CHM Blog

Daily Market Analysis

At 8:29 am ET the 10 yr. was unchanged at 1.79%, and MBS prices were up 5 bps from yesterday. At 8:34 am ET, the 10 yr. at 1.85% and MBS prices -19 bps from yesterday. Once again, the employment data proves that those forecasts we deal with each month are blind dart-throwing games. Before 8:30 am ET, stock indexes were up slightly (DJIA +25). At 8:45 am ET, the DIJA jumped to +180.

November job growth early this week was for an increase of 180K. On Wednesday, that idea was doused when ADP reported private jobs +67K on estimates of 156K. Since then, the whisper number for the BLS jobs had slipped to 135K. BLS reported job growth at 8:30 am ET +266K and revised October and Sept up an additional 41K. Private jobs estimates were +168K, private jobs came in at an increase of 254K. The unemployment rate thought to be unchanged at 3.6%, dropped to 3.5% in November. Manufacturing jobs, the segment of the economy that is slowing, was estimated at +15K, as released +54K (GM strike settled?). Average hourly earnings expected +0.3% increased 0.2%; yr./yr. +3.1% to $28.29/hr. from $27.43/hr. November marked the 110th straight month of US job growth, the longest such streak on record.

Trade: China relaxing tariffs on imports of US pork and soy by domestic companies, a step that may also signal a broader trade agreement with the US is drawing closer. Negotiators have indicated that they may be drawing closer to agreeing on phase one of a more comprehensive accord that would resolve the trade dispute. Still, Trump said he wouldn’t care if the trade issues dragged on through the next election. After saying that in a tweet, he later went on to say the negotiations were proceeding nicely. China is beginning to issue waivers on American soybeans, cotton, corn, sorghum, and pork but remains stalwart that any agreement has to be that the US lower its tariffs on Dec 15th, as it stands now Trump will add additional tariffs. If it weren’t for the employment data this morning, that would be the headline today.

Impeachment moving rapidly to a conclusion. Both Democrats and President Trump are pushing it forward. Next Thursday, the House Judiciary Committee will draft the articles of impeachment and talk now is that the House will vote before the end of the year. The end of the year for Congress is Dec 20th. Markets still not reacting and won’t until the trial in the Senate and then maybe not much.

At 10:00 am ET, the final Nov U. of Michigan consumer sentiment index expected at 96.9 from 96.8. As reported, the indexed jumped to 99.2.

Our technicals are bearish near term, but there hasn’t been much change movement in rates going back to 11/14; 10 yr. range 1.85% to 1.77%.

PRICES @ 10:00 AM ET

10 yr. note: 1.85% +5 bp

5 yr. note: 1.68% +4 bp

2 Yr. note: 1.62% +3 bp

30 yr. bond: 2.27% +3 bp

Libor Rates: 1 mo. 1.710%; 3 mo. 1.885%; 6 mo. 1.888%; 1 yr. 1.922% (12/5/19)

30 yr. FNMA 3.0: @9:30 101.17 -17 bp (-6 bp from 9:30 yesterday)

15 yr. FNMA 3.0: @9:30 102.18 -9 bp (-1 bp from 9:30 yesterday)

30 yr. GNMA 3.0: @9:30 102.56-12 bp (-7 bp from 9:30 yesterday)

Dollar/Yuan: $7.0343 -$0.0105

Dollar/Yen: 108.80 +0.04 yen

Dollar/Euro: $1.1062 -$0.0041

Dollar Index: 97.63 +0.22

Gold: $1466.30 -$16.80

Crude Oil: $59.34 +$0.91

DJIA: 27,956.79 +279.00

NASDAQ: 8650.60 +79.90

S&P 500: 3143.92 +26.49

About Richard Sardella

Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

About This Report And Disclosure Information

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.

Posted in:General
Posted by Richard Sardella MLO.100007700/NMLS 233568 on December 6th, 2019 9:04 AM
Daily Market Analysis

Overnight the rate markets were relatively quiet and unchanged, but at 8:30 am ET this morning, weekly jobless claims dropped to the lowest we have seen recently at 203K -10K (April). As a result, the bond and mortgage markets experienced selling sending the 10 yr. up 4 bps to 1.81% and MBS prices down 16 bps from yesterday's close. Better claims, but it is still only about trade (see the third paragraph).

Also, at 8:30 am ET October, US trade deficit was expected -$48.6B, as reported -$47.2B and Sept deficit lowered from -$52.5 to -$51.1B. The deficit has been narrowing for the past three months, its lowest level in nearly 1-1/2 years, suggesting trade could contribute to economic growth in the fourth quarter. On the flip side, a fall in imports of consumer goods hinted at a slowdown in domestic demand.

