Tucson Mortgages Home Loan News 7-24-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of July 17, 2017
  • Economic Calendar – week of July 24, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market continued its advance with the NASDAQ Composite and S&P 500 Indexes reaching new all-time highs during the week while the Dow Jones Industrial Average slipped slightly lower.  Favorable earnings reports among technology and internet companies helped to boost the NASDAQ while a rally in crude oil prices aided energy sector stocks.

The bond market enjoyed moderate price increases with falling yields despite some favorable economic reports.  Initial jobless claims fell by 15,000 during the week ending July 15 to 233,000 to reach their lowest level in two months, suggesting continuing strength in the labor market.  Also, there were a couple of strong reports from the housing sector including the latest report on Housing Starts and Building Permits.

The Commerce Department surprised economists by reporting a rebound in homebuilding during June as Housing Starts surged 8.3% to a seasonally adjusted annual rate of 1.215 million units, the highest level since February.  Both single-family and multi-family construction increased.  Economists had forecast an increase in June Housing Starts to 1.160 million units from May’s upwardly revised reading of 1.122 million.  Although this was a welcome sign after seeing three straight months of declining Starts, construction activity remains constrained by rising lumber prices and land and labor shortages.  Meanwhile, Building Permits increased 7.4% to a seasonally adjusted annual rate of 1.254 million to exceed the consensus forecast of 1.196 million.

Mortgage application volume increased during the week ending July 14.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) gained 6.3%.  The seasonally adjusted Purchase Index increased 1.0% from the prior week while the Refinance Index increased 13%.

Overall, the refinance portion of mortgage activity increased to 44.7% of total applications from 42.1% in the prior week.  The adjustable-rate mortgage share of activity was unchanged at 6.7% of total applications.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance remained unchanged at 4.22% with points decreasing to 0.31 from 0.40.

For the week, the FNMA 3.5% coupon bond gained 40.6 basis points to close at $103.03.  The 10-year Treasury yield decreased 9.44 basis points to end at 2.2375%.  Stocks ended the week mixed with the NASDAQ and S&P 500 indexes modestly higher while the Dow slipped slightly lower.

The Dow Jones Industrial Average fell 57.67 points to close at 21,580.07.  The NASDAQ Composite Index advanced 75.28 points to close at 6,387.75 and the S&P 500 Index gained 13.27 points to close at 2,472.54.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 9.20%, the NASDAQ Composite Index has advanced 18.66%, and the S&P 500 Index has risen 10.44%.

This past week, the national average 30-year mortgage rate fell to 4.00% from 4.06%; the 15-year mortgage rate decreased to 3.29% from 3.34%; the 5/1 ARM mortgage rate decreased to 3.18% from 3.22%; and the FHA 30-year rate fell to 3.65% from 3.75%.  Jumbo 30-year rates decreased to 4.29% from 4.35%.

Economic Calendar – for the Week of July 24, 2017

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

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

The FNMA 30-year 3.5% coupon bond ($103.03, +40.6 bp) traded within a 48 basis point range between a weekly intraday low of $102.59 on Monday and a weekly intraday high of $103.08 on Friday before closing the week higher at $103.03.

Bond prices rallied during the week to move above overhead resistance found at the 38.2% Fibonacci retracement level (102.806); the 200-day moving average (102.83); the 25-day moving average (102.84); and the 50-day moving average (102.92).  These levels now revert back to support levels while resistance levels are now found at 103.20 and 103.53.  The chart suggests the bond can continue to rise higher toward resistance as the slow stochastic oscillator shows the bond is not yet overbought.  Should this scenario play out in the coming week as the chart suggests, it should lead to a slight improvement in mortgage rates.

 

Tucson Mortgages Home Loan News 7-17-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of July 10, 2017
  • Economic Calendar – week of July 17, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market resumed its bullish ways to end the week higher on firming oil prices and softer than anticipated inflation news.  The feeble inflation data coupled with disappointing economic news also helped to push Treasury prices higher and yields lower for the week.

Retail Sales for June fell for the second straight month, coming in below expectations at -0.2%. Economists had forecast June sales growth of 0.1%.  This weaker consumer spending will also have a negative influence on upcoming GDP models for the second quarter.  The Atlanta Fed’s GDPNow model forecast moved lower on Friday to 2.4% from 2.6% on Tuesday following the Retail Sales report.  Consumer sentiment is also sliding lower with the preliminary July reading of the University of Michigan’s Consumer Sentiment Index falling to 93.1 when analysts were expecting 95.1.

Core inflation at both the producer and consumer levels was reported below consensus forecasts at 0.1%.  Economists had expected core inflation at 0.2% for both.  This may cause the Federal Reserve to think twice about raising interest rates in December when Fed watchers next expect a rate hike.  In fact, Fed Chair Janet Yellen during her Wednesday testimony before the House Financial Services Committee referred to the recent weakness seen in inflation data by stating “monetary policy is not on a preset course” and “the Committee will be monitoring inflation developments closely in the months ahead.”  Also, Dallas Fed President and FOMC voting member Robert Kaplan stated he wants “greater evidence” of rising inflation before hiking rates again.

