Shelter Six:  Retail Sales Surge

October 19, 2020 by · Leave a Comment 

Expect mortgage rates to be more volatile over the next few weeks with the election drawing near and continued covid uncertainty.

Remember, when it comes to rates, bad news is good news.  The more uncertainty, confusion, or weakness there appears to be, the more rates will hold steady or even drop.

Likewise, the more stable things are or if the fight against covid goes better than expected, the more likely rates will push up.

Retail Sales jumped 1.9% from August, have shown 5 straight months of gains, and are now above the levels seen prior to the pandemic.

Consumer spending accounts for over two-thirds of all economic activity in the U.S., so the Retail Sales figures are a key indicator of growth.

Contributing to the low rates this year is low inflation, and September’s Core CPI figure of only 1.7% indicates that low inflation seems here to stay.

Rate Update

Last week’s major economic data was mixed and had little impact, but an increase in coronavirus cases around the world helped rates hold steady around 3% and near record lows.

This Week

This will be a very light week for economic data with the spotlight on the housing sector.  Existing Home Sales will be released on Tuesday and Housing Starts on Thursday.

Shelter Six:  Mortgage Forbearance Figures Plummet

October 12, 2020 by · Leave a Comment 

The number of mortgages in active forbearance saw the largest one-week decline since the pandemic began, according to Black Knight.

As of October 6, forbearance figures fell 18% to only 5.6% of all active mortgages, bringing the total number of plans below 3M for the first time since mid-April.

The catalyst for the massive drop in forbearance figures is the result of the initial people entering forbearance hitting the end of their initial 6-month term.

A key index measuring the strength of the services industry shot up much more than expected in September, the fourth straight month of solid recovery.

According to a monthly Fannie Mae survey, 83% are not concerned about losing their job, and 56% think it is a good time to sell a home (up from 48% the previous month).

Temporary mortgage underwriting flexibilities have been extended for loans with application dates prior to Oct 31 for Conforming, FHA, and VA, and to Nov 30 for USDA.

Rate Update

Rapidly shifting headlines about government stimulus caused interest rate volatility last week, but rates ended the week with little net change and near record lows.

This Week

The Consumer Price Index will come out on Tuesday while Retail Sales will be released on Friday.

Shelter Six:  Strong Employment Figures Keep Economic Momentum Moving Forward

October 5, 2020 by · Leave a Comment 

The economy added a solid 661K jobs in August and the Unemployment Rate dropped from 8.4% to 7.9% after peaking at 15% in April.

The economy has now recovered roughly half of the 22 Million jobs lost in March and April.

August Pending Home Sales jumped 8.8% from July and 24% from a year ago to an all-time high.

The August Core PCE Price Inflation Index was only 1.6% higher than a year ago and well within the Fed’s stated 2% target.

News that President Trump tested positive for the coronavirus initially caused mortgage rates to drop slightly (bad news typically pushes rates lower).

Upbeat news around a potential fiscal stimulus package, however, caused rates to push higher (a stimulus package could put upward pressure on rates).

Rate Update

The net effect was little change as rates continue to hold steady near record lows and will most likely stay super low until good news regarding the pandemic emerges.

This Week

The ISM National Services Index is due out on Monday, the JOLTS report on Tuesday, and minutes from the September 16 Fed meeting on Wednesday.

Shelter Six:  Stellar Housing Rebound Continues

September 28, 2020 by · Leave a Comment 

The spectacular housing rebound continued in August with both Existing-Home and New-Home Sales hitting the highest levels since 2006.

Existing-Home Sales were up 2% from July and 11% from last year, while New-Home Sales were up 5% from July and 43% from last year.

Extremely limited inventory remains the primary trouble spot as levels were down 19% from a year ago to a 3-month supply nationally, which was the lowest level since 2004.

Lack of inventory and surging lumber prices continue to drive up home prices, which were up 11% nationally in August from a year ago.

Mortgage forbearance figures continue to dwindle and are down to a five-month low of 6.8% of all mortgages, per Black Knight as of Sept 22.

Starting Oct 1, there will be potential temporary lapses with both the USDA Rural Housing Program and the National Flood Insurance Program.

Rate Update

Mortgage Rates were flat last week near record lows and will most likely hold steady until good news regarding the pandemic emerges.

This Week

Employment figures are the most highly anticipated economic data of the month and are due out on Friday.

Shelter Six:  Federal Reserve Pledges to Keep Rates Low

September 21, 2020 by · Leave a Comment 

There were few surprises from last week’s Federal Reserve meeting as the Fed reiterated it does not plan to raise short-term rates over the next couple of years.

The steady recovery in consumer spending continues with August Retail Sales figures rising a solid .6% from July and now up 3% over last year.

The National Association of Home Builders (NAHB) reported that builder confidence in the new-home market hit an all-time high for the second month in a row in September.

August Housing Starts declined 5% from July, but the weakness was entirely due to a 23% decline in multi-family units, which are very volatile from month to month.

Single-family Housing Starts actually increased 4% from July, and single-family Building Permits, a leading indicator of future construction, rose 6% from July.

Rising cost of lumber and delays for building materials, however, threaten to slow down new construction (lumber prices are up more than 170% since mid-April, adding more than $16K to typical new-home price).

Rate Update

Last week’s economic data and Federal Reserve meeting had little impact on mortgage markets, and rates again held steady around 3% levels.

This Week

It will be a very light week for economic data with Existing Home Sales due out on Tuesday, New Home Sales on Thursday, and Durable Orders on Friday.

