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Blog

February 2020

February 3rd, 2020

Scroll Down to see the News!

Average Mortgage Rates

 

Rate

Change

Points

Mortgage News Daily

30 Yr. Fixed

3.51%

+0.04

0.40

15 Yr. Fixed

3.18%

+0.04

0.40

30 Yr. Jumbo

3.65%

+0.04

0.00

Freddie Mac

30 Yr. Fixed

3.47%

-0.19

0.70

15 Yr. Fixed

2.97%

-0.18

0.80

5/1 ARM

3.28%

-0.11

0.30

Mortgage Bankers Assoc.

30 Yr. Fixed

3.72%

+0.01

0.25

15 Yr. Fixed

3.20%

+0.01

0.27

30 Yr. Jumbo

3.75%

+0.05

0.17

 

Current Mortgage Rates Data Since 1971 xls

Click here for Weekly News Letter

Instructions on how to read this blog: Below is the news for the month when it happened and the market’s reaction.  For a full view of the month start at the bottom and work your way up. If want to know what just happened start at the top. All Times are Eastern Standard Time.  When the price of Mortgage Backed Securities (MBS) goes down rates go up, and when the price goes up rates come down. Remember in the bond market Bad News is Usually Good News and Good News is Usually Bad news.

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Tuesday - February 18  

Late Morning Review - The housing sector received some positive news today from builders as sentiment remains near a 20-year high due in part to low borrowing costs. The NAHB Housing Market Index fell one point to 74 in February while sentiment for builders in the South, the biggest region, was the highest on record. The NAHB reported that steady job growth, rising wages and low interest rates are fueling housing demand in a market that lacks inventory, particularly at the entry-level.

Manufacturing activity in the New York State region surged this month, reports the New York Federal Reserve Bank. The Empire State Manufacturing Index rose to 12.9 in February, double the 6.0 expected. Within the report, it showed that the new orders index shot up 16 points while the employment component saw a modest gain. The six-month outlook suggests that optimism about future conditions was somewhat restrained.

Home prices continued to rise in January as housing supplies declined, reports real estate brokerage Redfin. U.S. home-sale prices rose 6.7% year over year in January to a median of $306,400. Prices were up 0.7% month over month. Redfin went on to say that low inventory continues to lead to a crunch in many markets across the nation. "Every home is getting multiple offers, often going for substantially above the asking price," said San Fernando Valley Redfin agent Robert Iles.

 

 

Forecast for Next Week - The upcoming week is holiday-shortened with the financial markets and most banks closed on Monday in observance of Presidents' Day.

The week's economic calendar is highlighted by housing data, which as mentioned, has gotten a boost by the strong labor market.

The markets will continue to be impacted by the coronavirus, which is a fast-moving story as it turns both positive and negative at a moment's notice. Earnings season is winding down with 72% of S&P 500 companies reporting better than expected earnings in the latest quarter.

The minutes from the January Fed meeting will be released on Wednesday, but little impact is expected after Fed Chair Powell said last week that the U.S. economy "is in a good place."

Reports to watch:
 

  • Housing data dominates the economic calendar with the NAHB Housing Market Index on Tuesday, Housing Starts and Building Permits on Wednesday, and Existing Home Sales on Friday.
  • The Producer Price Index will be delivered on Wednesday, and the Philadelphia Manufacturing Index and Weekly Claims on Thursday.

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Friday - February 14  

Week in Review - Home loan rates continue to hover right near three-year lows. There are many "smart" folks on Wall Street who say rates are going to push even lower at some point...and they may be right. But what if they're wrong? What if rates have bottomed for the foreseeable future?

Yes, locking a home loan right here would be wise.

