Shelter Six:  Home Inventory and Wage Growth Forecasted to Rise

November 26, 2018 by · Leave a Comment 

1. Good news for real estate sales as the Mortgage Bankers Association (MBA) forecasts inventory to expand with gradual increases in the housing supply over the next 2-3 years.

2. The MBA also projects wage growth to accelerate over the next few years, which will help more people be able to qualify at today’s higher rates and house prices.

3. Interesting enough, MBA forecasts mortgage rates to stay mostly flat around 5.1% throughout 2019.  MBA also projects Existing Home sales to increase 4.2% next year.

4. VA remains the best 100% home loan option on the market today and is the ideal mortgage solution for any eligible Veteran.

5. VA is hot and the number of VA purchase loans has now increased year-over-year for seven straight years with VA now making up about 10% of the total mortgage market.

6. The VA loan limit is the same as Conforming ($453,100) but VA allows the Veteran to borrow more by putting 25% down on the difference between the home price and the $453,100.

Rate Update

Last week was a very slow week with the Thanksgiving holiday and mortgage rates remained mostly unchanged.

This Week

Consumer Confidence figures are due out today, New Home Sales on Wednesday, and Personal Incomes and Jobless Claims on Thursday.

Shelter Six:  Wishing You and Yours a Safe and Happy Thanksgiving!

November 19, 2018 by · Leave a Comment 

1. There are signs that the global economy is beginning to slow down.  Last week, both Germany and Japan released 3rd Quarter results indicating weakening economies.

2. The end of the rate hikes may be near.  Some investors are now projecting around four more Fed rate hikes this year and next before rate policy turns neutral.

3. Double good news last week for October as Retail Sales came in stronger than expected and the Core CPI Inflation Index came in as expected.

4. According to history.com, the Plymouth colonists and Wampanoag Indians shared a harvest feast in 1621 that we acknowledge today as the first Thanksgiving.

5. It was not until 1863 during the Civil War, however, that President Abraham Lincoln first proclaimed a national day of Thanksgiving to be held each November.

6. Thanksgiving this year comes on the earliest day possible, November 22.  All of us at Shelter Home Mortgage wish you and your family a safe and Happy Thanksgiving!

Rate Update

Concerns about global economic growth as well as uncertainty around Britain’s exit from the European Union were key factors influencing mortgage rates slightly lower last week.

This Week

Housing Starts will be released on Tuesday with Existing Home Sales and Durable Orders out on Wednesday.  Mortgage markets will be closed on Thursday and close early on Friday.

Shelter Six: Homeownership Rates Continue to Surge

November 12, 2018 by · Leave a Comment 

1. As expected, the Federal Reserve held off on raising short-term rates at last week’s policy meeting but left the door open for another rate hike in December.

2. October’s Producer Price Index came in a good bit higher than expected and was 2.9% higher than a year ago. Higher inflation is never good for rates.

3. Homeownership rates continue to surge evidenced by 1.5M more households formed in the 3rd Quarter compared to a year ago.

4. The pace of the number of new households formed is on track for the best year since 2004.

5. The 35 and under age group is leading the charge with a homeownership rate of 36.8% in the 3rd Quarter, the highest level in five years.

6. With a strong economy and the millennial generation hitting peak housing demand age, housing demand should be strong for years to come.

 

Rate Update

Reaction to the inflation data, the Fed meeting, and the midterm election results was minimal, and mortgage rates ended the week with little change.

 

This Week

The Consumer Price Index (CPI) will come out on Wednesday and Retail Sales on Thursday. The mortgage markets will be closed today in observance of Veterans Day.

Shelter Six:  The Economy Added 250K Jobs in October

November 5, 2018 by · Leave a Comment 

1. The strong economy just keeps rolling along as evidenced by Friday’s Employment Report, which showed the economy adding 250K jobs in October!

2. The U.S. has now averaged 211K new jobs per month over the past year, while Unemployment has dropped to only 3.7%, the lowest level since 1969.

3. Average Hourly Earnings are also finally rising and were 3.1% higher than a year ago, the largest annual rate of increase since 2009.

4. A real strong economy often leads to high inflation, but key inflation data released last week showed inflation holding steady right at the Fed’s stated target level of 2%.

5. Fed Chair Powell thinks that the country could be at a “unique” time in its history with a “remarkably positive outlook” and that he expects unemployment to remain below 4% and inflation around 2% through the end of 2020.

6. Goldman Sachs economists were also upbeat adding there is not much sign of recession in the next three years and giving only a 36% chance of recession during that time.

Rate Update

The strong employment report influenced rates higher last week.  Look for rates to stay above 5% or go higher unless there is surprisingly weak economic data, a big downturn in stocks, or an unexpected headline that implies big economic risks.

This Week

The ISM National Services Index is due out on Monday and the JOLTS report on Tuesday.  The Fed meets again on Thursday but no change in rates is expected.