There were no economic reports from the housing sector other than the latest mortgage application data.  Application volume decreased during the week ending July 7.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) fell 7.4%.  The seasonally adjusted Purchase Index decreased 3.0% from the prior week while the Refinance Index decreased 13% to its lowest level since last January.

Overall, the refinance portion of mortgage activity decreased to 42.1% of total applications from 44.9% in the prior week.  The adjustable-rate mortgage share of activity decreased to 6.7% of total applications from 7.2%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased to 4.22% from 4.20% with points increasing to 0.40 from 0.31.

For the week, the FNMA 3.5% coupon bond gained 21.9 basis points to close at $102.63.  The 10-year Treasury yield decreased 5.37 basis points to end at 2.3319%.  Stocks ended the week moderately higher.

The Dow Jones Industrial Average rose 223.40 points to close at 21,637.74.  The NASDAQ Composite Index advanced 159.39 points to close at 6,312.47 and the S&P 500 Index gained 34.09 points to close at 2,459.27.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 9.49%, the NASDAQ Composite Index has advanced 17.26%, and the S&P 500 Index has risen 9.85%.

This past week, the national average 30-year mortgage rate fell to 4.06% from 4.13%; the 15-year mortgage rate decreased to 3.34% from 3.38%; the 5/1 ARM mortgage rate increased to 3.22% from 3.20%; and the FHA 30-year rate was unchanged at 3.75%.  Jumbo 30-year rates decreased to 4.35% from 4.40%.

Economic Calendar – for the Week of July 17, 2017

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

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

The FNMA 30-year 3.5% coupon bond ($102.63, +21.9 bp) traded within a 56 basis point range between a weekly intraday low of $102.36 on Monday and a weekly intraday high of $102.92 on Friday before closing the week higher at $102.63.

Bond prices rallied on Wednesday and then attempted a substantial rally on Friday before selling off hard after prices were unable to break above a dual layer of overhead resistance.  Friday’s trading action resulted in a “shooting star” candlestick – a potential bearish reversal signal.  This suggests the bond will likely test technical support before attempting any move higher.  Contrary to this signal is the presence of a positive stochastic crossover buy signal from an oversold position.

The bond is poised to continue a little lower for a test of support at the key 100-day moving average.  If this level holds, mortgage rates should hold steady and may improve slightly in the coming week.  However, if the 100-day moving average is breached to the downside, bond prices would move lower resulting slightly worse mortgage rates.

 

Tucson Mortgages Home Loan News 7-10-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of July 3, 2017
  • Economic Calendar – week of July 10, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market ended the week modestly higher while most bond prices slid lower (yields higher) for seven out of the last eight trading days.  Treasury bond yields rose after Wednesday’s release of the minutes from the Federal Reserve’s June meeting failed to diminish investor expectations that the Fed will announce a third rate hike later this year.  Also weighing on bond prices were the minutes from the recent European Central Bank (ECB) policy meeting showing ECB officials discussing removal of their monetary easing preferences.  Furthermore, the financial markets acted negatively in response to North Korea’s successful intercontinental ballistic missile test and President Trump’s warning that “pretty severe things” could happen as a result of the test.

In economic news, Friday’s release showing the economy added more new jobs than anticipated helped the stock market to rebound at the expense of Treasury prices.  The Labor Department’s June Employment Situation Report revealed nonfarm payrolls increased by 222,000 versus a consensus forecast of 173,000.  Additionally, the previous two months’ readings were upwardly revised up by a net 47,000 jobs.  However, Average Hourly Earnings moved just 0.2% higher when economists were expecting a 0.3% increase suggesting wage inflation is not accelerating.

In housing, financial services company CoreLogic reported home prices increased 1.2% in May from April and 6.6% on a year-over-year basis.  Furthermore, CoreLogic is forecasting home prices will increase by 5.3% on a year-over-year basis from May 2017 to May 2018 while increasing a projected 0.9% from May 2017 to June 2017 on a month-over-month basis.  Dr. Frank Nothaft, chief economist for CoreLogic, remarked “The market remained robust with home sales and prices continuing to increase steadily in May.  While the market is consistently generating home price growth, sales activity is being hindered by a lack of inventory across many markets. This tight inventory is also impacting the rental market where overall single-family rent inflation was 3.1% on a year-over-year basis in May of this year compared with May of last year. Rents in the affordable single-family rental segment increased 4.7% over the same time, well above the pace of overall inflation.”

CoreLogic President and CEO Frank Martell commented “For current homeowners, the strong run-up in prices has boosted home equity and, in some cases, spending.  For renters and potential first-time homebuyers, it is not such a pretty picture.  With price appreciation and rental inflation outstripping income growth, affordability is destined to become a bigger issue in most markets.”

As for mortgage activity, application volume increased during the week ending June 30.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) rose 1.4%.  The seasonally adjusted Purchase Index increased 3.0% from the prior week while the Refinance Index decreased 0.4%.

Overall, the refinance portion of mortgage activity decreased to 44.9% total applications from 45.6% in the prior week.  The adjustable-rate mortgage share of activity increased to 7.2% of total applications from 7.0%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased to its highest level since May of this year at 4.20% from 4.13% with points decreasing to 0.31 from 0.32.

