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Weekly Mortgage Report – October 24, 2024

Raven Ramirez — Fri, 25 Oct 2024 17:17:23 +0000

Rates Continue to Rise Based on Economic Tension

Mortgage rates increased another 10 basis points last week, according to the Freddie Mac Primary Mortgage Market Survey released October 24^th. This is now four consecutive weeks of increases as the continued strength in the economy drives mortgage rates higher. Over the last few years, there has been a tension between downbeat economic narrative and incoming economic data stronger than that narrative. This has led to higher-than-normal volatility in mortgage rates, despite a strengthening economy.

Mortgage applications decreased 6.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending October 18th. “Mortgage rates saw mixed results last week. Application activity decreased to its lowest level since July, as both purchase and refinance applications saw declines,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase applications continued to run stronger than last year’s pace for the fifth consecutive week. Even though rates have been on a recent upswing, they are over a full percentage point lower than a year ago, which has kept some homebuyers in the market. For-sale inventory has started to loosen, and home-price growth has eased in some markets, providing more options for buyers in combination with these lower rates.”

Existing home sales dropped to a 14-year low in September, weighed down by higher mortgage rates and house prices. Home sales fell 1.0% last month to a seasonally adjusted annual rate of 3.84 million units, the lowest level since October 2010, the National Association of Realtors said on Wednesday. The second straight monthly decline in home resales reinforced economists’ views that the slump in residential investment, which includes homebuilding, deepened in the third quarter. Though supply has improved, entry-level homes remain scarce in most regions of the country, keeping home prices at levels that are unaffordable for most first-time buyers. “It will take more rate cuts and more options to bring buyers back,” said Jennifer Lee, a senior economist at BMO Capital Markets.

Weekly jobless claims unexpectedly fell last week in a sign that turnover in the labor market remains low. New data from the Department of Labor showed 227,000 initial jobless claims were filed in the week ending Oct. 19, down from 241,000 the week prior and below the 242,000 economists had expected, per Bloomberg data. Thursday’s data shows claims have reversed an upward trend seen in September that had brought the metric to its highest levels in more than a year. “It is important to keep in mind that the data is likely distorted to the upside due to residual damage from the hurricanes that hit the South and knock-on effects of the ongoing Boeing machinist’s strike,” Jefferies US economist Thomas Simons wrote in a note to clients on Thursday.

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Weekly Mortgage Report – October 17, 2024

Raven Ramirez — Fri, 18 Oct 2024 20:37:57 +0000

Mortgage Rates Increase Again, But Are One Percent Lower Than A Year Ago

Mortgage rates increased another 12 basis points last week, according to the Freddie Mac Primary Mortgage Market Survey released October 17^th. They have now increased for three consecutive weeks based on stronger than expected economic news. These higher rates reflect the strength in the economy that is supportive of the housing market. But notably, as compared to a year ago, rates are more than one percentage point lower and potential homebuyers can stand to benefit.

Mortgage applications decreased 17.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending October 11, 2024. “Mortgage rates moved higher for the third consecutive week, with the 30-year fixed rate increasing to its highest level since August,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The recent uptick in rates has put a damper on applications. Demand is holding up to an extent for prospective first-time buyers. FHA purchase applications were little changed despite the increase in rates, as some first-time homebuyers remain in the market because of improving housing inventory conditions.”

US consumer sentiment unexpectedly fell for the first time in three months as lingering frustration with a high cost of living offset more sanguine views of the job market. The preliminary October sentiment index declined to 68.9 from 70.1 in September, according to the University of Michigan. Consumers expect prices will climb 2.9% over the next year, up from the 2.7% expected in September and the first increase in five months. While the rate of inflation has cooled over the past year, households remain troubled by high prices that they also see outpacing their income gains in the year ahead. “Despite strong labor markets, high prices and inflation remain at the top of consumers’ minds,” Joanne Hsu, director of the survey, said in a statement.

U.S. retail sales increased solidly in September, likely as lower gasoline prices gave consumers more money to spend at restaurants and bars, supporting the view that the economy maintained a strong growth pace in the third quarter. The slightly stronger-than-expected rise in sales reported by the Commerce Department also reflected sharp increases in receipts at clothing store outlets as well as miscellaneous store retailers. Though labor market momentum has slowed, layoffs remain historically low, supporting wage gains. “Strong consumer spending in September suggests economic growth in the previous quarter was solidly above trend,” said Jeffrey Roach, chief economist at LPL Financial.

