Posts Tagged ‘Market Conditions’

What’s Ahead For Mortgage Rates This Week – May 18th, 2020

May 18, 2020

https://i2.wp.com/bringtheblog.com/i/05-Whats-Ahead.jpgLast week’s economic news included readings on inflation, retail sales, and a speech by Federal Reserve Chair Jerome Powell. The University of Michigan released a preliminary reading of its Consumer Sentiment Survey; weekly readings on mortgage rates and initial jobless claims were also released.

April Inflation and Retail Sales in Negative Territory

Consumer prices fell in April to a negative reading of -0.80 percent and matched expectations. The Core Consumer Price Index, which excludes volatile food and energy sectors, fell to -0.40 percent from -0.10 percent in March. Analysts expected a reading of -0.20 percent. Consumer Price Indices are used for determining inflation rates.

Retail sales also posted negative readings for April. Overall, retail sales fell by -16.40 percent as compared to the March reading of -8.30 percent and April’s expected reading of -12.50 percent. Retail sales excluding autos fell by 17.20 percent; analysts expected a reading of -0.90 percent based on the March reading of -0.40 percent. Retail readings may improve in May as retail establishments and malls start to open.

Fed Chair Expects Slow Economic Recovery

Jerome Powell, Chairman of the Federal Reserve advised business contacts that the economic recovery may be slower than originally expected.  In remarks given at the Peterson Institute for International Economics, Mr. Powell said, “The path ahead is both highly uncertain and subject to significant downside risks.” Mr. Powell cautioned that “the passage of time can turn liquidity problems into solvency problem” and suggested that additional government assistance to households and businesses may be worth it to prevent more damage to the economy.

Mortgage Rates Mixed; New Jobless Claims Fall

Freddie Mac reported little change in average mortgage rates last week. Rates for 30-year fixed-fixed rate mortgages averaged two basis points higher at 3.28 percent. Rates for 15-year fixed-rate mortgages dropped by one basis point to 2.72 percent. Rates for 5/1 adjustable rate mortgages averaged one basis point higher at 3.18 percent. Discount points averaged 0.70 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

New jobless claims were lower than in the prior week but remained far above traditional readings. 2.98 million claims were filed as compared to the prior week’s reading of 3.18 million initial claims filed. Analysts expected a reading of 2.73 million new claims filed. 

The University of Michigan released its preliminary Consumer Sentiment Index readings for May. The latest index reading was 73.70  as compared to an expected reading of 69.80 and last month’s reading of 71.80. May’s reading was in line with Chair Powell’s suggestion that consumers are looking ahead to returning to work and shopping as the economy gradually reopens.

What’s Ahead

This week’s economic reporting includes readings from the National Association of Home Builders on housing market conditions along with reports on housing starts and building permits issued. Data on existing home sales and weekly readings on mortgage rates and new jobless claims will also be released.

What’s Ahead For Mortgage Rates This Week – May 11th, 2020

May 11, 2020

https://i2.wp.com/bringtheblog.com/i/04-Whats-Ahead.jpgLast week’s economic releases included readings on public and private sector employment, the national unemployment rate.

Economic Destruction Continues as Coronavirus Spreads

ADP reported 20.2 million private-sector jobs lost in April as compared to 149,000 jobs lost in March. The government’s Non-Farm Payrolls report showed -20.5 million public and private-sector jobs lost in April as compared to -870,000 jobs lost in March. Both of these jobs reports typically show job growth, but they now report jobs lost due to the coronavirus pandemic and efforts to control it.

Likewise, the national unemployment rate grew in April to 14.70 percent as compared to the normal reading of 4.40 percent in March.

Mortgage Rates Mixed as New Jobless Claims Fall

Freddie Mac reported higher average mortgage rates for 30-year fixed-rate mortgages, which were three basis points higher at 3.26 percent. The average rate for 15-year fixed-rate mortgages fell by four basis points to 2.73 percent. Rates for 5/1 adjustable rate mortgages rose by three basis points to 3.17 percent. Discount points averaged 0.70 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages. 

First-time jobless claims fell to 3.17 million claims, which exceeded expectations of 3.10 million new claims filed. While new jobless claims were lower than the prior week’s reading of 3.85 million initial unemployment claims, the millions of claims filed were far above normal readings in the hundred-thousands. While jobless claims remain high, they are lower than the seasonally-adjusted peak of 6.90 million initial claims filed in March.

