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Week of May 6th 2019. Click the image banner below to listen.

 

30-second update:  Federal Reserve Leaves Rates Unchanged

 

At the Federal Reserve’s most recent meeting on May 1st, the Fed voted unanimously to keep its benchmark interest rate in a range of 2.25% to 2.5%.  The benchmark interest rate influences the cost of borrowing for mortgages and various other consumer and business loans.   Fed Chairman Jerome Powell went on to state that, “The Federal Reserve feels comfortable with current policy and is likely to keep interest rates steady for an extended period of time.”  In addition, President Donald Trump has even been pushing the Fed to lower rates, and that a one percentage point cut would be in order.   The President has cited low inflation as a key reason for the possible Fed cut to interest rates. 

Overall, the economy continues to grow at a solid rate, and with the welcoming news that we will most likely remain in a low interest rate environment for the rest of the year, current homeowners and those looking to buy are reaping the benefits.   With the spring housing market in full swing, now seems to be the perfect time to take advantage of these lower rates, by refinancing your current mortgage or purchasing a new home. 

Sources:

https://cnb.cx/2IWdGuP

https://on.mktw.net/2PKsaib


Home Values and Mortgage Volume Increasing

The Federal Housing Finance Agency recently released their monthly Home Price Index (HPI), and it showed that home prices rose 0.4% on average across the country for the month of November.  For the year, the HPI is up a large 5.8!  The HPI analyzes data based on single family homes that were purchased with conforming conventional mortgages.

Mortgage application data just came in, and it showed that applications to purchase a home are up 13% from this time last year.  At this level, application volume is nearing nine year highs!  Applications to refinance slowed slightly by 5%, but are still near their highest level since the springtime.   Refinance application volume was much lower a few months back and is slowly getting back to its highs, mostly due to the recent decline in mortgage rates.

 

Sources:

https://www.fhfa.gov/

https://www.mba.org/news-research-and-resources/newsroom


30 – Second Update:  Homeownership Still Viewed as the American Dream. Purchase Mortgage Applications Reach 8 Year High!

 

According to a study done by the National Association of Realtors (NAR), 75% of non-homeowners and 90% of current homeowners said homeownership was an essential aspect to the “American Dream”.  The survey was conducted across twelve months of last year, and consisted of 64% homeowners, 27% renters, and 9% non-homeowners living with family members without paying rent.   Affordability in housing was the main reason holding back potential homeowners.  In the 4th quarter of 2018, however, only 43% of non-owners stated they could not purchase a home due to being in a position to purchase, which is a 6% drop from the previous quarter, in which 49% answered the same.

On top of the NAR report, data from the Mortgage Bankers Association (MBA) from the week of January 11th, purchase mortgage applications increased for the sixth time in the last eight weeks.  That index was up 9% on a seasonally-adjusted basis, representing the highest level since April 2010.   In addition, the Refinance Index increased 19% from its previous week to its highest level since March 2018.   These numbers are strongly correlated to interest rates pulling back from recent highs, as homeowners are looking to capitalize.   Mike Frantantoni, MBA Senior Vice President and Chief Economist, stated, “The spring homebuying season is almost upon us, and if rates stay lower, inventory continues to grow, and the job market maintains its strength, we do expect to see a solid spring market.”

Sources:

http://bit.ly/2RxWOPW

http://bit.ly/2RRy18N


Strong Mortgage Application Data and Favorable Labor Market

Mortgage application numbers came in much hotter than predications.  Purchase applications increased for the week of 1/7/2019 by 17% and refinances increased by 35%.  Purchases are 4% higher than this time last year.   With the holidays coming to an end and interest rates improving, we are seeing much more mortgage application activity and very strong levels of demand.  This is the biggest gain in mortgage activity since 2015!  This data is compiled from the Mortgage Banker’s Association and focuses on single family homes sales and housing construction.

Source: http://bit.ly/2ybBBPX

Positive conditions are seen so far for 2019 from the Jobless Claims report.  Claims fell last week by 17,000 to 216,000.  This is a strong number and lower than many market experts’ expectations.  This decline is also gaining attention because it is lower despite the government shutdown where we saw 4,760 claims for unemployment just last week from federal jobs.  Even though the government shut down adds unique variables to the equation, this report as a whole points to a favorable labor market.

Source: http://bit.ly/2SKfng1

 


U.S. Adds Most Private Sector Jobs in Almost 2 Years!

Automatic Data Processing (ADP) reported that private sector employment jumped significantly in December, adding 271,000 jobs.  This increase was well above the 175,000 that economists expected and was the most jobs gained since February of 2017.   This ADP report is used by economists to get a feel for the Labor Department’s employment report which will be released on January 11th and covers government jobs in addition to the private sector.   Amidst concerns from economists that we are on the brink of a slowing economy, the ADP report data suggested otherwise.   Mark Zandi, Chief Economist at Moody’s Analytics stated, “At the current pace of job growth, low employment will get even lower.”  In addition, he noted that businesses continue to add aggressively to their payrolls despite the recent stock market slump and the trade war between the U.S. and China.

ADP Report Highlights (Jobs Created)

  • 66,000 – Professional and Business Services
  • 61,000 – Education and Health Services
  • 39,000 – Leisure and Hospitality
  • 37,000 – Construction
  • 12,000 – Manufacturing

Sources:

https://cnb.cx/2CObLUV

https://on.mktw.net/2RpDxi


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