07
Jan
By First Rate Financial Group
Financial Reports

What’s Ahead For Mortgage Rates This Week – January 7th, 2019

What’s Ahead For Mortgage Rates This Week – January 7th, 2019Last week’s economic reports included Labor Department readings on private and public sector jobs, the national unemployment rate. Weekly readings on mortgage rates and first-time jobless claims were also released. Monthly reporting on construction spending was delayed due to the government shutdown.

Public and Private-Sector Jobs Growth Exceeds Expectations

ADP reported 271private sector jobs added in December as compared to 157,000 jobs added in November. Analysts expected 182,000 jobs added for December and said that December’s reading was the highest number of jobs added in almost two years. Large companies added 54,000 jobs, medium sized companies added 129,000 jobs and small companies added 89,000 private-sector jobs.

The Bureau of Labor Statistics reported 312,0000 public and private-sector jobs were added in December, which was more than double November’s reading of 176,000 public and private-sector jobs added. Analysts predicted 182,000 new jobs added for December.

In related news, the national unemployment rose to 3.90 percent from November’s level of 3.70 percent. While the unemployment rate was expected to dip to 3.60 percent, it rose due to more workers seeking jobs. Unemployment rates are determined as a percentage of workers actively seeking employment. A larger pool of people seeking work suggested expanding job opportunities.

Mortgage Rates Fall as New Jobless Claims Rise

Freddie Mac reported lower average mortgage rates last week as rates for fixed rate mortgage were four basis points lower at 4.51 percent; rates for 15-year fixed rate mortgages averaged 3.99 percent and rates for 5/1 adjustable rate mortgages averaged two basis points lower at 3.99 percent. Discount points averaged 0.40 percent for 30-year fixed rate mortgages, 0.30 percent for 15-year fixed rate mortgages and 0.20 percent for 5/1 adjustable rate mortgages.

In remarks made at the American Economic Association, current Fed Chair Jerome Powell joined former Fed Chairs Janet Yellen and Ben Bernanke to comment about the economy in 2018 and emphasized that Fed policy would be adjusted quickly and flexibly” if economic conditions warrant. All three Fed Chairs expected a slowing of economic growth in 2019, but their overall outlook was positive.

First-time jobless claims rose by 10,000 new claims to 231,000 first-time claims filed. Expectations of 218,000 new claims filed were based on the prior weeks reading of 221,000 new claims filed. The increase in new claims filed was caused in part by holiday season fluctuations and more people actively seeking jobs. Unemployed workers must be actively seeking work to qualify for unemployment benefits.

What‘s Ahead

This week’s scheduled economic reports include readings on job openings, minutes of the December meeting of the Fed’s Federal Open Market Committee, and inflation. Weekly readings on mortgage rates and new jobless claims will also be released.

02
Jan
By First Rate Financial Group
Financial Reports

Case-Shiller: Home Price Growth Grinds to Lowest Rate in 2 Years

Case-Shiller: Home Price Growth Grinds to Lowest Rate in 2 YearsHome prices rose by 0.40 percent in October according to Case-Shiller’s 20-City Home Price Index and were unchanged from September’s year-over-year reading of 5.50 percent growth.

Slower growth in home prices could help some would-be home buyers enter the market, but rapidly rising mortgage rates have sidelined buyers concerned with affordability and meeting strict mortgage lending requirements.

High Mortgage Rates Stifle Demand for Homes

October’s year-over-year reading for home price growth was the lowest in two years, but home price growth continued to exceed wage increases; builders continued to face labor shortages and higher materials costs. Rising mortgage rates were a major cause of lower demand for homes as the average rate for a 30-year fixed rate mortgage increased from les than 3.50 percent at the beginning of 2017 to a high point of 4.94 percent in September.

Mortgage rates have fallen in recent weeks but remain more than one percent higher than they were two years ago. Recent volatility in financial markets and concerns over general economic conditions also contributed to a lower pace of home price growth.

