Category: Mortgage Rates

What’s Ahead For Mortgage Rates This Week – September 25th, 2017

Last week’s economic news included readings on housing starts, building permits issued and sales of pre-owned homes. The Fed’s Federal Open Market Committee issued its customary post-meeting statement and Fed Chair Janet Yellen gave a press conference. Weekly readings on mortgage rates and new jobless claims were also released.

Housing Starts Lower, but Building Permits Increase

August saw fewer housing starts with 1.18 million starts on a seasonally-adjusted annual basis. July’s reading was upwardly adjusted to 1.19 million starts; analysts expected 1.175 million starts annually in August. Building permits rose in August, which suggested builder confidence was strong regardless of fewer starts.

Recent hurricanes had little effect on August building permits, but building permits will likely increase as rebuilding gets under way in affected areas. 1.30 million building permits were issued on an annual basis as compared to July’s reading of 1.23 million permits issued. August’s reading for permits issued was the second highest since 2007.

Analysts noted that more permits were issued for single-family residences than for multi-family complexes. This is likely a response to high demand for single-family homes caused by persistent shortages of homes for sale. Multi-family permits issued fell by 5.80 percent in August with 323,000 permits reported. August’s reading for multi-family housing permits was 23 percent lower year-over-year.

PreOwned Home Sales Dip, Fed Holds Steady on Federal Funds Rate

Sales of previously-owned homes fell to a seasonally-adjusted annual rate of 5.35 million sales in August. Analysts expected a reading of 5.44 million sales, which matched July’s seasonally-adjusted annual reading of 5.44 million sales of previously-owned homes. High demand and very low inventories of homes for sale has caused sales to fall although very low unemployment rates and relatively low mortgage rates were positive indicators for would-be home buyers.

The Federal Reserve’s Federal Open Market Committee announced it did not raise the current federal funds rate of 1.00 to 1,25 percent. Fed Chair Janet Yellen remarked that “the basic message here is U.S. economic performance has been good.” The Fed was puzzled by sluggish inflation and revised its long-term inflation goal from 3.00 percent to 2.80 percent. The Fed is expected to raise its target federal funds rate one more time in 2017 and twice in 2018; this prediction may change if economic forecasts and world events change significantly.

Mortgage Rates Rise, New Jobless Claims Fall

Mortgage rates rose last week in response to the 10-year Treasury rate rising by seven basis points. The average rate for a 30-year mortgage rate rose five basis points to 3.83 percent; the average rate for a 15-year fixed rate mortgage rose five basis points to 3.13 percent. The average rate for a 5/1 adjustable rate mortgage rose four basis points to 3.17 percent. Discount points averaged 0.50 percent for fixed-rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

New jobless claims were lower with 259,000 new claims filed. Analysts expected a reading of 302,000 new jobless claims based on the prior week’s reading of 282,000 new jobless claims filed.

Whats Ahead

This week’s scheduled economic reports include readings on new and pending home sales, personal income, and inflation. Weekly readings on mortgage rates and new jobless claims are scheduled along with a monthly reading on consumer sentiment.

What’s Ahead For Mortgage Rates This Week – August 14, 2017

Job Openings, New Jobless Claims Rise

Job openings rose in June to 6.20 million as compared to May’s reading of 5.70 million job openings. Analysts said that increasing job vacancies show that employers are unable to find qualified workers. Business services, construction, health care and professional job sectors had the most job openings. Slow wage growth could be contributing to widespread job openings. Average wage growth has been running at approximately 2.50 percent, which is lower than the average of 3.50 to 4.00 percent typically seen during economic expansion.

First-time jobless claims rose to 244,000 as compared to expectations of 242,000 new claims and the prior week’s reading of 242,000 new jobless claims.

Mortgage Rates Lower

Freddie Mac reported lower mortgage rates last week. The average rate for a 30-year fixed rate mortgage was three basis points lower at 3.90 percent. The average rate for a 15-year fixed rate mortgage was unchanged at 3.18 percent. The average rate for a 5/1 adjustable rate mortgage was one basis point lower at 3.14 percent.

Inflation rose in July by 0.10 percent against an expected increase of 0.20 percent; June’s reading was unchanged. Core inflation, which excludes volatile food and energy sectors, rose by 0.10 percent against expectations of 0.20 percent and 0.10 percent growth in June.

What’s Ahead

This week’s scheduled economic reports include the NAHB Housing Market Index, Commerce Department readings on housing starts and building permits issued and the University of Michigan’s Consumer Sentiment Index, Weekly reports on mortgage rates and new jobless claims will also be released.

NAHB: Home Builder Confidence Rises in May

The National Association of Homebuilders reported a two-point increase in builder confidence in May. The NAHB Housing Market Index reading increased from 68 in April to 70, which was the second-highest reading since the economic recovery started. May’s reading exceeded analyst expectations of a flat reading for May. Builder confidence rose as demand for homes continued to rise; this factor overrode builder obstacles including higher prices for lots and ongoing labor shortages. A new tariff on lumber was also expected to dampen builder confidence.

Component Readings Suggest Strong Builder Confidence in Current and Future Housing Markets

The monthly Housing Market Index is comprised of three components. Builder confidence in current housing market conditions rose two points to 76; the reading for builder confidence in market conditions for the next six months rose four points to 79. Builder confidence in buyer traffic in new homes dropped one point to 51, but overall, builder confidence in market conditions is strong as any NAHB Housing Market Index reading over 50 is considered positive.

