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.

 

Tucson Mortgages Home Loan News 3-12-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of March 5, 2018
  • Economic Calendar – week of March 12, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

The major stock market indexes completely erased last week’s losses with the S&P 500 and the Dow Jones Industrial Average climbing 3.5% and 3.3% respectively while the Nasdaq Composite Index advanced by 4.2% to close Friday with a new all-time high.  As a result, bond market prices continued to slip lower leading to slightly higher yields and interest rates.

Thursday, market participants were worried about President Trump signing proclamations imposing tariffs on steel (25%) and aluminum (10%) imports.  However, investors’ initial concerns over the possibility of a trade war breaking out were somewhat abated after the president later tweeted that Canada and Mexico would be exempt “if a new & fair NAFTA trade agreement is signed.”  The president also suggested other favored trading partners might also be excluded.  Tariffs are viewed as inflationary as they raise input costs resulting in higher prices of finished goods.  However, it appears the president will be using these tariffs as bargaining chips to renegotiate more favorable trade deals for the United States in the coming months.

In other significant economic news, the Labor Department released its closely watched Employment Situation Summary (jobs report) Friday morning.  The report revealed robust job growth with nonfarm payrolls increasing by 313,000 versus a consensus forecast of 210,000 new jobs.  The unemployment rate held steady at 4.1%, but more importantly, wage inflation slowed with average hourly earnings showing a deceleration in the year-over-year change to 2.6% at the end of February from 2.8% for the 12 months ending in January, and this helped spark a rally on Wall Street.

In housing, the number of mortgage applications showed a 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) increased by 0.3% during the week ended March 2, 2018.  The seasonally adjusted Purchase Index decreased by 1.0% from the week prior while the Refinance Index increased 2.0%.

Overall, the refinance portion of mortgage activity was unchanged at 41.8% of total applications from the prior week.  The adjustable-rate mortgage share of activity increased to 7.3% of total applications from 6.7%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased to 4.65% from 4.64% with points decreasing to 0.58 from 0.63.

For the week, the FNMA 4.0% coupon bond lost 17.2 basis points to close at $102.203 while the 10-year Treasury yield increased 2.77 basis points to end at 2.8956%.  The major stock indexes moved sharply higher on the week.

The Dow Jones Industrial Average moved 797.68 points higher to close at 25,335.74.  The NASDAQ Composite Index added 302.94 points to close at 7,560.81, a new all-time high.  The S&P 500 Index gained 95.32 points to close at 2,786.57.  Year to date on a total return basis, the Dow Jones Industrial Average has risen 2.49%, the NASDAQ Composite Index has gained 9.52%, and the S&P 500 Index has advanced 4.22%.

This past week, the national average 30-year mortgage rate increased to 4.58% from 4.55%; the 15-year mortgage rate increased to 3.94% from 3.91%; the 5/1 ARM mortgage rate increased to 3.63% from 3.60% and the FHA 30-year rate increased to 4.38% from 4.34%.  Jumbo 30-year rates increased to 4.60% from 4.57%.

Economic Calendar – for the Week of March 12, 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 ($102.203, -17.2 bp) traded within a narrower 45.3 basis point range between a weekly intraday high of $102.547 on Monday and a weekly intraday low of $102.094 on Wednesday before closing the week at $102.203 on Friday.

The bond continued to trade in a sideways direction for the second consecutive week between nearest support and resistance levels as noted on the chart below.  The chart shows a weak buy signal from a positive stochastic crossover on Thursday just above the “oversold” level.  However, unless the stock market shows signs of faltering, we could very well see the current sideways trading pattern continue in the coming week with the bond trading between its 25-day moving average and support at $102 resulting in fairly stable mortgage rates at current levels.

 

Tucson Mortgages Home Loan News 3-5-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of February 26, 2018
  • Economic Calendar – week of March 5, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

The major stock market indexes began last week with promising gains on Monday only to see moderate losses on Tuesday through Thursday before showing some improvement on Friday.  Bond prices mostly traded in the opposite direction of stocks during the week.  The two major drivers of market fluctuations this past week were the semiannual testimony on monetary policy by new Fed Chairman Jay Powell before congressional committees and President Trump’s decision to impose tariffs on steel and aluminum imports.