US/China trade chats are continuing, according to Chinese officials. China is saying it wants tariffs reduced proportionately as part of a phase-one accord. More tariffs are scheduled for Dec 15th on Chinese exports to the US. Markets appear to be betting that President Trump will back away from applying the tariffs, or at least reducing them. Negotiators are moving closer to agreeing on the amount of tariffs that would be rolled back in a phase-one trade deal. Today trade appears to be moving in a positive direction — this afternoon, who knows.

Impeachment news: Pelosi made a statement this morning at 9:00 am ET saying Trump violated the public trust. President Trump saying "If you are going to impeach me, do it now, fast, so we can have a fair trial in the Senate, and so that our country can get back to business."…. Democrats "have no impeachment case and are demeaning our country." There's been a lot of media attention on impeachment, but so far there's been no impact on rates.

At 10:00 am ET October factory orders were expected +0.3%, as released +0.3%.

Nothing has changed; the interest rate markets remain in narrow ranges. The 10 yr. ran up to 1.82%, closing in on the recent high at 1.85% on Monday. Once again, markets have one focus, trade.

PRICES @ 10:00 AM

10 yr. note: 1.82% +5 bp

5 yr. note: 1.64% +4 bp

2 Yr. note: 1.59% +2 bp

30 yr. bond: 2.25% +3 bp

Libor Rates: 1 mo. 1.713%; 3 mo. 1.887%; 6 mo. 1.887%; 1 yr. 1.917% (12/4/19)

30 yr. FNMA 3.0: @9:30 101.19 -20 bp (-26 bp from 9:30 yesterday)

15 yr. FNMA 3.0: @9:30 102.19 -20 bp (-17 bp from 9:30 yesterday)

30 yr. GNMA 3.0: @9:30 102.64 -9 bp (-21 bp from 9:30 yesterday)

Dollar/Yuan: $7.0448 -$0.0052

Dollar/Yen: 108.87 unch

Dollar/Euro: $1.1103 +$0.0027

Dollar Index: 97.43 -0.22

Gold: $1481.40 +$1.20

Crude Oil: $59.08 +$0.65 (OPEC cutting output)

DJIA: 27,629.20 -20.58

NASDAQ: 8567.08 +0.40

S&P 500: 3110.13 -2.63

About Richard Sardella

Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

About This Report And Disclosure Information

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.

Posted in:General
Posted by Richard Sardella MLO.100007700/NMLS 233568 on December 5th, 2019 8:46 AM
Daily Market Analysis

Monday and Tuesday, the DJIA dropped 548 points on President Trump's comments that he wasn't in a hurry for a trade deal, and maybe it would be best to wait until the 2020 elections. Not news for our readers that trade issues are the primary drivers for the equity markets and by extension, the bond and interest rate market.

President Trump's continual one-liners keep markets on edge. Yesterday investors feared the possibility a trade deal was out the window in the near term. This morning President Trump saying the US and China are closer to agreeing on the number of tariffs to be rolled back in a phase-one trade deal even amid tension over Hong Kong and Xinjiang. The dramatic sentiment changes from day to day about trade discussions are having a whipsaw effect on markets.

Democrats in Congress will begin proceedings today that are widely expected to end in impeachment charges against President Donald Trump, a day after they accused him of abusing his office in a bid to secure his re-election in 2020. The House of Representatives Judiciary Committee will hold a hearing to examine if Trump's alleged misdeeds in his dealings with Ukraine qualify as the "high crimes and misdemeanors," punishable by impeachment under the US Constitution.

Nov ADP private jobs data released at 8:15 am ET this morning; forecasts were for jobs to have increased 156K, as released jobs increased just 67K. October jobs were revised better, from 125K to 140K. No reaction to the weak report in stocks or bonds (rates). More evidence that nothing matters these days as much as trade. Trade is the single issue that is the focus.

Early this morning, Mortgage Bankers Association (MBA) said last week mortgage applications declined 9.2%, purchase apps +1.0% with refinance apps -16.0%.

At 10:00 am ET, the Nov ISM non-manufacturing index was expected at 54.5 from 54.7 in October. The index came in at 53.9, the lowest since 2016. However, anything above 50 is expansionary, and there was no initial reaction to the softer number.