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Weekly Mortgage Report – October 10, 2024

Raven Ramirez — Fri, 11 Oct 2024 21:09:30 +0000

Mortgage Rates Jump on Recent Economic News

Mortgage rates increased 20 basis points last week according to the Freddie Mac Primary Mortgage Market Survey released October 10^th. Following the release of a stronger-than-expected September jobs report, the 30-year fixed rate mortgage saw the largest one-week increase since April. However, the rise in rates is largely due to shifts in expectations and not the underlying economy, which has been strong for most of the year. Although higher rates make affordability more challenging, it shows the economic strength that should continue to support the recovery of the housing market.

Mortgage applications decreased 5.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending October 4, 2024. “In the wake of stronger economic data last week, including the September jobs report, mortgage rates moved higher, with the 30-year fixed rate rising to the highest point since August,” said Mike Fratantoni, MBA’s SVP and Chief Economist. Added Fratantoni, “As we have highlighted before, the decision to buy a home is impacted by many factors, not just the level of mortgage rates. The largest constraint for many prospective homebuyers over the past year had been the lack of inventory. Now, there are more homes available in many markets across the country, and with mortgage rates still low compared to recent history, at least some potential homebuyers are moving ahead.”

The pace of price increases over the past year was higher than forecast in September. The consumer price index, a broad gauge measuring the costs of goods and services across the U.S. economy, increased a seasonally adjusted 0.2% for the month, putting the annual inflation rate at 2.4%. Excluding food and energy, core prices increased 0.3% on the month, putting the annual rate at 3.3%. “The overall trend is what’s important, not the day to day fluctuations,” Chicago Fed President Austan Goolsbee said in an interview following the release. “The overall trend over 12, 18 months is clearly that inflation has come down a lot, and the job market has cooled to a level which is around where we think full employment is.”

The number of Americans filing for unemployment benefits last week jumped to its highest level in a year, which analysts are saying is more likely a result of Hurricane Helene and the Boeing machinist strike than a broader softening in the labor market. The Labor Department reported Thursday that applications for jobless claims jumped by 33,000 to 258,000 for the week of October 3^rd. “Claims will likely continue to be elevated in states affected by Helene and Hurricane Milton as well as the Boeing strike until it is resolved,” said Nancy Vanden Houten, lead U.S. economist of Oxford Economics. “We think, though, that the Fed will view these impacts as temporary and still expect it to lower rates by (25 basis points) at the November meeting.”

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Weekly Mortgage Report – October 3, 2024

Raven Ramirez — Fri, 04 Oct 2024 14:56:37 +0000

Mortgage Rates Rise, But Fall Buying Conditions Are Improving

Mortgage rates increased for the first time in the past six weeks, moving up four basis points last week according to the Freddie Mac Primary Mortgage Market Survey released October 3rd. The decline in mortgage rates has stalled due to a mix of escalating geopolitical tensions and a rebound in short-term rates that indicate the market’s enthusiasm on rate cuts was premature. Zooming out to the bigger picture, mortgage rates have declined one and a half percentage points over the last 12 months, home price growth is slowing, inventory is increasing, and incomes continue to rise. As a result, the backdrop for homebuyers this fall is improving and should continue through the rest of the year.

Mortgage applications decreased 1.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending September 27th. “Last week’s incoming data showed an economy that is still growing at a solid pace, even as inflation continues to decline. As a result, mortgage rates were up modestly” said Mike Fratantoni, MBA’s SVP and Chief Economist. He added, “The news for the week was that more homebuyers appear to be entering the market. Purchase application activity was up for the week and increased more than 9 percent compared to last year at this time. Inventories of both new and existing homes have been increasing over the course of 2024, meaning that potential buyers have properties to look at and now have somewhat lower mortgage rates leading to better affordability.

Inflation moved closer to the Federal Reserve’s target in August, easing the way for future interest rate cuts, the Commerce Department reported Friday September 27th. The personal consumption expenditures price index, a gauge the Fed focuses on to measure the cost of goods and services in the U.S. economy, rose 0.1% for the month, putting the 12-month inflation rate at 2.2%. “All quiet on the inflation front,” said Chris Larkin, managing director of trading and investing at E-Trade from Morgan Stanley. “Add today’s PCE Price Index to the list of economic data landing in a sweet spot. Inflation continues to keep its head down, and while economic growth may be slowing, there’s no indication it’s falling off a cliff.”

