Tucson Mortgages Home Loan News 9-24-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of September 17, 2018
  • Economic Calendar – week of September 24, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market turned in a mixed performance for the week with the Dow Jones Industrial Average and the S&P 500 Index both recording new all-time highs while the technology-laden Nasdaq Composite Index and some of the smaller-cap indexes recorded modest losses.  The bond market slid lower with yields rising.  The solid performance in larger-cap stocks took place as investors shrugged off a further escalation in the trade conflict between the U.S. and China.

Last Monday evening President Trump announced the U.S. will be enacting tariffs on $200 billion worth of Chinese goods beginning September 24 at an initial rate of 10% that will increase to 25% on January 1, 2019.  The president also declared he will impose additional tariffs on $267 billion worth of Chinese goods if China retaliates, which it stated it would do with 5-10% tariffs on $60 billion worth of U.S. goods.

Stocks traded unexpectedly higher on Tuesday following Monday’s tariff announcement as a number of analysts suggested the initial 10% tariff rate by the U.S. was not as severe as expected and appeared to be a negotiating strategy.  Regardless, investor activities likely reflected the market’s conviction that the trade disagreements between the U.S. and China will eventually be resolved.

Wednesday, the Commerce Department reported Housing Starts rose 9.2% in August to a seasonally adjusted annual rate of 1.282 million, exceeding the consensus forecast of a 1.229 million annual rate.  However, monthly housing starts numbers are notoriously volatile and August’s housing starts number was driven by an outsized spike in apartment building that camouflaged weakening across single- and multifamily construction.

Single-family housing starts in August increased by 1.9% to a seasonally adjusted annual rate of 876,000 units while multifamily starts skyrocketed 27.3% to an adjusted annual rate of 392,000 units.  The 27% spike in multifamily starts inflates top-line numbers and covers a developing down trend in permits issued.

Total Building Permits declined 5.7% from July to August to a seasonally adjusted annual rate of 1.229 million and were below the consensus estimate of 1.310 million.  Single-family permits fell 6.1% and multifamily permits declined down 4.9% for the month.  Quoting from Wells Fargo Economics Group’s analysis of the August housing numbers, “Permits are now running below Starts, suggesting homebuilding is losing momentum.”

Thursday, the National Association of Realtors (NAR) reported Existing Home Sales held steady in August at a seasonally adjusted annual 5.34 million pace, a rate that was unchanged compared to July.  Total sales were 1.5% lower than a year ago, and although sales seem to have grind to a halt in 2018, in the year-to-date reading they’re only 1.2% lower than the same period a year ago.  The flat reading missed the consensus forecast of a 5.37 million rate.

The median existing home price for all housing types increased 4.6% to $264,800, marking the 78th straight month of year-over-year gains.  The median existing single-family home price was $267,300, up 4.9% from a year ago.  The inventory of homes for sale at the end of August was unchanged at 1.92 million remaining 2.7% higher from a year ago.  Unsold inventory remained at a 4.3-month supply for the third consecutive month.  This is below the 6.0-month supply typically associated with a more balanced market.  NAR Chief Economist Lawrence Yun remarked “the housing market seems to be wobbling toward some equilibrium.  Prices are still rising, rising, rising, but at a slightly slower pace.”

However, the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), a measure of home-builder confidence, may portray current housing-market conditions the best. Survey results are transformed into an index where any score over 50 indicates more builders view conditions as good than poor.  Tuesday, the September HMI was reported at a solidly positive 67 matching August’s number.  The HMI index measuring current sales conditions rose one point to 74 and the component gauging expectations in the next six months increased two points to 74. Further, the metric charting buyer traffic held steady at 49.  Moving forward, there are expectations for some housing market disruption effects due to the impact of Hurricane Florence.  Single-family construction in North Carolina, South Carolina and Virginia makes up 12% of national production.

Elsewhere, 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 1.6% during the week ended September 14, 2018.  The seasonally adjusted Purchase Index increased 0.3% from the week prior while the Refinance Index increased 4.0% from a week earlier.

Overall, the refinance portion of mortgage activity increased to 39.0% from 37.8% of total applications from the prior week.  The adjustable-rate mortgage share of activity increased to 6.5% 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 increased to 4.88% from 4.84%, its highest level since April 2011, with points decreasing to 0.44 from 0.46 for 80 percent loan-to-value ratio (LTV) loans.

