Market Update for the Week of November 12, 2018

MARKET UPDATE

Data firm Attom reports an all-time high 14.5 million homes are equity rich, where the loan amount is 50% or less of the property’s market worth. That’s 433,000 more homes than a year ago, 25.7% of all homes with a mortgage.

The National Association of Home Builders put builder confidence up to 68 in October. Moody’s rates homebuilding on solid footing, citing consumer confidence, unemployment and Millennial homeownership.

The Mortgage Bankers Association reports mortgage credit is now more available than at any time since 2008, with their Mortgage Credit Availability Index at its highest level in ten years.

REVIEW OF LAST WEEK

UNCERTAINTY FALLS, STOCKS RISE… The midterm elections removed some major political uncertainties, so stocks moved up under the assumption a divided Congress won’t harm market-friendly tax cuts and deregulation.

Historically minded investors reveled in the fact stocks have done well in years with a Republican president and a split Congress. But many feel Washington gridlock will push off major legislative initiatives until after the 2020 campaign.

Meanwhile, the economy is booming, as the Fed confirmed Wednesday after keeping rates in place. This was supported by strong corporate earnings, consumer sentiment, and growth in the economy’s services sector.

The week ended with the Dow UP 2.8%, to 25989; the S&P 500 UP 2.1%, to 2781; and the Nasdaq UP 0.7%, to 7407.

Bonds weathered a volatile week, ending pretty much where they began. The 30YR FNMA 4.0% bond went UP .04, to $99.59. Freddie Mac’s Primary Mortgage Market Survey had the national average 30-year fixed mortgage rate at a seven-year high. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?

Around 1.86 million mortgage holders still have an interest rate incentive to either refinance, or sell their current home and buy one they can finance at a lower rate.

THIS WEEK’S FORECAST

INFLATION ON TARGET, RETAIL SINGS, FACTORIES HUM… The Fed’s favorite inflation index, Core PCE Prices, should be up for October, but still in their target range. Analysts predict a good jump for October Retail Sales, reflecting strong consumer spending, while key manufacturing measures like the Philadelphia Fed Index are forecast to report healthy factory activity.

Yesterday, November 11, was Veterans Day. We honor and thank all those who serve and have served our country in the military. In observance of the holiday, the bond market is closed today.

NOTE: Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and higher loan rates.

FEDERAL RESERVE WATCH

Forecasting Federal Reserve policy changes in coming months… Rate-wise, the Fed left well enough alone last week but a quarter percent hike is expected in December, then nothing more until March. Note: In the lower chart, a 76% probability of change is a 24% probability the rate will stay the same.

Current Fed Funds Rate: 2.00%-2.25%

AFTER FOMC MEETING ON: CONSENSUS
Dec 19 2.25%-2.50%
Jan  30 2.25%-2.50%
Mar  20 2.50%-2.75%

 

Probability of change from current policy:

AFTER FOMC MEETING ON: CONSENSUS
Dec 19   76%
Jan  30   27%
Mar  20   61%

 

The Jim Passi Team at Citywide Home Loans proudly serves Illinois, Wisconsin, Michigan, Indiana, Georgia and Flordia. If you are looking to buy a home or refinance, we have you covered. Apply Now to get started.

Jim Passi - Citiwide Home Loans

Jim Passi
Regional Manager
NMLS# 158000

1300 East Woodfield Road, Suite 302
Schaumburg, IL 60173
Mobile: 847-899-1813
Office: 847-273-3265

We closed on our new

We closed on our new home a couple of weeks ago and the process couldn’t have been easier. I think selecting a new washer and dryer was more confusing! The paperwork was minimal and Jim and his staff moved quickly through every step. Jim was easy to reach and always available to answer questions. I would highly recommend Jim to anyone hoping to secure a mortgage, but especially to first time home buyers. He made the process smooth and uncomplicated.

Teresa S.