Friday Mortgage Rate Review – 02/06/2020

Mortgage Rates Fall for the Third Consecutive Week and the Jobs Report Doesn’t Matter

As rates fell for the third consecutive week, markets staged a rebound with increases in manufacturing and service sector activity. 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.

Many felt that the strong jobs report earlier in the week was going to chase money back into the market and mortgage bonds would shoulder the brunt of that move. When the non-farm payroll came in stronger than expected and last month’s numbers were revised upward, I expected that mortgage rates would suffer. They did not and in fact, the mortgage bond market is rallying today. Stocks are down mid-day, which may just be attributable to profit taking, in which case, locking any loans today might not be the worst thing to do. Just depends on whether you are gambler or not.

Your Weekly Update Begins Here

The last week of January brought plenty of headlines, as housing data, inflation news and GDP were all released. On top of that there was a Fed meeting and growing fears regarding the coronavirus, which is spreading much more quickly than SARS did in the past. China has confirmed that the number of cases is now over 10,000 while the death toll has climbed above 200. The World Health Organization declared the virus a global health emergency and the U.S. has now seen the first case transmitted by one person to another. This news spooked global markets late last week.

And that’s not the only important “panic” to mention. Recently we noted that the Panic/Euphoria Model from Citigroup, which is a gauge of investor sentiment, was very close to euphoric levels. Reminder that the model identifies ‘Panic’ and ‘Euphoria’ levels which are statistically driven buy and sell signals for the broader market.

Historically, a reading below panic supports a better than 95% likelihood that stock prices will be higher one year later, while euphoria levels generate a better than 80% probability of stock prices being lower one year later. A reading at or above .41 is euphoria and last week hit .45.

Bottom line: The index is now in full Euphoria territory, so this will be important to monitor in the months ahead.

The Jobs Report Isn’t Impacting Mortgage Backed Securities

Stocks are lower and Mortgage Bonds are rallying following the release of the January Jobs Report. The Bureau of Labor Statistics (BLS) reported that there were 225,000 jobs created in the month of January, which was much higher than the160,000 expected. Additionally, there were 7,000 in positive revisions to the previous two months – November was revised higher by 5,000 from 256,000 to 261,000 and December was revised higher by 2,000 from145.000 to 147.000. This brings the 3-month average to 211.000.

The Unemployment Rate ticked up from 3.5% to 3.6%. Let’s take a look at why – 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 89,000 jobs lost – It’s always interesting to see the disconnect between the business and household surveys. In addition to the job losses in this survey, the labor force increased by 50,000. As a result, the unemployment rate rose to 3.6%.

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 increased from 6.7% to 6.9%. The labor force participation rate remained increased from 63.2% to 63.4.

Average hourly earnings increased from 2.9% to 3.1% year over year. The more important weekly earnings figure increased from 2.3% to 2.5% year over year.

Fed Sings the Same Tune

The Fed’s first meeting of 2020 brought little surprises as the Statement that was released Wednesday was exactly as expected. In a unanimous decision, the Fed left rates unchanged. They noted that the labor market remains strong, economic activity is rising at a moderate pace, job gains are solid, and unemployment remains low.

If you’re feeling a sense of deja vu, there’s good reason. Last week’s Statement was almost exactly the same as the Fed’s Statement in December.

The most important part of the Statement we were looking for was comments on the Fed’s Balance Sheet. The Fed reiterated that they plan on purchasing T-bills “at least through April 2020 to ensure that the supply of reserves remains ample.” They then said that once they get to a point where reserves are sustainable, they will gradually reduce their purchases.

It seems like the Fed will be purchasing Treasury Bills for quite some time.

Digging Deeper on Inflation

In its Statement, the Fed also said that inflation remains muted but is turning towards their 2.0% target. That seemed to be confirmed with the subsequent release of the Personal Consumption Expenditures (PCE) Report, which is the Fed’s favored measure of inflation and which showed that headline inflation increased from 1.5% to 1.6% in December.