PRICES @ 10:10 AM

10 yr. note: 1.76% +4 bp

5 yr. note: 1.58% +4 bp

2 Yr. note: 1.56% +2 bp

30 yr. bond: 2.21% +5 bp

Libor Rates: 1 mo. 1.703%; 3 mo. 1.891%; 6 mo. 1.895%; 1 yr. 1.936% (12.3.19)

30 yr. FNMA 3.0: @9:30 101.45 -8 bp (+20 bp from 9:30 yesterday)

15 yr. FNMA 3.0: @9:30 102.36 -5 bp (-3 bp from 9:30 yesterday)

30 yr. GNMA 3.0: @9:30 102.88 -6 bp (+23 bp from 9:30 yesterday)

Dollar/Yuan: $7.0490 -$0.0122

Dollar/Yen: 108.70 +0.07 yen

Dollar/Euro: $1.1104 +$0.0021

Dollar Index: 97.50 -0.23

Gold: $1480.60 -$3.80

Crude Oil: $57.86 +$1.76

DJIA: 27,683.85 +181.04

NASDAQ: 8576.73 +56.09

S&P 500: 3114.74 +21.54

About Richard Sardella

Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

About This Report And Disclosure Information

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.

Posted in:General
Posted by Richard Sardella MLO.100007700/NMLS 233568 on December 4th, 2019 9:02 AM
Daily Market Analysis

Interest rates at the long end of the curve increased yesterday with little reason we could find. Not that rates shouldn't vacillate, but the magnitude was surprising. The 10 yr. increased to 1.83% +5 bps but opened at 1.85% +7 bps, MBS prices declined 8 bps. The stock market took a whipping. Interest rates are back to last Friday's close; the 10 yr. at 8:30 am ET 1.77% -5 bp, MBS prices +14 bps points.

Yesterday, President Trump announced another opening in the trade war applying tariffs on steel on Argentina and Brazil. He also called for Federal Reserve actions to weaken the dollar and ended with a threat for 100% tariffs on French champagne and other goods over a new digital tax that doesn't sit well in Silicon Valley. The threat of punitive tariffs came after a US government investigation found France's new digital services tax would harm US technology companies. France and the European Union said they're ready to retaliate if President Trump acts on a threat to impose duties of up to 100% on imports of champagne, handbags, and other French products worth $2.4 billion. Trump's addition of tariffs adds more to the uncertainty about the US economic outlook in 2020. Adding to the market volatility, President Trump, at the NATO meeting, said he doesn't care if the China deal isn't accomplished until after next year's election sending stock indexes down and removing yesterday's bump up in interest rates. The president seems to believe that the trade wars are winners, pointing to the huge increase in US stock markets this year.

China is roiling over the US bill supporting protesters in Hong Kong. A phase one trade deal based on today's volatile comments is not likely now, and on Dec 15th, more tariffs will go into effect unless President Trump steps back. It is a fast-moving target, as evidenced by today's news. No one can effectively handicap what President Trump may say or do next. The substance of the tariffs on Argentina and Brazil is based on their weak currencies.

Impeachment rolling along, now moving to the House Judiciary Committee to work up articles of impeachment.

What does the president mean when he says he is in no hurry to make a deal with China? Equity markets already in very overbought technical conditions reeling over trade and weakening manufacturing data are under a lot of pressure yesterday and so far today. Markets are going to exhibit an increase in volatility. The rate markets, however, don't appear to be overly worried, at least for now. The 10 yr. and mortgage rates remain in very narrow ranges with no significant movement in the last three weeks.

Technically, the bond and mortgage markets are neither bullish nor bearish. Just swing around on the breaking news. Fundamentally we didn't see a good reason for the magnitude of yesterday's increase in rates.

PRICES @ 10:00 AM ET

10 yr. note: 1.74% -8 bp

5 yr. note: 1.56% -9 bp

2 Yr. note: 1.55% -6 bp

30 yr. bond: 2.19% -7 bp

Libor Rates: 1 mo. 1.693%; 3 mo. 1.900%; mo. 1.906%; 1 yr. 1.962% (12/2/19)

30 yr. FNMA 3.5: @9:30 102.70 +6 bp (unch from 9:30 yesterday) 3.0 101.48 +16 bp (+5 bp from 9:30 yesterday)

15 yr. FNMA 3.0: @9:30 102.39 +15 bp (+1 bp from 9:30 yesterday)

30 yr. GNMA 3.5: @9:30 103.83 +8 bp (+5 bp from 9:30 yesterday) 3.0 102.86 +17 bp (+5 bp from 9:30 yesterday)

Dollar/Yuan: $7.0624 +$0.0230

Dollar/Yen: 108.69 -0.28 yen

Dollar/Euro: $1.1082 +$0.0003

Dollar Index: 97.72 -0.14

Gold: $1487.40 +$18.20

Crude Oil: $55.54 -$0.42

DJIA: 27,405.27 -377.77

NASDAQ: 8468.39 -99.60

S&P 500: 3079.52 -34.56

About Richard Sardella

Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

About This Report And Disclosure Information

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.

