming week, and should this happen; mortgage rates should undergo a slight improvement.

 

Tucson Mortgages Home Loan News 5-14-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of May 7, 2018
  • Economic Calendar – week of May 14, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market registered solid gains for the week propelled by solid corporate earnings reports, economic news, and geopolitical events.  In fact, the S&P 500 Index recorded its best weekly advance in two months, closing above its 100-day moving average for the first time since the middle of March.  Meanwhile, the yield on the benchmark 10-year Treasury note briefly touched the psychologically important 3% barrier for the first time since April 26, but ended 1.80 basis points lower for the week at 2.97%.

The volume of first quarter corporate earnings reports is winding down, and overall, they have been very favorable for the stock market.  Data and analytics firm FactSet is projecting overall earnings for the S&P 500 have grown by 24.9% for the quarter over the prior year with nearly four out of five companies beating analysts’ earnings and revenue estimates.  Rising oil prices have also pushed energy sector stocks higher during the week.

Oil prices jumped on President Trump’s decision to pull the U.S. out of the Iran nuclear agreement while restoring sanctions on Iran.  Military actions between Iran and Israel further supported oil prices when Israel struck Iran’s military installations in Syria in response to an Iranian missile attack on the Israeli-held Golan Heights.  Iran is OPEC’s third-largest oil exporter, and the threat of continuing military conflict within the oil-rich Middle East prompted speculators to bet on a disruption to crude oil supply on the global market.  West Texas Intermediate crude oil reached a new three-and-a-half year high at $71.26 per barrel.

On the economic front, investors received some welcome inflation data on Thursday from the April Consumer Price Index (CPI) report.  Total inflation at the consumer level was reported at +0.2% and came in slightly below the consensus estimate of +0.3%.  The Core CPI, which excludes food and energy, increased only 0.1% and was below the consensus forecast of 0.2%.  This data may prompt the Federal Reserve to be less aggressive in raising interest rates this year.

There were only a couple housing related reports released this past week.  CoreLogic released their Loan Performance Insights Report for February 2018 showing the number of loans 30 or more days past due declined from 4.9% to 4.8%.  The number of seriously delinquent loans of 90 or more days past due remained stable at 2.1% while those in foreclosure remained stable at 0.6%.

Dr. Frank Nothaft, chief economist for CoreLogic, stated “Last year’s hurricanes continue to have an effect on loan performance in affected markets, showing up in statewide data.  Serious delinquency rates in February were 50% higher than in August 2017 in Texas, and nearly double in Florida, even though the wind and flood damage was primarily in coastal markets.  In Puerto Rico, the damage was widespread.  Serious delinquency rates were up five-fold over the August-to-February period, with a significant increase in all metropolitan areas there.”

From the mortgage industry, the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey showed a slight decline in mortgage applications.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) decreased 0.4% during the week ended May 4, 2018.  The seasonally adjusted Purchase Index fell 0.2% from the week prior while the Refinance Index decreased by 1.0%.

Overall, the refinance portion of mortgage activity fell to 36.3% from 36.5% of total applications from the prior week, its lowest level since September 2008.  The adjustable-rate mortgage share of activity decreased to 6.5% 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 4.78% from 4.80% with points decreasing to 0.50 from 0.53.

For the week, the FNMA 4.0% coupon bond lost 18.8 basis points to close at $101.656 while the 10-year Treasury yield decreased 1.80 basis points to end at 2.9695%.  The major stock indexes moved higher for the week.

The Dow Jones Industrial Average advanced 568.66 points to close at 24,831.17.  The NASDAQ Composite Index gained 193.26 points to close at 7,402.88.  The S&P 500 Index added 64.30 points to close at 2,727.72.  Year to date on a total return basis, the Dow Jones Industrial Average has added 0.45%, the NASDAQ Composite Index has gained 7.24%, and the S&P 500 Index has advanced 2.02%.

This past week, the national average 30-year mortgage rate increased to 4.65% from 4.62%; the 15-year mortgage rate rose to 4.05% from 4.00%; the 5/1 ARM mortgage rate increased to 3.84% from 3.78% while the FHA 30-year rate stayed unchanged at 4.45%.  Jumbo 30-year rates were also unchanged at 4.68%.

Economic Calendar – for the Week of May 14, 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 ($101.656, -18.8 bp) traded within a slightly wider 53.1 basis point range between a weekly intraday high of 101.922 on Monday and a weekly intraday low of $101.392 on Friday before closing the week at $101.656 on Friday.  The bond looks like it will continue to be range-bound this coming week, trading between the dual bands of support and resistance shown on the chart below.  As a result, mortgage rates should remain relatively stable this week.

 

Tucson Mortgages Home Loan News 5-7-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of April 30, 2018
  • Economic Calendar – week of May 7, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market seemed to lack conviction this past week as investors had to wade through a plethora of corporate earnings, including technology giant Apple’s quarterly report, in addition to the latest monetary policy decision from the Fed and the Employment Situation report for April.  As a result, the major stock indexes ended “mixed” for the week with the Dow Jones Industrial Average and S&P 500 Index edging lower while the NASDAQ Composite Index moved slightly higher.  The 10-year Treasury yield slipped slightly lower at 2.95% after approaching 3% on Wednesday.