The more important Core rate, which strips out volatile food and energy prices, was reported at 1.6%. Both of these readings were in line with expectations and little changed from the previous report.

It’s also important to note that the Employment Cost Index, which measures compensation for workers, was in line with expectations and up 0.7% in the 4th quarter of 2019. On an annual basis, the index is up 2.7%, which was just below the 2.8% in the 3rd quarter of 2019. This report was former Fed Chair Greenspan’s favorite measure of inflation and this data is in line with what we saw in the last Jobs Report which showed average weekly earnings up 2.6%.

So what’s the bottom line? Inflation does remain muted in the reports the Fed follows closely, which is good news for fixed investments like Mortgage Bonds and the home loan rates tied to them. But we do think it’s important to keep a close eye on the Consumer Price Index (CPI). As we have mentioned several times, we think that CPI is a much better read of real inflation because it has a higher weighting towards the cost of putting a roof over your head and out of pocket medical expenses. And the CPI is running much hotter at 2.3%.

CPI figures for January will be released February 13, and we’ll be watching closely to see if Mortgage Bonds and home loan rates love the data … or not.

Looking Beneath the Housing Headlines

The latest New and Pending Home Sales figures were released last week, and while the media latched onto negative headline numbers, important takeaway’s come from digging deeper here as well.

December New Home Sales were down 0.4% from November but are still up a very strong 23% year over year … something the media conveniently left out of many reports. The estimate of new houses for sale at the end of December was 327,000, which represents a healthy supply of 5.7 months at the current sales rate.

Meanwhile, Pending Home Sales, which measures signed contracts on existing homes and is a good leading indicator for Existing Home Sales, were down 4.9% in December. While this reading was weaker than the expectations of a slight gain, Pending Home Sales are still up 4.6% on an annual basis.  Of course, the media focused on the 4.9% drop and headlines calling for the end of strong housing market surfaced shortly thereafter.  The National Association of Realtors, however, attributed the pullback to purely a lack of supply.  They went on to say that demand remains very strong and if there were more homes for sale, there would be a greater amount of sales.  While this can make finding a home more difficult, it’s a good dynamic for your customers’ investment in their home.  Tight supply and strong demand, as the first law of economics states, means that prices should move higher. 

How fast are homes appreciating in the US?  The Case-Shiller Home Price Index, which is considered the “gold standard” for appreciation, showed that home prices rose 3.5% November, which was a slight increase from 3.2% in October. The 20-city Index increased to 2.6% on a year over year basis from 2.2%. Phoenix (5.9%), Charlotte (5.2%), and Tampa (5.0%) led the gains, and the gains were broad based, with every city in the index seeing an increase.

Usually, the media cites the median home price when they claim housing is accelerating too quickly for incomes. Instead, appreciation is what we need to pay close attention to. And the 3.5% appreciation we are seeing nationally is still meaningful, but not too hot to outpace incomes and make homes unaffordable. 

Hold That Housing Dial

Not to be outdone in an already full news week, Black Knight also shared some interesting stats on the health of the housing market:

  • Mortgage delinquencies fell by nearly 4% month-over-month to within 0.04% of the record low set in May 2019 and more than 12% below last year’s level
  • The national foreclosure rate fell again in December to reach a new 14-year low, and the lowest on record outside the final five months of 2005
  • 2019 ended with just over two million borrowers past due on their mortgage (including active foreclosures) – down 236,000 from the same time last year and the lowest year-end volume since the turn of the century

All in all, despite what the media may focus on, the housing market is rolling along as we head into 2020. 

Technical Breakdown

Mortgage Bonds have been in a clearly defined upward trend since January 19th.  Last week they tested an overhead ceiling of resistance at 102.25, but to confirm a break above it the last two attempts.  Bonds are now in a wide range and could be susceptible to price swings.  Bonds will likely take their cue from the Stock market.  If Stocks sell off, Bonds will likely test overhead resistance again and potentially break above it.  If Stocks regain some of Friday’s losses, it may apply pressure to the Bond market.

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.

