14
Jan
By First Rate Financial Group
Financial Reports

What’s Ahead For Mortgage Rates This Week – January 14th, 2019

What’s Ahead For Mortgage Rates This Week – January 14th, 2019Last week’s economic reports included remarks by Federal Reserve Chair Jerome Powell, readings on inflation and core inflation. Weekly readings on mortgage rates and first-tome jobless claims were also released. If the government shutdown continues, it is expected to impact release dates for readings from federal government agencies.

Federal Reserve Watches and Waits on Interest Rates as Inflation Slows

Fed Chair Jerome Powell said that the Federal Open Market Committee of the Federal Reserve will “wait and see” about raising the target federal funds rate this year. Chairman Powell spoke at a discussion hosed by the Economic Club of Washington, D.C. Mr. Powell clarified the Fed’s estimate of two rate hikes during 2019 and said that the predicted two rate hikes would occur based on “a very strong economic outlook for 2019.”

Faltering financial markets and slower rates of home price growth caused the Fed to dial back it’s bullish outlook and instead emphasize that Fed monetary policy is flexible and could be adjusted quickly adjusted as changing economic conditions merit.

Mortgage Rates and New Jobless Claims Fall

Freddie Mac reported lower average mortgage rates for 30-year fixed rate mortgages fell six basis points to 4.45 percent; rates for 15-year fixed rate mortgages fell 10 basis points to 3.89 percent.

The average rate for 5/1 adjustable rate e mortgages was 15 basis points lower at 3.85 percent Discount rates averaged 0.50 percent for 30-year fixed rate mortgages, points for 15-year fixed rate mortgages averaged 0.40 percent and discount points for 5/1 adjustable rate mortgages averaged 0.30 percent.

First-time jobless claims fell by 15,000 claims to 216,000 new claims filed. Analysts expected 227,000 new claims based on the prior week’s reading of 231,000 new claims filed.

December’s Consumer Price Index was – 0.10 percent lower than for November, which matched expectations based on November’s positive inflation rate reading of + 0.10 percent. Slowing inflation could indicate slower economic growth; a consistent pattern of sluggish inflation may cause the Fed to hold steady on raising its key interest rate.

What‘s Ahead

This week’s scheduled economic news includes readings on the National Association of Homebuilders Housing Market Index, Commerce Department readings on housing starts and building permits issued. The Consumer Sentiment Index is also scheduled for release. Weekly readings on mortgage rates and initial jobless claims will be released on schedule.

07
Jan
By First Rate Financial Group
Financial Reports

What’s Ahead For Mortgage Rates This Week – January 7th, 2019

What’s Ahead For Mortgage Rates This Week – January 7th, 2019Last week’s economic reports included Labor Department readings on private and public sector jobs, the national unemployment rate. Weekly readings on mortgage rates and first-time jobless claims were also released. Monthly reporting on construction spending was delayed due to the government shutdown.

Public and Private-Sector Jobs Growth Exceeds Expectations

ADP reported 271private sector jobs added in December as compared to 157,000 jobs added in November. Analysts expected 182,000 jobs added for December and said that December’s reading was the highest number of jobs added in almost two years. Large companies added 54,000 jobs, medium sized companies added 129,000 jobs and small companies added 89,000 private-sector jobs.

The Bureau of Labor Statistics reported 312,0000 public and private-sector jobs were added in December, which was more than double November’s reading of 176,000 public and private-sector jobs added. Analysts predicted 182,000 new jobs added for December.

In related news, the national unemployment rose to 3.90 percent from November’s level of 3.70 percent. While the unemployment rate was expected to dip to 3.60 percent, it rose due to more workers seeking jobs. Unemployment rates are determined as a percentage of workers actively seeking employment. A larger pool of people seeking work suggested expanding job opportunities.

Mortgage Rates Fall as New Jobless Claims Rise

Freddie Mac reported lower average mortgage rates last week as rates for fixed rate mortgage were four basis points lower at 4.51 percent; rates for 15-year fixed rate mortgages averaged 3.99 percent and rates for 5/1 adjustable rate mortgages averaged two basis points lower at 3.99 percent. Discount points averaged 0.40 percent for 30-year fixed rate mortgages, 0.30 percent for 15-year fixed rate mortgages and 0.20 percent for 5/1 adjustable rate mortgages.

In remarks made at the American Economic Association, current Fed Chair Jerome Powell joined former Fed Chairs Janet Yellen and Ben Bernanke to comment about the economy in 2018 and emphasized that Fed policy would be adjusted quickly and flexibly” if economic conditions warrant. All three Fed Chairs expected a slowing of economic growth in 2019, but their overall outlook was positive.

First-time jobless claims rose by 10,000 new claims to 231,000 first-time claims filed. Expectations of 218,000 new claims filed were based on the prior weeks reading of 221,000 new claims filed. The increase in new claims filed was caused in part by holiday season fluctuations and more people actively seeking jobs. Unemployed workers must be actively seeking work to qualify for unemployment benefits.

What‘s Ahead

This week’s scheduled economic reports include readings on job openings, minutes of the December meeting of the Fed’s Federal Open Market Committee, and inflation. Weekly readings on mortgage rates and new jobless claims will also be released.

02
Jan
By First Rate Financial Group
Financial Reports

Case-Shiller: Home Price Growth Grinds to Lowest Rate in 2 Years

Case-Shiller: Home Price Growth Grinds to Lowest Rate in 2 YearsHome prices rose by 0.40 percent in October according to Case-Shiller’s 20-City Home Price Index and were unchanged from September’s year-over-year reading of 5.50 percent growth.

Slower growth in home prices could help some would-be home buyers enter the market, but rapidly rising mortgage rates have sidelined buyers concerned with affordability and meeting strict mortgage lending requirements.

High Mortgage Rates Stifle Demand for Homes

October’s year-over-year reading for home price growth was the lowest in two years, but home price growth continued to exceed wage increases; builders continued to face labor shortages and higher materials costs. Rising mortgage rates were a major cause of lower demand for homes as the average rate for a 30-year fixed rate mortgage increased from les than 3.50 percent at the beginning of 2017 to a high point of 4.94 percent in September.

Mortgage rates have fallen in recent weeks but remain more than one percent higher than they were two years ago. Recent volatility in financial markets and concerns over general economic conditions also contributed to a lower pace of home price growth.

Las Vegas Leads Cities with Highest Home Price Growth

The top three cities in October’s Case-Shiller 20-City index were Las Vegas, Nevada with year-over-year hone price growth of 12.80 percent; San Francisco, California’s home prices rose by 7.90 percent year-over-year and Phoenix, Arizona home prices rose by 7.70 percent year-over-year. 

October’s home price growth rates suggest that West Coast cities such as San Francisco, and Seattle, Washington may be losing their domination over double-digit home price growth rates they’ve enjoyed in recent years. Slower rates of home price growth could indicate that home prices have topped out in costly metro areas.

David M. Blitzer, managing director and chair of S&P Dow Jones Index Committee, echoed analyst’s concerns: “Rising home prices and mortgage rates mean fewer people can afford to buy a house.” The Fed’s recent decision to raise its key interest rate range for the third time in 2018 concerned some economists, but the Fed said that its Federal Open Market Committee predicts that it will raise rates only twice next year based on current and expected economic conditions in 2019.

Banks and credit-card companies typically follow the Fed’s interest rate decisions; this means that rates for consumer lending including mortgages are likely to increase in 2019.