Analysts said that unemployment figures would increase as small business claims increase.

 

Credit Card Use Falls In March

Consumers stopped using credit cards in March as the coronavirus took hold and the economic shut-down limited shopping, travel, and dining out. Credit card companies tightened lending standards and reduced credit lines as unemployment rates rose. Credit card use fell by nearly 31 percent to – $28.20 billion in March; installment loans including education and vehicle loans rose by 6.20 percent to $16.1 billion.

Auto dealers offering attractive incentives including low to no interest rates encouraged consumers to purchase vehicles. Home loans were not counted in the reading for installment loans.

 

What’s Ahead

This week’s scheduled economic releases include readings on inflation, retail sales, and consumer sentiment. Weekly readings on mortgage rates and new jobless claims will also be released.

Case-Shiller: February Home Prices Gained Before Coronavirus Outbreak

April 30, 2020

Case-Shiller February Home Prices Gained Before Coronavirus OutbreakHome prices continued to grow in February according to the Case-Shiller Home Price Indices. National home prices grew at a seasonally-adjusted annual pace of 4.20 percent as compared to national home price growth of 3.90 percent in January. Case-Shiller’s 20-City Home Price Index showed higher home price growth rates in February with average annual home price growth of 3.50 percent. January home prices grew by 3.10 percent for cities included in the 20-City Index.

The lowest year-over-year home price growth rates were posted by Chicago, Illinois with 0.70 percent; New York City posted 1.50 percent growth, and Dallas, Texas with 2.50 percent home price growth.

Phoenix, Arizona home prices grew by a seasonally-adjusted annual rate e of 7.50 percent; Seattle, Washington home prices grew by 6.00 percent year-over-year. Tampa, Florida’s home price growth was tied with Charlotte, North Carolina’s home price growth rate of 5.20 percent. Analysts said that long-standing market conditions of high buyer demand, low inventories of available homes, and mortgage rates near record lows contributed to February’s home price growth.

Gains Across 20 City Composite

Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, said February results “were broad-based with gains in every city in our 20-City Composite; 17 of 20 cities saw accelerating prices.”

February readings were based on home sales completed before the Coronavirus impacted the U.S. economy and government restrictions on all but essential activities reduced buyer traffic and slowed home sales. Areas supported by tourism and recreation were expected to see sharp declines in home prices and sales.

Fed Promises to Use All Remedies as Coronavirus Crisis Grows

The Federal Reserve’s Federal Open Market Committee said it would use all available tools to steady economic conditions destabilized by the Coronavirus pandemic. The FOMC said in its post-meeting statement that “The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook in the medium term.”

Committee members did not change the current federal interest rate range of 0.00 to 0.25 percent and pledged to hold the Fed rate steady until the economy has weathered the public health crisis and was on track to achieve the Fed’s dual mandate of full employment and price stability.

 

The Narrowing Gap Between Renting And Buying A Home In The US

April 17, 2020

According to data compiled by Realtor.com in the fourth quarter of 2019, it is still more affordable overall to rent versus buy a home — but just barely. The median monthly mortgage payment at the end of 2019 was $1,600, while the median monthly rent payment was $1,319. This is largely due to steadily-increasing rates, rising home prices, and near-record-low mortgage rates.

The Narrowing Gap Between Renting And Buying A Home In The USThe Realtor.com study looked at 593 counties across the country. As compared to the fourth quarter of 2018, the average monthly cost of renting a home increased 4%, up from $1,254, while the average monthly cost of homeownership actually declined 1%, falling from $1,658.

These numbers represent exactly 30% of a homeowner’s gross income and 25% for renters, based on median household income. 

A Turning Tide

In a stunning 84% of the 593 counties that were part of the study, renting is less expensive than buying. The average home price in these areas is 260% higher than the national median, while rent prices average about 79% more than the national median. 

Interestingly though, 26 of the 593 counties experienced the opposite for the first time ever: It became more affordable to purchase a home than to rent, even if only by a narrow margin.

The largest metropolitan areas in which homeownership is more economical than renting now include Bronx County, New York; the greater Cleveland area; Columbia, South Carolina, and the surrounding areas; Indianapolis, Indiana; and Camden County, New Jersey, which includes Philadelphia, as well as cities in Maryland and Delaware.

In 16% of the counties analyzed, buying a home is less expensive monthly than renting, which is up from 12% in 2018. 