Friday Mortgage Rate Review – 12/13/2019

Rates Are On The Rise, An Iffy Trade Deal and A Done Deal Brexit

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

With Federal Reserve policy on cruise control and the economy continuing to grow at a steady pace, mortgage rates have stabilized as the market searches for direction. The risk of an economic downturn has receded and, combined with the very strong job market, it should lead to a slightly higher rate environment. Since early September, when mortgage rates posted the year low of 3.49 percent, rates have moved up to 3.73 percent this week. Often, while higher mortgage rates are deleterious, improved economic sentiment is the reason that these higher rates have not impacted mortgage demand so far.

BUT 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 😊

Done Deal or Devil In the Details?

On the trade tariff front, even with the headlines reading that Trump has ‘signed off’ on a phase one trade deal with China, the truth is that there is no deal—yet. Even with the questionable state of the deal, the markets reacted quickly (and harshly for bonds) yesterday at the news. However, today investors have reversed their optimism and mortgage-backed securities (the investment instrument that drives mortgage rates) have rebounded slightly and stocks are mixed as investors grow anxious over the details of this “deal”. In truth, China hasn’t blessed this thing yet. Remembering that we “had a deal” in October that just needed a few small things worked out for signatures that never happened, perhaps has the market feeling a little less settled.

Brexit, Dear Brexit

Boris Johnson pulled off what Theresa May could not. Now that he has the clear majority in Parliament, it is highly likely that Brexit will be done by the end of January 2020. The UK will exit the European Union but what that means for the market is still as uncertain as ever. Some see it as potential windfall for the US economy because they will look to the us for increased trade. But we’ve already discussed the nature of trade talks earlier in this piece. We just don’t know, and that uncertainty will be felt in the bond market for a while still. Politics aside, most economists, with minor exception show that Brexit is economically bad for the UK over the next ten years with US and EU outpacing UK GDP by a large margin. If you are interested, you can read more here and here on the economic impacts of Brexit.

A Quick Word on Employment Statistics

There were 252,000 individuals that filed for unemployment benefits for the first-time last week. This was 49,000 higher than the previous week and 39,000 higher than estimates of 213,000. It makes sense that this number is higher because some people were not going to file during Thanksgiving week in the prior report, and they were likely pushed into this report. But there may be some weakness here that could be concerning. The next report will be important to follow and will likely show some clarity on which way is right and which way is wrong.

Product of the week


Our Peak loan program allows the purchase of a home up to $1.5M with only 5% down*. Additionally, the loan terms can be extended up to 40 years, with the first 10 being interest- only payments.

The Peak 2nd Lien program allows the option to access the equity in a current home (up to 95% combined LTV) and use it toward home improvement, debt consolidation, or as a source of down payment on a second home.

*Please visit our Disclosures page for more details for all loan types.

Friday Mortgage Rate Review – 12/6/2019

Jobs data, Trade Wars and IT’S STILL A GREAT TIME TO BUY!

Average rates for a 30-year fixed mortgage are down more that 1 percent from a year ago, home sales here in the East Bay continue to be weak and that makes for a great time to buy (you can’t negotiate if you don’t make an offer). According to Freddie Mac’s Primary Mortgage Rate Survey (see below), which provides weekly averages and longer-term evaluation of national market rates for 30-YR, 15-YR and 5/1-YR ARM products:

This week the economy sent mixed signals, leaving mortgage rates unchanged. Survey data for manufacturing and service industries varied while construction spending fell modestly. However, homebuyer demand continued to improve, rising eight percent. Clearly homebuyers remain bullish on the real estate market.”

Again, when we review the number for the local markets here in the San Francisco Bay Area, home sales continue their softness, with fewer homes sold, longer days on market and generally lower sales prices relative to initial listing prices. That’s quite a different story from a year ago, when there were 20% more homes on the market and prices were slightly more stable. You can see more on your local market here.

What’s Driving the Mortgage Rate Market?

