Tucson Mortgages Home Loan News 9-2-2019

By Todd Abelson NMLS #180858 on .
  • Weekly Review: week of August 26, 2019
  • Economic Calendar – week of September 2, 2019
  • Mortgage Rate Forecast with Chart

Weekly Review

The major stock market indexes snapped a four-week losing streak to record their best performance in nearly three months as prospects improved for a U.S. – China trade deal.  Despite President Trump’s assertion that the Chinese “want to make a deal very badly,” a spokesman for China’s Ministry of Commerce told reporters China had no plans to respond to the White House’s latest tariff escalation and remarked “China has ample means for retaliation.”  At the same time, China’s Foreign Ministry stated the two sides remained in “effective communication.”  China is facing a tariff rate of 24.3% by December 15 covering 96.8% of all Chinese imports to the U.S. if a trade deal is not reached by then.  However, China may be willing to take a “wait and see” approach to a trade deal before the November 2020 U.S. presidential election in hope that a Democrat candidate soft on trade gets elected.

The week’s economic reports were “mixed.”  Durable Goods Orders fell unexpectedly, but the Chicago Purchasing Manager’s Index surprised to the upside.  Personal Income growth for July was lower than expected, but Personal Spending increased by 0.6% to exceed expectations.

However, the Consumer Sentiment Index for August fell to its lowest level since late 2016 as consumers become more concerned about the impact of tariffs on Chinese imports.

In housing last Tuesday, the Federal Housing Finance Agency (FHFA) reported U.S. house prices increased 1.0% in the second quarter of 2019.  Comparing the year ago second quarter, house prices rose 4.99% percent from the second quarter of 2018 to the second quarter of 2019.  The FHFA’s seasonally adjusted monthly index for June was up 0.2% from May.

Dr. William Doerner, FHFA Supervisory Economist, remarked “House prices rose again in all states and the top 100 metro areas, but the pace of growth has slackened.  The majority of states and cities are experiencing slower house price gains than they did a year ago, even with constrained housing supply and extremely attractive mortgage rates.”

The top five areas in annual appreciation were: 1) Idaho 11.4%; 2) Utah 7.7%; 3) Tennessee 7.2%; 4) Georgia 6.9%; and 5) Arizona 6.9%. The areas showing the smallest annual appreciation were: 1) Delaware 1.2%; 2) Maryland 1.5%; 3) District of Columbia 1.8%; 4) Iowa 2.2%; and 5) New Jersey 2.7%.  Of the nine census divisions, the Mountain division experienced the strongest four-quarter appreciation with a 6.6% gain between the second quarters of 2018 and 2019 and a 1.3% increase in the second quarter of 2019.  Annual house price appreciation was weakest in the Middle Atlantic division where prices rose by 4.0% between the second quarters of 2018 and 2019.

Thursday, the National Association of Realtors (NAR) reported Pending Home Sales for July 2019 slowed by 2.5% and fell slightly by 0.3% from the year ago period.  All regions showed lower sales data from June.


Pending Sales in the Northeast Region fell 1.6% in July; the Midwest showed a 2.5% decline; the South decreased 2.4%; and the West dropped 3.4%.

NAR chief economist Lawrence Yun commented “Super low mortgage rates have not yet consistently pulled buyers back into the market.  Economic uncertainty is no doubt holding back some potential demand, but what is desperately needed is more supply of moderately priced homes.”

Elsewhere, the latest mortgage data from the Mortgage Bankers Association (MBA) showed the number of mortgage applications decreased from the prior week.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) fell 6.2% for the week ended

August 23, 2019.  The seasonally adjusted Purchase Index decreased 4% from a week prior while the Refinance Index decreased 8%.  Overall, the refinance portion of mortgage activity decreased to 62.4% from 62.7% of total applications from the prior week.  The adjustable-rate mortgage share of activity decreased to 6.1% from 6.4% of total applications.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased to 3.94% from 3.90% with points increasing to 0.38 from 0.35 for 80 percent loan-to-value ratio (LTV) loans.

For the week, the UMBS 3.0% coupon bond finished 32.8 basis points higher to close at $101.984 while the 10-year Treasury yield decreased 2.76 basis points to end at 1.499%.  The Dow Jones Industrial Average climbed 774.38 points to close at 26,403.28.  The NASDAQ Composite Index rose 211.11 points to close at 7,962.88.  The S&P 500 Index gained 79.35 points to close at 2,926.46.  Year to date (2019) on a total return basis, the Dow Jones Industrial Average has added 13.19%, the NASDAQ Composite Index has gained 20.01%, and the S&P 500 Index has advanced 16.74%.

This past week, the national average 30-year mortgage declined to 3.55% from 3.63%; the 15-year mortgage rate decreased to 3.25% from 3.33%; the 5/1 ARM mortgage rate fell to 3.38% from 3.42%; and the FHA 30-year rate decreased to 3.25% from 3.30%.  Jumbo 30-year rates decreased to 3.68% from 3.75%.

Economic Calendar – for the Week of September 2, 2019

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

Mortgage Rate Forecast with Chart – UMBS 30-Year 3.0% Coupon Bond

The UMBS 30-year 3.0% coupon bond ($101.984; +32.8 bp) traded within a wider 51.6 basis point range between a weekly intraday low of $101.484 on Monday and a weekly intraday high of 102.00 on Friday before closing the week at $101.984 on Friday.

After trading lower last Monday, mortgage bonds reversed direction and trended higher for the remainder of the week to challenge technical resistance at the 23.6% Fibonacci retracement level ($101.904) on Friday.  The bond is “overbought” but trading on a buy signal from last Tuesday.  If the price can continue to move higher above the 23.6% Fibonacci retracement level we could see a slight improvement in mortgage rates.  If the price falls back below the aforementioned resistance level, mortgage rates could edge slightly higher.  Overall, mortgage rates should remain relatively stable with no large interest rate moves in either direction.