Here are three reasons why rates may have bottomed -- at least for now:

  1. Solid economic numbers continue to be reported. We are seeing a historically strong labor market, rising wages, high consumer and business confidence, and an overall boost in housing. Bonds hate good news and there is simply too much good news to go around at the moment.
  2. Signs of improvement around the globe. One of the main tailwinds to our low rates is the relative underperformance of countries around the globe. It appears that many parts of the world are doing a bit better thanks to central bank monetary stimulus. If this trend continues, it's tough to see much better rates anytime soon.
  3. The trading action in the Treasury market. This may be signaling that further rate improvement from here may be tough to achieve. In recent weeks, in the face of heightened fear and uncertainty surrounding the coronavirus (which usually lowers rates), the 10-year Note yield was unable to move beneath 1.50%, which is also close to a historically low yield seen just a few times in the last decade. If the 10-year Note can't improve in the face of very uncertain news, a near-term bottom might be in place.

So, what would push rates to historically low levels? It would likely take some very bad news like an escalation of the coronavirus outbreak or possibly something worse.

Bottom line: the U.S. economy is performing very well. Rates are near historic lows and the markets are telling us this may be about as good as things get -- for now. So, if you, your family, friends, or clients are considering a home loan, now is a terrific time to lock in at incredible rates.

If you or someone you know has questions about home loans, give me a call. I'd be happy to help.

 

Market Wrap - Mortgage Bonds traded in a tight range during today's quiet session ahead of the three-day weekend. Treasury prices ended with modest gains. 10-yr yield closed at 1.58%. Stocks ended mixed with weekly gains for the Dow, S&P and NASDAQ. Given that mortgage rates are at three-year lows and with bond prices unable to pierce above stiff multi-year highs, we feel it looks like a good time to Lock.  

Late Morning Review - A brighter view from consumers on the economy and finances in January lifted sentiment to the highest level since March 2018. The Consumer Sentiment Index rose to 100.9 in early February from 99.8 recorded in January. Overall, both the sentiment and expectations indexes moved higher. In addition, net gains in household income and wealth were reported more frequently in early February than at any prior time since 1960.

The consumer continued to spend and fuel the U.S. economy in January though the numbers were seen as modest with a slight gain from December. January Retail Sales rose 0.3% as the unseasonably mild month pushed sales at hardware and furniture stores higher. Consumer spending is a big percentage of economic growth and spending should continue as the labor market remains very strong.

The U.S. financial markets are closed on Monday in observance of Presidents Day. Most banks and government offices are closed while there will be no mail delivery. City, county, federal and state offices, libraries and superior courts are closed. Originally established in 1885 in recognition of President George Washington, the holiday became popularly known as Presidents Day after it was moved to the third Monday in February as part of 1971’s Uniform Monday Holiday Act, an attempt to create more three-day weekends for the nation’s workers.

 

 

Thursday-February 13th

Market Wrap - Mortgage Bonds closed near unchanged again today despite a decline in stocks. The Fannie Mae 30-yr 3% coupon closed just below critical support of $102.0. Treasury prices closed with meager gains while the 10-yr yield settled at 1.61%. WTI oil closed at $51.40/barrel, +$0.23. Tomorrow's data includes Retail Sales and Consumer Sentiment. Given that mortgage rates are at three-year lows and with bond prices unable to pierce above stiff multi-year highs, we feel that locking makes a lot of sense.

Inflation at the consumer level remain tame in January though the Federal Reserve expects inflation to pick up in 2020. The January Consumer Price Index (CPI) rose a scant 0.1% from December while the year over year data showed a 2.5% increase. The CPI is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. And where the CPI is closely watched by the Federal Reserve, the Core PCE is the measure of inflation that the Fed watches for its inflation targets.

Mortgage rates inched higher this week but remain near three-year lows, reports Freddie Mac. The 30-year fixed-rate mortgage rose two basis points to 3.47% with 0.7 in points and fees. A spokesperson for Freddie Mac said that with mortgage rates hovering near a five-decade low, refinance application activity is once again surging, rising to the highest level in seven years. This surge coupled with strong purchase activity means that total mortgage demand remains robust, reflective of a solid economic backdrop and a very low mortgage rate environment.

