Friday Mortgage Rate Review – 01/17/2020

Mortgage Rates Generally Hold Steady

Mortgage rates inched up by one basis point this week with the 30-year fixed-rate mortgage averaging 3.65 percent. By all accounts, mortgage rates remain low and, along with a strong job market, are fueling the consumer-driven economy by boosting purchasing power, which will certainly support housing market activity in the coming months. While the outlook for the housing market is positive, worsening homeowner and rental affordability due to the lack of housing supply continue to be hurdles, and they are spreading to many interior markets that have traditionally been affordable.

Phase One Trade Deal, Senate Gets to Work and Rates are STABLE

Well, they did it. Finally, the USA and China have reached a Phase 1 trade deal. Perhaps now, the stock market will end it’s seesaw. Good stuff in the deal too. We cut our tariffs in half, they agree to buy $200 billion in goods and services over the next two years, which should take our exports up as high as $310 billion in 2021. While the deal is good and welcome news for the America’s farms, the real win is the intellectual property rights protections and the opportunity for banks to operate in China.

More headline than headwind is how the impeachment of Donald J. Trump is being viewed. There may be some economic volatility due to the articles being delivered to the Senate but the fundamentals of the economy remain strong. You can see what our resident economist is saying about the overall state of the economy in the United States in the video below. The market, in general, is very strong.

Economy Update – January 2020 – Elliot Eisenberg

Here’s the latest Primary Mortgage Market Rate Survey from FreddieMac (the government-owned corporation that buys mortgages and packages them into mortgage-backed securities)

IT IS STILL A GREAT TIME TO BUY!!! Rates are STILL at 40-year historic lows! If you want to get into a home, refinance to retire some debt or make home improvements or put your kids through school or maybe even help them buy something, PLEASE GIVE ME A CALL 😊

More Good Housing News

The housing market has been incredibly strong, and the good data keeps on rolling. CoreLogic reported that home prices rose 0.5% in November and 3.7% year over year. The year over year reading increased from last month’s report, which showed a 3.5% gain. It’s also the largest annual gain in almost a year. The states with the highest increases were Idaho (10.2%), Maine (8.6%), and West Virginia (6.9%).

CoreLogic forecasts that home prices will appreciate by 5.3% in the year going forward, which is a slightly lower pace from the 5.4% forecasted in the previous report, however still very strong. 

A 5.3% gain on a $525,000 home would translate to $27,825 in appreciation over the course of a year. Remember that you only need 3.5% for a down payment.

The One Piece of Jobs Data No One is Talking About

The Jobs Report is one of the most important economic reports released each month. There are many components within the report, but three of which are paramount: the overall level of job creations, the unemployment rate, and average hourly and weekly earnings.

Last week’s report was for December and it showed that there were 145,000 jobs created. This was lighter than the 158,000 expected. Additionally, there were 14,000 in negative revisions to the previous two months. While this was a slight miss, it was still a decent level of jobs. 

The Unemployment Rate remained stable at 3.5%. There are two different surveys within the Jobs Report – The Business Survey, where the headline jobs figure is derived from, and the Household Survey, where the Unemployment Rate comes from. The Household Survey also has a job creation component, which said that there were 267,000 job creations. Additionally, there were 209,000 additional individuals that came into the labor force. Since the figures were close to one another, the unemployment rate remained unchanged.

Interestingly, the all in U6 Unemployment Rate, which includes total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, moved lower from 6.9% to 6.7%….which is the lowest level on record. 

But the one piece of data that seemed to fly under the radar was average weekly earnings. There are two measures of earnings in the Jobs Report, average hourly and average weekly earnings. Average hourly earnings decreased from 3.1% year over year to 2.9%. But the more important figure and the real story here is Average Weekly earnings, which decreased sharply from 3.1% to 2.3% year over year. We pay closer attention to weekly earnings because it shows what an employee is taking home each week. Think about it, you may make a certain amount per hour, if you are working less, you are earning less. While average weekly earnings are still going up 2.3% year over year, this was a significant drop. This is something to watch to see if it’s just a one off or a trend.

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