For the week, the FNMA 4.0% coupon bond lost 26.5 basis points to close at $100.844 while the 10-year Treasury yield increased 6.60 basis points to end at 3.066%.  The Dow Jones Industrial Average gained 588.83 points to close at 26,743.50.  The NASDAQ Composite Index lost 23.08 points to close at 7,986.96.  The S&P 500 Index added 24.69 points to close at 2,929.67.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 8.19%, the NASDAQ Composite Index has advanced 15.70%, and the S&P 500 Index has added 9.58%.

This past week, the national average 30-year mortgage rate rose to 4.85% from 4.74%; the 15-year mortgage rate increased to 4.30% from 4.22%; the 5/1 ARM mortgage rate rose to 4.05% from 4.02% while the FHA 30-year rate increased to 4.48% from 4.42%.  Jumbo 30-year rates increased to 4.40% from 4.37%.

Economic Calendar – for the Week of September 24, 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 ($100.844, -26.50 bp) traded within a wider 54.7 basis point range between a weekly intraday high of 101.156 on Monday and a weekly intraday low of $100.609 on Wednesday before closing the week at $100.844 on Friday.  Mortgage bond prices trended lower until reaching technical support found at the 100% Fibonacci retracement level located at $100.609.  The bond then made a small bounce off of this support level on Thursday and Friday resulting in a weak buy signal.  The bond remains extremely “oversold” and thus could continue to make a run higher toward resistance at $101.15.  Such a rebound toward nearest technical resistance would have a positive influence on the mortgage bond market resulting in slightly lower rates.

 

Tucson Mortgages Home Loan News 9-17-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of September 10, 2018
  • Economic Calendar – week of September 17, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market rebounded from the prior week’s losses following news Wednesday and Thursday that there would be a new series of trade negotiations with China plus an invitation from the U.S. to the Chinese government to discuss trade policy.  Investors are hoping the discussions will thwart the implantation of extensive tariffs from both sides and prevent an escalating trade war.  The strength in stocks helped to push bond prices lower with Treasury yields increasing despite soft inflation data during the week.

On the economic front, there were a couple of significant reports concerning inflation.  The core Producer Price Index (PPI) and the core Consumer Price Index (CPI) for August were both below consensus expectations.  The core PPI fell 0.1% when economists were expecting an increase of 0.2%, and the core CPI came in at a less-than-expected increase of 0.1%.  These tame inflation numbers worked to lessen concerns the Federal Reserve might have to raise rates more frequently than expected in order to cool off an overheating economy.  Despite this, the Fed is expected to raise rates by another 25 basis points at its upcoming September 25-26 policy meeting, with the probability of a rate hike at 100%.  Further, the probability of a 25 basis point rate hike at the December policy meeting currently stands at 80%.

In housing related news, 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) declined 1.8% during the week ended September 7, 2018.  The seasonally adjusted Purchase Index increased 1.0% from the week prior while the Refinance Index decreased 6.0% from a week earlier, its lowest level since December 2000.

Overall, the refinance portion of mortgage activity decreased to 37.8% from 38.9% of total applications from the prior week.  The adjustable-rate mortgage share of activity increased to 6.4% 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 increased to 4.84% from 4.80% with points increasing to 0.46 from 0.43 for 80 percent loan-to-value ratio (LTV) loans.

For the week, the FNMA 4.0% coupon bond lost 34.4 basis points to close at $101.109 while the 10-year Treasury yield increased 6.10 basis points to end at 3.00%.  The Dow Jones Industrial Average gained 238.13 points to close at 26,154.67.  The NASDAQ Composite Index advanced 107.50 points to close at 8,010.04.  The S&P 500 Index added 33.30 points to close at 2,904.98.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 5.81%, the NASDAQ Composite Index has advanced 16.03%, and the S&P 500 Index has added 8.65%.

This past week, the national average 30-year mortgage rate rose to 4.74% from 4.71%; the 15-year mortgage rate increased to 4.22% from 4.19%; the 5/1 ARM mortgage rate remained unchanged at 4.02% while the FHA 30-year rate rose to 4.42% from 4.39%.  Jumbo 30-year rates increased to 4.37% from 4.36%.