For the week, the FNMA 3.5% coupon bond lost 26.6 basis points to close at $102.406.  The 10-year Treasury yield increased 8.19 basis points to end at 2.3856%.  Stocks ended the week marginally higher.

The Dow Jones Industrial Average rose 64.71 points to close at 21,414.34.  The NASDAQ Composite Index advanced 12.66 points to close at 6,153.08 and the S&P 500 Index gained 1.77 points to close at 2,425.18.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 8.36%, the NASDAQ Composite Index has advanced 14.30%, and the S&P 500 Index has risen 8.32%.

This past week, the national average 30-year mortgage rate rose to 4.13% from 4.07%; the 15-year mortgage rate increased to 3.38% from 3.32%; the 5/1 ARM mortgage rate increased to 3.20% from 3.16%; and the FHA 30-year rate was unchanged at 3.75%.  Jumbo 30-year rates increased to 4.40% from 4.33%.

Economic Calendar – for the Week of July 3, 2017

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

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

The FNMA 30-year 3.5% coupon bond ($102.41, -26.6 bp) traded within a narrower 44 basis point range between a weekly intraday high of $102.73 on Monday and a weekly intraday low of $102.29 on Friday before closing the week lower at $102.41.

Bond prices have fallen over the past two weeks as a result of mixed economic data, the negative influence from comments made by central bank officials both here and abroad, and volatility in oil prices that impact the holders of energy-related debt.  As a result, mortgage bond prices breached technical support at the 100-day moving average and this level now reverts to resistance.  The next level of support is found at $102.22.  The bond continues to be extremely “oversold” and susceptible to a rebound higher from support levels last seen during May 9-11.  The bond may continue a little lower to bounce off of support levels before turning higher and may become range-bound between the nearest support and resistance levels.  As a result, mortgage rates should remain fairly stable and there shouldn’t be more than a five or six basis point swing in either direction in the coming week based upon what the chart is currently showing.

 

Tucson Mortgages Home Loan News 7-3-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of June 26, 2017
  • Economic Calendar – week of July 3, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

Both the stock and bond markets moved lower while displaying greater volatility and increased trading volumes ahead of an approaching 4th of July holiday-shortened trading week.  Technology stocks in particular came under selling pressure triggered by news the European Union was fining Alphabet (Google) $2.7 billion for supposed antitrust violations.  An additional negative influence on the stock market stemmed from news the U.S. Senate was going to postpone a vote on health care reform resulting in a delay for a bill to overhaul taxes.

Meanwhile, the bond market was punished by comments made by European Central Bank President Mario Draghi on Tuesday suggesting higher eurozone inflation and economic growth will lead to higher interest rates in the not too distant future.  Global bond markets reacted very negatively to Draghi’s comments with yields jumping higher during the remainder of the week.

As far as when the next rate hike may occur here in the U.S., the fed funds futures market is suggesting with an implied probability of 54.4% that the December FOMC meeting on December 13 will be the most likely time for the next rate-hike announcement.

In housing, strong levels of home price appreciation continue to be seen even though the latest Case-Shiller Home Price Index showed slight moderation in the 20-City Composite Index for April.  The 20-City Composite Index showed home prices increased 5.7% on a year-over-year basis which was lower than the prior month’s reading of 5.9%, while the broader National Index showed home prices increasing 5.5%, down from 5.7% in March.  After seasonal adjustment however, the National Index recorded a 0.2% month-over-month increase while the 20-City Composite posted a 0.3% month-over-month increase.

Mortgage application volume decreased during the week ending June 23.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) fell 6.2%.  The seasonally adjusted Purchase Index decreased 4.0% from the prior week while the Refinance Index decreased 9.0%.

Overall, the refinance portion of mortgage activity decreased to 45.6% total applications from 46.6% in the prior week.  The adjustable-rate mortgage share of activity decreased to 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 was unchanged at 4.13% with points decreasing to 0.32 from 0.34.

The National Association of Realtors (NAR) reported their Pending Home Sales Index for May slipped 0.8% to record its third-straight monthly decline.  The index forecasts future sales by tracking real estate transactions in which a contract has been signed, but the deal has not yet closed.  The index dropped to 108.5 in May and the April level was revised lower to -1.7% from an initially reported -1.3%. The consensus forecast had been for a 0.5% increase.  NAR chief economist Lawrence Yun noted “Buyer interest is solid, but there is just not enough supply to satisfy demand.  Prospective buyers are being sidelined by both limited choices and home prices that are climbing too fast.”

For the week, the FNMA 3.5% coupon bond lost 57.8 basis points to close at $102.67.  The 10-year Treasury yield increased 15.97 basis points to end at 2.3037%.  Stocks ended the week lower.

The Dow Jones Industrial Average fell 45.13 points to end at 21,349.63.  The NASDAQ Composite Index dropped 124.83 points to close at 6,140.42 and the S&P 500 Index lost 14.89 points to close at 2,423.41.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 8.03%, the NASDAQ Composite Index has advanced 14.07%, and the S&P 500 Index has risen 8.24%.

