Category Archive: Market Outlook

What’s Ahead For Mortgage Rates This Week – February 12th, 2018

Whats Ahead For Mortgage Rates This Week – February 12th 2018Jerome “Jay” Powell was sworn in as Chair of the Federal Reserve amidst wild fluctuations in U.S. stock markets. Analysts attributed sliding stock prices to fears over inflation.

Mr. Powell, who follows former Fed Chair Janet Yellen, introduced himself via a video clip on the Fed’s website. Weekly readings on mortgage rates and new jobless claims were also released.

New Fed Chair Promises Transparency in Video Introduction

In a video introduction posted on the Fed’s website, new Fed Chair Jay Powell promised that the Fed would explain “what we are doing and why we are doing it.” Mr. Powell did not address stock market volatility but said that monetary policy decisions would be made based on the Fed’s dual mandate of achieving maximum employment and price stability along with economic growth.

Mr. Powell took leadership of the Fed as the national unemployment rate dipped to 4.10 percent.

Mr. Powell is an attorney by profession and is the first Fed Chair not to hold a PhD in economics in more than 30 years.

Former Treasury Secretary Advises Against Raising Rates Too Fast

Former Obama administration Treasury Secretary Larry Summers cautioned against raising rates too fast: “If the Fed raises rates sufficiently to assure financial stability, there is a risk that the economy will slow too much.

When the Federal Reserve raises its target federal funds rate financial institutions, mortgage lenders and retail lenders usually follow suit.

Mortgage Rates Rise, New Jobless Claims Fall

Freddie Mac reported higher mortgage rates last week. The average rate for a 30-year fixed rate mortgage was 10 basis points higher at 4.32 percent; the average rate for a 15-year fixed rate mortgage rose by nine basis points to 3.77 percent.

The average rate for a 5/1 adjustable rate mortgage gained four basis points to 3.57 percent. Discount points averaged 0.60 percent, 0.50 percent and 0.40 percent respectively.

New jobless claims fell to their lowest level since the 1970s. 221,000 first-time claims were filed as compared to 232.000 new claims expected and the prior week’s reading of 230,000 new claims filed.

Whats Ahead

This week’s economic news releases include readings on inflation, retail sales and the National Association of Home Builders Housing Market Indices. Readings on housing starts and building permits issued will also be released, along with weekly readings on mortgage rates and new unemployment claims.

What’s Ahead For Mortgage Rates This Week – February 5th, 2018

Whats Ahead For Mortgage Rates This Week – January 29, 2018Last week’s economic releases included readings on pending home sales, Case-Shiller Home Price Indices and construction spending. The Federal Open Market Committee of the Federal Reserve released its monthly statement and weekly readings on mortgage rates and new jobless claims were released. Last week’s economic readings wrapped with a report on consumer confidence.

Case-Shiller: Home Prices Rise in November

Home prices rose an average of 0.70 percent monthly and 6.20 percent year-over-year according to Case-Shiller’s national home price index for November. Seattle, Washington posted the highest year-over-year home price growth rate at 12.70 percent. Las Vegas, Nevada posted year-over-year home price growth of 10.60 percent and San Francisco, California posted a home price growth rate of 9.10 percent. Home price gains were attributed to slim supplies of available homes in many areas.

While analysts suggested that strong housing markets (as reflected by high demand for homes) were good for the economy, issues of affordability, slim inventories of homes available and obstacles facing builders continue to impact housing markets.

Recent gains in home prices are fueled by artificially high demand caused by low inventories of homes for sale. Builders cited shortages of labor and buildable lots and said increasing materials costs were impacting rising prices for new homes. Construction spending rose 0.70 percent in December, which exceeded expectations of 0.50 percent and November’s month-to-month reading of 0.60 percent growth in construction spending.

Pending Home Sales Rise, Key Fed Interest Rate Unchanged

The National Association of Realtors® reported 0.50 percent growth in pending home sales in December and the highest month-to-month reading since March 2017. Year-over-year pending home sales gained only 0.50 percent. Pending sales reflect purchase contracts signed with sales not yet closed.

The Federal Reserve’s Federal Open Market Committee announced that it would not raise the target federal funds range of 1.25 to 1.50 percent, but indicated that inflation was nearing the Fed’s goal of 2 percent annually. Analysts said this could foreshadow a rate increase at the Committee’s next meeting in March.

Mortgage Rates, Weekly Jobless Claims

Mortgage rates rose last week according to Freddie Mac’s weekly Primary Mortgage Markets Survey. Rates for a 30-year fixed rate mortgage rose by seven basis points to an average of 4.22 percent; the average rate for a 15-year fixed rate mortgage rose six basis points to 3.68 percent. The average rate for a 5/1 adjustable rate mortgage ticked up one basis point to 3.53 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

First-time jobless claims dipped by 1000 claims to 230,000claims. Analysts expected 240,000 new claims. The University of Michigan reported a lower reading for consumer sentiment in January with an index reading of 95.7 as compared to an expected reading of 95.0 and December’s reading of 95.90. Consumer sentiment remains near pre-recession highs. Consumers cited tax breaks and large stock market gains as the basis for high confidence.

Whats Ahead

This week’s economic releases include readings on job openings and consumer credit along with weekly reports on mortgage rates and new jobless claims.