Posted in:General
Posted by Richard Sardella MLO.100007700/NMLS 233568 on December 3rd, 2019 9:06 AM
Rates At a Glance
Mortgage Rates
Currently Trending
7 Day Mortgage
Rate Forecast
This Week's
Potential Volatility

Neutral

Neutral

Average
(by Sigma Research)
RE Report

Home sales report good numbers

Way to begin ending 2019 with a bang. According to The U.S. Census Bureau and Department of Housing and Urban Development reports home sales surged to surpass sales a year earlier by 31.6 percent, more than doubling the annual increase the prior month.

While sales of newly constructed homes were actually slightly lower than in September, sales during the month at a seasonally adjusted annual rate of 733,000, down 0.7 percent from September. That previous number, however, was revised from an originally reported 701,000 to 738,000 units. Sales in October 2018 were at the rate of 557,000 units.

According to Mortgage News Daily’s Jann Swanson, “On a non-adjusted basis, there were 57,000 newly constructed homes sold during the month, unchanged from September but up from 43,000 a year earlier. On a year-to-date basis, sales have totaled 586,000 units, 9.6 percent more than during the same period in 2018.” She goes on to say that the median sales prices of a home sold in October was $316,700, compared to $328,300 in October 2018. The average price was $383,300, down from 394,900 a year earlier.

While sales declined in the short term by 18.2 percent in the Northeast, they were still 17.4 percent higher year-over-year. The Midwest saw an increase of 4.2 percent and 17.2 percent for the two earlier periods.

The report says sales in the South dipped 3.3 percent from September but were 40.6 percent higher on an annual basis, while the West posted gains of 7.1 percent and 21.9 percent respectively.

At this point, 2020 might just turn out to be a good one for home sales.

This Week's Mortgage Rate Summary

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage Backed Securities (MBS) which are traded in real time, all day in the bond market.  This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events.  When MBS pricing goes up, mortgage rates or pricing generally goes down.  When they fall, mortgage pricing goes up.  Tracking these securities real-time is critical.  For more information about the rate market, contact me directly.  I’m among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are trending sideways so far today.  Last week the MBS market improved by +10bps.  This caused rates to move sideways. We saw very low rate volatility all week.

This Week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to move rates this week. 1. Trade War(s), 2. Jobs, and 3. Manufacturing and Services.

1) Trade War(s): The December 15th deadline is fast approaching for the newest round of Chinese Trade Tariffs. China is pushing for not only for those tariffs to be postponed or removed but also for existing tariffs to be removed as a condition of completing a Phase I trade deal. Meanwhile, President Trump has reactivated steel and aluminum tariffs against Brazil and Argentina due to the massive devaluation of their currencies.

2) Jobs: We get a ton of job and wage-related economic data this week with ADP Private Payrolls, Challenger Job Cuts, Initial Jobless Claims, Non-Farm Payrolls, Unemployment Rate, Participation Rate, Average Work Week and most importantly - Average Hourly Earnings. The market is expecting another reading of 3.0% on a YOY basis. Any reading hotter than that will be negative for rates.

3) Manufacturing and Services: We get key readings for both manufacturing (1/3) of our economy and services (2/3) of our economy with both Markit and ISM releases. Perhaps more importantly, we get the same data from China, Germany, and the Eurozone.

This Week's Potential Volatility: Average

We get a ton of economic numbers this week that can move rate markets. Having said that, rates are trapped in a very tight channel for weeks now. It will take some unexpected jobs or manufacturing numbers to push rates out of its channel.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

About Richard Sardella

Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

About This Report And Disclosure Information

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.

Posted in:General
Posted by Richard Sardella MLO.100007700/NMLS 233568 on December 2nd, 2019 12:13 PM
Daily Market Analysis

Interest rates jumping this morning after trading unchanged last week; at 8:00 am ET the 10 yr at 1.84% +6 bps, MBS prices -17 bps from Friday. Holiday internet shopping hit a record $17B while hard stores once again lost to internet buying. Early trading in US stock indexes generally unchanged. Stocks under a little pressure with President Trump restoring tariffs on some imports from Brazil and Argentina, overshadowing data showing that the Chinese and eurozone economies were stabilizing.

Impeachment gets back underway with Congress back from Thanksgiving. The process moves from the House Intelligence Committee to the House Judiciary Committee, where more testimony will occur, Republicans wanting more witnesses than Dems are willing to allow. It doesn't matter; we all know where this is going. Some Republicans on the committee considering calling Joe Biden, the whistleblower, and even Adam Schiff. None will likely be allowed. The Constitution calls for the chief justice of the US to preside over a Senate impeachment trial.

