Info That Hits Us Where We Live
As expected by nearly everyone breathing, the Fed hiked the Funds Rate 0.25% last week, but that should cause no immediate concern about mortgage rates. Fact is, the Fed rate directly affects only short-term loans.
Freddie Mac’s chief economist explains: “a much smaller segment of mortgage loans in today’s market are pegged to short-term rate movements.” Those are adjustable rate mortgages (ARMs), now 8% of outstanding loans.
Hey, flippers are back. Attom Data Solutions reports home flipping in the first quarter hit its highest rate in six years. And 35% of the flips were originally purchased with financing, the most since 2008.
Businesses Tip of the Week
Set high standards, but don’t be a perfectionist. You want to act in a timely manner, which won’t happen if you wait until everything’s perfect. It never is, so you wind up late to the party in a still imperfect world.
Review of Last Week
INVESTORS IGNORE HEADLINES… Last week’s news featured hot topics–global trade, North Korea, the Fed–but they didn’t have much effect on Wall Street. The Nasdaq went up nicely, the S&P 500 ended flat, while only the Dow lagged.
Trade tensions were seen as negotiating tactics, North Korea reaffirmed its commitment to completely denuclearize, and the Fed only threw an extra rate hike into this year’s “dot-plot” because the economy is doing so well.
How well? May Retail Sales shot up 0.8%, while continuing unemployment claims dropped to their lowest number since 1973 when the labor force was about half its size today. Oh, and U. of Michigan Consumer Sentiment climbed to 99.3.
The week ended with the Dow down 0.9%, to 25090; the S&P 500 flat, at 2779; and the Nasdaq UP 1.3%, to 7746.
Lots of action in bonds, and most finished with gains. The 30YR FNMA 4.0% bond ended UP .05, to $101.64. After dropping two weeks in a row, the national average 30-year fixed mortgage rate rose in Freddie Mac’s latest Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
Did You Know?
A major national real estate site reports that the homeownership rate increased in 2017 for the first time since 2004!
This Week’s Forecast
HOUSING STARTS, EXISTING HOME SALES UP, MANUFACTURING EXPANDS… Both new home building and existing home selling are forecast up in May’s Housing Starts and Existing Home Sales reports. June’s Philadelphia Fed Index should show continued expansion in Mid-Atlantic factory activity.
The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.
Economic Calendar for the Week of Jun 18 – Jun 22
| Date | Time (ET) | Release | For | Consensus | Prior | Impact |
|---|---|---|---|---|---|---|
| Tu Jun 19 |
08:30 | Housing Starts | May | 1.323M | 1.287M | Moderate |
| Tu Jun 19 |
08:30 | Building Permits | May | 1.343M | 1.352M | Moderate |
| W Jun 20 |
10:00 | Existing Home Sales | May | 5.55M | 5.46M | Moderate |
| W Jun 20 |
10:30 | Crude Inventories | 06/16 | NA | -4.1M | Moderate |
| Th Jun 21 |
08:30 | Initial Unemployment Claims | 06/16 | 220K | 218K | Moderate |
| Th Jun 21 |
08:30 | Continuing Unemployment Claims | 06/09 | NA | 1.697M | Moderate |
| Th Jun 21 |
08:30 | Philadelphia Fed Index | Jun | 27.0 | 34.4 | HIGH |
| Th Jun 21 |
10:00 | Leading Economic Index (LEI) | May | 0.4% | 0.4% | Moderate |
Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months… We’ve had our quarter percent rate hike and the Fed Funds futures market doesn’t expect another one until the end of September. Note: In the lower chart, a 2% probability of change is a 98% probability the rate will stay the same.
Current Fed Funds Rate: 1.75%-2.00%
| After FOMC meeting on: | Consensus |
|---|---|
| Aug 1 | 1.75%-2.00% |
| Sep 26 | 2.00%-2.25% |
| Nov 8 | 2.00%-2.25% |
Probability of change from current policy:
| After FOMC meeting on: | Consensus |
|---|---|
| Aug 1 | 2% |
| Sep 26 | 84% |
| Nov 8 | 21% |
Statistics source: www.markettrends.com
Material in this article from: Inside Lending Market Snapshot
This is an advertisement for Jim Passi. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice, or a commitment to lend. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in this message is the property of Citywide Home Loans and cannot be reproduced for any use without prior written consent. This message is intended for business professionals only and is not intended for distribution to consumers or other third parties. The material does not represent the opinion of Citywide Home Loans. Citywide CO NMLS #67180. Regulated by the Division of Real Estate.
