12 Nov 2023
By divfundposts

What’s Ahead For Mortgage Rates This Week – November 13, 2023

Financial Reports

The week following the FOMC rate decision meetings are typically very light, with the two most influential releases being the University of Michigan Consumer Sentiment and the weekly Job Claims reports. The more positive news is mortgage lending rates have been on the decline in the last two weeks.

Consumer Credit Reports

Consumer sentiment fell in November for the fourth month in a row due to tensions with the Middle East and there is lingering hawkishness from the Federal Reserve, which could spell continued rate hikes in the future.

The preliminary reading of the sentiment survey declined to 60.4 from 63.8 in October, the University of Michigan said Friday, making it the weakest reading since May.

Primary Mortgage Market Survey Index

  • 15-Yr FRM rates seeing a week-to-week decrease by -0.22% with the current rate at 6.81%.
  • 30-Yr FRM rates seeing a week-to-week decrease by -0.26% with the current rate at 7.5%

MND Rate Index

  • 30-Yr FHA rates increased week to week seeing a 0.20% increase for this week. Current rates at 6.91%
  • 30-Yr VA rates increased week to week seeing a 0.04% increase for this week. Current rates at 6.74%

Jobless Claims

The weekly jobless claims report from the Labor Department on Thursday also showed unemployment rolls rising to a six-month high.

Initial Claims have decreased to 217,000 compared to the expected claims of 220,000. The prior week was 220,000.

What’s Ahead

The next week will have much bigger market impacting data reports with the releases of CPI and PPI. There will also be a significant amount of the Federal Reserve members speaking throughout the week on rate policy decisions.

30 Oct 2023
By Kevin Gahagan
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What’s Ahead For Mortgage Rates This Week – October 30, 2023

Financial Reports

This week’s most significant data offered preliminary numbers for manufacturing and services PMI (Purchasing Managers Index). Both can serve as a forward indicator for the economy while providing insight into the current state of the cost of living for the service industry. While manufacturing met an expected rise for the end of October, services saw a contraction, falling to 46.6 from 49.3. Readings below 50.0 can be a sign of a downturn for the economy, particularly given the time of the year.

Mortgage Applications & Rates Indices
MBA Mortgage Applications Index saw a reduction of -1.0% in applications for the week, with rates once again increasing again week over week.

Primary Mortgage Market Survey Index

  • 15-Yr FRM rates are seeing a week-to-week increase by 0.11% with the current rate at 03%.
  • 30-Yr FRM rates are seeing a week-to-week increase by 0.16% with the current rate at 79%

MND Rate Index

  • 30-Yr FHA rates increased week to week with a -0.08% decrease for this week. Current rates at 32%
  • 30-Yr VA rates increased week to week with a -0.11% decrease for this week. Current rates at 33%

Personal Income & Spending

Personal income increased $77.8 billion (0.3 percent at a monthly rate) in September, according to estimates released today by the Bureau of Economic Analysis (table 2 and table 3). Disposable personal income (DPI), which is personal income less personal current taxes, increased $56.1 billion (0.3 percent), and personal consumption expenditures (PCE) increased $138.7 billion (0.7 percent).

  • The PCE price index increased 0.4 percent.
  • Excluding food and energy, the PCE price index increased 0.3 percent.

Key point: Personal income increased in September and spending accordingly rose, moving into October. This increase in income and spending is expected moving into the Holiday season. This is a strong sign for the Advanced GDP numbers for the remainder of the year.

Job Claims
Those who applied for unemployment benefits last week fell to a nine-month low of 188,000, subverting expectations that layoffs would rise as the U.S. interest rates continued to increase.
Initial Claims were 210,000 compared to the expected claims of 210,000. The prior week was at 211,000.

What’s Ahead
This week’s scheduled economic reports include ISM manufacturing data, S&P U.S. Manufacturing PMI, and Job Openings. The stronger data points of U.S. non-farm payrolls are coming at the end of the week on Friday.