This past week, the national average 30-year mortgage rate rose to 4.07% from 3.98%; the 15-year mortgage rate increased to 3.32% from 3.26%; the 5/1 ARM mortgage rate increased to 3.16% from 3.07%; and the FHA 30-year rate rose to 3.75% from 3.65%.  Jumbo 30-year rates increased to 4.33% from 4.25%.

Economic Calendar – for the Week of July 3, 2017

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

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

The FNMA 30-year 3.5% coupon bond ($102.67, +9.4 bp) traded within a wider 77 basis point range between a weekly intraday low of $102.56 on Friday and a weekly intraday high of $103.33 on Monday before closing the week lower at $102.67.

Bond prices were driven lower by negative comments from central bankers and mortgage bond prices moved below previous support levels that now become resistance levels.  Mortgage bonds are now deeply “oversold” and will look to bounce back after pulling up from their 100-day moving average support level on Friday.

Economic news, especially the latest job report on Friday, will likely determine market direction in the coming week.  If new job formation exceeds expectations on Friday, we could see bond prices test support levels resulting in slightly worse mortgage rates.  However, if the economic news is favorable for bonds, bond prices should test resistance levels resulting in an improvement in rates.

 

Tucson Mortgages Home Loan News 6-26-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of June 19, 2017
  • Economic Calendar – week of June 26, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market moved modestly higher during the week with intermittent strength shown in the financial, health care, and technology sectors that was countered by considerable weakness in energy sector.  In fact, oil stocks officially entered into a bear market with a decline of 20% from their recent highs to end at 10-month lows.  Bond yields ended the week slightly lower.

The housing sector was prominently featured in the week’s economic news and included the latest mortgage data.  Mortgage application volume increased during the week ending June 16.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) rose 0.6%.  The seasonally adjusted Purchase Index decreased 1.0% from the prior week while the Refinance Index increased 2.0%.

Overall, the refinance portion of mortgage activity increased to 46.6% total applications from 45.4% in the prior week.  The adjustable-rate mortgage share of activity increased to 7.5% 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 4.13% with points decreasing to 0.34 from 0.35.

Existing Home Sales during May exceeded analyst expectations, running at a seasonally adjusted annual rate of 5.62 million according to the National Association of Realtors.  May’s sales were 1.1% higher from a downwardly revised April sales rate of 5.56 million and were higher than the consensus forecast of 5.52 million.  May became the 63rd straight month for yearly housing price gains with the median sales price rising to $252,800, a new all-time high and 5.8% higher than a year ago.  The median number of days a property now spends on the market fell to a new low of 27 days.  Supply constraints coupled with robust demand continued to send housing prices higher.  First-time home buyers made up 33% of all buyers in May, down from 34% in April.

Moreover, according to the Federal Housing Finance Agency (FHFA), home prices increased 0.7% in April to match an upwardly revised increase in March to 0.7% from 0.6%.  Year-over-year, from April 2016 to April 2017, house prices have risen 6.8%.

Further, the Commerce Department reported New Home Sales increased 2.9% in May to a seasonally adjusted annual rate of 610,000 to surpass the consensus forecast of 599,000.  New home prices jumped higher with the year-over-year median price rising 16.8% to a record high $345,800 while the average sales price soared 16.1% to $406,400.  This is further evidence of strong demand and constricted inventories in the housing market.  Based on May’s sales rate, the inventory of new homes for sale comprised a 5.3 month supply.

For the week, the FNMA 3.5% coupon bond gained 9.4 basis points to close at $103.25.  The 10-year Treasury yield decreased 0.91 basis points to end at 2.144%.  Stocks ended the week modestly higher.

The Dow Jones Industrial Average gained 10.48 points to end at 21,394.76.  The NASDAQ Composite Index rose 113.49 points to close at 6,265.25 and the S&P 500 Index added 5.15 points to close at 2,438.30.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 7.63%, the NASDAQ Composite Index has advanced 14.08%, and the S&P 500 Index has risen 8.18%.

This past week, the national average 30-year mortgage rate fell to 3.98% from 4.00%; the 15-year mortgage rate was unchanged at 3.26%; the 5/1 ARM mortgage rate fell to 3.07% from 3.08%; and the FHA 30-year rate fell to 3.65% from 3.70%.  Jumbo 30-year rates decreased to 4.25% from 4.28%.

Economic Calendar – for the Week of June 26, 2017

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

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

The FNMA 30-year 3.5% coupon bond ($103.25, +9.4 bp) traded within a narrower 25 basis point range between a weekly intraday low of $103.00 on Monday and Tuesday and a weekly intraday high of $103.25 on Friday before closing the week higher at $103.25.  The chart reflects a mostly sideways trading pattern of consolidation as the bond moved back above the 25-day and 200-day moving averages.  Although appearing range-bound between technical support and resistance levels, the bond is neither overbought nor oversold and should be able to move higher toward resistance in the coming week.  Therefore, we should see mortgage rates continue to remain stable and possibly slightly improve, especially if the stock market takes a pause.

