Market Update for the Week of January 14, 2019


Last week, Freddie Mac’s chief economist observed, “Mortgage rates fell to their lowest level in nine months,” and he feels that this, “combined with continued income growth and lower energy prices…should lead to a firming of home sales.”

Buyers in many areas can also take advantage of the fact that home price growth has slowed in 33 states and 71 of the country’s 100 largest markets, according to data and analytics firm Black Knight.

Their latest Mortgage Monitor also reveals that today’s rates mean about 2.43 million borrowers can now likely qualify to reduce their rate by refinancing. Small wonder mortgage applications jumped more than 20%.


FED FRIENDLY, DATA DECENT, CHINA CLOSING… Stocks bolted ahead for the third week in a row, as investors sparked to market friendly comments from the Fed, good economic data and signs China is closing in on a deal.

Wednesday’s Fed Minutes revealed they could “afford to be patient” about raising rates. The next day, Fed Chair Powell confirmed they will be “flexible” and “patient” with rate hikes and balance sheet reductions.

The important services sector of the economy keeps growing and the latest CPI pegged inflation under the Fed’s 2% target, so no need to heat up rates to cool down prices. Finally, progress was reported on Chinese trade negotiations.

The week ended with the Dow UP 2.4%, to 23996; the S&P 500 UP 2.5%, to 2596; and the Nasdaq UP 3.5%, to 6971.

With stocks surging, bonds lost ground. The 30YR FNMA 4.0% bond went down .09, to $101.97. The national average 30-year fixed mortgage rate dropped significantly 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.


Despite the partial government shutdown, the IRS resumed processing lender requests to verify mortgage applicants’ incomes.


HOME BUILDING, RETAIL SALES MAY BE DELAYED, MANUFACTURING GROWS… December Housing Starts and Building Permits could be delayed by the partial government shutdown, and there are no forecasts. But we should get manufacturing reads, with the closely watched Philadelphia Fed Index expected to  show gains in that key region.

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… The latest rhetoric from the Fed has Wall Street convinced there won’t be another rate hike this year. Hmmm…. Note: In the lower chart, a 1% probability of change is a 99% probability the rate will stay the same.

Current Fed Funds Rate: 2.25%-2.50%

Jan  30 2.25%-2.50%
Mar  20 2.25%-2.50%
May   1 2.25%-2.50%


Probability of change from current policy:

Jan  30    1%
Mar  20    1%
May   1     8%
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

First time home buyer here

First time home buyer here who did it all without the adult supervision/guidance (i.e. my parents) , and I was clueless. I did my best to look into things before hand but I knew the very basics. Jim and his team were AMAZING! Jim took the time to explain the step-by-step process involved and explained it in a way that I understood. He also made sure I understood what he was saying by “quizzing” me. There was never any annoyance/aggravation in his tone even if he had to go over something 2 or 3 times. Always professional and always kind. Jim and his team were prompt with their email responses and made the whole process go smoothly. I also appreciated that Jim would reach out to me via phone and made sure I understood where we were in the process. This made for a great first time home buying experience! Highly recommend this group!