Market Update for the Week of May 13, 2019


National average mortgage rates dipped again, so it was no surprise the Mortgage Bankers Association reported a 5% increase in the unadjusted Purchase Index of applications for the week and versus a year ago.

Our 84 million Millennials are the largest U.S. generational group ever, and next year their biggest segment turns 30, the prime age for first home buying. Hey, 79% of Millennials say home ownership is still the hallmark of the American dream.

At the other end of the demographics, the 55+ housing market sees a surge in Baby Boomers buying retirement nests. The National Association of Home Builders reports builder confidence in this segment hit a record high in Q1.


TRADERS TRADED TRADE ANGST FOR TRADE OPTIMISM… Just as trade dominates this headline, it dominated Wall Street’s mindset. For four days, worries about tariff increases on Friday dampened investor enthusiasm.

But when Friday came, positive comments from both sides, plus the President’s tweet that talks were “constructive,” rallied stocks for the day, though the S&P 500 and the Nasdaq saw their worst weekly losses of the year. 

Consumer prices overall and core prices (excluding food and energy) rose less than expected. Both the Atlanta and New York Fed presidents said rates may be cut on concerns over low inflation and/or any economic effects from the tariffs.

The week ended with the Dow down 2.1%, to 25942; the S&P 500 down 2.2%, to 2881; and the Nasdaq down 3.0%, to 7917.

Bond prices went higher on trade worries, then finished flat with Friday’s optimism. The 30YR FNMA 4.0% bond ended unchanged, at $102.66. The national average 30-year fixed mortgage rate fell again 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 new study says up to 41% of homebuyers are considering accommodating a family member from another generation, such as a senior parent or adult child. In 1980 only 12% of us lived in multigenerational households.


HOMEBUILDERS BUILDING, RETAILERS SELLING… Expect to see an uptick in homebuilder activity when we get April Housing Starts and Building Permits numbers on Thursday. April Retail Sales should also be up, though at a slightly slower pace than March.

NOTE: Weaker 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 Fed Funds Futures market feels rates will hold for now, though we could have a rate cut in the fall. Note: In the lower chart, a 10% probability of change is a 90% probability the rate will stay the same.

Current Fed Funds Rate: 2.25%-2.50%

Jun 19 2.25%-2.50%
Jul 31 2.25%-2.50%
Sep 18 2.25%-2.50%


Probability of change from current policy:

Jun 19    10%
Jul 31    19%
Sep 18    38%
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Jim Passi
Regional Manager
NMLS# 158000

1284 West Northwest Hwy.
Palatine, IL 60067
Mobile: 847-899-1813

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