The Financial Times reporting today that the Federal Reserve may implement a rule that would allow inflation measures to exceed the 2.0% target. China's Manufacturing PMI inched back into expansionary territory (November Manufacturing PMI rose to 50.2 from 49.3), while eurozone economies also reported slightly better than expected Manufacturing PMI readings of their own Eurozone's November Manufacturing PMI rose to 46.9 from 46.6 (expected 46.6). Germany's November Manufacturing PMI rose to 44.1 from 43.8 (expected 43.8). Comments from China; its main focus in the trade talks is to remove the tariffs Trump has placed on its goods and the threat of adding more on Dec 15th. The trade deal is now "stalled" due to the passage of the Hong Kong Human Rights and Democracy Act. China suspended visits by US military ships and aircraft to Hong Kong and placed sanctions on some US nongovernment organizations, in the act of retaliation.

At 10:00 am ET Nov ISM manufacturing index expected at 49.4 declined to 48.1 (Oct 48.3); the weaker index sent stocks lower and improved the rate markets a little. Oct construction spending also weaker than forecasts; -0.8% on forecasts of +0.4; Sept spending originally reported +0.5% revised to -0.3%.

The increase in rates today pushed our technicals to bearish, standing back though the rate markets have been very stable for most of November. The 10 yr and the rest of the curve not moving much, but any bullishness has been short-lived. Strong retail sales and increasing belief there will be a phase one deal with China will happen soon.

This Week's Calendar:

Today,

10:00 am Nov ISM manufacturing (49.4 expected, as released 48.1)

  • Oct construction spending (+0.4% expected, as released -0.8%)

Tuesday,

No time Nov auto and truck sales (17.0 mil)

Wednesday,

7:00 am weekly MBA mortgage applications

8:15 am Nov ADP private jobs (156K from 125K in Oct)

10:00 am Nov ISM non-manufacturing (54.5 from 54.7 in Oct)

Thursday,

8:30 am weekly jobless claims (220K +7K)

  • Oct US trade deficit (-$48.6B)

10:00 am Oct factory orders (+0.3%)

Friday,

8:30 am Nov employment data (Unemployed 3.6%, NFP jobs 180K, private jobs +170K, average hourly earnings +0.3%, yr/yr +3.0%, manufacturing jobs +20K (Oct manufacturing -36K)

10:00 am final Nov U. of Michigan consumer sentiment (96.8, unch from mid-month)

3:00 pm Oct consumer credit (+$15.5B)

PRICES @ 10:10 AM

10 yr note: 1.82% +4 bp (got a boost frm 10:00 data 1.85% the high earlier)

5 yr note: 1.65% +2 bp

2 Yr note: 1.62% +1 bp

30 yr bond: 2.27% +7 bp

Libor Rates: 1 mo 1.697%; 3 mo 1.905%; 6 mo 1.896%; 1 yr 1.952% (11/29/19)

30 yr FNMA 3.5: @9:30 102.58 -9 bp (-6 bp frm 9:30 Friday) 3.0 101.23 -17 bp (-17 frm 9:30 Friday)

15 yr FNMA 3.0: @9:30 102.34 -4 bp (+3 bp frm 9:30 Friday)

30 yr GNMA 3.5: @9:30 103.48 -11 bp (-22 bp frm 9:30 Friday) 3.0 102.59 -19 bp (-19 bp frm 9:30 Friday)

Dollar/Yuan: $7.0396 +$0.0070

Dollar/Yen: 109.53 +0.02 yen

Dollar/Euro: $1.1044 +$0.0026

Dollar Index: 98.14 -0.14

Gold: $1464.80 -$7.90

Crude Oil: $56.44 +$1.27

DJIA: 27,916.81 -134.60

NASDAQ: 8573.44 -91.43

S&P 500: 3120.37 -20.61

About Richard Sardella

Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

About This Report And Disclosure Information

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.

Posted in:General
Posted by Richard Sardella MLO.100007700/NMLS 233568 on December 2nd, 2019 9:06 AM

As published by the Federal Housing Finance Agency 11/26/2019:

FHFA Announces Maximum Conforming Loan Limits for 2020

Fannie Mae and Freddie Mac Baseline Limit Will Increase to $510,400

FOR IMMEDIATE RELEASE
11/26/2019

Washington, D.C. – The Federal Housing Finance Agency (FHFA) today announced the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2020.  In most of the U.S., the 2020 maximum conforming loan limit for one-unit properties will be $510,400, an increase from $484,350 in 2019. 

Baseline limit

The Housing and Economic Recovery Act (HERA) requires that the baseline conforming loan limit be adjusted each year for Fannie Mae and Freddie Mac to reflect the change in the average U.S. home price.  Earlier today, FHFA published its third quarter 2019 FHFA House Price Index (HPI) report, which includes estimates for the increase in the average U.S. home value over the last four quarters.  According to FHFA's seasonally adjusted, expanded-data HPI, house prices increased 5.38 percent, on average, between the third quarters of 2018 and 2019.  Therefore, the baseline maximum conforming loan limit in 2020 will increase by the same percentage. 

