What’s Ahead For Mortgage Rates This Week – February 26th, 2018

Whats Ahead For Mortgage Rates This Week – February 26th 2018Last week’s economic releases included minutes from the most recent FOMC meeting, a report on January sales of pre-owned homes and weekly readings on mortgage rates and new jobless claims.

FOMC Minutes: Economic Strength Hints at More Rate Hikes

Minutes of the January 30-31 meeting of the Fed’s Federal Open Market Committee indicated that most Committee members believe that inflation will reach the Fed’s goal of 2.00 percent. Members found that the economy was stronger since 2017 and expected “a gradual upward trajectory of the federal funds rate would be appropriate.”

While analysts expect three rate hikes in 2018, the FOMC voted to hold the federal funds rate at 1.25 to 1.50 percent. Most FOMC members expected that the goal of 2 percent inflation was within reach in 2018.

Analysts were not as confident about reaching to Fed’s inflation goal. Instead, the said that in response to tax cuts, the labor market could exceed full employment and lead to higher wages and surging inflation.

A minority of FOMC members said that inflation could fall short of the Fed’s goal as retailers would compete by lowering prices.

Existing Home Sales Drop in January

According to the National Association of Realtors®, sales of previously-owned homes dipped from a seasonally-adjusted annual rate of 5.56 million sales to 5.38 million sales in January. This reading was the lowest in more than three years; it could indicate that the shortage of homes for sale has reached critical mass.

Months of short supplies of homes for sale have caused rapidly rising home prices, buyer competition and fewer choices of homes for would-be buyers. Real estate pros have repeatedly said the only solution to shortages of available homes is that builders must build more homes but increasing materials costs and labor shortages have caused construction pace to lag demand for homes. Affordability continued to weigh on moderate-income and first-time buyers.

Mortgage Rates Rise for 7th Consecutive Week

Freddie Mac reported higher mortgage rates on average last week. The average rate for a 30-year fixed rate mortgage was two basis points higher at 4.40 percent; rates for a 15-year fixed rate mortgage averaged one basis point higher at 3.85 percent. The average rate for a 5/1 adjustable rate mortgage was two basis points higher at 3.65 percent.

New jobless claims dropped by 7000 first-time claims and regained a 45-year low. 222,000 new claims were filed last week as compared to expectations of 229,000 new claims and 230,000 new claims filed the prior week. Real estate pros and analysts cite strong labor markets as driving housing markets and high demand for homes. Workers with job security and options for advancement in their careers are more likely to consider investing in a home than paying rising rents.

Whats Ahead

This week’s scheduled economic releases include Case-Shiller Home Price Indices, readings on new and pending home sales and construction spending. Weekly readings on mortgage rates and new jobless claims will be released along with a report on consumer sentiment.

What’s Ahead For Mortgage Rates This Week – February 16, 2016

Last week’s economic events included weekly releases on new jobless claims, mortgage rates and testimony by Fed Chair Janet Yellen concerning the Federal Reserve’s monetary policy. Here are the details:

Mortgage Rates, New Jobless Claims Drop

Freddie Mac reported that average mortgage rates fell across the board last Thursday, with the rate for a 30-year fixed rate mortgage seven basis points lower at 3.65 percent. The average rate for a 15-year fixed rate mortgage was six basis points lower at 2.95 percent, and the average rate for a 5/1 adjustable rate mortgage was two basis points lower at 2.83 percent. Discount points averaged 0.50 percent for 30 and 15 year fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

Lower mortgage rates may encourage first-time and moderate income home buyers to enter the market, although slim supplies of available homes and rising home prices have caused ongoing concerns about affordability in many markets.

Weekly jobless claims were also lower. 269,000 new claims were filed as compared to estimated claims of 280,000 new claims and the prior week’s reading of 285,000 new jobless claims. This was the lowest reading in two months and suggests healthy labor markets as more workers find jobs. Readings lower than 300,000 new jobless claims indicate healthy jobs markets. The four-week rolling average of new jobless claims was lower by 3500 claims at 281,250 new claims filed. Analysts consider the four-week reading as a more accurate indicator of labor markets as it smooths out anomalies in weekly claims.