The Fed’s latest monetary policy decision arrived Wednesday afternoon without any real surprises. As expected, Fed officials unanimously decided to leave the federal funds target range unchanged at 1.50% to 1.75%.  However, the Fed’s policy statement led investors to believe there will be a rate hike at their June meeting with the possibility for another one to two rate hikes before the end of the year.  Indeed, the latest probability reading from the Fed Fund Futures market now stands at 100% for a 25 basis point rate hike at the Fed’s June 13 FOMC meeting.

The Employment Situation (Jobs) report for April was released Friday morning, showing a lower than forecast 164,000 increase in nonfarm payrolls.  Although this was lower than the consensus estimate of 190,000, upwardly revised readings for the prior two months balanced the shortfall.  Average hourly earnings growth of +0.2% matched expectations while the unemployment rate fell to 3.9%, the lowest it has been in 17.5 years.  The reason the unemployment rate fell below 4% was not due to new job formation, but as a result of 236,000 people dropping out of the labor force during the month.

There were several housing related reports released this past week.  The National Association of Realtors® (NAR) reported Pending Home Sales edged higher in March by 0.4%.  This was below the consensus forecast calling for a 1.5% gain, and was constrained by continuing tight inventory levels and appreciating home values that are making it difficult for prospective buyers to find affordable homes to buy.  NAR chief economist, Lawrence Yun, remarked “Healthy economic conditions are creating considerable demand for purchasing a home, but not all buyers are able to sign contracts because of the lack of choices in inventory.  Steady price growth and the swift pace listings are coming off the market are proof that more supply is needed to fully satisfy demand.”

The U.S. Census Bureau announced total Construction Spending fell 1.7% in March following an upwardly revised 1.0% increase for February.  Private construction spending fell due to a 3.5% decline in residential spending including a 0.4% drop in single-family construction spending, and a 0.4% decline in nonresidential spending led by a 2.2% decline in commercial spending.  Year-over-year, total construction spending was up 3.6%, with public construction spending 3.0% higher and private construction spending up 3.9%.

CoreLogic® released their latest Home Price Index (HPI™) and HPI Forecast™ for March 2018, showing home prices increased both on a year-over-year and month-over-month basis.  Home prices increased nationally by 7% year-over-year from March 2017 to March 2018, and by 1.4% in March 2018 on a month-over-month basis.  Furthermore, the CoreLogic HPI Forecast shows the national home-price index is projected to continue to increase by 5.2% on a year-over-year basis from March 2018 to March 2019.  Dr. Frank Nothaft, chief economist for CoreLogic, stated “Home prices grew briskly in the first quarter of 2018.  High demand and limited supply have pushed home prices above where they were in early 2006.  New construction still lags historically normal levels, keeping upward pressure on prices.”

From the mortgage industry, the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey showed a decline in mortgage applications.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) decreased 2.5% during the week ended April 27, 2018.  The seasonally adjusted Purchase Index fell 2.0% from the week prior while the Refinance Index decreased by 4.0%.

Overall, the refinance portion of mortgage activity fell to 36.5% from 37.2% of total applications from the prior week, its lowest level since September 2008.  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 increased to 4.80% from 4.73%, its highest level since September 2013.  Points increased to 0.53 from 0.49.

For the week, the FNMA 4.0% coupon bond gained 3.1 basis points to close at $101.844 while the 10-year Treasury yield decreased 0.72 of one basis point to end at 2.9515%.  The major stock indexes ended “mixed” for the week.

The Dow Jones Industrial Average fell 48.68 points to close at 24,262.51.  The NASDAQ Composite Index gained 89.82 points to close at 7,209.62.  The S&P 500 Index lost 6.49 points to close at 2,663.42.  Year to date on a total return basis, the Dow Jones Industrial Average has fallen 1.85%, the NASDAQ Composite Index has gained 4.44%, and the S&P 500 Index has dropped 0.38%.

This past week, the national average 30-year mortgage rate decreased to 4.62% from 4.64%; the 15-year mortgage rate fell to 4.00% from 4.02%; the 5/1 ARM mortgage rate remained unchanged at 3.78% while the FHA 30-year rate stayed unchanged at 4.45%.  Jumbo 30-year rates were also unchanged at 4.68%.

Economic Calendar – for the Week of May 7, 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 ($101.844, +3.1 bp) traded within a narrower 48.4 basis point range between a weekly intraday low of $101.516 on Wednesday and a weekly intraday high of $102.00 on Friday before closing the week at $101.844 on Friday.  The bond looks like it will be range-bound this coming week, trading between dual bands of support and resistance.  This should result in relatively stable mortgage rates this week.

