Market Update for the Week of November 19, 2018


After rates held steady last week, Freddie Mac’s chief economist explained, “the stability in mortgage rates reflects the moderation in inflationary pressures,” a good thing, as mild inflation should keep the Fed from raising rates.

Analysts at Capital Economics agreed, noting that the Fed’s preferred Core PCE inflation measure is likely to remain close to the central bank’s 2% target.

Freddie Mac’s chief economist added another benefit from the moderate inflation rate: “lower energy costs are a positive for the home sales market, particularly for lower-middle income suburban buyers.”


RETREATING FROM RISK… You can always find something to worry about, and last week investors found Fed rate hikes, trade tensions and the global economy. So they retreated from the risk of stocks, sending all three major indexes down.

However, moderate inflation should keep the Fed from hiking too fast and slowing the economy; trade issues continue, but the Chinese have already made concessions, and we now have new agreements with Canada and Mexico.

Oil, Italy and Brexit roil the global economy, but, hey, domestically things are fine. Retail Sales shot up 0.8% in October, unemployment claims stay historically low, and U.S. manufacturing, once thought to be dead, keeps growing.

The week ended with the Dow down 2.2%, to 25413; the S&P 500 down 1.6%, to 2736; and the Nasdaq down 2.1%, to 7248.

The safe haven of bonds saw nice gains for the week. The 30YR FNMA 4.0% bond went UP .72, to $100.31. The national average 30-year fixed mortgage rate remained unchanged in Freddie Mac’s Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.


A REAL Trends study reveals a record high 90% of consumers used an agent in 2018, including 91% of Millennials and 94% of Gen-Xers.


HOME BUILDING, EXISTING HOME SALES HEAD UP… The October housing market is predicted to deliver some nice reports. Housing Starts and Building Permits are expected to show home builders were busy–and so were agents, as Existing Home Sales should edge up too.

Financial markets will be closed Thursday for Thanksgiving. Friday, the stock markets will close at 1 p.m., the bond markets at 2 p.m.

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.


Forecasting Federal Reserve policy changes in coming months… Investors still expect a small rate hike in December, although they’re a little less certain about it–along with another bump in March. Note: In the lower chart, a 65% probability of change is a 35% probability the rate will stay the same.

Current Fed Funds Rate: 2.00%-2.25%

Dec 19 2.25%-2.50%
Jan  30 2.25%-2.50%
Mar  20 2.50%-2.75%


Probability of change from current policy:

Dec 19   65%
Jan  30   36%
Mar  20   52%
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.
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Jim Passi
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1300 East Woodfield Road, Suite 302
Schaumburg, IL 60173
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Office: 847-273-3265

To say the home buying

To say the home buying process is anything less than stressful is a felony! Jim, first and foremost, helped us cope, understand and work through every step when we bought our home. There were many, upon many moments where we needed counsel and Jim was always there. His responses were immediate and insightful. Speaking with Jim was like speaking with a friend and you knew he had your best interest in mind. So, the needed, constant communication with him never became a chore. My husband and I can say, without shadow of a doubt, that Jim was our cheerleader that motivated us to continue on (believe us, our situation was one for the books!).

Now, that we are done (yay!), and the process is over, our hands have been wiped clean; we are still going to continue our rapport with Jim. Knowing he has invested so much time with us, there is no reason to cease our relationship now. We thank Jim for getting our family to where we are today, a brand new home for our son to grow up in.

Angela & Andrew