 

Tucson Mortgages Home Loan News 6-19-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of June 12, 2017
  • Economic Calendar – week of June 19, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market ended the week in “mixed” fashion with the NASDAQ Composite Index underperforming as investors locked in some profits in high-flying large-cap technology stocks.  Selling was particularly noticeable in the so-called FAANG stocks – Facebook, Amazon, Apple, Netflix, and Google (Alphabet) that represent $2.36 trillion in market capitalization.  Meanwhile, the Dow Jones Industrial Average traded to another new all-time high during the week.

Bond prices moved modestly higher with yields pulling back following the Federal Reserve’s widely expected decision to raise the fed funds target range by 25 basis points to 1.00%-1.25% and on weaker economic data and relatively tame inflation news.  Inflation as measured by the consumer price index was weaker than expected as were retail sales and housing starts and permits.

There were several housing reports released during the week including weekly mortgage data.

Mortgage application volume increased during the week ending June 9.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) rose 2.8%.  The seasonally adjusted Purchase Index decreased 3.0% from the prior week while the Refinance Index increased 9.0%.

Overall, the refinance portion of mortgage activity increased to 45.4% total applications from 42.1% in the prior week.  The adjustable-rate mortgage share of activity was unchanged at 7.4% of total applications with the average loan size for refinance applications reaching their highest level since September 2016 at $274,700.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance fell to 4.13% from 4.14% with points increasing to 0.35 from 0.34.

Moreover, Housing Starts and Building Permits for the month of May were both reported below their consensus forecasts.  Housing Starts in May fell 5.5% to a seasonally adjusted annual rate of 1.092 million from a downwardly revised 1.156 million in April, and were below the consensus forecast of 1.227 million.  The decline in Housing Starts was led by a 9.8% drop in multi-unit housing while single-family unit starts fell 3.9%.  On a year-over-year basis, Starts were 2.4% lower.  Building Permits didn’t fare much better, declining 4.9% month-over-month to a seasonally adjusted annual rate of 1.168 million versus a consensus forecast of 1.250 million.  Permits for single-family units declined 1.9% as compared to April.  Overall, the decline in single-family permits suggests housing supply shortages and affordability concerns are likely to continue within the new home market.

For the week, the FNMA 3.5% coupon bond gained 10.9 basis points to close at $103.156.  The 10-year Treasury yield decreased 4.92 basis points to end at 2.153%.  Stocks ended the week “mixed.”

The Dow Jones Industrial Average gained 112.31 points to end at 21,384.28.  The NASDAQ Composite Index fell 56.16 points to close at 6,151.76 and the S&P 500 Index added 1.38 points to close at 2,433.15.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 8.21%, the NASDAQ Composite Index has advanced 14.28%, and the S&P 500 Index has risen 8.68%.

This past week, the national average 30-year mortgage rate fell to 4.00% from 4.01%; the 15-year mortgage rate was unchanged at 3.26%; the 5/1 ARM mortgage rate rose to 3.08% from 3.05%; and the FHA 30-year rate fell to 3.70% from 3.75%.  Jumbo 30-year rates decreased to 4.28% from 4.29%.

Economic Calendar – for the Week of June 19, 2017

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

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

The FNMA 30-year 3.5% coupon bond ($103.16, +11 bp) traded within a wider 61 basis point range between a weekly intraday low of $102.89 on Tuesday and a weekly intraday high of $103.50 on Wednesday before closing the week higher at $103.16.  The chart shows the bond range-bound between support and resistance levels with the slow stochastic oscillator neither overbought nor oversold suggesting the bond could trade in a sideways direction with mortgage rates remaining relatively stable near current levels for the coming week.

 

Tucson Mortgages Home Loan News 6-12-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of June 5, 2017
  • Economic Calendar – week of June 12, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market ended the week in “mixed” fashion with the Dow Jones Industrial Average achieving a modest advance while the NASDAQ Composite and S&P 500 Indices traded lower.  Technology stocks in particular were hit with some profit-taking, especially on Friday, possibly due to surprising election results in Great Britain showing the Conservative Party losing its parliamentary majority.  The technology laden NASDAQ-100 Index saw a loss of 3.8% on Friday prompting investors to buy safe-haven assets such as Treasuries.

On the political scene, market tensions appeared to be relieved after highly anticipated testimony from former FBI Director James Comey before the Senate Intelligence Committee indicated there was no collusion between President Trump and Russia to influence the presidential election.  There was also no testimony from Comey suggesting Trump obstructed any investigations into Russian campaign interference.  Investors were also relieved when the European Central Bank decided to leave interest rates unchanged.

The week’s economic calendar was rather light, although the Labor Department released a couple of favorable reports showing continued strength in the labor market.  First, the JOLTS Job Openings report showed job openings reached a record high in April and were almost one million ahead of hirings.  Secondly, weekly Initial Jobless Claims continued to decline and remained close to historic lows, while the four-week moving average of claims fell to 1.915 million, a level not seen since the early 1970s.

This coming Wednesday the Federal Reserve (FOMC) is scheduled to release its latest monetary policy decision.  It is widely anticipated there will be a quarter of a point increase in the fed funds rate.  In fact, the fed funds futures market continues to show a 95.8% implied probability of a 25 basis point rate hike.

There were no housing reports released during the week other than weekly mortgage data.