 

Tucson Mortgages Home Loan News 4-30-2018

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

Weekly Review

Market action in stocks and bonds was driven by a combination of 1st Quarter earnings reports, economic news, and geopolitical news of a historic meeting between the leaders of North and South Korea, who agreed on Friday to work to remove all nuclear weapons from the Korean Peninsula and, within the year, pursue talks with the United States to declare an official end to the Korean War.

This week past week more than a third of S&P 500 companies reported their earnings results and they were mostly better than expected.  However, several companies including Caterpillar provided forward guidance that was worse than anticipated, helping to send stock prices lower for the week while at least temporarily boosting bond prices on Thursday and Friday.  Caterpillar helped to take the Dow lower after saying in its post-earnings conference call that margins in the first quarter will be the “high water mark” for the year.

Other than earnings reports, investors closely monitored Treasury yields, which reached new multi-year highs on Wednesday before retreating on Thursday and Friday.  The benchmark 10-year Treasury yield crossed above the psychologically important 3.0% mark for the first time in over four years, reaching 3.03% before closing the week at 2.96%.

In economic news, 1st quarter Gross Domestic Product (GDP) showed the US economy grew by 2.3%, which was higher than expectations of 2.0%, but lower than the fourth quarter’s growth rate of 2.9%.  Weaker consumer spending in the first quarter was largely responsible with only a 1.1% increase following an increase of 4.0% in the fourth quarter.

In housing, the National Association of Realtors reported Existing Home Sales increased 1.1% month-over-month in March to a seasonally adjusted annual rate of 5.60 million, slightly above the consensus forecast of 5.57 million.  The median existing home price for all housing types increased 5.8% to $250,400, while the median existing single-family home price increased 5.9% from a year ago to $252,100.  Home inventory for sale at the end of March increased 5.7% to 1.67 million, but this is 7.2% lower than the same period a year ago.  Unsold inventory is at a 3.6-month supply at the current rate of sales.  The low inventory of existing homes for sale coupled with high prices and rising mortgage rates continues to hinder overall sales.

Further, the Census Bureau and the Department of Housing and Urban Development reported New Home Sales in March at a seasonally adjusted annual rate of 694,000 versus expectations for 631,000.  This was a 4.0% month-over-month increase above an upwardly revised February rate of 667,000.  The median sales price of new houses sold in March was $337,200, a year-over-year increase of 4.8%.  The average sales price dipped 3.8% to $369,900.  Based on the current rate of sales, the inventory of new homes for sale fell to a 5.2-months’ supply, versus 5.4 months in February and 5.0 months in the year-ago period.

From the mortgage industry, the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey showed a drop in mortgage applications.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) decreased 0.2% during the week ended April 20, 2018.  The seasonally adjusted Purchase Index was unchanged from the week prior while the Refinance Index decreased by 0.3%.

Overall, the refinance portion of mortgage activity fell to 37.2% from 37.6% of total applications from the prior week, its lowest level since September 2008.  The adjustable-rate mortgage share of activity increased to 6.5% from 6.6% 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 4.73% from 4.66%, its highest level since September 2013.  Points increased to 0.49 from 0.46.

For the week, the FNMA 4.0% coupon bond gained 12.5 basis points to close at $101.813 while the 10-year Treasury yield decreased 0.15 of one basis point to end at 2.9587%.  The major stock indexes moved modestly lower during the week.

The Dow Jones Industrial Average dropped 151.75 points to close at 24,311.19.  The NASDAQ Composite Index fell 26.33 points to close at 7,119.80.  The S&P 500 Index lost 0.23 points to close at 2,669.91.  Year to date on a total return basis, the Dow Jones Industrial Average has fallen 1.65%, the NASDAQ Composite Index has gained 3.13%, and the S&P 500 Index has lost 0.14%.

This past week, the national average 30-year mortgage rate increased to 4.61% from 4.58%; the 15-year mortgage rate rose to 3.99% from 3.95%; the 5/1 ARM mortgage rate remained unchanged at 3.77% while the FHA 30-year rate moved from 4.37% to 4.43%.  Jumbo 30-year rates rose to 4.65% from 4.59%.

Economic Calendar – for the Week of April 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 ($101.813, +12.5 bp) traded within a wider 64.1 basis point range between a weekly intraday low of $101.172 on Wednesday and a weekly intraday high of $101.813 on Friday before closing the week at $101.813 on Friday.

As anticipated in last week’s newsletter, mortgage bond prices first fell for a test technical support before managing to bounce higher during the latter half of the week.  The rebound on Thursday resulted in a positive stochastic crossover buy signal from a deeply oversold position.  There was also positive follow through on Friday with the bond closing at its high for the day.

From a purely technical basis, the bond should move higher for a test of resistance, and this would result in a slight improvement in rates.  However, there is a potential market-moving personal consumption expenditures (PCE) report looming on Monday.  This report is one of the Federal Reserve’s favorite measures of inflation, and if the data shows hotter than expected inflation we could see bond prices retreat back toward support resulting in slightly worse rates.

Furthermore, a Preliminary 1st Quarter Unit Labor Cost report on Thursday could show a rise in wage inflation that would be negative for bond prices.  The week’s economic reports will also be highlighted by the April Jobs Report that could also be a market mover impacting mortgage rates.  While the technical picture currently looks favorable, significant economic news often “trumps” technical signals.