Yellen Testimony: Fed Won’t Change Course on Rates

Federal Reserve Chair Janet Yellen said that she doesn’t expect interest rate cuts in view of slowing economic indicators. In testimony before the House Financial Services panel, Chair Yellen indicated that although there are signs of slower economic conditions, there was still room for economic growth. She cited a strong labor market and strong consumer and business spending as indicators of economic expansion. Analysts interpreted Chair Yellen’s testimony to indicate that the Fed would not likely raise its target federal funds rate in March.

Chair Yellen said that monetary policy is not on a “preset course”. Federal Reserve press releases consistently state that policy makers review current and developing domestic and global economic trends as part of any decision to raise rates. In view of this, Chair Yellen’s testimony did not cover what could happen if future economic developments influence Fed policy. Recent concerns over volatile financial markets caused by the weakening in China’s economy were cited as examples of “downside risks” that could impact the Fed’s monetary policy.

Readings for Consumer Sentiment suggest that consumers are also watching economic developments. February’s reading decreased to 90.7 as compared to January’s reading of 92.0.

What’s Ahead

This week’s scheduled economic events include the National Association of Home Builders Housing Market Index, federal reports on housing starts and building permits. FOMC minutes and weekly reports on mortgage rates and new jobless claims will also be released.

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What’s Ahead For Mortgage Rates This Week – February 1, 2016

Whats Ahead For Mortgage Rates This Week Feburary 1 2016Last week’s economic events included S&P Case-Shiller’s home price indexes, reports on new and pending home sales and the Fed’s FOMC statement. The details:

Case-Shiller Reports Fast Paced Home Price Growth

According to S&P Case-Shiller Home Price Indexes, U.S. home prices grew at their fastest pace in 16 months in November. Portland, Oregon led the charge with home prices increasing 11.10 percent year-over-year followed by San Francisco, California at 11.0 percent; Denver, Colorado posted a year-over-year gain of 10.90 percent. 14 cities posted home price gains while four cities posted declines in home prices and two cities posted no change on a month-to-month basis.

David M. Blitzer, chairman of the S&P Index Committee, noted that slumping oil prices and a strong dollar were posing challenges to domestic and international homebuyers. In spite of high demand, the supply of available homes continued to drive home prices up in most cities in the S&P Case-Shiller 20-City Home Price Index.

In related news, the Commerce Department reported that sales of new homes jumped to a year-over-year reading of 544,000 new home sales as compared to November’s upwardly revised reading of 491,000 new homes sold and expectations of a year-over-year reading of 506,000 new homes sold as of December. The December 2015 reading was 9.90 percent higher than for December 2014.

Analysts cited a shortage of new homes for driving sales; builders are facing obstacles in hiring and finding suitable land for development. Some builders were said to be targeting high-end buyers which leaves a shortage of homes available for first-time and mid-range home buyers.

The National Association of Realtors® reported a minor gain in pending home sales in December. Pending home sales gauge future closings and mortgage activity. December’s pending sales reading was higher by 0.10 percent month-to-month and posted a year-over-year gain of 4.50 percent. December’s gain represented the 16th consecutive monthly gain for pending home sales. Analysts had expected a month-to-month gain of 1 percent, but high demand and a slim supply of affordable homes are leaving would-be buyers on the sidelines.

Fed Holds Off on Raising Rate; Mortgage Rates Lower

The Federal Reserve announced its decision not to raise its target federal funds rate on Wednesday; Freddie Mac reported lower average mortgage rates on Thursday. The average rate for a 30-year fixed rate mortgage dropped by two basis points to 3.79 percent; the average rate for a 15-year fixed rate mortgage fell 3 basis points to 3.07 percent. The average rate for a 5/1 adjustable rate mortgage were lower by one basis point at 2.90 percent. Discount points were unchanged at 0.6, 0.5 and 0.5 percent respectively.

What’s Ahead

This week’s scheduled economic news includes reports on construction spending, ADP payrolls, Non-Farm payrolls and the national unemployment rate.

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What’s Ahead For Mortgage Rates This Week – January 19, 2016

Whats Ahead For Mortgage Rates This Week January 18 2016In addition to weekly reports on mortgage rates and new unemployment claims, last week’s economic news included the Fed’s Beige Book report, retail sales and consumer sentiment. January’s Empire State Index showed an unexpected dip and Consumer Sentiment increased for January.