Mortgage application volume increased during the week ending June 2.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) rose 7.1%.  The seasonally adjusted Purchase Index advanced 10.0% from the prior week to its highest level since May 2010, while the Refinance Index decreased 3.0%.

Overall, the refinance portion of mortgage activity decreased to 42.1% total applications from 43.2% from the prior week.  The adjustable-rate mortgage share of activity decreased to 7.4% 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 4.14% (its lowest level since November 2016) from 4.17% with points increasing to 0.34 from 0.32.

For the week, the FNMA 3.5% coupon bond lost 15.6 basis points to close at $103.219 before undergoing a monthly bond rollover that ended with the bond being repriced at $103.05.  The 10-year Treasury yield increased 4.32 basis points to end at 2.2023%.  Stocks ended the week “mixed.”

The Dow Jones Industrial Average added 65.68 points to end at 21,271.97.  The NASDAQ Composite Index fell 97.88 points to close at 6,207.92 and the S&P 500 Index dropped 7.30 points to close at 2,431.77.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 7.64%, the NASDAQ Composite Index has advanced 15.32%, and the S&P 500 Index has risen 8.62%.

This past week, the national average 30-year mortgage rate rose to 4.01% from 3.98%; the 15-year mortgage rate increased to 3.26% from 3.24%; the 5/1 ARM mortgage rate rose to 3.05% from 3.04%; and the FHA 30-year rate was unchanged at 3.75%.  Jumbo 30-year rates increased to 4.29% from 4.27%.

Economic Calendar – for the Week of June 12, 2017

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

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

The FNMA 30-year 3.5% coupon bond ($103.05, -19 bp) traded within a narrow 39 basis point range between a weekly intraday high of $103.53 on Tuesday and a weekly intraday low of $103.14 on Friday before closing the week lower at $103.05 following a monthly bond rollover re-pricing.

The bond traded up to its nearest resistance level on Tuesday before being turned away from this level.  The bond subsequently traded down to its 200-day moving average support level during the remainder of the week before undergoing a monthly coupon repricing on Friday that reset the price below this level.  The bond remains “overbought” as shown by the slow stochastic oscillator, so we may continue to see the bond move toward the 25-day moving average.  The economic calendar picks up steam with a number of significant reports that could drive prices in either direction.  It is possible we could see the bond trade between the 200-day moving average and the 25 and 50-day moving averages.  Should this occur, mortgage rates should remain close to where they currently are in the coming week.

 

Tucson Mortgages Home Loan News 6-5-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of May 29, 2017
  • Economic Calendar – week of June 5, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market traded in a rather subdued fashion on Tuesday and Wednesday in a holiday shortened week before jumping higher on Thursday and Friday.  Stocks advanced Thursday following news the U.S. is pulling out of the Paris Climate Accord that was seen as having a destructive impact on the U.S. economy while bond prices modestly declined.  On Friday, both stocks and bonds reacted positively to the May Employment Situation Summary (jobs report).  The Goldilocks report was not too “hot” and not too “cold” – it was just right enough to pacify the bears.

While the headline nonfarm payrolls number was reported at 138,000, it easily missed the consensus forecast of 185,000 as did nonfarm private payrolls at 147,000 versus 172,000 expected.  Furthermore, each of the last two monthly job gains were downwardly revised with March’s payroll growth losing 29,000 while April’s gains dropped by 37,000 jobs.  Average hourly earnings also missed the consensus forecast with a 0.2% increase versus expectations of 0.3%.

The one encouraging piece of data was the unemployment rate falling to a 16-year low of 4.3%.  Also, the underemployment rate, which adds those who are working part-time but would prefer full-time work, fell to 8.4% from April’s reading of 8.6%.  Gary Cohn, President Trump’s chief economic advisor, has stated in recent months that the administration is concentrating on bringing the underemployment rate lower.

There were no housing reports released during the week other than the latest mortgage data.

Mortgage application volume declined during the week ending May 26.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) fell 3.4%.  The seasonally adjusted Purchase Index dropped 1.0% from the prior week, while the Refinance Index decreased 6.0%.

Overall, the refinance portion of mortgage activity decreased to 43.2% total applications from 43.9% from the prior week.  The adjustable-rate mortgage share of activity decreased to 7.7% 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 4.17% with points decreasing to 0.32 from 0.39.

For the week, the FNMA 3.5% coupon bond gained 31.2 basis points to close at $103.38 while the 10-year Treasury yield decreased 9.09 basis points to end at 2.159%.  Stocks ended the week higher.

The Dow Jones Industrial Average added 126.01 points to end at 21,206.29.  The NASDAQ Composite Index advanced 95.61 points to close at 6,305.80 and the S&P 500 Index gained 23.25 points to close at 2,439.07.

Year to date on a total return basis, the Dow Jones Industrial Average has gained 7.31%, the NASDAQ Composite Index has advanced 17.14%, and the S&P 500 Index has risen 8.94%.

This past week, the national average 30-year mortgage rate fell to 3.98% from 4.02%; the 15-year mortgage rate declined to 3.24% from 3.28%; the 5/1 ARM mortgage rate dropped to 3.04% from 3.09%; and the FHA 30-year rate was unchanged at 3.75%.  Jumbo 30-year rates decreased to 4.27% from 4.30%.