 

Tucson Mortgages Home Loan News 4-23-2018

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

Weekly Review

Stock market traders responded with a “relief rally” to the previous Friday’s air strike on Syria when they realized it was limited in scope and after it did not trigger a military response from Russia.  Additionally, crude oil prices continued to rally with West Texas Intermediate crude moving closer to $70 per barrel, a price level not seen since November 2014.

The higher oil prices combined with stronger than forecast retail sales and housing data released during the week sparked inflation fears resulting in lower bond prices and higher yields.  Friday, the 10-year Treasury note traded with a 2.96% yield, the highest yield since January 8, 2014.

Retail Sales increased 0.6% in March versus a consensus forecast of +0.4%, ending a streak of three consecutive monthly declines.  Housing Starts and Building Permits for the month of March were also strong with Housing Starts reported at a seasonally adjusted annualized rate of 1.319 million, compared to expectations for 1.267 million.  Building Permits reached a rate of 1.354 million, 33,000 greater than forecasts.

However, while the headline data was strong in both reports, the underlying trend wasn’t quite as positive as single-family units actually declined on a month-over-month basis with a drop of 3.7% in Starts and a decline of over 5% in Permits.  However, multi-family unit starts and permits were both higher by double-digit percentages.

From the mortgage industry, the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey showed a rise in mortgage applications.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) increased 4.9% during the week ended April 13, 2018.  The seasonally adjusted Purchase Index increased 6.0% from the week prior while the Refinance Index increased by 4.0%.

Overall, the refinance portion of mortgage activity fell to 37.6% from 38.4% of total applications from the prior week, its lowest level since September 2008.  The adjustable-rate mortgage share of activity increased to 6.6% 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 remained unchanged at 4.66% with points remaining at 0.46.

For the week, the FNMA 4.0% coupon bond fell 57.8 basis points to close at $101.688 while the 10-year Treasury yield increased 13.54 basis points to end at 2.9602%.  The major stock indexes managed to move modestly higher during the week.

The Dow Jones Industrial Average gained 102.80 points to close at 24,462.94.  The NASDAQ Composite Index advanced 39.48 points to close at 7,146.13.  The S&P 500 Index added 13.84 points to close at 2,670.14.  Year to date on a total return basis, the Dow Jones Industrial Average has fallen 1.04%, the NASDAQ Composite Index has gained 3.52%, and the S&P 500 Index has lost 0.13%.

This past week, the national average 30-year mortgage rate increased to 4.58% from 4.50%; the 15-year mortgage rate rose to 3.95% from 3.89%; the 5/1 ARM mortgage rate increased to 3.77% from 3.68% while the FHA 30-year rate moved from 4.25% to 4.37%.  Jumbo 30-year rates rose to 4.59% from 4.51%.

Economic Calendar – for the Week of April 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 ($101.688, -57.8 bp) traded within a narrower 55.6 basis point range between a weekly intraday high of $102.328 on Tuesday and a weekly intraday low of $101.672 on Friday before closing the week at $101.688 on Friday.

Mortgage bond prices continued to retreat during the week on renewed inflation fears and a resilient stock market with investors preparing for what many believe will be a strong 1st Quarter earnings season that is just getting underway.  Although mortgage bond prices moved slightly higher on Monday and Tuesday, they declined the remainder of the week, falling below the $102 support level.  The $102 level now becomes a resistance level with additional resistance found at the 25-day and 50-day moving averages at $102.3588.  Support is found at $101.563, a low from September 5, 2013.

The bond now finds itself significantly “oversold,” but there are no evident signs of a reversal at the present time.  The chart is “bearish” and we could see a continuing decline for a test of support at $101.563.  Should this happen, we would see a slight deterioration in mortgage rates this coming week.

 

Tucson Mortgages Home Loan News 4-16-2018

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

Weekly Review

The stock market bounced back this past week as concerns about a possible trade war with China faded after several U.S. officials, including Treasury Secretary Steven Mnuchin, and Chinese President Xi Jinping downplayed talk of a retaliatory trade war.  In fact, Xi Jinping stated in a speech at the Boao Forum on Tuesday that he “plans to significantly cut tariffs on imported automobiles, reduce duties on other imported goods, and improve the intellectual property rights of foreign firms.”  Fears of a trade war with China were then replaced with rising geopolitical tension between the U.S. and Russia.

A suspected chemical attack from the Russian-supported Syrian government on the rebel-held town of Douma, Syria on April 7th brought strong condemnation and threats of a retaliatory strike against Syria from the U.S., Great Britain, and France.  Russia replied last Wednesday that it would shoot down any missiles fired at Syria prompting President Trump to state “get ready Russia, because they will be coming.”  And come they did late Friday evening when a military coalition from the U.S., Great Britain, and France struck several chemical weapons sites in Syria.  As a result, we will likely see a sharp increase in volatility this week in the financial markets with the rising tensions between Russia and coalition forces and the uncertainty that comes from military action in Syria.