A spike in coronavirus cases in China is weighing on global stocks, however Mortgage Bond and Treasury prices are near unchanged. China's Hubei province reported 15K new cases of the virus bringing the total to nearly 60K and 250 additional deaths. A report hit today suggesting China is under-reporting the count of affected by 100,000. Here in the U.S., stocks are modestly lower as the Dow, S&P and NASDAQ closed at record highs yesterday.

Wednesday - February 12  

Market Wrap - Mortgage Bonds continued to hover near support today closing near unchanged despite the big rise in stocks. The S&P 500 (3,379) closed at another record high today as the coronavirus fears ease. The 10-yr yield closed at 1.63%. WTI oil settled at $51.67/barrel. CPI will be released tomorrow

Late Morning Review - Mortgage rates continue to hover near historic lows this week, reports the MBA. The 30-year fixed-rate mortgage was at 3.72% for the week ended February 7, 2020. Mortgage application activity rose with the Market Composite Index, a measure of total mortgage loan application volume up 1.1%, the Refinance Index rose 5% while the Purchase Index declined 6.0%. Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting said, "Despite a decline last week, purchase activity was still up almost 16% from a year ago."

On the coronavirus front, more than 1,100 deaths and 45,000 cases concentrated in Asia have been reported with the vast majority stricken in China. However, new cases are beginning to slow and that is mildly positive. To combat an economic fallout from the outbreak, Chinese officials continue to signal more stimulus ahead to promote growth which is boosting stocks around the globe, including here in the U.S.

Tuesday - February 11  

Market Wrap - Once again today, Mortgage Bonds opened and closed near unchanged with little movement seen during the session. Treasury prices declined on headlines that workers in China have begun to return to their posts and allayed some fears about the impact of economic growth. The 10-yr yield closed at 1.59%. Stocks closed with meager gains, off the early highs though the S&P (3,357) and NASDAQ (9,638) closed at record highs. WTI oil settled at $50/barrel, +$0.43. There are no economic reports due for release tomorrow. The Treasury will sell $27B 10-yr Notes. In the absence of a very negative event, current pricing may be as good as it gets. 

Late Morning Review - Small business owners across the U.S. were more positive about conditions as the new year kicked off as owners raise wages and invest in their business. The NFIB Small Business Optimism Index rose 1.6 points in January to 104.3, a reading among the top 10% of all readings in the 46-year history of the survey. The economic expansion continues its historic run as small businesses enter 2020. NFIB Chief Economist William Dunkelberg said, "Small businesses continue to build on the solid foundation of supportive federal tax policies and a deregulatory environment that allows owners to put an increased focus on operating and growing their businesses."

Fed Chair Powell is on Capitol Hill this morning in front of the House Financial Services Committee testifying on the state of the U.S. economy. In his prepared speech, Powell said, "The economic expansion is well into its 11th year, and it is the longest on record. Over the second half of last year, economic activity increased at a moderate pace and the labor market strengthened further, as the economy appeared resilient to the global headwinds that had intensified last summer."

The continued expanding economy coupled with a strong labor market continues to boost the housing market as mortgage delinquency rates continuing to decline. The MBA reports that the delinquency rate for mortgage loans on one-to-four unit residential properties declined to a rate of 3.77% at the end of Q4 2019. "The mortgage delinquency rate in the final three months of 2019 fell to its lowest level since the current survey series began in 1979," said Marina Walsh, MBA's Vice President of Industry Analysis.

 

Monday - February 10  

Market Wrap - Mortgage Bonds opened and closed near unchanged today in lackluster trading while the 10-yr yield closed at 1.56%, unchanged. Stocks were able to shrug off the virus fears and closed with solid gains after opening in negative territory. WTI oil settled at $49.57/barrel, -$0.75 on fears that China's oil consumption will decline. There are no major economic reports due for release tomorrow. Fed Chair Powell will be on Capitol Hill testifying in front of Congress on the state of the U.S. economy. The Treasury will sell $38B 3-yr Notes tomorrow, results at 1:00 p.m. ET. In the absence of a very negative event, current pricing may be as good as it gets.