Fed’s Beige Book Shows Diverse Economic Trends

According to the Federal Reserve’s Beige Book report for January, the central bank’s business contacts reported strength in housing, while agriculture, energy and manufacturing sectors were struggling. New York’s Empire State Manufacturing Index for January supported this trend with a sharp drop. New York manufacturing has hit its lowest level since the recession and has stayed in negative territory since March 2009. Two analysts said that the Fed’s recent rate hike and subsequent hikes could slow housing markets. Consumer lending rates, including mortgage rates, typically follow suit when the Fed increases its target federal funds rate.

In other news, retail sales posted negative growth of -0.10 percent in December against an expected reading of -0.20 percent and November’s reading of +0.40 percent. December retail sales not including auto motive also posted a reading of -0.10 percent as compared to expectations of +0.20 percent and November’s reading of 0.30 percent.

Mortgage Rates Fall, New Unemployment Claims Rise

Last week’s average mortgage rates fell across the board according to Freddie Mac. The average rate for a 30-year fixed rate mortgage dropped by five basis points to 3.92 percent; the average rate for a 15-year mortgage rate also fell by five basis points to 3.19 percent. The average rate for a 5/1 adjustable rate mortgage was eight basis points lower at 3.01 percent. Average discount points were 0.60, 0.50 and 0.40 percent respectively.

New unemployment claims rose to 284,000 against expectations of 275,000 new claims and the prior week’s reading of 277,000 new claims. Analysts said that the jump in claims resulted from job losses related to temporary holiday positions, but noted that last year’s momentum of falling jobless claims has slowed.

Last week’s economic news ended on a positive note; consumer sentiment rose according to the University of Michigan. Lower prices were credited for the boost in consumer confidence in current economic conditions.

What’s Ahead

This shortened week’s scheduled economic events include the National Association of Home Builders Housing Market Index, Housing Starts, Consumer Price Index and Core Consumer Price Index.

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What’s Ahead For Mortgage Rates This Week – January 04, 2016

Whats Ahead For Mortgage Rates This Week January 04 20162015 said farewell with reports on Case Shiller home prices, pending home sales, and consumer confidence. The details:

Case-Shiller Home Prices Post Double Digit Gains in October

According to Case-Shiller’s 20 City Home Price Index, Denver, Colorado, Portland, Oregon and San Francisco, California tied for the highest home price gains in October with year-over-year home price gains of 10.90 percent. Lowest annual price gains were posted by Chicago, Illinois at 1.30 percent followed by Washington, D.C with a year-over-year –reading of 1.70 percent. Home prices rose at their fastest rate since August 2014 according to Case-Shiller.

Month-to-month home prices showed mixed results in October. Miami, Florida posted the highest month-to-month gain of 0.70 percent. San Francisco, California posted a gain of 0.60 percent; Phoenix, Arizona and Portland, Oregon posted month-to-month home price gains of 0.60 percent.

Cities posting month-to-month declines in home prices included Chicago, Illinois where home prices declined 0.70 percent, Cleveland Ohio and San Diego, California posted month-to-month declines of 0.40 percent, Washington, DC home prices dropped 0.30 percent month-to-month. Home prices in Boston, Massachusetts and Las Vegas, Nevada were unchanged in October from September readings.

While Case-Shiller’s 20-City Index remains 11 to 13 percent below 2006 peak home prices, the index is approximately 36 percent higher than lowest home prices posted in 2012.

Pending Home Sales Dip in November

According to the National Association of Realtors®, pending home sales dipped 0.90 percent in November after posting a gain of 0.20 percent in October. Analysts expected a 1.0 percent gain in pending sales for November. Pending home sales peaked in May 2015, but short supplies of available homes and rising prices have caused home sales to slow. Pending home sales are defined as homes for which a sales contract is signed, but aren’t yet closed. November’s pending sales were 2.70 percent higher than for October and represented the 15th consecutive month of annual gains in pending home sales.

Regional results for November’s pending sales were mixed. The Northeast reported a reading of 91.8, which was nearly three points lower than October’s reading. The Western region posted a reading of 100.4, a decline of nearly 6 points. The Midwestern region posted a gain of one point to a reading of 104.9. The South had the strongest reading for pending home sales in November with a reading of 119.9, which represented an increase of 1.50 percent.