The week’s economic reports took a backseat to geopolitical news, receiving a muted response from investors.  Minutes from the Fed’s March FOMC meeting were released containing no surprises.  The latest round of inflation data from the March Producer Price Index (PPI) and Consumer Price Index (CPI) reports revealed a stiffening inflation trend with the PPI rising +0.3% while the core CPI advanced 0.2% for the month.  This will keep the Fed on plan to raise rates at least two more times this year with the next 25 basis point hike likely to occur at the June FOMC meeting with a probability of 95.0%.

According to the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey, there was a decline in mortgage applications.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) decreased by 1.9% during the week ended April 6, 2018.  The seasonally adjusted Purchase Index decreased by 2.0% from the week prior while the Refinance Index also decreased by 2.0%.

Overall, the refinance portion of mortgage activity fell to 38.4% from 38.5% of total applications from the prior week, its lowest level since September 2008.  The adjustable-rate mortgage share of activity fell to 6.3% 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 fell to 4.66% from 4.69% with points increasing to 0.46 from 0.43.

For the week, the FNMA 4.0% coupon bond fell 32.8 basis points to close at $102.266 while the 10-year Treasury yield increased 4.95 basis points to end at 2.8248%.  The major stock indexes moved higher during the week.

The Dow Jones Industrial Average gained 427.38 points to close at 24,360.14.  The NASDAQ Composite Index advanced 191.54 points to close at 7,106.65.  The S&P 500 Index added 51.83 points to close at 2,656.30.  Year to date on a total return basis, the Dow Jones Industrial Average has fallen 3.18%, the NASDAQ Composite Index has gained 0.17%, and the S&P 500 Index has lost 2.59%.

This past week, the national average 30-year mortgage rate increased to 4.50% from 4.48%; the 15-year mortgage rate rose to 3.89% from 3.86%; the 5/1 ARM mortgage rate increased to 3.68% from 3.65% while the FHA 30-year rate was unchanged at 4.25%.  Jumbo 30-year rates rose to 4.51% from 4.50%.

Economic Calendar – for the Week of April 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 ($102.27, -32.8 bp) traded within a wider 60.9 basis point range between a weekly intraday high of $102.625 on Monday and a weekly intraday low of $102.016 on Thursday before closing the week at $102.266 on Friday.

Mortgage bonds lost ground during the week as the stock market advanced and failed to remain above a declining 50-day moving average while also falling below the 25-day moving average.  These two moving averages now form a tight band of overhead resistance.  However, Friday’s trading resulted in a potentially bullish two-day Harami candlestick pattern signaling a possible change in market direction higher that will require confirmation on Monday with a positive candlestick with a higher closing price.

With a coalition of U.S., Great Britain, and French military forces striking chemical weapons installations in Syria late Friday evening to significantly increase geopolitical tensions with Syrian ally Russia, we will likely see increased volatility in the stock and crude oil markets with investors moving money from stocks into bonds in a “flight to safety” trade.  If this anticipated reaction is strong enough, it would be bullish for mortgage bonds and would perhaps send prices above both resistance levels resulting in a slight improvement in mortgage rates this coming week.

 

Tucson Mortgages Home Loan News 4-9-2018

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

Weekly Review

Fears of an escalating trade war between the U.S. and China along with the prospects for rising interest rates weighed on investor sentiment resulting in significant stock market volatility during the week.  Trade officials in the U.S. and China went back and forth proposing new tariffs on each other’s imported goods.  Last Monday, China announced it would retaliate against U.S. aluminum and steel tariffs with $3 billion in new tariffs of its own targeting mostly U.S. agricultural exports.  On Tuesday, the U.S. countered with a new list of $50 billion in proposed tariffs on 1,300 Chinese products, and China promptly responded on Wednesday with its own $50 billion list of tariffs on U.S. aircraft, automobiles, and soybeans.  President Trump responded by asking U.S. trade officials to consider tariffs on another $100 billion worth of Chinese imports.

The recent volatility in the financial markets may be a sign investors are overreacting to the sentiment portrayed in the media about trade wars.  The President’s new economic advisor, Larry Kudlow, and Commerce Secretary Wilbur Ross downplayed the economic impact of the proposed tariffs by suggesting further negotiations with China will soon occur.  Also, there was a report by Bloomberg that President Trump may announce a possible agreement on a renegotiated North American Free Trade Agreement (NAFTA) at the Summit of the Americas meetings in mid-April.

Another factor moving the markets was the Labor Department’s Employment Situation Summary (Jobs Report) for March that showed a far smaller increase in new job creation than expected.  March saw the formation of 103,000 jobs versus a consensus estimate of 175,000.  This lower number might be the result of the enormous increase of 326,000 jobs in February.  Also, fears of future inflation were furthered by a solid 0.3% increase in Average Hourly Earnings for the month with an unemployment rate remaining at 4.1%.  This will not deter the Federal Reserve from its plan to continue bumping interest rates higher.  In fact, Fed Chairman Jerome Powell stated in a speech to the Economic Club of Chicago on Friday that he sees further gradual rate hikes on expectations that inflation will pick up this spring.