Economic Calendar – for the Week of June 5, 2017

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

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

The FNMA 30-year 3.5% coupon bond ($103.38, +31.2 bp) traded within a narrow 47 basis point range between a weekly intraday high of $103.47 on Friday and a weekly intraday low of $103.00 on Thursday before closing the week at $103.38.

The bond moved only eight basis points higher from Tuesday through Thursday until jumping 24 basis points higher on Friday following a rather benign May Situation Summary (Jobs Report).  Friday’s trading powered the bond above a tough dual layer of overhead resistance at the 200-day moving average (103.24) and prior resistance at 103.297.  These levels should serve as nearest technical support.  If these support levels can manage to hold in the coming week, the bond could take out resistance at Friday’s intraday high of 103.469.  Further resistance lies considerably higher at the 23.6% Fibonacci retracement level at 103.967.  However, further movement to the upside will be difficult as the slow stochastic oscillator is at an extreme level suggesting a pending pullback in upward momentum.  Mortgage rates should hold fairly steady in the coming week.

 

Tucson Mortgages Home Loan News 5-29-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of May 22, 2017
  • Economic Calendar – week of May 29, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The stock market bounced back this past week to record its seventh consecutive daily gain since selling off on Wednesday, May 17 following media speculation about the FBI’s investigation of potential Russian interference in the U.S. presidential election.  Meanwhile, the bond market largely traded sideways with mortgage bonds edging almost five basis points higher and mortgage rates holding steady.

Last Wednesday the Federal Reserve released the minutes from their May 2-3 FOMC meeting and there were no strong reactions from the stock and bond markets.  The minutes showed Fed officials were pondering on whether or not the first-quarter slowing in economic growth would be reversed during the second quarter.  However, Fed officials will only have about half of the 2nd Quarter’s economic data they will need to make a rate decision by their June 14 meeting, so there is a possibility the Fed may have to delay their next rate hike until September.  However, the Fed Funds Futures market is currently pricing in an 83.1% probability for a rate hike in June.

Fed officials also discussed their intention to gradually reduce the Fed’s $4 trillion balance sheet by shrinking their holdings of Treasury bonds and mortgage-backed securities.  This will likely put upward pressure on longer-term interest rates beginning later in the year.

There were several key economic reports from the housing sector this past week.  Tuesday, the Commerce Department reported New Home Sales fell 11.4% from nearly a 9-1/2-year high in April to a seasonally adjusted annual rate of 569,000 units.

However, March’s New Home Sales number was revised higher to 642,000 units (from 621,000), which was the highest level since October 2007.  The inventory level for new homes on the market increased 1.5% to 268,000 units and at April’s sales rate it would take 5.7 months to deplete the supply of houses on the market, up from 4.9 months in March.

Overall, the upward revisions in new sales for prior months more than compensated for the decline in April relative to the consensus forecast.  Therefore, the April report is not as poor as it initially appeared and the housing recovery likely remains unharmed within a tightening labor market.

Wednesday, the Federal Housing Finance Agency (FHFA) announced their House Price Index advanced 0.6% during the month of March.  This was slightly higher than the forecast of 0.5%. Year-over-year, the FHFA index has increased 6.2%.

Further, the National Association of Realtors reported Existing Home Sales fell 2.3% during April to 5.570 million units to come in below the consensus forecast of 5.650 million units.  Sales were 1.6% higher year-over-year.  Total housing inventory increased 7.2% to 1.93 million existing homes (9.0% lower than a year ago) marking the 23rd consecutive year-over-year decline.

Unsold inventory increased to a 4.2-month supply versus 3.8 months in March based on April’s sales rate.  The median home price for all housing types increased 6.0% to $244,800 while the median price for existing single-family homes rose 6.1% to $246,100.

As for mortgages, mortgage application volume increased during the week ending May 19.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) rose 4.4%.  The seasonally adjusted Purchase Index dropped 1.0% from the prior week, while the Refinance Index increased 11.0% to its highest level since March.

Overall, the refinance portion of mortgage activity increased to 43.9% total applications from 41.1% from the prior week.  The adjustable-rate mortgage share of activity increased to 8.2% 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 4.17% from 4.23% with points increasing to 0.39 from 0.37.

For the week, the FNMA 3.5% coupon bond gained 4.7 basis points to close at $103.06 while the 10-year Treasury yield increased 1.54 basis points to end at 2.250%.  Stocks ended the week higher.

The Dow Jones Industrial Average added 275.44 points to end at 21,080.28.  The NASDAQ Composite Index advanced 126.49 points to close at 6,210.19 and the S&P 500 Index gained 34.09 points to close at 2,415.82.

Year to date on a total return basis, the Dow Jones Industrial Average has gained 6.67%, the NASDAQ Composite Index has advanced 15.36%, and the S&P 500 Index has risen 7.91%.

This past week, the national average 30-year mortgage rate held steady at 4.02%; the 15-year mortgage rate was unchanged at 3.28%; the 5/1 ARM mortgage rate was unchanged at 3.09%; and the FHA 30-year rate was unchanged at 3.75%.  Jumbo 30-year rates decreased to 4.30% from 4.31%.