On the other end of the spectrum, several large counties made the switch from being more affordable to buy a home to more affordable to rent. The top five include the Wichita Falls, Texas, area; Harrisburg-Carlisle, Pennsylvania; Luzerne County, Pennsylvania; the Greensboro, North Carolina metro area; and Craven County, North Carolina. 

With the costs of homeownership becoming more favorable over the past year, the gap between renting and buying a home is more narrow than it ever has been in the U.S. If you are in the market for a new home, be sure to contact your trusted real estate or mortgage professional.

Case-Shiller: January Home Price Growth Strong; Pandemic Impact Unknown

April 2, 2020

Case-Shiller: January Home Price Growth Strong; Pandemic Impact UnknownUnited States home prices increased by 3.90 percent year-over-year in January as compared to December’s growth rate of 3.70 percent according to Case-Shiller’s National Home Price Index. Home prices also rose in Case-Shiller’s 20-City Home Price Index.

20-City Home Price Index: Phoenix Arizona Leads in Home Price Growth

The Case-Shiller 20-City Home Price Index is followed closely by real estate pros and its trends are used to gauge home price growth within cities included in the index. Phoenix, Arizona led home price growth rates for the eighth consecutive month with a year-over-year growth rate of 6.90 percent.

Seattle, Washington followed with year-over-year home price growth of 5.10 percent; Tampa, Florida also reported home price growth of 5.10 percent.

Seattle replaced Las Vegas, Nevada in second place, which showed a comeback for coastal housing markets that lost ground in recent months.

Case-Shiller’s 10-City, 20-City, and National Home Price Indices all posted higher home price growth rates in January. 14 of 20 cities in the 20-City Home Price Index showed faster growth rates for home prices in January than in December. Home price growth was strongest in the South and West; home price growth was weaker in the Midwest and Northeast.

FHFA Reports 5.20 Percent Yearly Home Price Growth in January

The Federal Housing Finance Agency, which oversees mortgage giants Fannie Mae and Freddie Mac, reported 5.20 percent annual home price growth for homes owned or financed by Fannie Mae and Freddie Mac.

While home prices have been fueled by limited supplies of available homes, demand for homes will likely fall as the coronavirus spreads throughout the U.S.

Local and statewide requirements to limit nonessential activities caused businesses and schools to close and many workers were laid off.  Prospective homebuyers could be sidelined for months if not indefinitely.

Analysts had mixed opinions on how the coronavirus outbreak could impact home prices; if companies and jobs reopen after the virus has passed, housing markets are expected to recover. Because the ultimate length and impact of the pandemic remain unknown, it’s currently impossible to know how housing markets will be impacted.

 

 

Most Renters Are Paying Far More Than Their Landlord’s Mortgage

March 5, 2020

Most Renters Are Paying Far More Than Their Landlord's MortgageIn the overwhelming majority of the 50 largest cities across the U.S., monthly rent is more than the mortgage payment for single-family homes. In several cases, much more. 

Global answering service and chat support company Moneypenny compiled data from Zillow on median rent and mortgage payments from July 2014-July 2019.

In order to calculate the monthly mortgage payments, Moneypenny took the median home sale prices during the same time period and in the same major cities and then used nationally-average mortgage terms: 30-year fixed rate at 4% with approximately 6% down. 

Once the two figures — median monthly rent and median monthly mortgage — were calculated for each city, they were compared side-by-side. The data may surprise you. 

From Less Than Half To More Than Triple

In just seven of the 50 cities analyzed, tenants pay less rent than the owner’s mortgage payment each month. In 28 of the cities — well over half, tenants are paying more than 150% of their home’s mortgage. The city with the highest rent-to-mortgage ratio, Miami, shows that renters pay more than 300% of their landlord’s monthly mortgage payment on average.

Rounding out the top five are New York (276%); Riverside, California (231%); Boston (230%); and San Diego (221%). At the opposite end of the spectrum is New Orleans, where tenants pay just 49% of their home’s mortgage each month, followed by Richmond, Virginia (57%), and Kansas City, Missouri (82%). 

An interesting data point is that the median monthly mortgage payment in Miami is $720, while in New Orleans it’s $2,857. 