Economic Calendar – for the Week of September 17, 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 ($101.109, -34.40 bp) traded within a wider 42.2 basis point range between a weekly intraday high of 101.50 on Monday and a weekly intraday low of $101.078 on Friday before closing the week at $101.109 on Friday.  Mortgage bond prices declined below nearest support levels and are now taking aim toward the next major support level at the 100% Fibonacci retracement level located at $100.797.  Although the bond is deeply “oversold,” it could stay this way and could continue to gradually trend lower toward the 100.797 level.  Should this scenario play out, mortgage rates could slowly rise higher.

 

Tucson Mortgages Home Loan News 9-10-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of September 3, 2018
  • Economic Calendar – week of September 10, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock and bond markets both traded lower during the Labor Day holiday shortened week.  Continuing uncertainty regarding U.S. trade policy weighed on investor sentiment with trade negotiations between the U.S. and Canada making little progress.  Furthermore, tariffs on $200 billion in Chinese goods after the public comment period on the proposed tariffs closed on Thursday were set to be implemented.

However, White House Economic Adviser Larry Kudlow told Bloomberg Television the administration would first evaluate the public comments before taking any action.  President Trump then remarked to reporters that another $267 billion in Chinese tariffs might follow the $200 billion round of tariffs to essentially cover all U.S. imports from China.  This remark would ostensibly apply pressure on China to negotiate in good faith for a fair trade deal.

While there is little evidence about whether the trade “war” with China is having a negative effect on the Chinese economy, signs are scarce that it has had a negative impact on U.S. economic growth.  Friday, the Labor Department reported job growth picked up in August , while average hourly earnings increased by 2.9% on a year-over-year basis, the fastest growth rate during the present economic expansion beginning in 2009.

The data seemed to have the greatest impact on bond prices with investors worrying wage inflation might be enough to trigger a faster pace of short-term rate increases by the Federal Reserve.  The Fed is widely expected to hike short-term rates by another 25 basis points when policymakers meet at the end of September.  Plus, the probability of a December rate hike has risen to 79.8% from 72.8% on Thursday.

Friday, the positive jobs data contributed to a jump in longer-term interest rates with the yield on the benchmark 10-year Treasury note briefly touching 2.95%, its highest level in nearly a month.

Elsewhere, 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) fell 0.1% during the week ended August 31, 2018.  The seasonally adjusted Purchase Index increased 1.0% from the week prior while the Refinance Index fell 1.0% from a week earlier.

Overall, the refinance portion of mortgage activity increased to 38.9% from 38.7% 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 4.80% from 4.78% with points decreasing to 0.43 from 0.46 for 80 percent loan-to-value ratio (LTV) loans.

For the week, the FNMA 4.0% coupon bond lost 36.0 basis points to close at $101.453 while the 10-year Treasury yield increased 7.90 basis points to end at 2.939%.  The Dow Jones Industrial Average fell 48.28 points to close at 25,916.54.  The NASDAQ Composite Index plunged 207.00 points to close at 7,902.54.  The S&P 500 Index lost 29.84 points to close at 2,871.68.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 4.84%, the NASDAQ Composite Index has advanced 14.47%, and the S&P 500 Index has added 7.41%.

This past week, the national average 30-year mortgage rate rose to 4.71% from 4.65%; the 15-year mortgage rate increased to 4.19% from 4.15%; the 5/1 ARM mortgage rate increased to 4.02% from 3.98% while the FHA 30-year rate rose to 4.39% from 4.37%.  Jumbo 30-year rates increased to 4.36% from 4.33%.

Economic Calendar – for the Week of September 10, 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 ($101.453, -36.0 bp) traded within a wider 39.1 basis point range between a weekly intraday high of 101.797 on Thursday and a weekly intraday low of $101.406 on Friday before closing the week at $101.453 on Friday.  Mortgage bond prices took a dip lower on Tuesday and Wednesday below support levels before bouncing back to support on Thursday.  Bond prices then made a solid step lower on Friday following the release of the Employment Situation Summary (Jobs Report) for August showing a higher-than-expected increase of +0.4% in Average Hourly Earnings, triggering fears inflation might be ratcheting up.  Economists had expected only a +0.2% increase.  The bond is now approaching “oversold” status so we could see a continuation lower toward the next support level before we see a rebound.  Therefore, mortgage rates may deteriorate slightly this week before improving.