The National Association of Realtors® expects sales of pre-owned homes to top out at 5.25 million for 2015, which would be the highest reading since 2006. The national median home price for pre-owned homes is $220,700, which is six percent higher than in November 2014.

Mortgage Rates, Consumer Confidence Rise

Freddie Mac reported that the average mortgage rates rose across the board last week. The average rate for a 30-year fixed rate mortgage was three basis points higher at 4.01 percent; the average rate for a 15-year fixed rate mortgage was two basis points higher at 3.24 percent and the average rate for a 5/1 adjustable rate mortgage also rose two basis points to 3.08 percent. Average discount points were unchanged at 0.6, 0.6 and 0.4 percent respectively.

On a positive note for year-end, consumer confidence increased to a reading of 96.5 in December as compared to November’s upwardly revised reading of 92.6 and an expected index reading of 93.50. Analysts were relieved to see increasing consumer confidence after an unexpected decline in November.

What’s Ahead

This week’s scheduled economic news includes reports on construction spending, the government’s Non-farm Payrolls report and ADP’s payroll reports. Labor reports act as potential indicators of future housing markets as steady employment is typically a major factor in home-buying decisions.

What’s Ahead For Mortgage Rates This Week – December 28, 2015

Whats Ahead For Mortgage Rates This Week December 28 2015Last week’s report of economic events was shortened due to the Christmas holiday. Economic news through Wednesday included Existing Home Sales, New Home Sales and Consumer Spending. The details:

Existing Home Sales Dip, New Home Sales Rise

According to the National Association of Realtors®, sales of previously owned homes dipped from October’s seasonally adjusted annual rate of 5.32 million sales to 4.76 million sales of pre-owned homes. This was considerably lower than analysts’ expectations of 5.30 million sales. Factors seen as contributing to November’s reading included pent-up demand caused by low inventories of available homes and affordability issues emerging as demand pushes home prices up. New regulations that extended the closing period for home sales were cited as causing some closings to be pushed into December.

In contrast to lower sales for pre-owned homes, November sales of new homes rose by 4.30 percent from October to November based on a revised October reading of 470,000 sales. The original October reading was 495,000 sales of new homes, which provided the basis for analyst projections of 505,000 new homes sold on a seasonally-adjusted annual basis.

New home sales were up by 9.10 percent year-over-year in November. New home sales account for approximately 9.30 percent of home sales. Regional reports for new home sales were mixed. The Northeast region reported a drop of 28.60 percent, while the Midwest reported a gain of 20.50 percent. New home sales rose 4.50 percent in the South and fell 8.60 percent in the West. The good news about new home sales softened concerns about cooling housing markets caused by the abrupt drop in home resales.

Last week’s financial news ended on a positive note with December’s reading of 92.60 for consumer sentiment rose from November’s reading of 91.30 and also surpassed analysts’ expected reading of 92.

What’s Ahead

This week’s roster of economic reports includes Case-Shiller Home Price Indexes, Pending Home Sales and Consumer Sentiment for December. No reports will be issued Friday in observance of the New Year’s Day holiday.

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What’s Ahead For Mortgage Rates This Week – December 21, 2015

Whats Ahead For Mortgage Rates This Week December 21 2015Last week’s scheduled economic reports included the NAHB Housing Market Index, Housing Starts, FOMC statement and Fed Chair Janet Yellen’s press conference. In addition to weekly reports on jobless claims and mortgage rates, inflation reports were also released.

Builder Confidence Slips, Housing Starts Increase

According to the NAHB / Wells Fargo Housing Market Index for December, home builder confidence slipped by one point to a reading of 61 as compared to an expected reading of 63 and November’s reading of 62. December’s reading was three points higher year-over-year. Readings over 50 indicate that more builders than fewer are confident about housing market conditions. December’s confidence reading remained higher than 2015’s average reading of 59.

Components used in comprising the NAHB HMI also slipped in December. Builder confidence in current market conditions fell one point to a reading of 66; the six months sales outlook fell two points to 67 and the reading for buyer foot traffic in new developments also decreased by two points to a reading of 46. The reading for buyer foot traffic has consistently remained below the neutral benchmark of 50 since the housing bubble ended.

