09
May
By support
Mortgage Rates

What’s Ahead For Mortgage Rates This Week – May 9, 2016

Closing Paperwork: How to Read and Understand the Truth-in-Lending Disclosure Statement

Mortgage rates fell across the board last week according to Freddie Mac’s Primary Mortgage Market Survey. Other economic news included reports on construction spending, public and private sector employment and national unemployment.

Construction Spending Grows in March

The Commerce Department reported that the growth rate for construction spending fell in March to 0.30 percent/Analysts expected a reading of 0.70 percent based on February’s upwardly revised growth rate of 1.0 percent. Construction spending was propelled by a 1.50 percent increase in residential construction spending; this is good news for would-be home buyers who’ve been shut out of the market due to high demand and low inventories of available homes.

Housing market analysts have repeatedly said that new home construction is the answer to short supplies of homes and high buyer demand. Year-over-year, construction spending is up 8.0 percent overall; residential construction spending grew by 7.60 percent year-over-year.

Mortgage Rates Dip

Average mortgage rates were lower last week. The rate for a 30-year fixed rate mortgage fell by five basis points to 3.61 percent; the average rate for a 15-year fixed rate mortgage was three basis points lower at 2.86 percent and the average rate for a 5/1 adjustable rate mortgage dropped six basis points to an average of 2.80 percent.

While any drop in mortgage rates is welcomed by home buyers, the high demand for homes continues to drive prices up and has raised concerns about affordability of single-family homes in many communities.

Jobs Growth Slows

The national unemployment rate held steady at 5.0 percent in April, but job growth slowed in public and private sectors. ADP reported private sector jobs increased by 156,000 jobs as compared to 194,000 jobs added in March. According to the Bureau of Labor Statistics, Non-Farm Payrolls increased by 160.000 jobs as compared to expectations of 203,000 jobs added and March’s reading of 208,000 jobs added. Non-Farm payrolls measure public and private sector job growth.

New jobless claims rose by 17,000 to 274,000 new claims, but remained below the benchmark of 300,000 new claims for 61 consecutive weeks. Analysts projected that new claims would grow by 265,000 new claims based on the prior week’s reading of 257,000 new claims. The less volatile four-week rolling average of new jobless claims indicated that 258,000 new claims were filed. The labor force participation rate dropped from 65 percent to 63 percent in March. Retiring baby boomers contributed to some but not all of this workforce decline.

What’s Ahead

This week’s scheduled economic news includes weekly reports on mortgage rates and new jobless claims along with a report on consumer sentiment.

25
Apr
By support
Mortgage Rates

What’s Ahead For Mortgage Rates This Week – April 25, 2016

What's Ahead In Mortgage News

Last week’s economic releases included Existing Home Sales, Commerce Department Releases on Housing Starts and Building Permits and the National Association of Home Builders/Wells Fargo Housing Market Index. Mortgage rates and new jobless claims were released according to their weekly schedule.

Home Builder Confidence Holds Firm in April

According to April’s National Association of Home Builders/Wells Fargo Housing Market Index, home builder confidence held steady with a reading of 58 for the third consecutive month. Analysts viewed April’s reading as a sign of steady expansion for home building, but builders noted concerns over labor shortages. NAHB Chief Economist Robert Dietz said that builders were “cautiously optimistic” concerning housing market conditions.

The National Association of Realtors® reported a jump in sales of previously owned homes in March. The seasonally-adjusted annual rate of sales rose to 5.33 million and surpassed expectations of 5.30 million sales and February’s reading of 5.07 million sales of pre-owned homes.Mr. Lawrence Yun, chief economist for NAR, said that demand is increasing and noted that the national average home price increased more than twice as fast as average wages.

In other housing-related reports, the Commerce department reported slower growth in housing starts, which reached 1.089 million starts in March. Analysts expected 1.170 million starts based on March’s reading of 1.194 housing starts. Building permits were also lower with 1.086 million building permits issued as compared to 1.177 million building permits issued in March.

National Association of Realtors®: Sales of Pre–Owned Homes Exceed Expectations

March sales of previously owned homes reached a seasonally-adjusted annual rate of 5.33 million sales against predictions of 5.30 million sales and February’s reading of 5.07 million sales. While March sales of pre-owned homes coincide with the approaching peak home selling season, high demand for homes and low supplies of homes for sale could slow sales. Inventories of available homes are currently at a 4.5 month supply; a six month supply of available homes indicates a normal reading for available homes.