 

Tucson Mortgages Home Loan News 9-3-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of August 27, 2018
  • Economic Calendar – week of September 3, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

Trade-related news dominated investor sentiment during the week.  Last Monday, news of a bilateral trade agreement between the U.S. and Mexico propelled several stock indexes to new all-time highs including the Nasdaq Composite and S&P 500 indices.  With stocks making new highs, bond prices failed to gain much traction with the yield on the benchmark 10-year Treasury note rising slightly during the week.  Following news of the trade deal between Mexico and the U.S., Canada entered trade discussions with the U.S. but was unable to conclude a new trade deal by a Friday deadline.   Negotiations are scheduled to resume this coming week.

In other trade news Thursday, President Trump announced he would move ahead with tariffs on $200 billion worth of Chinese goods as early as this coming week and also said in a Bloomberg interview that the European Union’s (EU) offer to eliminate auto tariffs was “not good enough” and compared the EU’s trade policies to those of China.

This tough talk on trade by the president is a negotiating tactic and it will be interesting to see the ultimate outcomes when trade deals are finalized between the U.S. and the EU and China.

There were several housing-related news releases during the week.  Tuesday, the latest Case-Shiller Home Price Index from S&P Dow Jones Indices and CoreLogic showed home prices nationwide increased 6.2% for the year through June 2018.  However, this is lower than May’s reading of a 6.4% price gain for the year.  Average home prices for the top 10 metropolitan areas increased 6% and the 20-city composite saw a 6.3% year-over-year gain.

David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices, remarked “Home prices continue to rise across the U.S.  However, even as home prices keep climbing, we are seeing signs that growth is easing in the housing market.  Sales of both new and existing homes are roughly flat over the last six months amidst news stories of an increase in the number of homes for sale in some markets.”

Seattle, Las Vegas and San Francisco continue to have the highest year-over-year gains among all cities in the 20-city index.  Las Vegas took the lead from Seattle with a year-over-year price increase of 13% to Seattle’s 12.8% price increase while San Francisco saw an increase of 10.7%.

Wednesday, the National Association of Realtors (NAR) reported Pending Home Sales fell on an annual basis for the seventh consecutive month in July.  The NAR’s Pending Home Sales Index, a forward-looking indicator based on contract signings, dropped 0.7% in July to 106.2, down from 107 in June.  With June’s decline, the index is down 2.3%.   NAR Chief Economist Lawrence Yun stated “Contract signings inched backward once again last month, as declines in the South and West weighed down on overall activity.  It’s evident in recent months that many of the most overheated real estate markets – especially those out West – are starting to see a slight decline in home sales and slower price growth.  The reason sales are falling off last year’s pace is that multiple years of inadequate supply in markets with strong job growth have finally driven up home prices to a point where an increasing number of prospective buyers are unable to afford it.”

Elsewhere, 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) fell 1.7% during the week ended August 24, 2018.  The seasonally adjusted Purchase Index decreased 1.0% from the week prior while the Refinance Index fell 3.0% from a week earlier.

Overall, the refinance portion of mortgage activity remained unchanged at 38.7% of total applications from the prior week.  The adjustable-rate mortgage share of activity decreased 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 decreased to 4.78% from 4.81% (the lowest rate since the week ended July 20, 2018) with points increasing to 0.46 from 0.42 for 80 percent loan-to-value ratio (LTV) loans.

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 4.70 basis points to end at 2.860%.  The Dow Jones Industrial Average gained 174.47 points to close at 25,964.82.  The NASDAQ Composite Index advanced 163.56 points to close at 8,109.54.  The S&P 500 Index added 26.83 points to close at 2,901.52.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 5.04%, the NASDAQ Composite Index has advanced 17.47%, and the S&P 500 Index has added 8.52%.

This past week, the national average 30-year mortgage rate rose to 4.65% from 4.63%; the 15-year mortgage rate increased to 4.15% from 4.14%; the 5/1 ARM mortgage rate increased to 3.98% from 3.95% while the FHA 30-year rate remained unchanged at 4.37%.  Jumbo 30-year rates eased to 4.33% from 4.34%.