While builder confidence eased, housing starts rose in November with 1.17 million starts reported. Analysts expected a reading of 1.14 million starts based on October’s reading of 1.06 million housing starts. During much of 2015, demand for homes accelerated due to slim inventories of available homes; new construction is seen as essential to easing demand.

Fed Raises Interest Rates, Mortgage Rates Higher

The Federal Open Market Committee of the Federal Reserve raised its target federal funds rate from a range of 0.00 to 0.25 percent to a range of 0.25 percent to 0.50 percent. While the Fed’s increase is expected to affect consumer lending rates for auto loans and credit cards more than mortgages, Freddie Mac reported that rates for fixed rate home loans rose last week. The average rate for a 30-year fixed rate mortgage rose by two basis points to 3.95 percent and the average rate for a 15-year fixed rate mortgage increased by three basis points to 3.22 percent. The average rate for a 5/1 adjustable rate mortgage was unchanged at 3.03 percent. Discount points were unchanged for fixed rate mortgages at 0.60 percent and 0.50 percent respectively while average points for a 5//1 adjustable rate mortgage dropped to an average of 0.40 percent.

Weekly jobless claims fell to 271,000 new claims against expectations of 275,000 new claims and the prior week’s reading of 282,000 new claims.

What’s Ahead

This week’s economic reports include reports on new and existing home sales, consumer spending and consumer sentiment. Weekly jobless claims and Freddie Mac’s mortgage rates report will also be released as scheduled. No reports will be released on Friday due to the Christmas holiday.

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Federal Reserve Raises Short-Term Interest Rates: How Will It Affect You?

Federal Reserve Raises Short Term Interest RatesAfter prolonged speculation by economic analysts and news media, the Federal Open Market Committee of the Federal Reserve raised short-term interest rates for the first time in seven years. Committee members voted to raise the target federal funds rate to a range of 0.25 to 0.50 percent from a range of 0.00 to 0.25 percent to be effective December 17. The good news about the Fed’s decision is that the Central Bank had enough confidence in improving economic conditions to warrant its decision. But how will the Fed’s decision affect mortgage rates?

December’s FOMC statement cited improving job markets, increased consumer spending and declining unemployment as conditions supporting the Committee’s decision to raise the target federal funds rate. While inflation has not yet reached the Fed’s goal of two percent, FOMC members were confident that the economy would continue to expand at a moderate pace in spite of future rate increases. The FOMC said that the Central Bank’s monetary policy remained “accommodative.”

Little Impact Expected on Mortgage Rates after Fed Decision

The Fed’s decision to raise short-term rates likely won’t affect mortgage rates in a big way. The Washington Post quoted Doug Douglas, chief economist at Fannie Mae: “This one change, in the larger scheme of things, will be unlikely to make a dramatic impact on what consumers feel.”

Mortgage rates, which are connected to 10-year Treasury bonds, may not rise and could potentially fall. While the interest rate increase could increase yields on these bonds, analysts say that multiple factors impact 10-year Treasury bonds, so a rate increase is not set in stone for mortgage rates.

Rising Mortgage Rates Would Impact Affordability and Cost of Buying Homes

Higher mortgage rates could sideline some first-time and moderate income home buyers and would also increase the long-term cost of buying a home. Interest rates on vehicle loans and credit cards are more closely tied to the Fed rate and may rise according to current and future Fed rate hikes. Rising consumer interest rates indirectly impact housing markets as prospective home buyers face higher debt-to-income ratios caused by higher interest rates on car loans and credit card balances.

During a press conference following the Fed’s announcement, Fed Chair Janet Yellen emphasized that future rate increases would be “gradual.” Chair Yellen said that the Fed’s decision reflects the agency’s confidence in an economy that is on a path of “sustainable improvement.” When questioned about inflation rates, Chair Yellen said that the Fed will closely monitor both expected and actual changes in the inflation rate.

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What’s Ahead For Mortgage Rates This Week – December 07, 2015

Multiple economic reports released last week indicate further improvement in economic conditions. Pending home sales, construction spending and ADP payrolls increased while Non-farm Payrolls fell and the national unemployment rate held steady. The details:

Pending Home Sales, Construction Spending Increase

According to the Commerce Department, pending home sales increased by 0.20 percent in October as compared to September’s reading of -2.30 percent. Construction spending of 1.00 percent for October exceeded September’s reading of 0.60 percent growth and expectations that October’s reading would hold steady with a growth rate of 0.60 percent. Increased construction spending suggests that home builders may increase home building projects, which could relax tight inventories of available homes and ease demand for homes.