Shelter Six:  Home Buyers and Sellers More Optimistic

September 14, 2020 by · Leave a Comment 

Both home buyers and sellers reported greater optimism in Fannie Mae’s August Home Purchase Sentiment Survey.

Respondents indicating that it is a good time to buy increased from 53% to 59%, while respondents indicating that it is a good time to sell increased from 45% to 48%.

Despite recent Unemployment stats, respondents had little concern about job security with 78% reporting they were not concerned about losing their job (up 2% from July).

Inflation reports came in a little higher than expected last week, but were still far below the readings from the first few months of the year prior to the pandemic.

About 6M homeowners have been in forbearance at some point over the last six months and about 2M have now exited with only about 7% still in forbearance.

Self-employed borrowers pursuing a mortgage are now facing additional steps, including a YTD P&L, bank statements that support income, and a written business analysis.

Rate Update

Freddie Mac has been tracking rates since 1971 and last week’s were the lowest ever reported with the 30-year at 2.86% with .8 points, and the 15-year at 2.37% with .7 points.

This Week

The Fed meets on Wednesday. Retail Sales will also be released on Wednesday and Housing Starts on Thursday.

Shelter Six:  Strong Economic Data Continues to Roll In

September 7, 2020 by · Leave a Comment 

The faster-than-expected economic rebound continues as last week’s economic data again came in stronger than anticipated.

In August, the economy added a massive 1.37M new jobs and Unemployment dropped from 10.2% to 8.4%.

Strong reports also came out for both the manufacturing and services industries, while weekly Jobless Claims declined to the lowest level since the pandemic started.

According to CoreLogic, home prices grew in July by the fastest rate in nearly two years, up 1.2% from June and 5.5% from last July.

Forbearance figures have flattened out and are now holding steady in the 7% range after peaking around 9% in June, and there has been no uptick after the Fed’s unemployment insurance benefits expired.

Temporary underwriting flexibilities on things such as verifications of employment and exterior-only appraisals have been extended again for several more months.

Rate Update

The 30-year Conforming rate continues to hover around and slightly under 3%. Expect more or the same as long as the Fed keeps buying bonds.

This Week

The Consumer Price Index, the most widely followed monthly inflation report, is due out on Friday.

Shelter Six:  July New Home Sales 36% Higher Than Last Year

August 31, 2020 by · Leave a Comment 

The Fed unveiled a major shift in policy last week to allow inflation and unemployment to run higher, abandoning decades of precedent and ensuring rates will stay low for years to come.

The new policy is known as “average inflation targeting” and will allow inflation to run above the Fed’s 2% goal “for some time” following periods when it has run below 2%.

As a result of the change, it is expected that the Fed will raise the Federal Funds Rate at a slower pace than in the past when labor market conditions improve.

The strong housing data continues to roll in. Last week’s New Home Sales report rose 14% from June and 36% from last July to the best level since 2006.

Fannie Mae and Freddie Mac announced a nationwide suspension of single-family foreclosures and evictions has been extended from Aug 31 through the end of the year.

The FHFA pushed the implementation date for a new Conforming .5% refinance fee from Sept 1 to Dec 1 (loans under $125K will be exempted).

Rate Update

Although a volatile week, the 30-year Conforming rate trickled down last week and fell slightly back under 3%.

This Week

The ISM National Manufacturing Index will be released on Tuesday, the ISM National Services Index on Thursday, and Employment figures on Friday.

Shelter Six:  Stellar Housing Trends Continue

August 24, 2020 by · Leave a Comment 

July Existing Home Sales surged a massive 25% from June to the highest level since 2006, according to NAR.

Inventory of existing homes fell nationally to a 3.1-month supply (6 months considered normal) after being at a 3.9-month supply in June and 4.2-month supply last July.

To help with inventory concerns, more homes need to be built and this explains why July Builder Confidence surged the most since 1990, according to the NAHB.

July Housing Starts were also up much higher than expected (23% from June) representing the highest increases in four years.

Housing Permits, which are a good indicator of the future, also climbed 19% from June.

Construction trends are recently toward custom-homes (built for specific owners) and smaller homes.

Rate Update

Mortgage Rates fell slightly last week and continue to hover a hair above 3%.

This Week

New Home Sales will be released on Tuesday and the Core PCE Price Index on Friday.

Shelter Six:  Consumer Spending Boosts Economic Recovery

August 17, 2020 by · Leave a Comment 

Consumer Spending continued to rebound for the third straight month in July, up 1.2% from June and 2.7% from a year ago.

Inflation, always a concern to mortgage rates, came in stronger than expected last week largely due to a jump in auto and apparel costs.

A Mortgage Bankers Association survey showed mortgage applications for new home purchases up 1% from a very strong June and 39% from a year ago.

Home prices were up 4.2% over the Second Quarter of the year, after increasing 7.7% over the First Quarter.  The Second Quarter National Median Price was $291,300.

Initial Jobless claims for the week ending August 8 decreased to below a million for the first time in five months, an encouraging sign for the labor market recovery.

The most popular ARM index, LIBOR, is being replaced this month by the Secured Overnight Financing Rate, or SOFR.

Rate Update

Mortgage rates pushed higher last week due to a new fee added by Fannie Mae and Freddie Mac’s regulator as well as inflation figures coming in stronger than expected.  30-year rates are now a little over 3% for the first time since early June.

This Week

It will be a very light week for economic data with Housing Starts to be released on Tuesday and Existing Home Sales on Friday.

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