Federal Reserve Chair Jerome Powell indicated on Monday the U.S. central bank would likely stick with quarter-percentage-point interest rate cuts moving forward and was not “in a hurry” after new data boosted confidence in ongoing economic growth and consumer spending. “This is not a committee that feels like it is in a hurry to cut rates quickly,” Powell told a National Association for Business Economics conference, even though the policy-setting Federal Open Market Committee kicked off its easing cycle with a larger-than-expected half-percentage-point reduction at its Sept. 17-18 meeting. “We will do what it takes in terms of the speed with which we move,” Powell said, to try to keep inflation progressing towards the Fed’s 2% target while maintaining a low unemployment rate.

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Weekly Mortgage Report – September 26, 2024

Raven Ramirez — Thu, 26 Sep 2024 20:39:06 +0000

Mortgage Rates Decline, Refinances Surge: Opportunities for Homeowners and Buyers

Mortgage rates declined one basis point last week according to the Freddie Mac Primary Mortgage Market Survey released September 26th. Although this week’s decline was slight, given the downward trajectory of rates, refinance activity continues to pick up, creating opportunities for many homeowners to trim their monthly mortgage payment. Meanwhile, many looking to purchase a home are playing the waiting game to see if rates decrease further as additional economic data is released over the next several weeks.

Mortgage applications increased 11.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending September 20, 2024. “Mortgage applications increased to their highest level since July 2022, boosted by a 20 percent increase in refinance applications after a large increase the prior week. The 30-year fixed rate decreased for the eighth straight week.” according to Joel Kan, MBA’s Vice President and Deputy Chief Economist. “As a result of lower rates, week-over-week gains for both conventional and government refinance applications increased sharply. The refinance share of applications is now at 55.7 percent.”

Sales of new U.S. single-family homes fell less than expected in August and could regain momentum in the months ahead as declining mortgage rates and house prices stimulate demand. The report from the Commerce Department on Wednesday also showed new home sales were higher than previously estimated in the prior three months. Mortgage rates have dropped to the lowest level in more than 1-1/2 years and previously owned homes remain in short supply on the market. “We expect lower mortgage rates, pent-up demand and a still relatively scarce supply of existing homes despite some recent increases to support modest growth in new home sales over the balance of 2024 and into 2025,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics.

The number of Americans filing new applications for unemployment benefits dropped to a four-month low last week, suggesting that the labor market remained healthy. The upbeat outlook on the economy was underscored by other data on Thursday showing corporate profits increased at a more robust pace than initially thought in the second quarter. Strong profit growth should help to underpin the labor market and investment. The economy’s resilience could make it harder for the Federal Reserve to deliver another 50 basis points interest rate cut in November as some investors are hoping. “The economy remains strong and the need for additional large rate cuts are questionable if the economy continues to move forward at a brisk pace,” said Christopher Rupkey, chief economist at FWDBONDS.

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Weekly Mortgage Report – September 19, 2024

Cassidy Holst — Fri, 20 Sep 2024 19:54:10 +0000

Mortgage Rates Continue to Fall, Fed Cuts Rates as Anticipated

Mortgage rates continue their downward trajectory, falling another 11 basis points last week according to the Freddie Mac Primary Mortgage Market Survey released September 19th. As they continue to decline towards the six percent mark, it is reviving purchase and refinance demand for many consumers. While mortgage rates do not directly follow moves by the Federal Reserve, their first cut in over four years will have an impact on the housing market. Declining mortgage rates over the last several weeks indicate this cut was mostly baked in, but rates will likely fall further, sparking more housing activity.

Mortgage applications increased 14.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending September 13, 2024. “Application activity was up significantly last week, as market expectations of a rate cut from the Fed pulled mortgage rates lower.” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Refinance applications were up 24 percent, more than double last year’s pace, with both conventional and government activity jumping to the fastest pace of refinancing since 2022.” Added Kan, “There was also an increase in purchase applications. Homebuyers are seeing improving affordability conditions, sparked by lower rates and slower home-price growth.”

On Wednesday, The Federal Reserve enacted its first interest rate cut since the early days of the Covid pandemic, slicing half a percentage point off benchmark rates to head off a slowdown in the labor market. Outside of the emergency rate reductions during Covid, the last time the FOMC cut by half a point was in 2008 during the global financial crisis. The decision lowers the federal funds rate to a range between 4.75%-5%. “We’re trying to achieve a situation where we restore price stability without the kind of painful increase in unemployment that has come sometimes with this inflation. That’s what we’re trying to do, and I think you could take today’s action as a sign of our strong commitment to achieve that goal,” Chair Jerome Powell said at a news conference following the decision.