In the mortgage industry, the number of mortgage applications decreased according to the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) decreased by 3.3% during the week ended March 30, 2018.  The seasonally adjusted Purchase Index decreased by 2.0% from the week prior while the Refinance Index decreased 5.0%.

Overall, the refinance portion of mortgage activity fell to 38.5% from 39.4% of total applications from the prior week.  The adjustable-rate mortgage share of activity fell 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 remained at 4.69% with points remaining unchanged at 0.43.

For the week, the FNMA 4.0% coupon bond lost 1.5 basis points to close at $102.594 while the 10-year Treasury yield increased 3.46 basis points to end at 2.7753%.  The major stock indexes moved lower during the week.

The Dow Jones Industrial Average declined 170.35 points to close at 23,932.76.  The NASDAQ Composite Index fell148.33 points to close at 6,915.11.  The S&P 500 Index lost 36.40 points to close at 2,604.47.  Year to date on a total return basis, the Dow Jones Industrial Average has fallen 3.18%, the NASDAQ Composite Index has gained 0.17%, and the S&P 500 Index has lost 2.59%.

This past week, the national average 30-year mortgage rate decreased to 4.48% from 4.51%; the 15-year mortgage rate declined to 3.86% from 3.89%; the 5/1 ARM mortgage rate increased to 3.65% from 3.64% and the FHA 30-year rate decreased to 4.25% from 4.30%.  Jumbo 30-year rates fell to 4.50% from 4.54%.

Economic Calendar – for the Week of April 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 ($102.59, -1.5 bp) traded within a narrower 40.6 basis point range between a weekly intraday low of $102.313 on Tuesday and Friday and a weekly intraday high of $102.719 on Friday before closing the week at $102.594 on Friday.

Mortgage bonds traded in a sideways direction within a narrow range between the 25-day and 50-day moving averages.  These two moving averages serve as nearest technical support and resistance levels respectively.

The chart shows the bond is just below the “overbought” level while showing a new buy signal from a positive stochastic crossover.  This suggests there is some room for price improvement with the prospects the bond will stay above its 50-day moving average.  If the bond can manage to stay above the 50-day moving average, mortgage rates should remain stable at current levels or may improve very slightly.

 

Tucson Mortgages Home Loan News 4-2-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of March 26, 2018
  • Economic Calendar – week of April 2, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market, although continuing to show significant volatility, reacted favorably to a decision by China to not implement retaliatory tariffs on its imports of U.S. soybeans and commercial aircraft, easing fears of a trade war at least for the time being.  There were also reports that U.S. and Chinese officials were negotiating to protect intellectual property rights of U.S. technology companies while opening China’s markets to U.S. goods.  The volatility seen in stocks during the week, and especially in the technology sector, prompted investors to seek a safer haven in the Treasury market as the yield on the benchmark 10-year Treasury note reached its lowest level since early February.

In housing, Pending Home Sales rebounded in February by 3.1% after falling by a downwardly revised 5% in January.  Economists had predicted only a 2.5% gain for the month.  However, even with February’s gain, Pending Sales are 4.1% lower from the prior year as available inventory has shrunk while home prices have climbed.  The National Association of Realtors chief economist, Lawrence Yun, remarked “The minuscule number of listings on the market and its adverse effect on affordability are squeezing buyers and suppressing overall activity.”  Last Tuesday, Standard & Poor’s reported its S&P CoreLogic Case-Shiller national home price index advanced 6.2% in January from a year earlier in addition to a 6.3% annual gain in December.

As for mortgage activity, the number of mortgage applications increased according to the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) increased by 4.8% during the week ended March 23, 2018.  The seasonally adjusted Purchase Index increased by 3.0% from the week prior while the Refinance Index increased 7.0%.

Overall, the refinance portion of mortgage activity rose to 39.4% from 38.5% of total applications from the prior week.  The adjustable-rate mortgage share of activity remained unchanged at 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 4.69% from 4.68% with points decreasing to 0.43 from 0.46.

For the week, the FNMA 4.0% coupon bond gained 25.0 basis points to close at $102.609 while the 10-year Treasury yield decreased 7.28 basis points to end at 2.7407%.  The major stock indexes moved higher for the week.

The Dow Jones Industrial Average rose 569.91 points to close at 24,103.11.  The NASDAQ Composite Index climbed 70.77 points to close at 7,063.44.  The S&P 500 Index gained 52.61 points to close at 2,640.87.  Year to date on a total return basis, the Dow Jones Industrial Average has fallen 2.49%, the NASDAQ Composite Index has gained 2.32%, and the S&P 500 Index has lost 1.22%.

This past week, the national average 30-year mortgage rate decreased to 4.51% from 4.55%; the 15-year mortgage rate declined to 3.89% from 3.91%; the 5/1 ARM mortgage rate decreased to 3.64% from 3.65% and the FHA 30-year rate decreased to 4.30% from 4.34%.  Jumbo 30-year rates fell to 4.54% from 4.57%.

