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Find out why a Fed rate hike next week doesn’t necessarily mean higher mortgage rates in Markets in a Minute!

Find out why a Fed rate hike next week doesn’t necessarily mean higher mortgage rates in Markets in a Minute!
June 9, 2017 Fred Kreger

 

For the Week Ending June 9, 2017

The stock market couldn’t be flatter through the first four trading days of the week. The Dow began the week at 21,183, and closed at 21,182 yesterday. There have been some momentary jumps up and down during the
week, but overall, investors seem to be sitting on the sidelines watching and waiting. There has, for the most part, been no economic data that gives them reason to think the market will improve or decline driving them to make a trading decision. It seems
for now, until something comes out that creates an opportunity or urgency to trade, investors are going to hang back and observe.

 

Could even more life be coming back into the housing market? That is the question many are asking based upon the Mortgage Bankers Association latest loan application report. For the week ending June 2nd, purchase
applications jumped a seasonally adjusted 10.0 percent. This is the highest level of purchase loan activity since May of 2010. This jump follows 3 weeks of consecutive declines. Refinance applications also moved higher by 3.0 percent. Overall purchase loan
activity is up a healthy 6.0 percent from the same time last year.

 

The first-time jobless claim numbers seem to just be staying put at a very low level. The latest report for claims was at 245,000. This is down by 3,000 from the prior week. Overall claims have been remaining in
a very narrow range in the mid 200’s for months, and there appears to be no sign that this will change any time soon.

 

The latest JOLTS Report, (Job Openings and Labor Turnover Report), shows that job availability continues to greatly outpace hiring. There were an estimated 1 million more jobs available than positions filled in the
month of April. Employers contend they are struggling to find employees with the jobs skills that meet the positions they have available.

The ISM non-manufacturing index came in just about as expected. At a level of 56.9, this is considered a very solid rate of growth that shows business activity remains strong. Hiring in this sector has grown as there
appears to be backlogs of delivery of services. Companies are scrambling to meet customer demand and are working hard to try and fill vacant positions to meet demand.

 

Finally, are consumers becoming more adverse to borrowing? The latest April data on credit growth shows that consumers seem to be borrowing less. Non-revolving debt which rose 6.7 billion, is the lowest reading in
nearly 6 years. Even though this includes vehicle financing and student loans, historically the amount of money being currently borrowed is very low.

 

Next week’s potential market moving reports:

• Monday June 12th – 10 Year Note Auction
• Tuesday June 13th – FOMC Meeting Begins, Producer Price Index
• Wednesday June 14th – MBA Mortgage Applications, CPI, FOMC Announcement
• Thursday June 15th – First Time Jobless Claims, Housing Market Index
• Friday June 16th – Housing Starts

 

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can.

 

Please enjoy this quick update on what happened this week in the housing and financial markets.

 

 

The labor market continues to show strength, with this week’s jobless claims below the 300,000 threshold for the 118th straight week and unemployment at 4.3%.
Recent data indicates that inflation is still below the Fed target of 2%, coming in at 1.5% in April. The Fed is expected to raise policy rates next week
regardless.
Although a Fed policy rate increase next week is likely, that won’t necessarily drive mortgage rates higher. The Fed doesn’t control mortgage rates directly.

 

Home prices continue to soar, with low inventory causing bidding frenzies in some metro areas. Home-price growth is currently even outpacing rent gains.
According to NAR, 47% of consumers said it was a good time to buy a home, and 39% said it was a good time to sell. Both figures are up from a year ago.
Fannie Mae will ease income requirements in July, paving the way for more new buyers to qualify. Millennials with student debt are expected to benefit most.

A banker, an accountant and a real estate agent all become homeless and decide to live under a bridge.
The banker finds a cardboard box and moves into it.
The accountant finds a cardboard box, puts it next to the banker and crawls into it.
The real estate agent finds a cardboard box and puts it on top of the banker’s and accountant’s boxes. He then slaps a poster on it reading:
“Penthouse available in new development for professionals.”

 

Rate movements and volatility are based on published, aggregate national averages and measured from the previous to the most recent midweek daily reporting period. These
rate trends can differ from our own and are subject to change at any time.

Sincerely,

Fred Kreger
American Family Funding
Certified Mortgage Consultant
NLMS # 1850 / 214640 BRE# 01215943 / 01371184
(661) 505-4311
Fred.Kreger@affloans.com
28368 Constellation Road
Suite 398
Santa Clarita, CA
91355

www.fredkreger.com

 

©2017 American Pacific Mortgage Corporation. All information contained herein is for informational purposes only and, while every effort has been made to insure accuracy, no guarantee is expressed or implied. Any programs shown
do not demonstrate all options or pricing structures. Rates, terms, programs and underwriting policies subject to change without notice. This is not an offer to extend credit or a commitment to lend. All loans subject to underwriting approval. Some products
may not be available in all states and restrictions apply. Licensed by the Department of Business Oversight under the CRMLA.

 

 

 

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