Mortgage Rates Mixed, Jobless Claims Lowest Since 1973

Freddie Mac reported mixed results for last week’s average mortgage rates. The rate for a 30-year fixed rate mortgage was one basis point higher at 3.59 percent. The rate for a 15-year fixed rate mortgage was one basis point lower at 2.85 percent while the average rate for 5/1 adjustable rate mortgages fell by three basis points to 2.81 percent. Discount points averaged 0.60 percent for fixed rate mortgages and 0.50 percent for 5/1 adjustable rate mortgages.

Weekly jobless claims dropped to their lowest level since 1973 with a reading of 247,000 new claims filed. Analysts expected a reading of 265,000 new claims filed based on the prior week’s reading of 253,000 new claims filed. Strong labor markets can be an incentive to home buyers to move up to larger homes or transition from renting to owning, but short supplies of available homes and rapidly rising home prices present obstacles. First-time buyers account for approximately 30 percent of home sales; their participation could diminish unless available homes increase and demand for homes eases.

What‘s Ahead

This week’s scheduled economic reports include the S&P Case-Shiller Home Price Indices along with new and pending home sales reports. Weekly reports on mortgage rates and new jobless claims will be released on schedule.

18
Apr
By support
Financial Reports

What’s Ahead For Mortgage Rates This Week – April 18, 2016

What's Ahead For Mortgage Rates This Week - April 18, 2016

Last week’s scheduled economic releases included reports on retail sales, inflation and the Federal Reserve’s Beige Book report. Weekly reports on mortgage rates and new jobless claims were also released. The Consumer Financial Protection Bureau announced a limited program for reducing principal on eligible mortgages held by Fannie Mae and Freddie Mac. This program is intended to resolve remaining “underwater” mortgages on homes worth less than their current mortgage amounts.

Retail Sales Fall, Inflation Rises

Retail sales fell in March to close out a weaker than expected first quarter 2016. Retail sales fell 0.30 percent in March as compared to expectations of a 0.10 percent increase and February’s flat reading. Analysts said consumers were reluctant to spend in spite of improving job markets and household finances. Retail sales rose by 1.70 percent year-over-year, a reading categorized as “weak” by analysts.

Hiring for lower wages and fewer hours worked was seen as contributing to consumers’ reluctance to spend, especially on big-ticket items including vehicles. Retail sales excluding auto sales were 0.20 percent higher than in February, but did not meet the expected reading of 0.50 percent and incrementally exceeded February’s reading, which was unchanged from January.

Inflation rose by 0.10 percent in March against expectations of 0.20 percent and February’s negative reading of -0.70 percent. Core inflation readings that exclude volatile food and energy sectors mirrored the Consumer Price Index with 0.10 percent growth against an expected reading of 0.20 percent and February’s Core Consumer Price Index reading of 0.30 percent. Lagging inflation is largely attributed to lower fuel prices, but this doesn’t impact the Core CPI reading.

Fed Beige Book: Economy Recovering at Modest to Moderate Rate

According to the Federal Beige Book report for March, business contacts surveyed by the Federal Reserve suggested that increases in wages and oil prices should bump up the economy, but the Fed expects economic expansion to increase at a “modest to moderate” rate for the long term. Employers noted difficulties in hiring for low and high skilled jobs in some areas, and retailers were optimistic about sales for the rest of 2016.

In general, the Fed has adopted a cautious approach to raising its target federal funds rate. Fed Chair Janet Yellen repeatedly cited concerns over global risks for scaling back Fed rate increases from four to two in 2016.

Mortgage Rates, Jobless Claims Fall

Freddie Mac reported the lowest mortgage rates for 2016; rates were also their lowest since May 2013. The average rate for a 30-year fixed rate mortgage fell one basis point to 3.58 percent; the average rate for a 15-year fixed rate mortgage fell two basis points to 2.86 percent. The average rates for a 5/1 adjustable rate mortgage also slipped two basis points to 2.84 percent. Discount points were 0.50, 0.40 and 0.50 percent respectively.

In unrelated mortgage news, the Consumer Financial Protection Bureau announced a limited program for reducing mortgage balances for eligible mortgages owned by Fannie Mae and Freddie Mac that exceed home values. Mortgage lenders will notify eligible homeowners by December 31.While limited in scope, this program is expected to prevent foreclosure of eligible properties that cannot be sold or refinanced.

Jobless claims fell to 253,000 new claims last week, which was lower than the expected reading of 270,000 new jobless claims and the prior week’s reading of 266,000 new claims. Coupled with the Beige Book findings that employers are facing shortages of qualified workers, this low reading appears to further support improving economic conditions.

What‘s Ahead

Next week’s scheduled economic releases include the National Association’s Home Builders Housing Market Index along with Commerce Department reports on housing starts and building permits. The National Association of Realtors® will also release its Existing Home Sales Report.