Economic Calendar – for the Week of May 29, 2017

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

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

The FNMA 30-year 3.5% coupon bond ($103.06, +4.7 bp) traded within a narrower 40 basis point range between a weekly intraday high of $103.17 on Friday and a weekly intraday low of $102.77 on Wednesday before closing the week at $103.06.

The bond churned sideways on Monday and Tuesday week before edging marginally higher on Wednesday.  Interestingly, the bond closed at the same value of $103.06 on Wednesday through Friday.  Thursday, there was a weak buy signal from the slow stochastic oscillator taking place while “overbought.”  This suggests the bond could remain range-bound between current technical support ($102.806) and resistance ($103.297) this coming week unless the economic data from the May Employment Situation Summary (Jobs Report) on Friday triggers a strong reaction in the bond market.

Last week’s Initial Jobless Claims data will serve as the “sample week” for modeling and estimates for the upcoming ADP and Jobs Reports.  This data suggests there could be a stronger than forecast May Jobs Report that could result in a negative reaction in the bond market to send mortgage bond prices lower and interest rates slightly higher.

 

Tucson Mortgages Home Loan News 5-22-2017

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of May 15, 2017
  • Economic Calendar – week of May 22, 2017
  • Mortgage Rate Forecast with Chart

Weekly Review

The week’s economic news took a backseat to continuing political turmoil over alleged collusion between former Trump presidential campaign officials and the Russian government.  The stock market showed a sharp increase in volatility by plunging on Wednesday following allegations Tuesday evening that President Trump had requested ex-FBI Director James Comey to drop his investigation into retired general Michael Flynn who had business ties to Russia and briefly served as Trump’s National Security adviser.

Investors sold stocks and bought bonds as obstruction of justice allegations expanded the controversy surrounding Trump and threatened to weaken the Trump administration’s agenda for business-friendly legislation such as tax and health care reform.  As a result, bond prices moved higher sending Treasury yields to three-week lows.

In housing, the Commerce Department reported April Housing Starts fell 2.6% to a seasonally adjusted annual rate of 1.172 million units to miss the consensus forecast of 1.255 million.  A sizeable drop in apartment construction, an often volatile sector, was primarily responsible for the decline.  Construction of single-family homes edged higher by 0.4% to an annual rate of 835,000 units while construction of multi-family units fell 9.2% to a rate of 337,000 units.

Furthermore, Building Permits fell 2.5%, driven by a 4.5% decline in the single-family segment while multi-family permits increased by 1.4%.

As for mortgages, mortgage application volume decreased during the week ending May 12.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) fell 4.1%.  The seasonally adjusted Purchase Index dropped 3.0% from the prior week, while the Refinance Index retreated 6.0%.  Overall, the refinance portion of mortgage activity decreased to 41.1% total applications from 41.9% from the prior week.  The Refinance Index fell to its lowest level since September 2008.  The adjustable-rate mortgage share of activity decreased to 8.1% 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 4.23% with points increasing to 0.37 from 0.31.

For the week, the FNMA 3.5% coupon bond gained 39.1 basis points to close at $103.02 while the 10-year Treasury yield decreased 9.11 basis points to end at 2.2346%.  Stocks ended the week lower.  The Dow Jones Industrial Average fell 91.77 points to end at 20,804.84.  The NASDAQ Composite Index dropped 37.53 points to close at 6,083.70 and the S&P 500 Index lost 9.17 points to close at 2,381.73.  Year to date, the Dow Jones Industrial Average has gained 5.01%, the NASDAQ Composite Index has advanced 11.52%, and the S&P 500 Index has risen 6.00%.

This past week, the national average 30-year mortgage rate declined to 4.02% from 4.09%; the 15-year mortgage rate fell to 3.28% from 3.34%; the 5/1 ARM mortgage rate edged higher to 3.09% from 3.07%; and the FHA 30-year rate dropped to 3.75% from 3.85%.  Jumbo 30-year rates decreased to 4.31% from 4.36%.

Economic Calendar – for the Week of May 22, 2017

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

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

The FNMA 30-year 3.5% coupon bond ($103.02, +39.1 bp) traded within a 83 basis point range between a weekly intraday high of $103.297 on Thursday and a weekly intraday low of $102.469 on Tuesday before closing the week at $103.02.  Wednesday, mortgage bonds powered their way above a previously formidable dual layer of technical resistance formed by the 25-day moving average (102.67) and the 38.2% Fibonacci retracement level at $102.81.  Wednesday’s advance coincided with weakness in the stock market triggered by political turmoil.  The bond then traded lower on Thursday when the stock market showed greater stability and was turned away from the 200-day moving average resistance level (103.34).

The stock market continued to recover on Friday, helping to push bonds lower for a successful test of support (and former resistance) at the 38.2% Fibonacci retracement level (103.297).  The bond now finds itself nearly “overbought” while just above what appears to be a solid layer of technical support.  If support holds in the coming week, mortgage rates should remain very close to where they currently are.  However, a failure to hold support could lead to a slight worsening in rates to end where they were a couple of weeks ago.