Economic Calendar – for the Week of September 3, 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 slightly wider 29.7 basis point range between a weekly intraday high of 101.953 on Monday and a weekly intraday low of $101.656 on Wednesday before closing the week at $101.813 on Friday.  Mortgage bond prices took a dip lower to test a solid, triple layer of support Monday through Wednesday from the prior week’s extremely “overbought” position.  Prices then bounced just above the triple support layer formed from the convergence of the 25-day (101.727), 100-day (101.745) and 50-day (101.784) moving averages on Thursday and Friday.  Mortgage bonds are no longer “overbought” and prices appear ready to continue higher from support.  However, a stubborn resistance level found at the 76.4% Fibonacci retracement level at $101.988 has put a manhole cover over any meaningful advances since last May.  This has resulted in bond prices getting squeezed between support and resistance forcing a mostly sideways direction in the market.  This action should continue this week with minimal effect on mortgage rates.

 

Tucson Mortgages Home Loan News 8-27-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of August 20, 2018
  • Economic Calendar – week of August 27, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market recorded moderate gains with the S&P 500 notching another all-time record high on Friday, the first time since January 26th of this year.  Bonds also fared well with U.S. Treasury yields decreasing modestly during the week.  President Trump’s publicly pronounced unhappiness with Federal Reserve Chair Jerome Powell for raising interest rates in addition to voicing his desire for Fed policymakers to keep interest rates low may have helped boost buying demand for Treasuries, sending yields lower.  Because U.S. Treasury yields are substantially higher than many other industrialized nations, U.S. Treasuries remain attractive investments for foreign buyers.

President Trump also publicly blamed both the European Union and China of manipulating their currencies to weaken them relative to the U.S. dollar in an effort to boost their exports to the U.S. Although low-level trade talks between the U.S. and China took place in Washington, D.C. during the week, no real progress was made on tariffs and trade.  In fact, last Thursday the U.S. began to enforce an additional 25% in tariffs on Chinese imports ranging from machinery to motorcycles while China retaliated with corresponding tariffs on U.S. products from coal to trucks.  Trade resolutions may not be realized until later in the year when higher-level negotiations are scheduled to take place.

Meanwhile, the minutes from the Fed’s July 31–August 1 monetary policy meeting indicated the Fed expects to next raise rates at its September meeting.  Fed officials stated in the minutes that it would likely “soon” be appropriate to raise rates.  There currently is a 96.0% probability rates will be bumped up another 25 basis points on September 26.  Friday, in a speech at the Kansas City Fed’s annual economic symposium in Jackson Hole, Wyoming, Fed Chair Powell defended the gradual pace of the Fed’s rate hikes saying that the “slow increases are appropriate given current levels of inflation and unemployment.”

It was a big week for housing news.  Wednesday, the National Association of Realtors reported Existing Home Sales tumbled for the fourth straight month falling to a seasonally-adjusted annual rate of 5.34 million in July, down 0.7% from June.

Affordability issues are taking a toll on home buyers, especially for first timers facing ever-increasing prices on lower inventory and seeing home prices increasing faster than their incomes.

Total home sales in July were 1.5% lower than the same period a year ago.  The median existing home prices for all housing types increased 4.5% in July to $269,600 – the 77th straight month of year-over-year gains.

For sales of existing single-family homes, the median price has climbed 4.6% from a year ago to $272,300.  Unsold inventory remained at a 4.3-month supply, unchanged from June and last July and remaining below the 6.0-month supply typically associated with a more balanced market.

Thursday, the Commerce Department reported sales of New Homes fell 1.7% month-over-month in July to a seasonally adjusted annual rate of 627,000.  This was below the consensus forecast of 645,000 and also below an upwardly revised 638,000 (from 631,000) in June.

The median sales price increased 1.8% year-over-year to $328,700 while the average sales price increased 5.9% to $394,300.

Based on the current rate of sales, the inventory of new homes for sale increased to a 5.9-months’ supply, versus 5.2 months in June and 5.8 months in the year-ago period.

Homes priced below $400,000 accounted for 71% of new homes sold in July versus 70% in June.