Fewer Mortgage Applications: Home Buyers Dont Share Builder Optimism

According to the Mortgage Bankers Association, mortgage applications dropped 4.30 percent year-over-year in April, and were 20 percent lower than in March. While the Mortgage Bankers Association doesn’t report seasonal adjustments, fewer applications for purchase mortgages on new homes illustrated ongoing affordability challenges faced by first-time and moderate income home buyers.

High demand for available homes puts mortgage-dependent home buyers at a disadvantage when cash offers are in play. Rapid escalation of home prices creates difficulty for first-time and moderate income buyers as down payment and mortgage qualification requirements sideline buyers.

Increasing home builder sentiment has not corresponded to the number of new homes being built, which industry analysts consider the main solution to high demand for homes driven by short inventories of homes. First-time buyers are important to housing markets as they enable “move-up” buyers to sell their homes and buy new or larger homes.

What’s Ahead For Mortgage Rates This Week – May 15, 2017

Last week’s economic reports included readings on inflation and core inflation, retail sales and consumer sentiment. Weekly reports on new jobless claims and mortgage rates were also released.

Inflation, Retail Sales Higher in April

April inflation grew by 0.20 percent as expected. Core inflation, which excludes volatile food and energy sectors, increased by 0.10 percent. Analysts expected a reading of 0.20 percent. The Federal Reserve monitors inflation readings as part of its research for monetary policy decisions. The Fed set a benchmark of 2.00 percent annual inflation as an indicator of solid economic recovery. Growing inflation could prompt the Fed to raise interest rates in June.

Retail sales grew in April from 0.10 percent in March to 0.40 percent, but fell short of an expected 0.50 percent increase. Retail sales not including the automotive sector rose by 0.30 percent in April, which was the same growth rate posted in March. Analysts expected a reading of 0.50 percent. Growing retail sales indicates that consumers are more confident about economic conditions.

Mortgage Rates Rise, Weekly Jobless Claims Fall

Freddie Mac reported higher mortgage rates last week. The average rate for a 30-year fixed rate mortgage was three basis points higher at 4.05 percent. 15-year fixed rate mortgages had an average rate of 3.29 percent and was two basis points higher than the prior week. The average rate for 5/1 adjustable rate mortgages rose one basis point to 3.14 percent. Discount points averaged 0.50 percent for all three types of mortgages reported.

New jobless claims fell to 236,000 last week as compared to an expected reading of 245,000 new claims and the prior week’s reading of 238,000 new claims. Jobless claims remained below the 300,000 benchmark for the 114th consecutive week; last week’s reading was the lowest in more than 28 months.

Consumer sentiment ended the week on a positive note with a May index reading of 97.7 as compared to an expected reading of 97.20 and April’s reading of 97.0.

Whats Ahead

Economic readings scheduled for this week includes reports on the National Association of Home Builders Housing Market Index, Commerce department readings on housing starts and building permits issued. Weekly readings on mortgage rates and new jobless claims will also be released.

What’s Ahead For Mortgage Rates This Week – May 8, 2017

Last week’s economic news included readings on construction spending, the post-meeting statement by the Fed’s Open Market Committee and labor-related reports including ADP payrolls, Non-farm payrolls and the national unemployment rate. Weekly readings on new jobless claims and mortgage rates were also released.

Fed Rate Unchanged, Mortgage Rates Hold Steady

Federal Reserve policymakers did not change the target federal funds rate, which ranges from 0.75 to 1.00 percent. In its usual post-meeting statement, FOMC said that a weak first quarter was “transitory” and expected economic growth to continue going forward. Less consumer spending contributed to a sluggish first quarter, but analysts said that a rate hike was very likely at the FOMC meeting in June. The FOMC included its usual caveat concerning monetary policy in its statement; FOMC policies are not pre-determined, but are based on members’ ongoing review of news and economic developments.

Freddie Mac reported minor changes in its weekly survey of mortgage rates. 30-year fixed rate mortgage rates were one basis point lower at 4.02 percent. The average rate for a 15-year fixed rate mortgage was unchanged at 3.27 percent; the average rate for a 5/1 adjustable rate mortgage rose one basis point to 3.13 percent. Discount points averaged 0.50 percent for all three mortgage types.

Construction, Labor Reports Reflect Economic Growth

Construction spending fell in March after an unusually high reading in February. The original growth rate for February construction spending was 0.80 percent, but was adjusted to 1.80 percent. A spurt of unseasonably warm weather was cited as pushing construction activity to unusual levels in February. Construction spending fell by -0.20 percent as compared to an expected reading of 0.50 percent, which was based on the original reading for February.

ADP Payrolls reported lower growth for private sector jobs in April with a reading of 177,000 new jobs as compared to 255,000 new jobs gained in March. The Federal Non-farm payrolls report, which covers public and private sector jobs, posted a gain of 211,000 jobs in April after reporting only 79,000 jobs added in March. The disparity in month to month readings indicates ongoing volatility in jobs growth, but the national unemployment rate dropped to 440 percent in April from 4.50 percent in March. Low unemployment rates can indicate economic growth with job seekers gaining employment.