 

Late Morning Review - Fed Chair Powell will be on Capitol Hill this week in front of Congress on Tuesday and Wednesday testifying on the state of the U.S. economy. Mr. Powell's speech to Congress was released Friday with little fanfare stating the U.S. economy grew modestly and the labor market continued to strengthen last year. Downside risks have diminished somewhat while the coronavirus poses a new concern.

The death toll from the coronavirus is nearly 1,000 while there are more than 40,000 cases. It is reported that workers are beginning to return to work in China while factories begin to slowly reopen. The problem with the coronavirus story is that it remains highly uncertain. We still don't know where it came from and if the spread outside of mainland China will continue. U.S. stocks are higher today, having shrugged off opening losses with the Dow, S&P and NASDAQ just below all-time highs.

Fears of a slowdown in oil consumption in China have pushed prices lower in the past few weeks. The decline has pushed U.S. gas prices at the pumps lower for the second straight week. The national average price for a regular gallon of gasoline is at $2.42, down from $2.47 last week and down from $2.60 a month ago. Gas prices are $0.16 more than last year but that gap has been declining for the past two months. The highest price ever recorded was $4.11 back on July 17, 2008.

 

 

 

Forecast for the week - With fears of the coronavirus easing and the shenanigans of the impeachment process behind us, the markets can now get back to what usually drives sentiment... economic data, consumer confidence and spending, inflation numbers, and monetary and trade policy.

The upcoming week will bring a key inflation report from the Consumer Price Index along with a gauge of consumer spending in the Retail Sales report. In addition, earnings season will continue, though most of the big-name companies have already reported. Of the 60% of S&P 500 companies that have reported earnings so far this season, 71% of them have beaten analyst expectations.

Fed Chair Powell will be on Capitol Hill on Tuesday and Wednesday testifying on the state of the U.S. in his Monetary Policy Report to Congress, originally called the Humphrey-Hawkins Testimony. We don't see any glaring words from the Fed Chair, but we will be closely watching.

Reports to watch:
 

  • Economic data is on the light side this week and kicks off on Thursday with Weekly Initial Jobless Claims that continue to hover near 50-year lows.
  • On Friday, the Consumer Price Index, Retail Sales, and Consumer Sentiment will be released.   

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Friday - February 7  

Week in Review - This past week was a bit rough for the Bond market as home loan rates steadily ticked higher and off the best levels in three years.

The coronavirus has been a tailwind to the Bond market and home loan rates for the past few weeks, but this week the story seems to be less negative and less uncertain. As better news started to emerge in the coronavirus headlines, financial markets started paying attention back to the economic outlook or "future" of our economy.

The news has been solid across the board with better than expected readings in manufacturing, services, and jobs.

The end of the impeachment process also removed uncertainty and helped Stocks focus on the good economic news at the expense of Bonds and home loan rates.

Bottom line: while rates ticked up week over week, they remain within a whisker of the best levels in three years. If the coronavirus outbreak story becomes more positive, home loan rates could inch higher still, meaning now is a great time to refinance or purchase a home.

If you or someone you know has questions about home loans, give me a call. I'd be happy to help.

 

 

Market Wrap - Mortgage Bonds closed modestly higher today with stocks taking a breather as investors took profits after the Dow, S&P and NASDAQ hit fresh record highs this week. The 10-yr yield settled at 1.58%. Despite today's lossses, it was the best week for the Dow since last June

Late Morning Review - And the survey says ... 225K jobs created in January, well above the 164K expected while November and December were revised slightly higher by a total of 7K, reports the Bureau of Labor Statistics. The Unemployment Rate inched higher to 3.6% from 3.5%. As more people entered the workforce, the Labor Force Participation Rate rose to 63.4%, the highest since June 2013. The three-month job growth average was a solid 211K.

