December 11th to 15th

December 11th, 2017

12/13/17

Market Wrap:

Coming soon

Late Morning Review:

Inflation at the consumer level was somewhat tame in November, due in part to weak healthcare costs and a big drop in apparel prices. The Labor Department reported that the Consumer Price Index (CPI) rose 0.4% in November from October, which was inline with expectations. When stripping out volatile food and energy, the more closely watched Core CPI rose 0.1%, below the 0.2% expected. Year over year, Core CPI fell to 1.7% from 1.8%.

The Federal Reserve Bank of the U.S. is expected to raise the short term Fed Funds Rate when the Fed meeting ends later this afternoon. The Fed Funds Rate should rise by 0.25% to 1.50%. The Fed Funds Rate impacts interest rates for car loans, credit cards, small business loans and home equity lines of credit. The Fed Funds Rate is the interest rate in which banks lend their balances held at the Federal Reserve to other banks on an overnight basis.

The Mortgage Bankers Association (MBA) reports that mortgage rates were essentially unchanged in the latest week as 2017 comes to a close. The average contract rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) rose to 4.20% from 4.19% with an average point of 0.39. The MBA also reports that the refinance share of applications fell 3.0% while the purchase index decreased 1.0%.

 

12/12/17

Market Wrap:


Mortgage Bonds traded near unchanged for most of the session but did take a dip late morning, but the favorable 30-yr Bond auction helped to push prices from their session lows. The uptick in wholesale inflation and heated inflation headlines from the U.K. also capped Bond prices during the session. The Fannie Mae 30-yr 3.5% coupon closed at 102.50, -6bp. The Dow and S&P hit fresh record highs on higher banking shares while lower tech stocks pushed the NASDAQ lower. The Dow gained 118.77 points to 24,504.80, the S&P was up 4.12 points to 2,664.11, while the NASDAQ fell by 12.76 points to end at 6,862.31. WTI oil fell by $0.85 to 57.14/barrel. 10-yr yield 2.40%. The November CPI will be released tomorrow morning. The Fed statement will be released at 2:00 p.m. ET followed by a Fed Chair Yellen's last press conference at 2:30.

Late Morning Review:

Fannie Mae reported this week that its Home Price Sentiment Index rose 2.6 points in November near its all-time high from September. The net share of respondents who said now is a good time to buy a home increased 7 percentage points compared to October but remains down 1 percentage point compared to the same period last year. Fannie Mae expects that the housing market will continue its modest expansion going forward.

Wholesale inflation rose in November due in part to higher food prices. The Labor Department reported that the November Producer Price Index (PPI) rose 0.4% from October, in line with estimates. On a year-over-year basis, PPI rose 2.8%, the largest annual increase in more than five years. The annual increase was driven by a 7.6% surge in energy prices. The numbers will be closely watched by the Fed members at their two-day meeting, which began today.

Overnight shipping companies are warning that holiday deliveries are falling behind after the record orders paced on Cyber Monday. Americans spent a record $6.59 billion on Cyber Monday. UPS reported last week that some packages may arrive late by one or two days as its deliveries are expected to rise 5% this season, to 750 million packages. UPS has implemented a 70-hour, eight-day workweek for its drivers this season after 60 hours over seven days in previous years.

 

 

12/11/17

Market Wrap:

Mortgage Bonds traded near unchanged for most of the session but did take a dip late morning, but the favorable 30-yr Bond auction helped to push prices from their session lows. The uptick in wholesale inflation and heated inflation headlines from the U.K. also capped Bond prices during the session. The Fannie Mae 30-yr 3.5% coupon closed at 102.50, -6bp. The Dow and S&P hit fresh record highs on higher banking shares while lower tech stocks pushed the NASDAQ lower. The Dow gained 118.77 points to 24,504.80, the S&P was up 4.12 points to 2,664.11, while the NASDAQ fell by 12.76 points to end at 6,862.31. WTI oil fell by $0.85 to 57.14/barrel. 10-yr yield 2.40%. The November CPI will be released tomorrow morning. The Fed statement will be released at 2:00 p.m. ET followed by a Fed Chair Yellen's last press conference at 2:30.

Late Morning Review: 

The two-day Fed meeting kicks off on Tuesday and ends Wednesday with the 2:00 p.m.ET release of the Fed statement. Fed Chair Yellen will hold a press conference immediately following the release at 2:30 p.m. ET in what will be her last as Fed Chair. The Fed Funds Rate is expected to rise by 0.25% to 1.50%. The statement could reveal more rhetoric on the Fed's balance sheet and will reveal the current state of the economy. The Fed statement always carries a big headline risk.

Rising home prices across the U.S. lifted many underwater mortgages into positive equity between the second and third quarters of 2017. Analytics firm CoreLogic reports that 260,000 mortgaged properties regained equity between the second and third quarters of 2017. CoreLogic Chief Economist Frank Nothaft said, "Homeowner equity increased by almost $871 billion over the last 12 months, the largest increase in more than three years. This increase is primarily a reflection of rising home prices, which drives up home values, leading to an increase in home equity positions and supporting consumer spending.” Negative equity means your home's current fair market value is less than your outstanding loan balance (i.e you owe more on your home than it's worth). 

Contact

John Marbury
jmarbury@nationalbankofcommerce.com
Mortgage Lender NMLS# 514390
NMLS# 740833
Phone:205-266-5669
Fax: 866-217-4174

813 Shades Creek Parkway
Birmingham, Alabama 35209
 

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