Friday – April 12, 2019

Corporate earnings season kicked off on a high note today with the banking sector coming in with solid numbers. Both JPMorgan Chase and Wells Fargo beat expectations for revenues and profits. Earnings season will give investors insight as to whether or not the US economy is cooling and what will be guidance and forecasts for the coming quarters. S&P 500 earnings have risen every quarter since Q1 2016 but are expected to decline in Q1 2019.

Consumer Sentiment edged lower in early April following the small gain posted in March. The preliminary April Consumer Sentiment Index fell to 96.9 from 98.4 in March while the index during the past 30 months the index was higher than any other time since 1997 to 2000. The report showed that consumers have increasingly voiced complaints about rising vehicle and home prices, and slight declines in unit sales of both markets are anticipated in 2019.

Courtesy of Mortgage Market Guide

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Thursday – April 11, 2019

Inflation at the wholesale level pushed higher in March fueled by higher energy costs. The Producer Price Index heated up in March rising 0.6% from February’s gain of 0.1%. It was the largest increase in five months and comes after CPI had its biggest increase in 12 months. However, the Fed’s favorite gauge on inflation, Core PCE, is running at 1.9% year-over-year, slightly beneath the Fed’s target of 2.00%.

Mortgage rates remained near lows seen in January 2018, though they did inch higher over the latest week. Freddie Mac reports that the 30-year fixed-rate mortgage rose four basis points to 4.12%, well below the 4.94% seen the week ended November 8, 2018. The current rate comes with an average point of 0.50. Last year this time, the rate was 4.42%. Freddie Mac expects mortgage rates to remain low, boosting homebuyer demand in the next few months.

Labor market news remained strong today as the sector continues its winning ways. The Labor Department reports that Weekly Initial Jobless Claims fell to 196,000 in the latest week to lows seen in the late 1960s. To put it into perspective as to how strong the labor market is – the population in the late 1960s was 202 million compared to the current 327 million – so today’s 196,000 print is off a much larger labor pool.

Courtesy of Mortgage Market Guide

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Wednesday – April 10, 2019

Higher gas prices along with rising rental prices pushed consumer prices higher in March. The March Consumer Price Index (CPI) rose 0.4% from the 0.2% gain in February, matching estimates. It was the largest increase since January 2018. The Core CPI rose 0.1%, below the 0.2% expected. Year-over-year numbers saw the headline CPI up 1.9% while the Core rate rose 2% from 2.1% in February. Inflation continues to remain subdued.

Mortgage rates continue to hover near more than 12-month lows given the low inflation environment here in the US. The Mortgage Bankers Association (MBA) reports that the 30-year fixed-rate mortgage rose four basis points to 4.40% in the week ending March 29 with an average 0.47 in points. Total mortgage application volume decreased 5.6%, the refinance index decreased 11% while the purchase index increased 0.5%. Mike Fratantoni, MBA Senior Vice President and Chief Economist said, “This spring’s lower borrowing costs, coupled with the strong job market, continue to push purchase application volume much higher. Purchase applications are now up more than 13 percent compared to last year at this time.”

The MBA also reported this week in its Builder Application Survey that mortgage applications to purchase new homes jumped both monthly and annually. The increase came on the heels of low mortgage rates, rising wages and a strong job market, which should boost the housing market this spring. The MBA said that applications to purchase homes rose 19% in March from February with a 7% gain from March 2018. MBA Senior Vice President and Chief Economist Mike Fratantoni said, “The confluence of declining mortgage rates with the spring buying season is supporting stronger housing demand and activity.”

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Tuesday – April 9, 2019

The NFIB Small Business Optimism Index rose in March from February to 101.8, a historically strong level and an indication that small businesses continue to power the economy after being briefly shaken by January’s government shutdown,’ reports the NFIB. “Small business owners continue to create jobs, expand their operations, and are enjoying strong sales,” said NFIB President and CEO Juanita Duggan. The NFIB index is a leading economic indicator in many ways while giving us a “boots on the ground” perspective of the labor market. This is a solid report and it bodes well for the economy.

A recent prediction by mortgage forecast and advisory firm iEmergent, shows that home-loan volume this year could be set to hit highs seen back in 2005. iEmergent is predicting that total home loan volume will rise nearly 4% in 2019. In addition, there could be $1.2 trillion in home purchase lending in 2019 due in part to the current low mortgage rate environment. Further, a slightly slowing economy and low inflation levels have led the U.S. Federal Reserve to stop raising interest rates this year, which bodes well for the housing market.

The number of job openings edged a bit lower at the end of February but remain just below all-time high levels. The Labor Department reports that the number of job openings fell to 7.1 million in February from the 7.6 million in January. Job openings decreased in a number of industries, with the largest decreases in accommodation and food services (-103,000), real estate and rental and leasing (-72,000), and transportation, warehousing, and utilities (-66,000). This will keep the labor market tight and with wages growing – another good sign for the housing market.

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Monday – April 8, 2019

Fannie Mae reports that its key housing index surged in March just in time for the spring homebuying season. Declining mortgage rates as well as a drop in prices were two reasons behind the increase. The Fannie Mae Home Purchase Sentiment Index jumped 5.5 points in March to 89.8, the highest level since June 2018. The good time to buy and good time to sell components both increased in March. Doug Duncan, senior vice president and chief economist at Fannie Mae said, “Consumers appear to have regained some confidence in the housing market, with perceptions of both home buying and home selling conditions returning to their longer-term trends.”

Gas prices at the pumps continued to increase over the past week as demand holds steady while inventories continue to lighten, reports motor club AAA. The national average price for a regular gallon of gasoline is at $2.74, up $0.08 from last week and up $0.28 from a month ago. The increase is also due in part to the rise in oil prices, which hit five-month highs this week. A year ago, the price was $2.66 a gallon. The all-time high for a gallon of gas was $4.11 hit back on July 17, 2008.

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