Mortgage Rates, New Jobless Claims Rise

Average mortgage rates fell last week according to Freddie Mac. The average rate for 30-year fixed rate mortgages fell by two basis points to 3.93 percent; average rates for 15-year fixed rate and 5/1 adjustable rate mortgages also fell by two basis points with readings of 3.16 percent and 2.99 percent respectively. Average discount points were 0.60 percent for 30-year fixed rate mortgages and 0.50 percent for fixed rate mortgages. Average discount points for a 5/1 adjustable rate mortgage held steady at 0.50 percent.

New jobless claims rose last week with 269,000 new claims filed as compared to the prior week’s reading of 260,000 new claims and analysts’ expectations of 265,000 new claims. The level of new jobless claims neared levels not seen since 2000. The four week rolling average of new claims dropped by 1750 claims to a reading of 269,250 new claims filed. The four-week rolling average of new jobless claims is considered less volatile than weekly readings which can be impacted by holidays and other anomalies that can cause volatility.

Labor Reports Show Growth, Unemployment Rate Unchanged

Hiring increases and lower layoffs have contributed to the lowest national unemployment rate since 2007. The national unemployment rate held steady at 5.00 percent. ADP reported 217,600 new jobs in November as compared to October’s reading of 196,000 new private sector jobs. Non-Farm Payrolls reported lower job growth of 211,000 jobs as compared to expectations of 200,000 jobs added and October’s reading of 298,000 jobs added. Non-Farm Payrolls covers government and private-sector jobs.

What’s Ahead

This week’s scheduled economic releases include reports on job openings, retail sales and consumer sentiment. Weekly reports on mortgage rates and new jobless claims will also be released.

 

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What’s Ahead For Mortgage Rates This Week – November 16, 2015

The Fibromyalgia Diet: Healthy Eating Ideas That Could Help You Feel BetterLast week’s scheduled economic news was sparse due to no scheduled releases on Monday and the Veterans Day Holiday on Wednesday. A report on job openings was released on Thursday along with regularly scheduled weekly reports on jobless claims and Freddie Mac’s report on mortgage rates.

Mortgage Rates, Weekly Jobless Claims Rise

Mortgage rates rose last week according to Freddie Mac. The average rate for a 30-year fixed rate mortgage rose to 3.98 percent from last week’s reading of 3.87 percent. The average rate for a 15-year fixed rate mortgage rose to 3.20 percent from the prior week’s reading of 3.09 percent; the average rate for a 5/1 adjustable rate mortgage was also higher at an average of 3.03 percent as compared to the prior week’s average rate of 2.96 percent. Discount points were unchanged for all three types of mortgages at 0.60 percent for fixed rate mortgages and 0.40 for 5/1 adjustable rate mortgages.

New jobless claims rose last week to 276,000 claims filed against the expected reading of 268,000 new claims and the prior week’s reading of 276,000 new jobless claims filed. The Labor department reported 5.53 million job openings on September, which was the second highest reading since the inception of the job openings report in 2000.

The Labor Department also reported that the quits rate held steady at 1.90 percent for the sixth consecutive month. Fed Chair Janet Yellen has said that the Fed considers the quits rate an indicator of economic strength; if workers have enough confidence to quit their jobs for new jobs, this a strong economy. The quits rate has held steady for six months, which could signal to the Fed that the economy is not yet ready for a rise in interest rates that analysts expect to occur in December.

U.S. News recently cautioned that a combination of rising home prices and interest rates could quickly cool housing markets as first-time and moderate income buyers are priced out of the market and other would-be buyers find it difficult to qualify for the mortgages they need to finance home purchases. Recent hikes in mortgage rates are a likely response to the anticipated Fed rate hike in December.

What’s Ahead

This week’s scheduled economic reports include the National Association of Home Builders Housing Market Index, Housing Starts and minutes from the most recent meeting of the Fed’s Federal Open Market Committee. The minutes may provide additional insight into how Fed policymakers are approaching the decision about raising the target federal funds rate.

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