Much research goes into purchasing a home. Potential buyers get Home Inspections, check out the school district and may even determine if the night life suits their needs. Unfortunately too many buyers often realize they have
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Grants Pass, OR
My sister Penny was here from Oregon as well and my brother Bruce and his wife Riva from Rhode Island too! Mom went back to the East Coast with them!
ECB Adds Stimulus The big event over the past week was Thursday's ECB meeting. The stimulus measures announced by the ECB made investors more willing to own riskier assets such as stocks, which was negative for safer assets such as bonds. The small amount of U.S. economic data released over the past week had little impact. As a result, mortgage rates ended the week higher. The European Central Bank (ECB) added to its stimulus program to help boost economic growth and raise inflation. The actions included cutting key interest rates and increasing the size of its asset purchase program to 80 billion euros each month from 60 billion previously. Increased demand for bonds from the ECB helps keep down yields around the world, including U.S. mortgage-backed securities (MBS). These measures were essentially in line with investor expectations, however, so their effect on mortgage rates had already been factored in. The ECB also announced other changes designed to help the banking sector, and these were unexpected. These measures made riskier assets such as stocks more appealing to investors. When investors show a preference for adding risk, they often reduce their exposure to safer assets, including MBS, which is not good for mortgage rates. While recent readings have shown that inflation is rising, one area has continued to exert downward pressure. The cost of imported goods dropped in February for the eighth straight month. A big reason for this has been the decline in the price of oil. Even excluding oil, the cost of other imported goods has been dropping. Lower prices for imported goods reduce inflation, which is positive for mortgage rates. Looking ahead, there will be a Fed meeting and press conference on Wednesday. No change in the federal funds rate is expected, but the comments from the Fed could have a significant impact. Before that, Retail Sales will be released on Tuesday. Consumer spending accounts for about 70% of economic output in the U.S., and the retail sales data is a key indicator. Housing Starts, Industrial Production, and CPI will come out on Wednesday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, looks at the price change for goods and services which are sold to consumers.
Wage Growth Picks Up
Most of the economic data released over last week fell short of expectations. However, strong wage growth in Friday's employment report offset some of the weakness perceived in the other data. Mortgage rates ended last week a little lower.
Against a consensus forecast of 190K, the economy added 151K jobs in January. This was down from average gains of about 280K over the prior three months. The unemployment rate declined from 5.0% to 4.9%, the lowest level since February 2008.
While job gains in January were a little lower than expected, investors focused more on the surprisingly strong wage growth. Average hourly earnings, an indicator of wage growth, rose 0.5% in January, which was well above the consensus forecast. Investors raised their outlook for future inflation based on the wage data, forcing mortgage rates a little higher after the report.
By contrast, nearly all of the data released earlier last week was positive for mortgage rates. U.S. manufacturing activity has slowed sharply in recent months. The ISM national manufacturing index is at the lowest level since 2009. The stronger dollar and weakening demand in other countries have hurt the sector. Manufacturing makes up a relatively small portion of U.S. economic activity, though. More disturbing to investors, the ISM national services index declined to the lowest level since early 2014. The service sector represents over 80% of the U.S. economy.
Looking ahead, additional labor market data, the JOLTS report, will come out on Tuesday(tomorrow). JOLTS measures job openings and labor turnover rates.Retail Sales will be released on Friday. Consumer spending accounts for about 70% of economic output in the U.S., and the retail sales data is a key indicator. Fed Chair Janet Yellen will be speaking on Wednesday and Thursday. There will be Treasury auctions on Tuesday, Wednesday, and Thursday.
Oil Prices Fall
Mortgage rates are affected by many different market forces. Often it is economic data and its impact on the outlook for inflation. This week, the biggest influence on mortgage rates came from the drop in the price of oil and its effects on the stock market. Stocks declined, and mortgage rates ended the week a little lower.