Economic Calendar – for the Week of April 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 ($102.609, +25.0 bp) traded within a narrower 45.3 basis point range between a weekly intraday low of $102.188 on Monday and a weekly intraday high of $102.641 on Wednesday before closing the week at $102.609 on Thursday.

Mortgage bond prices were able to rise above their 25-day moving average resistance level ($102.34) that now reverts to nearest support, and continued higher toward their 50-day moving average ($102.69) where the next level of technical resistance is located.

The chart shows the bond is approaching the “overbought” level as it approaches the 50-day moving average, so while there is still room for price improvement, the bond may have a tough time breaking through this level.  If the bond can manage to move above the 50-day moving average, mortgage rates should improve slightly.  However, if the bond is turned away from this level, mortgage rates would hold steady near current levels.

 

Tucson Mortgages Home Loan News 3-26-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of March 19, 2018
  • Economic Calendar – week of March 26, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market retreated for the second consecutive week as investors worried about the ramifications of an escalating trade war with China.  Thursday, President Trump signed a presidential memorandum for tariffs on up to $60 billion worth of Chinese goods in response to avowed intellectual property theft by China against U.S. technology companies.  China’s commerce ministry promptly responded Friday morning with a proposed a list of 128 U.S. products as potential tariff retaliation targets including fresh and dried fruit, ginseng, modified ethanol, pork, nuts, recycled aluminum goods, steel pipes, and wine.

Additionally, the technology-laden Nasdaq Composite Index was particularly hard hit with declines in social media stocks led by a 13.8% drop in Facebook following a report research firm Cambridge Analytica mined data from 50 million Facebook users without their approval.  The U.S. Federal Trade Commission will now be looking into how users’ personal data are mined for commercial and political purposes, and this could end up in new government regulations having a negative impact on social media company profits.

The Federal Reserve and its monetary policy took center stage on Wednesday when the Fed, as widely expected, increased the fed funds target range by 25 basis points to 1.50%-1.75% and left its forecast for a total of three rate hikes this year intact.  However, the Fed slightly increased their expectations for future rate hikes in 2019 and 2020 and might be more aggressive in tightening monetary policy during the following couple of years.

In housing, Existing Home Sales increased 3.0% month-over-month in February to a seasonally adjusted annual rate of 5.54 million, exceeding the consensus estimate of 5.42 million.  Sales were 1.1% above the year ago period.  The median existing home price for all housing types increased 5.9% to $241,700, the 72nd straight month of year-over-year gains.  The median existing single-family home price increased 5.9% from a year ago to $243,400.  At the current rate of sales, unsold inventory is at a 3.4-month supply, versus 3.8 months a year ago and remains constrained.

First-time buyers were 29% of sales in February, unchanged from January, and down from 31% a year ago.

Meanwhile, New Home Sales fell 0.6% month-over-month in February to a seasonally adjusted annual rate of 618,000 and just below the consensus forecast of 620,000 from an upwardly revised 622,000 in January.  The median sales price increased 9.7% year-over-year to $326,800 while the average sales price increased 15.3% to $376,700.  Inventory of new homes for sale increased to a 5.9-months’ supply versus 5.8 months in January and 5.0 months in the year-ago period, based upon the current rate of sales.

As for mortgage activity, the number of mortgage applications showed a slight decrease according to the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) decreased by 1.1% during the week ended March 16, 2018.  The seasonally adjusted Purchase Index increased by 1.0% from the week prior while the Refinance Index decreased 5.0%.

Overall, the refinance portion of mortgage activity fell to 38.5% from 40.1% of total applications from the prior week – its lowest level since September 2008.  The adjustable-rate mortgage share of activity decreased to 7.0% of total applications from 7.1%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance decreased to 4.68% from 4.69% with points increasing to 0.46 from 0.45.

For the week, the FNMA 4.0% coupon bond gained 1.5 basis points to close at $102.359 while the 10-year Treasury yield decreased 3.10 basis points to end at 2.8135%.  The major stock indexes moved lower for the week.

The Dow Jones Industrial Average plunged 1,413.31 points to close at 23,533.20.  The NASDAQ Composite Index fell 489.32 points to close at 6,992.67.  The S&P 500 Index lost 163.75 points to close at 2,588.26.  Year to date on a total return basis, the Dow Jones Industrial Average has fallen 4.80%, the NASDAQ Composite Index has gained 1.29%, and the S&P 500 Index has lost 3.19%.

This past week, the national average 30-year mortgage rate increased to 4.55% from 4.53%; the 15-year mortgage rate remained unchanged at 3.91%; the 5/1 ARM mortgage rate increased to 3.65% from 3.64% and the FHA 30-year rate increased to 4.34% from 4.31%.  Jumbo 30-year rates increased to 4.57% from 4.56%.

Economic Calendar – for the Week of March 26, 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 ($102.359, +1.50 bp) traded within a wider 67.2 basis point range between a weekly intraday low of $101.859 on Wednesday and a weekly intraday high of $102.531 on Thursday before closing the week at $102.359 on Friday.