This week, it’s strong jobs data and trade war concessions. Truth is that we’ve been whipsawed back and forth on rates for weeks now and whatever your political leanings are, we appear to be no more than a tweet away from volatility in the rate market…on a daily basis. However, when you look at the national average for 30-YR fixed rate mortgages, since the beginning of July, we’ve seen a high of 3.81% (week ending July 18, 2019) and a low of 3.49% (week ending September 5, 2019).

That’s not a huge swing and on a $726,550 mortgage, it might result in a payment difference of about $125 per month. It’s not my money but if you want to buy something you love or even if you simply want to get into something, NOW IS THE TIME! That payment difference is minor compared to the cost of waiting, which could be somewhere between $45,000-$60,000 over the next 12-18 months depending on where and what you buy!

Want to Know the Best Way to Make a Purchase?

Simple! Get pre-approved. I can’t tell you how many times in the last year, I’ve had an agent call me the day before offers are due to get a pre-approval. Pre-qualification? Maybe. Pre-approval? Not happening overnight. 48 hours with a loan application and all the necessary docs and credit pull? For sure! We can even get the loan closed in 25 days or less, if needed. So, you or your clients want to buy? Good! Getting a fully underwritten pre-approval is absolutely the smartest thing you can do to put yourself in the best possible position to buy the home of your dreams. It also saves a lot of disappointment when you find out they can’t afford what you’ve shown them or they realize that the other offer already has a conditionally approved loan and is willing to remove the loan contingency to get the home.

Call me today! I’d be thrilled to help you or your client get through the underwriting process.

Product of the Week

Bridge Loan

Our Bridge Loan programs* can help you purchase a new home before your existing home is sold. If a seller is unwilling to consider purchase offers with sales contingencies, we have two programs to choose from:

Close with Confidence Bridge Loan

This loan program is designed for borrowers who are in contract for the sale of their existing property and want to make an offer on another property without a sales contingency. Under this program, you can take the equity from your current home (that is a pending sale) and use the funds to purchase a new home.

Debt Inclusive Bridge Loan

This loan program is designed for borrowers who want to take equity from their current home that is listed for sale and use the funds to purchase another home. All of the debts for the departing residence including any payments on the bridge loan (if any are required) are factored into the borrower’s total DTI (debt-to-income) when purchasing the new home. 

*Please visit our Disclosures page for more details for all loan types. 

Your Weekly Technical Review for the Week of November 25th Begins Here

Last week was an action-packed holiday week, with both the Stock and Bond Markets closed all day on Thursday and early on Friday for the Thanksgiving celebration. And speaking of Thanksgiving, we all have so much to be thankful for. It seemed fitting to share portion of this passage from our friends at The Garrett, McAuley Report:

How’s your health?  Not so good?  Give thanks you’ve lived this long. Are you hurting?  Millions are hurting more. Visit a veterans’ hospital or a hospital for children to appreciate what you have.

When you woke up this morning, were you able to hear the birds sing, use your voice, walk to the breakfast table, read the paper?  There are a lot of people today who are deaf, blind, paralyzed, or unable to speak.

How’s your financial situation?  Not good?  Most people on this planet have no welfare. No food stamps. No pensions. No health insurance. In fact, hundreds of millions of people in the world go to bed hungry every night.

Are you lonely?  The way to have a friend is to be a friend. If nobody calls, call someone. Get out and do something nice for someone.

Are you unhappy?  Go out of your way to smile at people you bump into during the day.

And be kind to everyone, for everyone you meet might be fighting a hard, lonely battle of some kind.

The above passage does a good job of reminding us that things could always be worse and to remember to try to live your life with gratitude. Also remember that everyone has their own struggles they face and to be kind before passing judgement.

Onto the news of the week, which provided a Thanksgiving helping of data. All reports were packed into Tuesday and Wednesday, due to the market being closed on Thursday…And the theme was stronger data.

The Housing Scoop

On the housing front, acceleration accelerated. The Case-Shiller Home Price Index, which is considered the “gold standard” for appreciation, showed that homes appreciated 3.2% on a year over year basis in September. The 3.2% gain was a slight increase from the previous annual figure of 3.1% reported for August. 