Jefferies, LLC economist Ward McCarthy had this to say about the latest housing data.  “Housing activity in general has retreated from levels that were temporarily boosted by 2017 natural disasters –hurricanes and wild fires— that forced displaced households to seek alternative housing.  The housing sector is also undergoing an adjustment to affordability that is less attractive than it was for most of the cycle, as well as changes in the treatment of SALT deductions in the federal tax code.  That is the bad news.  The good news is that there is no evidence of the type of imbalances that could cause a sharp downturn, such as heavy inventories and/or rising mortgage default and delinquency rates.  We also note this is not the first temporary slowdown in housing activity this cycle.”

Also on Thursday, the Federal Housing Finance Agency (FHFA) released their latest House Price Index (HPI) showing home prices increased just 0.2% in June from May.  Economist William Doerner said although home prices rose in the second quarter, it was at a much slower pace than previously recorded in the past four years.  “Mortgage rates have increased by more than half a percentage point over the first six months of the year.  Rates are still inexpensive from a historical standpoint, but their bump-up appears to have gently pressed the brakes on house price increases.”

Nationally, home prices in all 50 states and the District of Columbia increased since the second quarter last year.

States with the largest gains are Nevada (+17%), Idaho (+13%), District of Columbia (+11.8%), Utah (+11.3%) and Washington (+11%).

States showing the least amount of annual appreciation are North Dakota (+2.1%), Louisiana (+2.3%), West Virginia (+2.3%), Connecticut (+2.4%) and Alaska (+2.6%).

Elsewhere, 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 4.2% during the week ended August 17, 2018.  The seasonally adjusted Purchase Index increased 3.0% from the week prior while the Refinance Index jumped 6.0% higher from a week earlier.

Overall, the refinance portion of mortgage activity increased to 38.7% from 37.6% of total applications from the prior week.  The adjustable-rate mortgage share of activity increased to 6.5% from 6.2% 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 4.81% with points decreasing to 0.42 from 0.43 for 80 percent loan-to-value ratio (LTV) loans.

For the week, the FNMA 4.0% coupon bond gained 15.6 basis points to close at $101.984 while the 10-year Treasury yield decreased 5.10 basis points to end at 2.813%.  The Dow Jones Industrial Average gained 121.03 points to close at 25,790.35.  The NASDAQ Composite Index advanced 129.65 points to close at 7,945.98.  The S&P 500 Index added 24.56 points to close at 2,874.69.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 4.33%, the NASDAQ Composite Index has advanced 15.10%, and the S&P 500 Index has added 7.52%.

This past week, the national average 30-year mortgage rate fell to 4.63% from 4.64%; the 15-year mortgage rate remained unchanged at 4.14%; the 5/1 ARM mortgage rate decreased to 3.95% from 3.97% while the FHA 30-year rate remained unchanged at 4.37%.  Jumbo 30-year rates eased to 4.34% from 4.37%.

Economic Calendar – for the Week of August 27, 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, +15.6 bp) traded within a narrower 17.2 basis point range between a weekly intraday low of 101.828 on Monday and Friday and a weekly intraday high of $102.00 on Monday before closing the week at $101.984 on Friday.  Mortgage bond prices traded mostly in a sideways direction between technical support provided by the 100-day moving average and overhead resistance from the 76.4% Fibonacci retracement level located at $101.988.  The bond remains on a buy signal from August 10th but is now extremely “overbought” and susceptible to a pullback toward technical support.  However, support is close at hand, so we could see a continuation of a sideways trading pattern without much effect on mortgage rates.  Rates should continue to show stability in the coming week.

 

Tucson Mortgages Home Loan News 8-20-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of August 13, 2018
  • Economic Calendar – week of August 20, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market turned in a “mixed” performance while mortgage bonds and treasuries traded essentially flat on the week.  Both the Dow Jones Industrial Average and S&P 500 were able to advance while the technology-heavy NASDAQ Composite Index posted a modest loss.  Equity markets were influenced by continuing volatility in emerging market currencies, the Turkish Lira in particular.  Other factors included news of renewed trade negotiations between the U.S. and China and economic news of solid retail sales.

Thursday and Friday, reports surfaced that the U.S. and China will resume trade negotiations by the end of August.  U.S. and Chinese trade negotiators reportedly now have a goal of ending their trade disagreements ahead of multilateral meetings between President Trump and President Xi of China scheduled for November.