Fed Chairman Powell testified before the House Financial Services Committee last Tuesday and the Senate Banking Committee on Thursday.  Powell acknowledged the Fed was comfortable with the current path of gradual rate hikes but also noted that his economic growth projections have increased since the Fed’s December FOMC meeting.  Powell stated that he and fellow policymakers were “going to be taking the developments since the December meeting into account and writing down our new rate paths.”  The financial markets interpreted Powell’s comments as perhaps laying the rationale for a greater than anticipated number of rate hikes this year.  The markets have pretty much priced in three additional 25 basis point rate hikes this year and the thought of a fourth rate hike by December sent the stock market lower.  The implied probability of a fourth rate hike in December has now increased to 33.8% while the probability for a rate hike when the Fed next meets on March 21 currently stands at 83.1%.

Meanwhile, President Trump’s decision to impose tariffs on aluminum and steel imports, 10% for aluminum and 25% for steel, rippled through the financial markets on Thursday.  Aluminum and steel companies saw their stock prices record nice gains while companies who use these commodities traded lower.  Investors are now concerned about higher input prices for products primarily made of steel and aluminum and the prospects for a trade war with foreign trading partners.  European Commission President Jean-Claude Juncker reportedly responded by announcing plans to raise tariffs on imports of U.S. whiskey, motorcycles, and blue jeans Friday afternoon.

In housing, the Commerce Department reported January’s New Home Sales came in at a seasonally adjusted annual rate of 593,000, the lowest level since August, and 7.8% lower than December’s revised 643,000.  The median new home price increased 2.5% year-over-year to $323,000 while the average sales price increased 7.0% to $382,700.  At the current sales rate, the inventory of new homes for sale increased to a 6.1-months’ supply from 5.5 months in December and 5.2 months in the year-ago period.

Further, the National Association of Realtors reported Pending Home Sales fell 4.7% in January compared to December, to its lowest level in nearly four years due to a tight supply of homes for sale, higher prices and rising mortgage rates.

The number of mortgage applications showed a 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) increased by 2.7% during the week ended February 23, 2018.  The seasonally adjusted Purchase Index increased by 6.0% from the week prior while the Refinance Index decreased 1.0%.

Overall, the refinance portion of mortgage activity decreased to 41.8% of total applications from 44.4% in the prior week.  The adjustable-rate mortgage share of activity increased to 6.7% of total applications from 6.4%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance was unchanged at 4.64% with points increasing to 0.63 from 0.61.

For the week, the FNMA 4.0% coupon bond lost 9.4 basis points to close at $102.375 while the 10-year Treasury yield increased 0.19 basis points to end at 2.8679%.  The major stock indexes moved moderately lower on the week.

The Dow Jones Industrial Average moved 771.93 points lower to close at 24,538.06.  The NASDAQ Composite Index dropped 79.52 points to close at 7,257.87 and the S&P 500 Index lost 56.05 points to close at 2,691.25.  Year to date on a total return basis, the Dow Jones Industrial Average has fallen 0.73%, the NASDAQ Composite Index has gained 5.13%, and the S&P 500 Index has advanced 0.66%.

This past week, the national average 30-year mortgage rate increased to 4.55% from 4.53%; the 15-year mortgage rate increased to 3.91% from 3.90%; the 5/1 ARM mortgage rate increased to 3.60% from 3.54% and the FHA 30-year rate increased to 4.34% from 4.33%.  Jumbo 30-year rates increased to 4.57% from 4.55%.

Economic Calendar – for the Week of March 5, 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 ($102.375, -9.40 bp) traded within a 78.1 basis point range between a weekly intraday high of $102.75 on Thursday and a weekly intraday low of $101.969 on Tuesday before closing the week at $102.375 on Friday.

The bond traded mostly in a sideways direction for the week between nearest support and resistance levels as noted on the chart below, and is currently trading on a buy signal from early last week.  We could see the bond remain range-bound between these levels in the coming week but could see a noticeable market reaction on Friday with the release of the Employment Situation Summary (Jobs Report) for February.  The labor market has been very strong of late and a better than expected jobs report could send bond prices lower (yields higher) resulting in upward pressure on mortgage rates.