High-cost area limits

For areas in which 115 percent of the local median home value exceeds the baseline conforming loan limit, the maximum loan limit will be higher than the baseline loan limit.  HERA establishes the maximum loan limit in those areas as a multiple of the area median home value, while setting a “ceiling" on that limit of 150 percent of the baseline loan limit.  Median home values generally increased in high-cost areas in 2019, driving up the maximum loan limits in many areas.  The new ceiling loan limit for one-unit properties in most high-cost areas will be $765,600 — or 150 percent of $510,400. 

Special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam, and the U.S. Virgin Islands.  In these areas, the baseline loan limit will be $765,600 for one-unit properties.

As a result of generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit, the maximum conforming loan limit will be higher in 2020 in all but 43 counties or county equivalents in the U.S.   

Questions about the 2020 conforming loan limits can be addressed to LoanLimitQuestions@fhfa.gov and more information is available at https://www.fhfa.gov/CLLs.

  • For a list of the 2020 maximum loan limits for all counties and county-equivalent areas in the U.S. click here
  • For a map showing the 2020 maximum loan limits across the U.S. click here.  
  • For a detailed description of the methodology used to determine the maximum loan limits in accordance with HERA, click here.

###

Posted in:General
Posted by Richard Sardella MLO.100007700/NMLS 233568 on November 30th, 2019 12:45 PM
Daily Market Analysis

A number of data points at 8:30 am ET this morning sent interest rates up and MBS prices down. As for the equity markets, not much movement, even though the data would normally spark a better reaction.

At 8:30 am ET the Q3 preliminary GDP, the second look, was widely expected at 1.9% as it was on the advance report, GDP increased to 2.1%, real consumer spending +2.9% better than 2.8% expected, GDP price index +1.7% as expected. Q3 has been seen as a soft quarter, still is, but the data is slightly stronger. October durable goods orders much better than forecasts; +0.6% on estimates of -0.7%, excluding transportation orders +0.6% on estimates of +0.1%, core capital goods orders were thought to be +0.1%, reported at +1.2% the biggest increase in nine months and up 0.9% on a year-on-year basis. Finally, at 8:30 am ET weekly jobless claims were anticipated at 218K -9K, claims declined to 213K -15K.

Early this morning MBA weekly mortgage apps; +1.5%, purchases -1.0%, refinances +4.0%.

At 9:30 am ET the DJIA opened +10, NASDAQ +19, S&P +4. 10 yr 1.77% +3 bps. MBS prices -6 bps from yesterday’s close and -9 bps from 9:30 yesterday.

At 9:45 am ET Nov Chicago purchasing mgrs. index expected at 46 reported at 46.3.

At 10:00 am ET two more key data points. Nov pending home sales declined 1.7% on thoughts of +0.8%, yr/yr +4.4% (more details this afternoon). October personal income and spending; income expected +0.3% was unchanged, spending expected +0.3% as released +0.3%. Oct PCE +0.2% on forecasts of +0.3%, core PCE +0.1% as expected. PCE yr/yr +1.3% on thoughts of +1.2%, yr/yr core PCE +1.6% better than 1.7% expected.

At 1:00 pm $32B 7 yr note auction

President Trump commented yesterday that the phase one trade deal is close to completion. China earlier this week also made similar remarks. China’s Ministry of Commerce said officials “reached consensus on properly resolving relevant issues” and agreed to stay in contact on the remaining points in phase one. The US Trade Representative’s office confirmed a conversation took place. Trump in an interview with former Fox News host Bill O’Reilly said that he’s holding up the trade deal to ensure better terms for the US, “We can’t make a deal that’s like, even. We have to make a deal where we do much better, because we have to catch up.”

JPMorgan is saying with improving growth, it will push yields higher in the second half. The firm expects the 10-year note to yield 2.05% at the end of next year, up from 1.77% now. JPMorgan expects the Fed to cut rates by 25 basis points in the second quarter. Net new bond supply may drop by about 18%, driven mostly by lower Treasury and high-grade corporate issuance. Don’t make bets on it; the big banks don’t have a good track record for longer-term forecasts.

The long weekend begins about noon today; data this morning would have pushed rates higher and prices lower, but since most will be out until Monday and with that much time away, making major moves in either stocks or bonds isn’t likely. Our technicals remain positive near-term, but there isn’t any real change in rates the last two weeks, and we expect that will continue into next week when congress gets back, and markets get recent data on consumer spending over the weekend.