Just how significant is 3.2% appreciation?  On a $300,000 home, a 3.2% gain in appreciation translates to a $9,600 gain over the course of the year…which is meaningful.  

The FHFA (Federal Housing Finance Agency) released their House Price Index, which is another widely viewed measure of appreciation, but only on single-family homes with conforming loan amounts. Because it’s measuring homes with conforming loan amounts, they are most likely homes under $500,000, which is the area of the market we have been seeing the strongest demand. As a result, the appreciation figures are much stronger – Year over year homes appreciated 5.1%, up from 4.6% in the previous report. Again, a sign of acceleration.

There were two other reports pertaining to housing, New Home Sales and Pending Home Sales. New Home Sales, which measures signed contracts on new homes, were down 0.7% in October. But because of the strong revision in September, in aggregate they were much higher and showed a lot of strength. Perhaps of more importance, year over year sales increased from 15.5% in August to 31.6%. 

Pending Home Sales, which measures signed contracts on existing homes and is a good leading indicator for Existing Home Sales, were down 1.7% in October. This reading was weaker than expectations, but again, year over year sales rose 4.4% from 3.9% in the previous report. Overall, Pending Home Sales remain at very strong levels, but the minor drop was due to a lack of inventory according to the National Association of Realtors.

Lastly, the Mortgage Bankers Association reported that Mortgage Application volume was up 1.5% last week. Applications to purchase a home were down 1.0%, while Refinances were up 4.0%. Year over year Purchases were up 55% and Refinances up 314%…which would normally seem fantastic. 

Remember that data is not always what it seems, and you have to dig deeper than the headlines in many cases. The year over year figures in this report were skewed heavily because last year the Thanksgiving holiday fell one week earlier, so these results are being measured against a holiday week and appear much greater. Keep in mind that next week we will likely see the reverse occur and will need to wait a few weeks for these figures to smooth out.

How Strong is the Economy?

Let’s switch gears from housing and look at some of the economic reports released that show how the economy is fairing. Judging by the data received last week, the economy appears to be on solid footing. The second look at Q3 GDP showed that it increased from 1.9% to 2.1% and was stronger than expectations of 1.79%. Consumer Spending was up 2.9%, which was slightly stronger than the 2.8% expected. Additionally, Durable Goods, which was expected to show a decline, surprised to the upside. Initial Jobless Claims, which measures individuals filing for unemployment benefits for the first time, dropped after two consecutive weeks of higher prints. Overall, the economic data was strong and helped Stocks set several new all-time highs.

The Latest on Inflation

Inflation is something that we follow closely, as it has a direct correlation to interest rates. Think about it – If you were to purchase a Bond, let’s say for 30-years, you would receive a fixed interest payment over that time period. But if inflation is on the rise, that fixed payment could purchase less and less. As a result, in a rising inflation market, the investor has to be compensated with a higher rate of interest. As a result, when inflation is on the rise, interest rates rise. 

The highly anticipated Personal Consumption Expenditures (PCE) Report, which is the Fed’s favored measure of inflation, showed that headline inflation remained very tame at 1.3%. The Core rate, which strips out food and energy prices and is the most important reading that we focus on, was reported at 1.6%, which was lower than September’s reading of 1.7%. There are other factors, but the low readings of inflation will help to keep rates low.

What to Look for This Week

It’s jobs week, which means we will be getting the overall job creation figure, the unemployment rate, and average weekly and hourly earnings. See below for more on that front:

There are always estimates that are released that set the bar for the level of job creations expected. If that figure is beat heavily to the upside, usually the Stock market rallies at the expense of Bonds. If the figure is much weaker than expected, the opposite is usually also true. The unemployment rate is also very important, as it can be an early warning signal that the economy is slowing and a recession could be on the horizon. Lastly, average weekly and hourly earnings will show if there is wage pressured inflation, which the Bond market will be watching closely…Remember Bonds hate inflation.