The price of oil declined during the week to the lowest level in seven years. This is great for consumers, but has mixed effects on financial markets. The drop weighed heavily on energy stocks and concerns spread throughout the broader stock market. Investors sold stocks and bought safer investments like government-backed mortgage-backed securities (MBS). The added demand for MBS pushed mortgage rates lower.
With more cash in their pockets from lower gas prices, consumer spending in other areas showed solid improvement in November. After three disappointing months, retail sales, excluding volatile auto sales, rose nicely. Consumer spending accounts for about 70% of economic output in the U.S., and the retail sales data is a key indicator.
Next week, the highly anticipated Fed meeting will take place on Wednesday. If the Fed raises the federal funds rate as widely expected, investors will be looking for guidance about the pace of future rate hikes. Before that, the consumer price index (CPI), the most closely watched monthly inflation report, will come out on Tuesday. Industrial Production, an important indicator of economic activity, and Housing Starts will be released on Wednesday.
Mortgage Market News for the week ending October 09, 2015
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Custom Lending Group, Inc.
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Stocks Rally, Rates Rise
Demand shifted from bonds to stocks over the past week. The economic data had little impact. As a result, mortgage rates ended the week a little higher.
Under most circumstances, mortgage rates improve when stocks decline, and the reverse is true as well. We have seen an example of this relationship over the last few weeks. During the second half of September, stocks declined and mortgage rates improved. The trend has reversed, however, as the Dow has climbed about 600 points over the past week, while mortgage rates have risen.
There were no major surprises in the Minutes from the September 17 Fed meeting released on Thursday. The Minutes revealed that Fed officials held off on a rate hike due to uncertainty that inflation will rise to their 2.0% target level. The Minutes also noted that weakness in other countries added to the downside risk for economic growth and inflation in the U.S. Since the September 17 Fed meeting, the U.S. economic data has indicated slowing growth, justifying the Fed's decision and adding pressure for the Fed to hold rates steady longer.
Looking ahead, Retail Sales will be released on Wednesday. Retail Sales account for about 70% of economic activity. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Thursday. Industrial Production, another important indicator of economic activity, and the JOLTS report will be released on Friday. JOLTS measures job openings and labor turnover rates. Mortgage markets will be closed on Monday in observance of Columbus Day.
Mortgage Market News for the week ending June 19, 2015
DaleDiGennaroOwner | NMLS: 298353 | CalBRE: 966783
Custom Lending Group, Inc.Co. NMLS: 845079 | CalBRE: 944064
Focus is on Greece
Worries about Greece had the greatest impact on mortgage rates over the past week. The Fed statement and the U.S. economic data caused some volatility, but had little net effect. Mortgage rates ended lower.
A lack of progress in the negotiations between Greece and its creditors has raised concerns for investors. Neither side has indicated much willingness to compromise over required reforms. Without a bailout, Greece likely will default on debt payments due on June 30. The response of investors to the uncertainty about the global impact of a default has been to shift to safer assets such as German and U.S. government bonds, including mortgage-backed securities, helping mortgage rates improve.
There were no major surprises in Wednesday's Fed statement or Fed Chair Yellen's press conference. The guidance for the timing of the first federal funds rate hike remained unchanged and will depend on the future performance of the economy. The consensus now is that continued improvement in the economy will justify a rate hike in September.
The Fed's stated target level forcore inflation is 2.0%. In recent months, core inflation has remained below this level. For example, the Consumer Price Index data released over the past week revealed that core inflation in May was just 1.7% higher than a year ago, down from an annual rate of 1.8% last month. The trend this year had been for rising inflation, so the May data was a welcome reversal.
Looking ahead, investors will remain focused on the situation in Greece. An emergency meeting between Greek officials and the creditors has been scheduled for Monday. In the U.S., Existing Home Sales and New Home Sales will come out early in the week. Durable Orders, an important indicator of economic activity, will be released on Tuesday. The Core PCE price index, the Fed's preferred inflation indicator, is scheduled for Thursday. In addition, there will be Treasury auctions on Tuesday,Wednesday, and Thursday.