PRICES @ 10:10 AM

10 yr. note: 1.76% +2 bp

5 yr. note: 1.61% +2 bp

2 Yr. note: 1.60% +1 bp

30 yr. bond: 2.19% +1 bp

Libor Rates: 1 mo. 1.701%; 3 mo. 1.908%; 6 mo. 1.914%; 1 yr. 1.941% (11/26/19)

30 yr. FNMA 3.5: @9:30 102.63 -6 bp (-9 bps from 9:30 yesterday)

15 yr. FNMA 3.0: @9:30 102.31 -5 bp (+1 bp from 9:30 yesterday)

30 yr. GNMA 3.5: @9:30 103.61 -20 bp (-21 bps from 9:30 yesterday ?)

Dollar/Yuan: $7.0289 -$0.0046

Dollar/Yen: 109.27 +0.22 yen

Dollar/Euro: $1.0996 -$0.0026

Dollar Index: 98.41 +0.16

Gold: $1454.20 -$6.10

Crude Oil: $58.41 unch

DJIA: 28,093.72 -27.96

NASDAQ: 8671.69 +23.75

S&P 500: 3143.79 +3.27

About Richard Sardella

Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

About This Report And Disclosure Information

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.

Posted in:General
Posted by Richard Sardella MLO.100007700/NMLS 233568 on November 29th, 2019 9:27 AM
Daily Market Analysis

Treasuries and MBS opened better this morning, at 8:00 am ET. The 10 yr. is are 1.73% -3 bp, and MBS prices at 8:00 am ET +2 bps.

US and Chinese trade officials were in contact yesterday. China reached consensus on some issues, China's Commerce Ministry said, without giving details. The US Trade Representative's office was also tight-lipped. All Beijing would say was that Steven Mnuchin, Robert Lighthizer, and Liu He discussed core concerns by phone. Lifting tariffs and agricultural purchases were probably among them. Progress or just more rhetoric? A deal is still in the making, but comments and reports like this keep hope alive. There will be a deal, but we doubt it will happen this year. President Trump doesn't see any reason to hurry, and he has another tariff card to play on Dec 15th; 15% tariffs on some $160B in imports from China. Over the weekend, China took a good step forward by announcing more pressure on IP stealing and increased surveillance of intellectual thefts.

Stocks set more new all-time highs yesterday and in pre-opening trading this morning adding to them. New highs are almost a daily thing these days. The large majority of key analysts, economists, and big money managers all agree that the end is nowhere in sight as the bull markets run on.

Congress will be back on Dec 3rd. The panels involved in the impeachment probe will send a report to the House Judiciary Committee then the Judiciary will file official charges against President Trump. After that, on to the Senate for trial. Adam Schiff said the report would include a catalog of White House refusals to cooperate with the inquiry, and that the Trump administration's failure to cooperate could form the basis of a separate article of impeachment - or formal charge of obstruction of Congress against the president.

Preliminary Oct trade deficit better than expected at -$66.35B, but both sides of the ledger were weaker. A contraction in both sides of the balance sheet, exports were off a further 0.7% after a slightly shallower revised 1.3% drop in September while imports decreased a steeper 2.4% following a 2.1 percent slide last time.

Sept Corelogic home prices were a little better than expected +0.4% against +0.3% forecasts. The unadjusted annual inflation rate a ticked higher to 2.1%. On the month, unadjusted prices were 0.1% firmer. The Sept FHFA home price index jumped 0.6% on expectations of +0.2%.

At 9:30 am ET, the DJIA gave back early gains in futures markets, opened -13, NASDAQ +2, S&P -1. 10 yr. 1.74% -2 bps. MBS prices unchanged from yesterday but +6 bps from 9:30 yesterday.

Two key data points at 10:00 am ET; October new home sales thought to be 707K units; sales reported 733K; Sept new home sales were revised from 701K to 738K. Good numbers but with the revised Sept number sales in October down 0.7%. The Nov Conference Board's Nov consumer confidence index was expected at 126.9 the index at 125.5 the softest since June but still a very strong level. Oct revised to 126.1 from 125.9.

At 1:00 pm this afternoon $41B of 5s will be auctioned.

Markets preparing for a long weekend, the bond market is keeping a little safety for insurance. Most players will be gone by 12:00 pm ET tomorrow, and many already out shopping for a plump turkey. Thin trading now through the end of the week. No impeachment news other than what is already known, Congress gone until next Tuesday. So far, impeachment has had little impact on investors or the markets. Our near term outlook still slightly bullish for the bond market, but fundamentally, unless the trade deal falls completely apart, interest rates are not likely to decline much from present levels. MBSs in a very tight range.