Mortgage bond prices ended up this past week close to where they ended the prior week as bonds continued to trade in a sideways direction for the fourth consecutive week.  The 25-day moving average continues to provide some technical resistance although the bond did close just above this level the past two sessions.

The chart continues to show the bond is neither oversold nor overbought, and with the addition of a new buy signal last Friday from a positive stochastic crossover, we should see a slightly higher move in bond prices within a trading range defined by the identified support and resistance levels in the chart below.  This trading action would then result in stable mortgage rates this coming week.

 

Tucson Mortgages Home Loan News 3-19-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of March 12, 2018
  • Economic Calendar – week of March 19, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

The major stock market indexes recorded modest losses for the week amid reports of possible further tariffs – this time targeting China.  Rumors circulated that President Trump will be pursuing tariffs against China totaling $60 billion related to consumer electronics, information technology, and telecommunications products in retribution for purported intellectual property theft.  The prospects of a possible trade war between the two largest economies in the world weighed on investor sentiment during the week.

The bond market, on the other hand, responded favorably to economic data showing slower economic growth and softer inflation data that led to a modest five basis point decrease in the yield on the 10-year Treasury note.  The Commerce Department reported Retail Sales fell 0.1% in February when economists were expecting a far more robust 0.3% increase.  Moreover, inflation during February as measured by the Consumer Price Index rose modestly at 0.2% to match the consensus forecast, but the absence of an upward surprise caused some to think a tepid inflation number could be a sign of a potential slowdown in economic growth.  In fact, this past week’s economic data resulted in the Atlanta Federal Reserve’s GDPNow model, which provides a running estimate of current-quarter economic growth, to decline to 1.8%, well below recent consensus GDP growth expectations.  However, this will not be enough to persuade the Federal Reserve’s Federal Open Market Committee to postpone their plans for a rate hike when they next meet this coming Wednesday.  The current probability for a 25 basis point (+0.25%) rate hike on Wednesday is 94.4%.

In housing, February Housing Starts were reported at a seasonally adjusted annual rate of 1.236 million units versus an upwardly revised 1.329 million units in January.  Housing Permits were reported at a seasonally adjusted annual rate of 1.298 million versus a downwardly revised 1.377 million in January.  Although February’s Starts and Permits numbers were below expectations this was still a strong housing report with single-family starts increasing 2.9% to 902,000 units. Also, the number of homes under construction was higher than January at 1.115 million to leave the first quarter average just above the fourth quarter average of homes under construction.  This will then result in a positive input into first quarter GDP growth estimates.

As for mortgage activity, the number of mortgage applications showed a slight increase according to the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) increased by 0.9% during the week ended March 9, 2018.  The seasonally adjusted Purchase Index increased by 3.0% from the week prior while the Refinance Index decreased 2.0%.

Overall, the refinance portion of mortgage activity fell to 40.1% from 41.8% of total applications from the prior week – its lowest level since September 2008.  The adjustable-rate mortgage share of activity decreased to 7.1% of total applications from 7.3%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased to 4.69% from 4.65% with points decreasing to 0.45 from 0.58.

For the week, the FNMA 4.0% coupon bond gained 15.6 basis points to close at $102.359 while the 10-year Treasury yield decreased 5.11 basis points to end at 2.8445%.  The major stock indexes moved lower for the week.

The Dow Jones Industrial Average fell 389.23 points to close at 24,946.51.  The NASDAQ Composite Index dropped 78.82 points to close at 7,481.99.  The S&P 500 Index lost 34.56 points to close at 2,752.01.  Year to date on a total return basis, the Dow Jones Industrial Average has risen 0.92%, the NASDAQ Composite Index has gained 8.38%, and the S&P 500 Index has advanced 2.93%.

This past week, the national average 30-year mortgage rate decreased to 4.53% from 4.58%; the 15-year mortgage rate decreased to 3.91% from 3.94%; the 5/1 ARM mortgage rate increased to 3.64% from 3.63% and the FHA 30-year rate decreased to 4.31% from 4.38%.  Jumbo 30-year rates decreased to 4.56% from 4.60%.

Economic Calendar – for the Week of March 19, 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 ($102.359, +15.6 bp) traded within a narrower 40.7 basis point range between a weekly intraday low of $102.156 on Monday and a weekly intraday high of $102.563 on Wednesday before closing the week at $102.359 on Friday.

There wasn’t much directional change in price movement this past week as the bond continued to trade in a sideways direction for the third consecutive week.  This past week the bond traded up to the 25-day moving average (MA), but the 25-day MA acted like a tough ceiling of resistance.

The chart shows the bond is neither oversold nor overbought so we could see the sideways trading pattern continue resulting in stable mortgage rates.  However, the next rate hike announcement will very likely take place this Wednesday, and the bond will likely react by trading higher as it has on the previous three rate hike announcements.  If it reacts by moving convincingly higher above the 25-day MA on Wednesday, we might see a continuation move higher into the weekend with a temporary improvement in mortgage rates.