23 Oct 2023
By Kevin Gahagan
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What’s Ahead For Mortgage Rates This Week – October 23, 2023

Financial Reports

This week featured the usual retail sales report which shows consumer demand and as well as an indicator of the velocity of money, not only for consumers but business to business as well. An increase would show an increase in national and local increase in economic activity, which is important as we move into Q4 of the year; where the holiday season is expected to see an increase in consumer activity.

Retail Sales
Retail sales have exceeded expectations this month showing month-to-month increases across the board:

  • Retail sales are up 0.7% from the previous month with an expected increase of 0.3%.
  • Retail sales with auto removed show an increase of 0.6% compared to an expected 0.2% increase.
  • Business inventories are also above the expected increase at 0.4% compared to 0.3%.

Housing Starts & Building Permits
U.S. Housing Starts rebound in September in September after a sharp drop in the prior month. Largely, economists are feeling that builders have been losing confidence since rates have peaked over 7% and housing is expected to trend lower until the end of the year.

  • Construction of new U.S. homes rebounded 7% in September to an annual pace of 1.36 million units after a sharp 1.5% drop in the prior month, the Commerce Department said Wednesday.
  • Building permits, a sign of future construction, fell 4.4% to a 1.47 million rate.
  • Existing home sales beat expected sales with 3.98 million sales compared to the expected 3.90 million sales.

Key point: The pace of construction for single-family homes in September has risen by 3.2% and apartment building construction rose by 17.1%

Mortgage Applications Increased for the Month of October
MBA Mortgage Applications Increase, a measure of mortgage loan application volume again.
Primary Mortgage Market Survey Index

  • 15-Yr FRM rates seeing a week-to-week increase by 0.03% with the rates now at 92%.
  • 30-Yr FRM rates seeing a week-to-week increase by 0.06% with the current rate at 63%

MND Rate Index

  • 30-Yr FHA rates increased week to week seeing a 0.28% basis point increase. Current rates at 40%
  • 30-Yr VA rates increased week to week seeing a 0.30% basis point increase. Current rates at 44%

Job Claims
Those who applied for unemployment benefits last week fell to a nine-month low of 188,000, subverting expectations that layoffs would rise as the U.S. interest rates continued to increase.

Initial Claims were 188,000 compared to the expected claims of 211,000. The prior month was 211,000.

What’s Ahead
This week’s scheduled economic reports include PMI data, along with new home sales. There will also be a national GDP data release which can give an indication of the growth of markets and economy as a whole. Lastly, Personal Income and Spending will be at the tail of the week along with PCE Index numbers.

02 Oct 2023
By Kevin Gahagan

What’s Ahead For Mortgage Rates This Week – October 2, 2023

Financial Reports

Last week, consumers were treated to several indicators on inflation that not only paint a picture of the economy’s health but also give the Fed more information to work with as it continues to aim for a soft landing.

August Sees a Slight Upward Trend in Inflation

This week, the personal consumption expenditures price index, which excludes more volatile commodities like food and energy, increased 0.1 percent for the month. This is lower than the expected value of 0.2 percent, which indicates that the rising interest rates are starting to have an impact on the economy as the Fed continues to work to bring down inflation.

When compared to the previous 12 months, the price index was up 3.9 percent. This matched expectations and shows that inflation could finally be turning a corner. In addition, consumer spending rose 0.4 percent in August, which is down sharply from 0.9 percent in July. This is another indicator that higher interest rates are having an impact on consumers, who are finally pulling back on their spending.

As the month continues to progress, a lot of people will wait and see how the Fed’s decision to hold interest rates steady will impact the economy. Those looking for houses will probably be excited that interest rates were held steady, but it will be interesting to see how this decision impacts the fight against inflation.

Mortgage Rates Continue To Rise

This week, the 30-year fixed mortgage rate sits at around 7.59 percent on average, which remains one of the highest rates in decades. In August, the average rate was 7.18 percent, indicating that rates have gone up sharply. This is also up slightly from the previous week, where the average 30-year fixed rate was 7.51 percent.