Las Vegas Leads Cities with Highest Home Price Growth

The top three cities in October’s Case-Shiller 20-City index were Las Vegas, Nevada with year-over-year hone price growth of 12.80 percent; San Francisco, California’s home prices rose by 7.90 percent year-over-year and Phoenix, Arizona home prices rose by 7.70 percent year-over-year. 

October’s home price growth rates suggest that West Coast cities such as San Francisco, and Seattle, Washington may be losing their domination over double-digit home price growth rates they’ve enjoyed in recent years. Slower rates of home price growth could indicate that home prices have topped out in costly metro areas.

David M. Blitzer, managing director and chair of S&P Dow Jones Index Committee, echoed analyst’s concerns: “Rising home prices and mortgage rates mean fewer people can afford to buy a house.” The Fed’s recent decision to raise its key interest rate range for the third time in 2018 concerned some economists, but the Fed said that its Federal Open Market Committee predicts that it will raise rates only twice next year based on current and expected economic conditions in 2019.

Banks and credit-card companies typically follow the Fed’s interest rate decisions; this means that rates for consumer lending including mortgages are likely to increase in 2019.

31
Dec
By First Rate Financial Group
Financial Reports

What’s Ahead For Mortgage Rates This Week – December 31st, 2018

What’s Ahead For Mortgage Rates This Week – December 31st, 2018Last week’s economic reports included readings from Case-Shiller Housing Market Indices, National Association of Realtors® on pending home sales and weekly readings on mortgage rates and new jobless claims.  

The Commerce Department’s reading on sales of new homes was delayed due to the federal government’s shutdown.

Case-Shiller: Home Price Growth Lowest in Two Years

Home price growth was nearly nil with October’s month-to-month reading of 0.40 percent; The Case-Shiller 20-City Home Price Index showed a year-over-year home price growth rate of 5.50 percent, which matched September’s year-over-year reading. Las Vegas, Nevada led home price growth in the 20-city index with a year-over-year increase of 12,80 percent; San Francisco, California had home price growth of 7,90 percent and Phoenix, Arizona home prices grew by 7.70 percent year-over-year in October.

While San Francisco, California, Seattle, Washington and Portland, Oregon dominated the top three spots in the 20-City Home Price Index in recent years, the latest home price growth rates indicate that the West Coast may be easing off on its rapid home price gains. High-cost metro areas risk reaching a tipping point when there are few properties available with very high prices and buyers competing.

,Affordability and slim choice of available homes can cause would-be buyers to sideline themselves while they await more options and lower prices. Rising mortgage rates caused concern among buyers concerned with affordability and qualifying for mortgage loans under strict lender requirements.

Pending Home Sales Improve, But Remain in Negative Territory

Future home sales slipped in November, but less so than they did in October. Pending sales registered in negative territory with a reading of -0.70 percent in November as compared to October’s reading of -2.60 percent.

Analysts and real estate pros view pending sales as an indication of future completed sales and mortgage activity; falling numbers for pending home sales suggest slowing home sales that could impact housing markets. Pending sales are considered sales for which purchase contracts have been signed, but that have not closed.

Mortgage Rates, New Jobless Claims

Freddie Mac reported lower averaged fixed mortgage rates with the rate for a 30-year fixed rate mortgage lower by seven basis points at 4.55 percent. The average rate for a 15-year fixed rate mortgage fell by six basis points to 4.01 percent and the average rate for a 5/1 adjustable rate mortgage rose two basis points to 4.00 percent. Falling mortgage rates could induce discouraged home buyers to look for homes again.

First-time jobless claims dropped by 1000 claims to 216,000 new claims filed. Analysts predicted a reading of 217,000 mew claims filed, which was unchanged from the prior week’s reading.

What‘s Ahead

This week’s scheduled economic reports include readings on construction spending, non-farm payrolls and the national unemployment rate. Weekly reports on mortgage rates and first-time unemployment claims are also scheduled. Please note that some scheduled readings could be delayed due to the federal government shut-down.