Mortgage Blog - April 10, 2017

There are some good reasons for us to feel confident about the housing market so fun and amazing things may be soon upon us.

The latest market analysis from realtor.com reveals this spring will be the hottest buying season yet.

The median number of days homes are staying on the market is sixty nine, eight fewer than a year ago and experts predict buying will accelerate, with homes remaining on the market just twenty two  days as the spring selling season ramps up. The realtor.com manager of economic research says, "we're already in the thick of the most frenzied spring home buying season on record."

There's also good reason to be confident about home buying among the important Millennial generation. A leading provider of loan origination software released a tracking study on that group's activities. The firm's EVP of corporate strategy noted: "Purchase loans are increasing, indicating that Millennials are continuing to enter the first-time home buyer market." In fact, the Mortgage Bankers Association reported purchase applications up 1.0% for the week ending March 31 plus, purchase demand is up as the average loan size for purchase applications set a new record, coming in at $318,200. Seems like amazing things are already happening.

Review of Last Week

Last week's last trading day began with two out-of-the-ordinary reports. The first was the news of a surprise U.S. missile attack on the Syrian air base believed responsible for a chemical attack earlier in the week. The second was the Bureau of Labor Statistics reveal that a way less than expected 98,000 jobs were added in March. Additional geopolitical concerns included another North Korean missile test, and the diplomatic talks between President Trump and his Chinese counterpart Xi Jinping in Florida. Investors were by no means panicking but all three major stock market indexes closed fractionally lower for the week.

Wall Streeters stayed calm as the Syrian action garnered support from several U.S. partners while the President said he had made "tremendous progress" with Xi. Even the jobs report contained comforting items. The Unemployment Rate dropped to 4.5%, its lowest level in almost 10 years. Hourly Earnings continued on an upward trend, rising 0.2% for the month and 2.7% annually. Total hours worked are up 1.4%, so total wages are up 4.1% versus a year ago, good for the housing market, which needs incomes to keep up with home prices.

The week ended with the Dow down seven points, to 20656; the S&P 500 down 0.3%, to 2356; and the Nasdaq down 0.6%, to 5878.

Geopolitics and the lower than expected jobs number helped some bond prices. The 30YR FNMA 4.0% bond we watch finished the week UP .12, at $105.06. In Freddie Mac's Primary Mortgage Market Survey for the week ending April 6, national average 30-year fixed mortgage rates dropped for the third week in a row, nearing their low for the year. 

Where are interest rates headed?

 This Week’s Forecast

Consumer spending is a big driver of the economy so we keep an eye on Retail Sales. The overall number is forecast to come in a tick down for March but when you exclude volatile auto sales, growth should continue. The Consumer Price Index (CPI) is predicted to show overall inflation flat in March, although the Core CPI, which excludes volatile food and energy prices, is predicted to be up a bit.

The Week’s Economic Indicator Calendar

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

Economic Calendar for the Week of April 10th – April 14th

Apr 12     10:30     Crude Inventories
Apr 13     08:30     Initial Unemployment Claims
Apr 13     08:30     Continuing Unemployment Claims
Apr 13     08:30     Producer Price Index (PPI)
Apr 13     08:30     Core PPI
Apr 13     10:00     U. of Michigan Consumer Sentiment
Apr 14     08:30     Retail Sales
Apr 14     08:30     Retail Sales ex-auto
Apr 14     08:30     Consumer Price Index
Apr 14     08:30     Core CPI
Apr 14     10:00     Business Inventories
                                                                                                          
Federal Reserve Watch   

Speculative Forecasting Federal Reserve policy changes in coming months:

Expectations have firmed a little more for another hike from the Fed in June.

Note: In the lower chart, a 5% probability of change is a 95% certainty the rate will stay the same.

Current Fed Funds Rate: 0.75%-1.0%

After FOMC meeting on:  

May 3     0.75%-1.0%
Jun 14     1.0%-1.25%
Jul 26     1.0%-1.25%

Probability of change from current policy:

After FOMC meeting on:

May 3             5%
Jun 14           71%
Jul 26           74%

Where are interest rates headed?

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Cheers!

Scott Synovic
Nations Reliable Lending, LLC
Colorado's Mortgage Expert
www.scottsynovic.com
303.668.3350 Direct

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The material contained in this newsletter has been prepared by an independent third-party provider. The content is provided for use by real estate, financial
services and other professionals only. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without errors.

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