Not-Necessarily-For-Profit

While it makes perfect sense that rent prices in hot real estate markets are higher, some may still be surprised by the disparity between rental amounts and monthly mortgage payments. However, it’s important to note that even in the cities with the biggest gap, landlords are not necessarily pocketing the excess and enjoying a nice profit. While it’s certainly possible that they may be, homeowners are more likely putting some of that money back into the house in the form of improvements and maintenance, as well as setting some of it aside for large emergency repairs. 

If you are in the market for a new home or interested in refinancing your current property, be sure to contact your trusted home mortgage professional to discuss financing options.

NAHB: Home Builder Confidence Near 1999 High

February 20, 2020

NAHB Home Builder Confidence Near 1999 HighThe National Association of Home Builders reported a housing market index reading of 74 in February; the index reading was one point lower than for January and was only two points below the highest reading of 76 reported in December. Readings over 50 indicate that most builders consider housing market conditions to be positive.

Factors contributing to builder confidence included strong housing markets and low mortgage rates; job growth and higher wages also boosted builder confidence.

Low Inventory Influences Home Prices

Low inventories of available homes continued to drive demand and rising home prices. Homebuyers faced with low supplies of existing homes turned to new home developments for additional options. First-time homebuyers faced obstacles including affordability and student loan debt that negatively impacted the ability to save for a down payment and qualify for home loans.

High costs of building materials and lots contributed to homebuilder expenses and higher home prices. Analysts noted that environmental and zoning issues also presented challenges for builders and limited their ability to meet the rising demand for affordable single-family homes.

Composite indices used to calculate the Homebuilders Housing Market Index slipped one point in each category. Builder confidence in current market conditions for newly-built single-family homes fell to an index reading of 80 and builder confidence in market conditions over the next six months dipped to 79. Buyer traffic volume in new housing developments dropped to 57, but buyer traffic readings of 50 or more were historically rare until recently.

Analysts identified correlations between the Housing Market Index and readings on consumer sentiment. The University of Michigan’s Consumer Sentiment Index and the Conference Board’s Consumer Confidence Index readings trend close to the NAHB Housing Market Index but are reported one month behind the Housing Market Index.

Regional Builder Confidence Mixed

Homebuilders reported mixed confidence in housing market conditions throughout the U.S. Market Conditions improved in the Northeast where homebuilder confidence was five points higher at 67. The Midwestern region reported a builder confidence reading of 62, which was five points lower than January’s reading. Homebuilder confidence in the South rose two points to an index reading of 79; homebuilder confidence fell four points in the West to 82.

Regional builder confidence levels reflect local economic conditions and events impacting housing markets.

 

FOMC Statement: Key Fed Rate Unchanged; Policymakers Monitor Impact of Asian Flu Outbreak

January 31, 2020

FOMC Statement Key Fed Rate Unchanged; Policymakers Monitor Impact of Asian Flu OutbreakThe Federal Open Market Committee of the Federal Reserve issued its scheduled post-meeting statement Wednesday. Policymakers unanimously decided to leave the target federal funds rate range unchanged at 1.50 to 1.75 percent.

FOMC members reasserted previous views that inflation was “subdued” and the economy was growing at a moderate pace. The Fed typically bases decisions about interest rates on its dual mandate of achieving maximum employment and an annual inflation rate of 2.00 percent.

U.S. Economy Strong, Fed Chair Sees No Immediate Risk From China

FOMC cut the target interest rate range three times in 2019 to offset higher prices associated with a trade war with China, but the Committee considered recent progress in trade negotiations as an indication that there was no current need for further rate cuts. Fed Chair Jerome Powell said he was not concerned about immediate risks from China.

In its current assessment of economic conditions, the Fed cited a strong labor market and job growth but said that business investments and exports were weak. Core inflation readings, which exclude volatile food and fuel sectors, consistently ran below 2.00 percent. The FOMC changed language in its statement to indicate a goal of achieving an inflation rate of 2.00 percent; previous statements referred to an inflation goal of near 2.00 percent.

Committee members will continue to monitor current and developing economic conditions to determine when or if to change the benchmark interest rate range in future meetings.

Fed Chair: Fed Is Monitoring Potential Impact Of Coronavirus Outbreak

Concerns over trade conflicts with China were overshadowed by an outbreak of a strain of Asian influenza in China. The disease, caused by a coronavirus, is extremely contagious and spreads quickly. This could impact global economic conditions as international air travel and shipping may be limited or stopped to prevent further spread of the virus.