 

Tucson Mortgages Home Loan News 2-26-2018

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

Weekly Review

The major stock market indexes were able to register a modest move higher this past week due to a late rally on Friday that erased losses recorded on Tuesday and Wednesday when the indexes displayed increased intra-day volatility.  Mid-week, investors were worried over recent market volatility, rising interest rates, and the S&P 500 Index breaking below its 50-day moving average of 2,726.

The economic calendar was relatively quiet with the notable exception of Wednesday’s release of the minutes from the Federal Reserve’s January FOMC meeting.  The minutes showed a majority of FOMC members expect inflation to increase in 2018 with most members believing in stronger economic growth that will raise the “likelihood that further gradual policy firming would be appropriate.”  The stock and bond markets reacted negatively to the release with the yield on the benchmark 10-year Treasury note moving up to a four-year high on Wednesday to 2.94% before pulling back to 2.866% by Friday’s close to finish flat for the week.

However, stocks seemed to get a boost late Friday after the Fed released its semiannual Monetary Policy Report to Congress, indicating the Fed expects inflation to remain below their 2% target in 2018.  New Fed Chair Jerome Powell will be testifying about monetary policy before Congress this week.

Elsewhere, the National Association of Realtors reported Existing Home Sales fell 3.2% month-over-month during January to a seasonally adjusted annual rate of 5.38 million compared to December’s rate.  On a year-over-year basis, the decline in sales was an even worse 4.8%, the largest annual decline since August of 2014.  Although the inventory of homes for sale at the end of January increased 4.1% to 1.52 million units, it is 9.5% lower than the same period a year ago and remains a headwind for future Existing Home Sales.  Unsold inventory is at a 3.4-month supply at the current sales rate compared to 3.6 months a year ago.

Low inventory is also leading to higher home prices.  The median price for all categories of homes in January was $240,500, 5.8% higher than the same time a year ago and the 71st straight month of year-over-year gains in home prices.  The median price for existing single-family homes increased 5.7% from a year ago to $241,700.

The number of mortgage applications showed a 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) fell by 6.6% during the week ended February 16, 2018.  The seasonally adjusted Purchase Index decreased by 6.0% from the week prior while the Refinance Index decreased 7.0%.

Overall, the refinance portion of mortgage activity increased to 44.4% of total applications from 46.5% in the prior week.  The adjustable-rate mortgage share of activity increased to 6.4% of total applications from 6.3%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased to 4.64% from 4.57% to its highest level since January 2014, with points increasing to 0.61 from 0.59.

For the week, the FNMA 4.0% coupon bond was unchanged to close at $102.469 while the 10-year Treasury yield decreased 0.71 basis points to end at 2.866%.  The major stock indexes moved modestly higher on the week.

The Dow Jones Industrial Average moved 90.61 points higher to close at 25,309.99.  The NASDAQ Composite Index added 97.93 points to close at 7,337.39 and the S&P 500 Index gained 15.08 points to close at 2,747.30.  Year to date on a total return basis, the Dow Jones Industrial Average has risen 2.39%, the NASDAQ Composite Index has gained 6.29%, and the S&P 500 Index has advanced 2.76%.

This past week, the national average 30-year mortgage rate was unchanged at 4.53%; the 15-year mortgage rate increased to 3.90% from 3.89%; the 5/1 ARM mortgage rate increased to 3.54% from 3.49% and the FHA 30-year rate was unchanged at 4.33%.  Jumbo 30-year rates increased to 4.55% from 4.53%.

Economic Calendar – for the Week of February 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 ($102.469, unchanged) traded within a 65.6 basis point range between a weekly intraday high of $102.547 on Friday and a weekly intraday low of $101.891 on Wednesday before closing the week at $102.469 on Friday.

The bond traded in a “V” pattern during the holiday-shortened (Presidents’ Day) week.  After selling off hard on Wednesday following the release of the January FOMC meeting minutes, the bond rebounded off of support at the $102 level to erase Wednesday’s loss.  The bond ended the week unchanged and just below overhead resistance found at $102.49.

The economic calendar heats up this week with Wednesday, March 1 being a significant news day.  Personal Income, Personal Spending, and key inflation data from PCE and Core PCE Prices will be reported and could trigger a sizeable market reaction.  In all likelihood, bond prices will be driven more by economic news this week than by technical factors.  There was a weak buy signal on Friday and even though bonds are “oversold” they are bumping up against resistance, so it will take tame inflation numbers on Wednesday for bonds to have a chance to move higher.  If PCE and Core PCE Prices jump higher, bonds will sell off and move back toward support resulting in slightly higher mortgage rates.