Within the data, it showed that the U6 number, a measure of total unemployed, ticked up to 6.9%, just above the all-time series low of 6.7% hit in December. Average hourly earnings rose 0.2% month over month with a 3.1% year over year gain. There was one slightly negative data point as the report showed downward revisions of 514,000 for the year ended March 2019 for Non-Farm Payrolls, a bit higher than the 500K expected. Overall, a very strong report.

The low mortgage rate environment has made 11.3 million mortgages refi-eligible, the second-highest on record, reports Black Knight. The 11.3 million is made up of those borrowers paying interest rates that are 0.75% or higher than current rates who also have credit scores above 720 and enough equity in homes to get a loan. In the absence of credit scores and equity, there are 22 million mortgage holders with a loan rate of more than 0.75%, or in the money, also the second-highest on record.

 

Thursday - February 6  

Market Wrap - Mortgage Bonds opened and closed near unchanged today as traders await tomorrow's Jobs Report for January. The yield on the 10-yr Note settled at 1.64%, unchanged. Stocks closed higher as coronavirus worry ebbs. The Dow (29,379), S&P (3,345) and NASDAQ (9,572) all closed at record highs. WTI oil closed at $50.97/barrel, +$0.23

Late Morning Review - Mortgage rates continued to decline in the latest survey from Freddie Mac hitting the lowest point in three years. The 30-year fixed-rate mortgage fell to 3.45% from 3.51% with 0.7 in points and fees. A year ago at this time, the rate averaged 4.41%. Sam Khater, Freddie Mac’s Chief Economist said, "The combination of very low mortgage rates, a strong economy and more positive financial market sentiment all point to home purchase demand continuing to rise over the next few months.”

Americans filing for first-time unemployment benefits fell to a nine-month low in the latest week and are hovering near 50-year lows. The numbers signal that the tight labor market would continue to bolster the economy in 2020. Weekly Initial Jobless Claims fell to 202,000, down 15,000 for the week ended February 1. The four-week moving average of initial claims, which irons out seasonal abnormalities, dropped 3,000 to 211,750 last week, also the lowest level since last April.

 

Wednesday - February 5  

Market Wrap - Mortgage Bonds closed near unchanged today weighed down by the dizzying surge in stock prices as fears of the coronavirus eased along with strong economic data. The CDC said today there have been no new coronavirus cases in the U.S. The S&P closed at a fresh record high of 3,334. The 10-yr yield ended at 1.65%. Tomorrow's data includes Weekly Claims and Productivity.

Late Morning Review - The low mortgage rate environment boosted mortgage application activity in the latest week due in part to fears that China's economy will slow driven by the spread of the coronavirus. The MBA reports that the 30-year fixed-rate mortgage fell by ten basis points to 3.71% with 0.28 in points. It was the lowest rate since October 2016. The MBA's Market Composite Index rose 5, the Refinance Index jumped 15% though the Purchase Index fell dropped 10%. "Prospective buyers weren't as responsive to the decline in mortgage rates - likely because of suppressed supply levels. Purchase applications took a step back, but still remained 11% higher than a year ago," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting.

The service sector of the U.S. economy continues to hum along as the outlook remains favorable for 2020. The ISM Service Index came in at 55.5 in January, the highest level since August and grew for the 120th consecutive month. A reading above 50 indicates the non-manufacturing sector economy is generally expanding; below 50 indicates the non-manufacturing sector is generally contracting. Most respondents to the survey said the outlook remains favorable for growth in 2020.

Private job growth surged in January and was the best monthly gain in nearly five years. ADP Private Payrolls surged by 291,000 last month, well above the 160,000 expected. Private job growth was robust across a large portion of industries. The 291,000 was the best monthly gain since May 2015. “The labor market experienced expanded payrolls in January. Job creation was strong among midsized companies, though small companies enjoyed the strongest performance in the last 18 months,” said Ahu Yildirmaz, vice president and cohead of the ADP Research Institute.

 

Tuesday - February 4 

Market Wrap - Surging stocks weighed on Mortgage Bonds today while Treasury prices plunged as risk on was the trade today. The 10-yr yield rose to 1.60%. The NASDAQ (9,467) closed at a fresh record high as stocks shrugged off the virus fears. WTI oil settled at $49.61/barrel, -$0.50. January ADP Private Payrolls will be released tomorrow morning.