Regarding the rate cut, Mike Fratantoni, senior vice president and chief economist for the Mortgage Bankers Association, says the FOMC has “signaled that this is the first cut in a series that should bring rates down by about 2 percentage points by the end of 2025. It is also important to note that the FOMC’s estimates of the neutral fed funds rates keeps moving up, and that the committee members see a range of outcomes, from 2.5 percent to 3.5 percent as consistent with neutral in the long run. Mortgage rates likely had this cut priced in, and lower mortgage rates, now close to 6 percent, have resulted in much more refinance and some additional purchase activity in recent weeks,” Fratantoni says. “We do expect that if mortgage rates remain near these levels, it will support a stronger than typical fall housing market and suggest that next spring could see a real rebound in activity.”

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Weekly Mortgage Report – September 12, 2024

Cassidy Holst — Fri, 13 Sep 2024 18:19:04 +0000

Rates Fall, But Affordability Challenges and Limited Inventory Remain

Mortgage rates fell another 15 basis points last week according to the Freddie Mac Primary Mortgage Market Survey released September 12th. They have now fallen more than half a percent over the last six weeks and are at their lowest level since February 2023. Rates continue to soften due to incoming economic data that is more sedate. However, despite the improving mortgage rate environment, prospective buyers remain on the sidelines, as they negotiate a combination of high house prices and persistent supply shortages.

Mortgage applications increased 1.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending September 6, 2024. “Mortgage rates declined for the sixth consecutive week, with the 30-year fixed rate decreasing to the lowest rate since February 2023. Treasury yields have been responding to data showing a picture of cooling inflation, a slowing job market, and the anticipated first rate cut from the Federal Reserve later this month,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. Added Kan, “Purchase applications increased over the week and are edging closer to last year’s levels. Despite the drop in rates, affordability challenges and other factors such as limited inventory might still be hindering purchase decisions.”

Slightly more Americans filed for unemployment benefits last week, but layoffs remain at historically low levels despite two years of elevated interest rates. Jobless claims rose by 2,000 to 230,000 for the week of September 7th, the Labor Department reported Thursday. The four-week average of claims, which smooths out some of week-to-week volatility, ticked up by 500, to 230,750. The total number of Americans collecting jobless benefits rose by a modest 5,000, remaining at about 1.85 million for the week of August 31st. Weekly filings for unemployment benefits, considered a proxy for layoffs, remain low by historic standards, though they are up from earlier this year. During the first four months of 2024, claims averaged just 213,000 a week, but they started rising in May. They hit 250,000 in late July, adding to the evidence that high interest rates were finally cooling a red-hot U.S. job market.

Inflation in August declined to its lowest level since February 2021, according to a Labor Department report Wednesday that also showed a key measure higher than expected, setting the stage for an expected quarter percentage point rate cut from the Federal Reserve. The Consumer Price Index, increased 0.2% for the month. That put the 12-month inflation rate at 2.5%, down 0.4 percentage point from the July level, and at its lowest level in 3½ years. However, the core CPI, which excludes volatile food and energy prices, increased 0.3% for the month, and the 12-month core inflation rate held at 3.2%. The slight uptick in core CPI keeps the Fed on defense against inflation, likely negating the probability of a more aggressive interest rate when policymakers meet next Tuesday and Wednesday.

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Weekly Mortgage Report – September 5, 2024

Cassidy Holst — Fri, 06 Sep 2024 19:03:25 +0000

Rates hold Steady, Markets Await Friday’s Jobs Numbers for Direction

Mortgage rates remained flat week to week according to the Freddie Mac Primary Mortgage Market Survey released September 5th. The markets await the release of the highly anticipated August jobs report. Even though rates have come down over the summer, home sales have been lackluster. On the refinance side however, homeowners who bought in recent years are taking advantage of declining mortgage rates to lower their monthly payments.

Mortgage applications increased 1.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending August 30, 2024. “Most mortgage rates moved lower last week, with the 30-year fixed rate edging down slightly. Purchase applications increased more than 3 percent over the week and are inching closer to last year’s levels,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Refinance applications were slightly down but continued to show strong annual gains as borrowers with higher rates have been refinancing to lower their monthly payments.

Inflation edged higher in July, according to a measure favored by the Federal Reserve as the central bank prepares to enact its first interest rate reduction in more than four years. The Commerce Department reported Friday that the personal consumption expenditures price index rose 0.2% on the month and was up 2.5% from the same period a year ago, exactly in line with the Dow Jones consensus estimates. The report comes with the markets pricing in a 100% chance of a rate cut in September, with the only uncertainty being whether the Fed will take the incremental step of lowering benchmark rates by a quarter percentage point or being more aggressive and moving a half-point lower.