Fed Chair Jerome Powell said that although the Fed is not worried about an immediate threat, the FOMC members would continue to monitor how and where the current outbreak of Asian influenza spreads to determine if changes to the Fed’s monetary policy positions are necessary. Tensions in the Middle East were not mentioned in the FOMC statement or Fed Chair Jerome Powell’s post-meeting statement.

 

Case-Shiller Reports Growth In Home Prices In November

January 29, 2020

Case-Shiller Reports Growth In Home Prices In NovemberCase-Shiller Home Price Indices reported that national growth of home prices rose by 0.30 percent in November. Analysts said that slim inventories of available homes boosted home prices. Whether or not home price growth continues gaining speed depends on variables including supplies of homes for sale, affordability and home-buyer confidence in the economy.

Mr. Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices said, “It is, of course, too soon to say whether this marks an end to the deceleration [of home price growth] or is merely a pause in the longer-term trend.”

Phoenix Holds First Place In Home-Price Growth For 6 Consecutive Months

Case-Shiller’s 20-City Home Price Index showed that all cities tracked reported year-over-year growth in home prices after seasonal adjustments. Phoenix, Arizona held the top position with home price growth of 5.90 percent; Charlotte, North Carolina held second place in the 20-City Index with 5.20 percent growth in home prices and Tampa, Florida held third place with year-over-year home price growth of 5.00 percent.

The Case-Shiller 20-City Home Price Index posted a year-over-year gain of 2.60 percent in November and home prices rose by 0.10 percent in November as compared to October. Case-Shiller reported that home price growth increased by 3.50 percent nationally on a seasonally adjusted annual basis.

Buyers Seeking Affordable Homes Inland

Home-buyers sought less expensive homes in inland states as high-priced homes in coastal regions continued to be unaffordable for many. Slim supplies of homes contributed to bidding wars that drove home prices higher. Analysts said that home prices are set to drop in high-cost markets as the home-buyers move to more affordable markets.

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, reported a 4.90 percent gain in November home prices for properties associated with mortgages owned by Fannie Mae and Freddie Mac; this reading was compiled on a seasonally-adjusted annual basis.

FHFA data noted that the Mountain Region reported slower month-to-month growth in home prices in November, but all geographic regions reported positive growth in home prices year-over-year. The Mountain region includes the states of Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming; these states typically offer a lower cost of living and affordable home prices as compared to high priced coastal areas.

10 US Cities With Highest Mortgage Denial Rates

January 10, 2020

10 US Cities With Highest Mortgage Denial RatesFor many, owning property is seen as a rite of passage. At the same time, for most people, accomplishing this dream is largely dependent on the approval of a mortgage. For this reason, it is important for people to think carefully when deciding who to ask for a mortgage. Some cities have a higher mortgage approval rate than others.

Identifying Problems With A Mortgage Application

Before applying for a mortgage, it is important to think about the most common reasons why someone might be rejected. First, if someone has a debt to income ratio that is too high, they are more likely to be turned down for a mortgage.

It is understandable that if someone already has too much debt, they are unlikely to be able to handle the added burden of a mortgage. Another possible reason for being turned down might be out of someone’s control entirely. This has more to do with geography.

Application Problems In The Sunshine State

For those who might not know, the sunshine state is Florida. Many of the cities with the highest rejection rates are right here. For example, Miami, Jacksonville, Tampa Bay, and Orlando are all among the cities with the highest rejection rates on mortgage applications.

Some of the other cities on the list include New York, San Antonio, San Jose, Detroit, Birmingham, and Houston. Those who live in these cities need to make sure that their mortgage applications are in excellent shape. Otherwise, it could end up in disappointment.

Take, for example, Miami, Florida. More than one in nine mortgage applications are rejected. The most common reason why someone might be denied a mortgage in this major city is debt to income ratio.

Another common reason why those applying for a mortgage in this city might be denied is a lack of collateral. Florida has a reputation for attracting retirees; however, most of the jobs in this state have to do with hospitality. This is an industry that is largely seasonal and has low wages, contributing to a high rejection rate on mortgage applications.

Preparing For The Application Process

Anyone looking to buy property, particularly in these cities, must make sure their application is in order. Getting approved for a mortgage is a critical part of buying a home. For this reason, try to maximize credit scores while minimizing outstanding debt. This can go a long way toward getting approved.

And as always, talk with your trusted mortgage professional for personal guidance through the application process. They are experienced and have the best vantage point to make sure your application is set up for success.