What's Ahead For Mortgage Rates This Week - October 2, 2023In addition, 15-year fixed mortgage rates have gone up as well, with the national average sitting at around 6.82 percent. This is up from last week, when the average 15-year fixed was 6.51 percent. This is also up slightly from August, where the rates hovered around 5.84 percent.

Because the Federal Reserve decided to hold interest rates study, many home buyers are hoping that mortgage rates will stabilize for a couple of months. It remains to be seen if that will happen.

Consumer Sentiment Might Be Stabilizing

The consumer sentiment report from the University of Michigan is stabilizing, with numbers for September coming in at around 68.1. While this is a slight dip from August’s average numbers, the numbers for September are starting to rise.

Consumers might be starting to relax a little bit because inflationary numbers are starting to come down. For consumer sentiment to rise further, mortgage rates might have to come down without contributing to a spike in inflation or home prices.

This dip implies that despite the decreasing inflation rates, there remains a cloud of uncertainty amongst consumers. This could be attributed to potential interest rate hikes and a subtle slowing down of the job market. The prevailing mood is still optimistic, but the trend is shifting.

Looking To Next Week

Next week, the unemployment data is going to be released, as initial jobless numbers are going to come in. This is a key indicator because rising interest rates generally lead to more layoffs, which could jeopardize the Fed’s goal of a soft landing.

25 Sep 2023
By Kevin Gahagan

What’s Ahead For Mortgage Rates This Week – September 25, 2023

Financial Reports

What's Ahead For Mortgage Rates This Week - September 25, 2023Last week’s economic reports included readings on U.S. housing markets, housing starts and building permits, and the scheduled post-meeting statement from the Federal Open Market Committee of the Federal Reserve. Data on sales of previously owned homes were released along with weekly reports on mortgage rates and jobless claims.

National Association of Home Builders: Rising Mortgage Rates Shake Builder Confidence

Homebuilders lost confidence in U.S. housing market conditions in September. September’s index reading was 45 as compared to the expected reading of 49.5 and August’s reading of 50. The combination of rising mortgage rates and high home prices presented obstacles to first-time and moderate-income buyers, while homeowners delayed listing homes for sale while awaiting lower mortgage rates. Low inventories of previously owned homes for sale drove would-be buyers to consider purchasing new homes.

Home builders offered price cuts averaging 25 percent to buyers in August; the price cuts were deeper in September with cuts averaging 32 percent. The NAHB said 59 percent of home builders offered buyer incentives other than price cuts.

Building Permits Rise as Housing Starts Fall in August

The Commerce Department reported 1.54 million building permits issued in August as compared to 1.44 million permits issued in July. The August reading exceeded analysts’ expectations of 1.45 million building permits issued in August. Housing starts fell to 1.28 million starts in August as compared to July’s reading of 1.44 million starts and the expected reading of 1.43 million housing starts in August.

Sales of previously owned homes fell to 4.04 million sales in August as compared to July’s reading of 4.07 million sales and the expected reading of 4.10 million sales.

Fed Leaves Key Interest Rate Range Unchanged

The Federal Open Market Committee of the Federal Reserve announced its decision to leave the federal funds rate range unchanged at 5.25 to 5.50 percent, but policymakers hinted at another rate hike before the end of 2023. FOMC members review a variety of domestic and global financial and economic data to inform their decision-making process.

Mortgage Rates Rise, Jobless Claims Fall

Freddie Mac reported fixed mortgage rates above 7 percent last week. The average rate for 30-year fixed-rate mortgages was one basis point higher at 7.19 percent. The average rate for 15-year mortgages rose by three basis points to 6.54 percent.

First-time jobless claims fell to 201,000 claims last week as compared to the previous week’s reading of 221,000 new claims and the expected reading of 225,000 claims filed.

What’s Ahead

This week’s scheduled economic reporting includes readings on new home sales, S&P Case-Shiller home price indices,  the Federal Reserve Chair’s speech, and reports on inflation. Weekly readings on mortgage rates and jobless claims will also be released.