 

Late Morning Review - CoreLogic reports that home prices nationwide, including distressed sales, rose 4% in December 2019 compared with December 2018 and increased 0.3% in December 2019 compared with November 2019. Looking ahead, CoreLogic is forecasting that home prices will rise 5.2% year-over-year from December 2019 to December 2020. “On a national level, home prices are on an upswing. Price growth is likely to accelerate in 2020," said Frank Martell President and CEO of CoreLogic. The strong labor market will continue to support the housing sector.

U.S. stocks are rallying today shrugging off the coronavirus fears as investors use the "buy on the dip" strategy after the recent decline. The Dow Jones Industrial Average is up 450 points and comes after Friday's plunge and yesterday's rebound. The rise in equity prices is weighing on the bond markets while mortgage rates could edge higher though they remain historically low. Freddie Mac reported last week that the 30-year fixed-rate mortgage fell to 3.51%, the second-lowest level in three years.

U.S. consumers are paying less for the price of gasoline at the pumps due in part to a decline in oil prices. The decline in the price of oil is due in part to the recent coronavirus headlines that could cut demand while OPEC is mulling over supply cuts. The national average price for a regular gallon of gasoline is at $2.46, down from $2.58 a month though above the $2.25 a gallon seen last year this time. “Gas prices are pushing cheaper for two reasons. Crude oil prices are $10 less a barrel than one month ago and U.S. gasoline stocks sit at an all-time record high,” said Jeanette Casselano, AAA spokesperson.

 

Monday - February 3  

Market Wrap - Mortgage Bonds ended slightly lower today in lackluster trading. The 10-yr yield closed near unchanged at 1.52% and closed below its session high of 1.57%. Stocks ended higher after a strong ISM Index report though off best levels. WTI oil ended at $50.05/barrel, -$1.51 as demand could plunge in China by as much as 20% due to the virus outbreak. There are no impacting economic reports due tomorrow. Continue to float all files but be on guard. The coronavirus story can change for the better or worse very quickly and you and your clients will need to pivot quickly.

Late Morning Review - The U.S. manufacturing sector received positive news this morning as it has been in a somewhat mild recession for the past six or seven months, reports the Institute for Supply Management (ISM). The ISM Manufacturing Index rose to 50.9 last month, above the 48.1 expected and up from 47.8 in December. It was the first expansion for the index since last July where 50 is the dividing line between expansion and contraction. "Overall, sentiment this month is moderately positive regarding near-term growth,” said ISM spokesperson Timothy R. Fiore.

Two key labor market reports will be released this week with the ADP Private Payrolls Report on Wednesday followed by the government's Jobs Report on Friday. The government report includes Non-Farm Payrolls and the Unemployment Rate. In addition, earnings season continues with some big names yet to report this week, Google reports after the close today. Of the 126 S&P 500 companies that have reported quarterly results so far, 70% have topped earnings estimates.

 

 

 

Forecast for the Week - Job creation data will be in the spotlight in the upcoming week with two key reports on the radar.

The ADP Private Payrolls Report and the government's Jobs Report, both for January, will be front and center and will be closely monitored by both the Federal Reserve as well as the investing community.

Earnings season will continue next week. However, the bulk of the reports are behind us.

The markets will also continue to be gripped in the coronavirus headlines with the financial implications still uncertain in these early stages. There could be a slowdown in China's economy if the virus is not contained within a decent amount of time. How this story goes will determine how global Stock markets, Bonds, and home loan rates perform.

Reports to watch:
 

  • The ISM Manufacturing Index will be released on Monday followed by the ISM Service Index on Friday.
  • Labor market data will come from Wednesday's ADP Private Payrolls with the government's Jobs Report on Friday which includes Non-Farm Payrolls, the Unemployment Rate, and Hourly Earnings.

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