Surprisingly with job growth slowing. the report came in strong. However, it is worth keeping an eye on. When businesses slow, the first thing they do is stop hiring. Next, they cut hours or pay or lay people off (the latter of which will show up in the Initial Jobless Claims figures). And eventually, the unemployment rate will rise…which is probably the best recession indicator. So far, despite all of the discussion in the news, we seem to be avoiding the R-word.

Have a great weekend!

Friday Mortgage Rate Review – 07/12/2019

Consumer Credit Up, Job Openings Down, Mortgage Applications Mixed

Mortgage rates stayed low this week, trending downward according to some sources. Consumer credit expanded for the second month in a row. Job openings fell in May, but could bounce back, especially after the strong jobs report last week. New purchase mortgage applications increased but refinance applications are down.

Consumer credit expanded again in May, after a gainful April, reaching an annual growth rate of 5%. Revolving credit, like monthly credit card debt, increased 8.2% month-over-month and nonrevolving debt, like car and student loans, is up 3.9% month-over-month. Analysts are calling May’s growth a positive indicator for growth in the coming months.

Job openings fell slightly in May, according to the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS). Job openings slipped to a level of 7.323 million. Hiring also saw a month-over-month decline, down to a rate of 5.725 million. Voluntary quits did not change much, down slightly to a level of 3.425 million.

The weekly mortgage application survey returned mixed results for the week ending 7/5. New purchase application submissions increased 2.0% and refinance application submissions are down 7.0% for a composite decrease of 2.4%. The data suggests that borrowers are becoming less rate sensitive as rates continue to trend lower.

Comments this week from Federal Reserve Chair Jerome Powell leave some economists suspecting a rate cut later this year. In his remarks to the House Financial Services Committee, Powell stated, “Many FOMC participants saw that the case for a somewhat more accommodative monetary policy had strengthened. Since then, based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook.” Powell’s testimony resulted in a stock market surge, as the markets brace for a more dovish policy.

Sources: CNBC, CNBC, Econoday, MarketWatch, MarketWatch, Mortgage
News Daily, The Wall Street Journal
All rates quoted are at 0 point + closing costs. 30-day rate lock. Based on 75% LTV. Other rates, terms, lock periods and closing cost options available.
For REALTOR use only. Not an offer of consumer credit as per
the Federal Truth In Lending Act. Licensed by the Department of Business
Oversight under the California Residential Mortgage Lending Act, #4150025.
Pleasanton #508121 / Fremont #508123.

Friday Market Update – 06/28/2019

Average mortgage rates lowest in 31 months and SF Bay Area home prices fall 1.7% year-over year

The benchmark 30-year fixed mortgage rate fell again this week to 3.94 percent from 3.99 percent a week ago, according to Bankrate’s latest survey of the nation’s largest mortgage lenders. The last time mortgage rates were this low was November 2016.

A year ago, it was 4.71 percent. Four weeks ago, the rate was 4.20 percent. The 30-year, fixed-rate average for this week is 1.16 percentage points below the 52-week high of 5.10 percent, and matches the 52-week low of 3.94 percent.

The 30-year fixed mortgages in this week’s survey had an average total of 0.32 discount and origination points.


Last month’s 1.7% drop “marked the largest decline since February 2012, when the median fell 3.6% year over year,” said CoreLogic analyst Andrew LePage. The next month, the median rose 0.6%, and in April 2012, it began an 83-month stretch of consecutive gains. CoreLogic’s report includes new and existing homes and condos in the nine-county Bay Area.

Today, “there is a sense of pause by buyers because they don’t know what’s next,” said Selma Hepp, chief economist with the Compass real estate brokerage. “We are definitely seeing a lot of activity out there; buyers are coming to open houses. But for homes in imperfect condition, or imperfectly priced, they’re not willing to pull the trigger.”

Bay Area home prices fall 1.7% in May, biggest year-on-year drop in 7-plus years

Home Price Appreciation Flat, New Home Sales Decline, Pending Home Sales Improve

Mortgage rates continue to swing lower, amidst the Federal Open Market Committee’s decision to leave rates unchanged. Home price appreciation was flat month-over-month but up marginally year-over-year. New home sales declined, but pending home sales are up.

