Limited Inventories

May 31st, 2017

Suggestion: Mortgage rates continue to hover near six-month lows while Mortgage Bond prices hover near six-month highs. Locking is recommended.

 

Overview: Limited inventories of homes for sales are causing problems in the purchase market, reports the National Association of REALTORS®. April Pending Home Sales declined 1.3% from March and fell for the second consecutive month. Pending Home Sales are down year-over-year nationally in all four major regions across the nation. Sales were down 3.3% from April 2016, the first year-over-year decline since December and the biggest since June 2014 (7.1%).

The Mortgage Bankers Association reported on Wednesday that mortgage rates were unchanged in the latest week and remain just above all-time lows. The 30-year fixed conforming mortgage rate was 4.17% in the latest survey with 0.32 points on top of that rate. The 30-year jumbo rate was also unchanged at 4.11% with 0.30 in points, while FHA loans fell 4bp to 4.03% with 0.32 points.

The retail sector continues its troubled ways with the latest round of declining sales and store closings. Luxury retailer Michael Kors said it will close up to 125 stores amidst plunging sales as the company admits that its stores have been underwhelming for consumers. Mega shoe store outlet Payless ShoeSource has reported it is looking to shut 408 stores after seeking bankruptcy protection two months ago. Payless cited increasing competition and plummeting sales for the massive closures.

What Is Going On With Interest Rates?  #wigowir

 

Below is the news when it happened and the market’s reaction.  For a full view of the day 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 Good News and Good News is Bad news.

 

Weak economic data and lower Stock prices were unable to ignite a rally in the Mortgage Bond markets today. The Fannie Mae 30-yr 3.5% coupon closed unchanged at 103.22 after failing to overtake resistance at the 200-day Moving Average. Stocks closed with minor losses weighed down by financial shares. The Dow lost 20.82 points to 21,009.65, the S&P 500 fell by 1.11 points to 2,411.80, while the NASDAQ was down 4.67 points to end the session at 6,198.61. WTI oil closed at $48.32/barrel. -$1.34 as Libya may be producing more oil. 10-yr T Note yield 2.20%.
Wed, May 31 3:46 PM The Dow cuts most of its losses and is now down just 22 points from -88 points.
Wed, May 31 3:44 PM ADP Private payrolls for May will be released tomorrow morning where it is expected that 180K workers were hired.
Wed, May 31 3:44 PM It is expected that 185K new workers were hired in May when Non-farm Payrolls are released on Friday morning.
Wed, May 31 3:39 PM MBS give up meager gains and fall into negative territory.
Wed, May 31 3:29 PM Once again, the Fannie Mae 30-yr 3.5% hits resistance at the 200-day Moving Average and backs off.
Wed, May 31 2:28 PM Black Knight reports that home prices rose to a median $272K in March, a new peak in home prices and a 2.3% gain since the beginning of the year.
Wed, May 31 2:09 PM Beige Book: inflation pressures were little changed from the prior report.
Wed, May 31 2:08 PM Beige Book: Labor markets continued to tighten, with most Districts citing shortages across a broadening range of occupations and regions.
Wed, May 31 2:06 PM Fed's Beige Book reveals that most of the twelve Federal Reserve Districts reported that their economies continued to expand at a modest or moderate pace from early April through late May. Consumer spending softened.
Wed, May 31 1:24 PM Stocks modestly lower at midday. 10-yr yield 2.20%.
Wed, May 31 1:22 PM The Fannie Mae 30-yr 3.5% coupon hits resistance at the 200-day Moving Average (103.26).

 

Wed, May 31 11:33 AM Fed Fund Futures show a 91% probability of a hike to the fed Funds Rate at the June FOMC meeting.
Wed, May 31 11:28 AM Not much movement in MBS this morning as prices trade near unchanged. Dow -30 points.
Wed, May 31 11:01 AM Stocks cut into a big chunk of losses.
Wed, May 31 10:01 AM April Pending Home Sales -1.3% from March, -3.3% from April 2016 due in a big way to a limited supply of homes for sale.
Wed, May 31 9:59 AM Stocks fall into negative territory.
Wed, May 31 9:51 AM May Chicago PMI 55.2 vs 57.3 expected, down from 58.3 in April.
Wed, May 31 9:36 AM S&P slightly higher soon after the opening bell on Wall Street.
Wed, May 31 9:04 AM The MBA mortgage rates come with at least 0.30 in points.
Wed, May 31 8:53 AM May Chicago PMI will be released at 9:45, April Pending Home Sales at 10.

8:52 AM ET  3.5% Fannie Mae 30-yr coupon down  3 bp at a price of 103.19  up 9 bp when rates were set yesterday at 10:00 am Open 103.16  High 103.19 Low 103.12

 

Numbers to watch for:

Currently Buying Opportunities for Traders

102.64 50 day moving average

102.76 25 day moving average

103.00  Traders keep their eye on round numbers and this is one them with lots of zeros    

Currently Selling opportunities for Traders

103.12  Traders keep their eye numbers that have been resistance or support in the past.  This is one of them.

103.26 200 day moving average

 

Wed, May 31 8:51 AM The Dow, NASDAQ and S&P all look to end the month higher.

 

Wed, May 31 8:18 AM The MBA reports that the 30-yr fixed conforming mortgage rate unchanged at 4.17%, jumbos unchanged at 4.11%, FHA -4bp to 4.03%.
Wed, May 31 8:17 AM The MBAs refinance index -5.6%, purchase index -1.4%.
Wed, May 31 8:16 AM The MBA reports that its Market Composite Index, a measure of total mortgage loan application volume, fell 3.4% in the latest week.
Wed, May 31 8:09 AM U.S. dollar index 97.06, -0.14.
Wed, May 31 8:08 AM WTI oil lower by $1 to $48.65/barrel on concerns over increased production in Libya.
Wed, May 31 8:07 AM MBS open slightly lower.
Wed, May 31 8:04 AM The 10-yr T Note yield 2.22%, near unchanged.
Wed, May 31 8:03 AM MBS look to open flat to slightly lower as S&P futures edge higher.

 Johnmarbury.com has attempted to verify the information contained on this post.  However any aspect of such may change without notice.  Johnmarbury.com does not provide investment advice and does not represent that any of the information or related analysis is accurate or complete at any time. On October 5th we started posting our rates and leaving them on the site for you to refer back to. This will allow  you see where actual rates have been along with the news that caused the fluctuations on the rate sheet.  I ask that you forgive my spelling and grammatical mistakes. This is due writing skills that are lacking and the need to communicate quickly.  Most of the information posted on this blog along with the charts and indexes are available all during the day to the subscribers of www.themortgagemarketguide.com  The cost of subscription is very reasonable.

 

Contact

John Marbury
jmarbury@nationalbankofcommerce.com
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As a loan officer (mortgage broker 1989-2006) since 1985, I have seen a lot of changes over the years. The only consistency in the mortgage business and life is change. This is the reason that we believe it is necessary to move quickly and to be early. Let us know if you have any questions or if we can help in any way.

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