PRICES @ 10:10 AM ET

10 yr. note: 1.74% -2 bp

5 yr. note: 1.59% -2 bp

2 Yr. note: 1.57% -3 bp

30 yr. bond: 2.17% -3 bp

Libor Rates: 1 mo. 1.699%; 3 mo. 1.918%; 6 mo. 1.919%; 1 yr. 1.941% (11/25/19)

30 yr. FNMA 3.5: @9:30 102.72 unch (+6 bp from 9:30 yesterday)

15 yr. FNMA 3.0: @9:30 102.36 +7 bp (-2 bp from 9:30 yesterday)

30 yr. GNMA 3.5: @9:30 103.75 unch ( +10 bp from 9:30 yesterday)

Dollar/Yuan: $7.0369 +$0.0005

Dollar/Yen: 109.07 +0.16 yen

Dollar/Euro: $1.1013 -$0.0002

Dollar Index: 98.35 +0.02

Gold: $1453.80 -$3.10

Crude Oil: $58.46 +$0.45

DJIA: 28,098.30 +31.83

NASDAQ: 8639.59 +7.10

S&P 500: 3136.05 +2.41

About Richard Sardella

Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

About This Report And Disclosure Information

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.

Posted in:General
Posted by Richard Sardella MLO.100007700/NMLS 233568 on November 26th, 2019 10:31 AM
Rates At a Glance
Mortgage Rates
Currently Trending
7 Day Mortgage
Rate Forecast
This Week's
Potential Volatility

Neutral

Neutral

Average
(by Sigma Research)
RE Report

Single-family rentals continue to get more expensive

Apartment living has its advantages, but it seems today's renters are opting for single-family homes instead of schlepping their bags of groceries up elevators. More room for their pets to roam? Possibly. After all, it's reported that 75% of renters own a furry friend. All we know is that apartment rental occupancy rates hit an all-time low. Meanwhile, single-family rental prices have also surged.

CoreLogic reports that U.S. single-family rent prices rose 3% in September over August. If we compare this to last September, however, the national rent increase has remained flat. Looking around for comparisons, Phoenix saw the highest year over year rent price increase, 6.7%, while Miami saw the lowest, 1%.

Low rental home inventories seem to spur the growth of single-family rental prices. September is also the 65th month in a row where low-end rentals spurred national rent growth, according to HousingWire's Julia Falcon. "Rent prices among this segment, defined as properties with rent prices less than 75% of the regional median, increased 3.8% year over year in September 2019, the same as in September 2018," she says.

Upscale rentals (more than 125% of a particular region's median rent), increased 2.9% in September, slightly up from last September's 2.5%. But Phoenix is still the rising star, having seen the highest year-over-year increase for the 10th year in a row, at 6.7%. Phoenix also had an annual employment growth of 2.4%, which is higher than the national employment growth average of 1.4%.

"Metro areas with limited new construction, low rental vacancies and strong local economies that attract new employees tend to have stronger rent growth," says Falcon.

Source: CNBC, CoreLogic, TBWS

This Week's Mortgage Rate Summary

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage Backed Securities (MBS) which are traded in real time, all day in the bond market.  This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events.  When MBS pricing goes up, mortgage rates or pricing generally goes down.  When they fall, mortgage pricing goes up.  Tracking these securities real-time is critical.  For more information about the rate market, contact me directly.  I’m among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are trending sideways this morning.  Last week the MBS market improved by +1bps.  This caused rates to move mostly sideways for the week on low volatility.

This Week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Trade, 2) Inflation, and 3) The Fed.

1) Trade: No official scheduled announcements are expected this week, but the bond market will continue to be reactive to any tweets, rumors, or speeches. The markets are still cautiously optimistic that some sort of Phase 1 deal is progressing. However, the next leg or Phase 2 is now considered only a remote possibility.

2) Inflation: We get the Fed's preferred measure of inflation (aka the "trigger rate") on Tuesday with the PCE Core YOY number, which is expected to remain at 1.7%, but bonds will be very sensitive to any upward movement in that data point.

3) The Fed: We will hear from Fed Chair Jerome Powell on Monday night at 7 pm ET. We will also get the Fed's Beige Book on Wednesday, which is prepared two weeks ahead of the next Fed policy meeting.

Treasury Auctions this Week:

  • 11/25 2 year note
  • 11/26 5 year note
  • 11/27 7 year note

This Week's Potential Volatility: Average

We have a short week this week, with markets closing Thursday for Thanksgiving and an abbreviated trading day on Friday. Rates will likely trade in a tight channel once again this week on relatively low volatility. Two things can move rates this week, news on trade and unexpected inflation numbers Wednesday. Otherwise, we expected relatively low volatility.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

About Richard Sardella

Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

About This Report And Disclosure Information

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.

Posted in:General
Posted by Richard Sardella MLO.100007700/NMLS 233568 on November 25th, 2019 12:33 PM

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