The Case-Shiller home price index was unchanged from March to April. Year-over-year the index is up 2.5%. Gains were driven by “sand cities” with warmer climates including. Las Vegas, Tampa, and Phoenix, though no cities posted double-digit annual gains. MarketWatch contributor Andrea Riquier wrote, “a slower pace of price gains should help attract buyers, particularly those who have been frustrated by a competitive and pricey housing market.”

New home sales declined from April to May, down 7.8% month-over-month. Year-over-year, sales are down a less significant 3.7%. Despite lower mortgage rates, buyers are not rushing to buy newly built homes. Builders Are competing with an ample supply of existing homes, plus higher cost of building materials and shortages of land and labor. Buck Horne, home building analyst and senior vice-president at Raymond James, commented, “it’s harder for the builders to compete against resale inventory that is priced significantly below where their asking price is now.”

The pending home sales index increased in May, up 1.1% year-over-year. Annually, however, signed contracts are down 0.7%. Three of the four regions increased, led by the Midwest, up 3.6% and the Northeast, up 3.5%. Pending home sales were up a marginal 0.1% in the South and down 1.8%in the West.

Lower mortgage rates combined with slowed home price appreciation are contributing to a favorable market for home buyers. Prospective buyers who may have been priced out last year may be inclined to take advantage of this year’s improved affordability.

Here’s what Fannie Mae is forecasting for the housing market from CNBC.

May single family home sales drop 7.8%, missing expectations from CNBC.

How lower mortgage rates are strengthening the refinance market from CNBC.

All rates quoted are at 0 point + closing costs. 30 -day rate lock. Based on 75% LTV. Other rates, terms, lock periods and eliding cost options available.

Sources: CNBC, CNBC, Econoday, MarketWatch, MarketWatch, Mortgage News Daily, The Wall Street Journal

Friday Market Update – 05/31/2019

Home Price Appreciation Gainful, but Slower. Pending Home Sales Decline

Average mortgage rates continued their downward trend this week. Both the S&P CoreLogic Case-Shiller home price index and the Federal Housing Finance Agency (FHFA) house price index indicated that home price appreciation is also slowing down. Pending home sales are down.

The Case-Shiller home price index posted the weakest gains in seven years, a good sign for prospective home buyers. From February to March, the index appreciated 0.1%. Annually, the index is up just 2.7%. No cities posted double-digit annual gains. Las Vegas and Phoenix had the most significant rates of annual appreciation up 8.2% and 6.1% respectively. All metros were gainful month-over-month, except New York, down 0.1% month-over-month.

The FHFA house price index also appreciated 0.1% from February to March. Annually, gains were more substantial, up 5.0% year-over-year. The data corroborates the Case-Shiller home price index, home price appreciation has slowed nationwide after several red-hot years.

The pending home sales index weakened in April, down 1.5% month-over-month, and 2% year-over-year, despite March’s gains. The trend will likely not persist into the summer, especially with such positive housing market conditions. The National Association of Realtors chief economist explained, “though the latest monthly figure shows a mild decline in contract signings, mortgage applications and consumer confidence have been steadily rising. It’s inevitable for sales to turn higher in a few months.”

Lower mortgage rates and a slowdown in home price appreciation could give some home buyers a much needed break. The current environment will likely also spur more home buying activity, that could lead to a competitive market this summer. For prospective home buyers looking to buy while rates and prices are low, we recommend that they get preapproved for financing before they start shopping. A mortgage preapproval shows the home seller your clients can ensure an expeditious transaction and they are serious about buying a home.

Here’s some additional food for thought:

What you need to know before getting into housing market from CNBC.

Market will hit new lows this summer, says Scott Minerd from CNBC.

Here’s what the yield curve might be suggesting about the economy from CNBC.

May 31, 2019 All rates quoted are at 0 points + closing costs. 30 day rate lock. Based on 75% LTV. Other rates, terms, lock periods and closing cost options available.

Sources: CNBC, CNBC, Econoday. MarketWatch, MarketWatch, Mortgage News Daily, The Wall Street Journal