The US economy appears to be on the knife’s edge, and Friday’s jobs report will be the deciding factor as to the next direction. The August jobs report is expected to provide some much-needed clarity as to whether the labor market is slowing gracefully or spiraling quickly as was indicated by the recent weeks’ bleak batch of employment data. “The next set of job numbers released this week will be among the most consequential in a while,” Tuan Nguyen, US economist at RSM US, wrote in commentary issued Wednesday. Friday’s jobs report should provide further reassurance that the labor market is merely softening and not collapsing, economists predict. Either outcome, however, could ultimately determine the size of the Fed’s next rate cut.

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Weekly Mortgage Report – August 29, 2024

Cassidy Holst — Fri, 30 Aug 2024 18:06:28 +0000

Rates Decrease Again, Fed Signals Interest Rate Cut

Mortgage rates decreased again this week, another 11 basis points from last week according to the Freddie Mac Primary Mortgage Market Survey released August 29th. With expectations of a Fed rate cut now clear, rates are expected to continue their decline and while potential homebuyers are watching closely, a rebound in purchase activity remains elusive until further declines are seen.

Mortgage applications increased 0.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending August 23, 2024. “Mortgage rates declined for the fourth consecutive week, with the 30-year fixed rate at 6.44 percent, the lowest since April 2023. Rates have now come down more than 80 basis points from a year ago,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “As observed in recent weeks, despite lower rates, purchase applications have not moved much. Prospective homebuyers are staying patient now that rates are moving lower and for-sale inventory has started to increase.”

The number of Americans filing new applications for jobless benefits slipped last week, but re-employment opportunities for laid-off workers are becoming scarcer, a sign that the unemployment rate probably remained elevated in August. Initial claims for state unemployment benefits fell 2,000 to a seasonally adjusted 231,000 for the week ended Aug. 24^th. While the labor market slowdown positions the Federal Reserve to start cutting interest rates next month, the data argues against a 50-basis point reduction in borrowing costs. “The soft-landing narrative for the economy remains intact for now,” said Christopher Rupkey, chief economist at FWDBONDS.

At the most recent Fed meeting, Federal Reserve Chair Jerome Powell gave an unambiguous signal that the long-anticipated U.S. interest rate cut would come next month. At his keynote speech to the Kansas City Fed’s annual economic conference in Jackson Hole, Wyoming, Powell said, “The time has come for policy to adjust,” given that upside risks to inflation have diminished and downside risks to employment have increased. “We do not seek or welcome further cooling in labor market conditions,” Powell said. “We will do everything we can to support a strong labor market as we make further progress toward price stability. “

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Weekly Mortgage Report – August 22, 2024

Cassidy Holst — Fri, 23 Aug 2024 18:27:10 +0000

Mortgage Rates Decrease Slightly, Big Downward Revision In Non-Farms Payroll

Mortgage rates decreased 3 basis points from last week, according to the Freddie Mac Primary Mortgage Market Survey released August 22^nd. Although mortgage rates have stayed relatively flat over the past couple of weeks, softer incoming economic data suggest rates will gently slope downward through the end of the year. Earlier this month, rates plunged and are now lingering just under 6.5 percent, which has not been enough to motivate potential homebuyers. Rates likely will need to decline another percentage point to generate buyer demand.

Mortgage applications decreased 10.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending August 16, 2024. “Both mortgage rates and mortgage applications have now stabilized after a few weeks of financial market volatility, which led to a quick drop in mortgage rates.” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. He added, “Home sales have slowed despite rising inventory levels. Even with lower mortgage rates, potential buyers might be more selective now that there are more options.”

The U.S. economy created 818,000 fewer jobs than originally reported in the 12-month period through March 2024, the Labor Department reported Wednesday. As part of its preliminary annual benchmark revisions to the nonfarm payroll numbers, the Bureau of Labor Statistics said the actual job growth was nearly 30% less than the initially reported 2.9 million from April 2023 through March of this year. The revision to the total payrolls level of -0.5% is the largest since 2009. The numbers are routinely revised each month, but the BLS does a broader revision each year when it gets the results of the Quarterly Census of Employment and Wages.

Consumer sentiment rebounded in August for the first time in five months. The latest University of Michigan consumer sentiment survey released Friday showed that sentiment ticked higher in August. The index reading for the month came in at 67.8, up from 66.4 in July and above the 66.9 economists had expected. It was the highest reading of consumer sentiment since June. The reading on consumer sentiment comes amid a volatile two weeks for the stock market and the overall narrative surrounding the US economy. A weaker-than-expected July jobs report fueled concerns about how rapidly the US labor market is cooling, helping spark a market sell-off.

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