In economic news, the Commerce Department reported Retail Sales increased a robust 0.5% in July to easily surpass the consensus forecast of +0.1% and a downwardly revised 0.2% gain in June.  Core Retail Sales, sales excluding autos, gas stations, and building materials stores, rose by an even greater 0.6% and were driven by healthy spending at clothing stores, restaurants and bars, and online purchases.

Last Wednesday in housing, the National Association of Home Builders (NAHB) reported their Housing Market Index (HMI), a gauge of builder opinion on the relative level of current and future single-family home sales, fell slightly lower for August to 67 from last month’s reading of 68.  Readings above 50 indicate a favorable outlook on home sales while those below 50 indicate a negative outlook.

NAHB chairman Randy Noel had this to say “The good news is that builders continue to report strong demand for new housing, fueled by steady job and income growth along with rising household formations.  However, they are increasingly focused on growing affordability concerns, stemming from rising construction costs, shortages of skilled labor and a dearth of buildable lots.”

On Thursday, the Commerce Department reported Housing Starts increased 0.9% in July to a seasonally adjusted annual rate of 1.168 million.  This was below the consensus forecast of 1.256 million and followed a downwardly revised 1.158 million from an initially reported 1.173 million for June.  However, Building Permits increased 1.5% to 1.311 million.  Although the Permits number was slightly below the consensus forecast of 1.316 million, June’s number was revised higher to 1.292 million from an originally reported 1.273 million.

Permits for single-family units increased 1.9% to 869,000 while Permits for multi-unit dwellings increased 0.7% to 442,000.  Regionally, single-family starts were 5.7% lower in the Northeast, 22.3% higher in the Midwest, 2.0% higher in the South, and 10.0% lower in the West.  The number of units under construction at the end of July totaled 1.122 million units.  This is slightly below the second quarter average of 1.123 million, suggesting a slightly negative influence on third quarter GDP forecasts.

Overall, the fact that single-family starts increased by only 0.9% to 862,000 likely reflect some of the difficulties home builders are facing with higher costs for land, materials, and skilled construction labor.

Elsewhere, the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey showed another decrease in mortgage applications.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) fell 2.0% during the week ended August 10, 2018.  The seasonally adjusted Purchase Index dropped 3.0% from the week prior while the Refinance Index remained unchanged from a week earlier.

Overall, the refinance portion of mortgage activity increased to 37.6% from 36.6% of total applications from the prior week.  The adjustable-rate mortgage share of activity decreased to 6.2% 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 dropped to 4.81% from 4.84% with points decreasing to 0.43 from 0.45 for 80 percent loan-to-value ratio (LTV) loans.

For the week, the FNMA 4.0% coupon bond gained 1.5 basis points to close at $101.828 while the 10-year Treasury yield decreased 0.90 of one basis point to end at 2.864%.  The Dow Jones Industrial Average gained 356.18 points to close at 25,669.32.  The NASDAQ Composite Index fell 22.78 points to close at 7,816.33.  The S&P 500 Index added 16.85 points to close at 2,850.13.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 3.84%, the NASDAQ Composite Index has advanced 13.22%, and the S&P 500 Index has added 6.60%.

This past week, the national average 30-year mortgage rate remained unchanged at 4.64; the 15-year mortgage rate rose to 4.14% from 4.13%; the 5/1 ARM mortgage rate increased to 3.97% from 3.95% while the FHA 30-year rate remained unchanged at 4.37%.  Jumbo 30-year rates eased to 4.37% from 4.40%.

Economic Calendar – for the Week of August 20, 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 ($101.828, +1.50 bp) traded within a narrow 25.0 basis point range between a weekly intraday low of 101.641 on Tuesday and a weekly intraday high of $101.891 on Wednesday and Friday before closing the week at $101.828 on Friday.  Mortgage bond prices retreated slightly on Monday and Tuesday before recovering essentially to where they began the week during Wednesday through Friday.  Prices are trending along a convergence of the 25-day, 50-day, and 100-day moving averages that act both as technical support and resistance.  The bond is neither “overbought” nor “oversold” while remaining on a ‘buy” signal so we could likely see more of the same recent pattern where prices trend in a sideways direction with the abovementioned major moving averages.  Continue to look for stable to slightly improved mortgage rates this coming week.

 

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.