Market Update for the Week of February 11, 2019

MARKET UPDATE

Freddie Mac‘s chief economist notes, “Mortgage rates are essentially similar to a year ago, but today’s buyers have a larger selection of homes and more consumer buying  power than they did the last few years.”

The Mortgage Bankers Association’s head of surveys and forecasts chimed in with “moderating price gains and the strong job market, including evidence of faster wage growth, should help purchase growth going forward.”

More good news for buyers came with CoreLogic‘s report that home prices rose in December at the slowest pace since 2012. And those analysts predict price growth will drop to just 3.4% in 2019.

REVIEW OF LAST WEEK

DOW UP SEVEN WEEKS… Stocks ended with the Dow ahead for the seventh week, the Nasdaq up decently, and the S&P 500 eking out a one point gain. Worries about slowing global growth kept traders in check.

Bad news from across the pond featured lower growth outlooks from Britain and the EU, and German manufacturing declines for December. China’s growth also slowed, while the U.S. trade deal still has some distance to go.

Nevertheless, our economy continues to show little evidence of a slowdown. With two thirds of the S&P 500 reporting earnings, about 72% have beaten expectations, way better than was feared by those looking for a recession.

The week ended with the Dow UP 0.2%, to 25106; the S&P 500 flat, at 2708; and the Nasdaq UP 0.5%, to 7298.

Bond prices went up on the down European data. The 30YR FNMA 4.0% bond ended UP .25, at $102.30. The national average 30-year fixed mortgage rate fell to a 10-month low 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.

DID YOU KNOW?

The Urban Institute says 5.6 million millennials live with their parents. Yet their research shows people who go out and buy a home before age 25 end up with the largest return on their housing investment in later years.

THIS WEEK’S FORECAST

INFLATION COOL, RETAIL WARM… Economists expect the CPI Consumer Price Index to show inflation in January remained well within the Fed’s  2% target range. December Retail Sales should grow at a temperate 0.2%.

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… The Fed Funds Futures market does not expect the central bank to touch rates right through the start of summer. 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%

AFTER FOMC MEETING ON: CONSENSUS
Mar  20 2.25%-2.50%
May   1 2.25%-2.50%
Jun  19 2.25%-2.50%

 

Probability of change from current policy:

AFTER FOMC MEETING ON: CONSENSUS
Mar  20    1%
May   1     4%
Jun  19     6%
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
Regional Manager
NMLS# 158000

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

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Andrea L.