 

Tucson Mortgages Home Loan News 2-19-2018

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of February 5, 2018
  • Economic Calendar – week of February 12, 2018
  • Mortgage Rate Forecast with Chart

Weekly Review

The major stock market indexes experienced a rapid decline with each losing about 5% in volatile trading.  Surprisingly, the bond market also lost ground as investors failed to seek the “safe haven” bonds usually provide when the stock market sells off in such dramatic fashion.  This past week’s selloff was again associated with fears about rising interest rates.  Congress didn’t help matters much by passing a two-year budget deal that will increase spending by approximately $390 billion over the next two years while extending the debt ceiling until 2019.

The growth in spending will force the government to borrow over $1 trillion in the coming fiscal year and the likelihood of increased Treasury borrowing also fueled fears of higher bond yields and interest rates.  Investors were already expecting a rise in Treasury debt issuance due to the recent changes in the U.S. tax code and the lack of fiscal discipline shown by Congress intensifies concerns about rising yields and interest rates.

The Fed Funds Futures market still expects the next rate hike will occur at the March FOMC meeting as Fed officials downplayed this week’s sell off by continuing to underline a course of gradual rate increases.  The probability of a March rate hike currently stands at 71.9%, down slightly from last week’s 76.1%.

In housing, the number of mortgage applications showed an 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 0.7% during the week ended February 2, 2018.  The seasonally adjusted Purchase Index remained unchanged from the week prior while the Refinance Index increased 1.0%.

Overall, the refinance portion of mortgage activity decreased to 46.4% of total applications from 47.8% in the prior week.  The adjustable-rate mortgage share of activity increased to 6.1% of total applications from 5.7%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased to 4.50% from 4.41%, with points increasing to 0.57 from 0.56.

For the week, the FNMA 3.5% coupon bond lost 29.6 basis points to close at $99.938 while the 10-year Treasury yield increased 1.55 basis points to end at 2.8566%.  The major stock indexes continued to crater during the week.

The Dow Jones Industrial Average fell 1330.06 points to close at 24,190.90.  The NASDAQ Composite Index dropped 366.46 points to close at 6,874.49 and the S&P 500 Index lost 142.58 points to close at 2,619.55.  Year to date on a total return basis, the Dow Jones Industrial Average has retreated 2.14%, the NASDAQ Composite Index declined 0.42%, and the S&P 500 Index has dropped 2.02%.

This past week, the national average 30-year mortgage rate rose to 4.50% from 4.45%; the 15-year mortgage rate increased to 3.86% from 3.79%; the 5/1 ARM mortgage rate increased to 3.45% from 3.42% and the FHA 30-year rate climbed to 4.30% from 4.25%.  Jumbo 30-year rates increased to 4.55% from 4.50%.

Economic Calendar – for the Week of February 12, 2018

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

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

The FNMA 30-year 3.5% coupon bond ($99.94, -29.6 bp) traded within a 117.20 basis point range between a weekly intraday high of $100.969 on Monday and a weekly intraday low of $99.797 on Thursday before closing the week at $99.938 on Friday.

The bond made a nice reversal by opening and trading higher last Monday before running into what proved to be stiff resistance at the 61.8% Fibonacci retracement level at 100.929.  The bond subsequently pulled back and traded lower for the rest of the week even though the stock market was undergoing a sharp correction, the magnitude of which has not been seen for a couple of years.  The bond remains oversold while seeking a bottom and if support levels can hold we should see rates remain relatively stable this coming week.

On Friday, the S&P 500 index moved down to test its 200-day moving average, which appeared to be a technical “line in the sand” that triggered automated buying programs to kick in resulting in sharp rebound off of session lows.  It will be interesting to see if Friday’s rebound off of the key 200-day moving average will have staying power and signal a turn higher in the stock market.  A number of momentum indicators flashed buy signals from oversold positions as a result of Friday’s trading action so we could see stocks attempt a rally off of Friday’s bounce.

The economic calendar picks up some strength this coming week and investors will be closely watching a couple of inflation reports – the consumer price and producer price indexes.  The markets have recently become fearful of the prospects of inflation so these two reports could trigger strong market reactions in both stocks and bonds.