CHM Blog

Realtor Market Insider April 12, 2021

April 12th, 2021 10:01 PM by Richard Sardella MLO.100007700/NMLS 233568

Rates At a Glance
Mortgage Rates
Currently Trending
7 Day Mortgage
Rate Forecast
This Week's
Potential Volatility



(by Sigma Research)
RE Report

A place called home is getting more facelifts than ever

If it’s one thing the past year has done to homeowners, it has injected into them a renewed interest in home renovations. According to EyeOnHousing’s Paul Emrath, remodeler confidence was up strongly on a year-over-year basis, according to the Remodeling Market Index (RMI).

The report, just released by the National Association of Home Builders (NAHB), shows that in the first quarter of 2021, the RMI posted a reading of 86, up a full 38 points from the first quarter of 2020, signaling a very strong recovery in remodeling activity since the onset of the pandemic.

The survey asks remodelers to rate 5 components of the remodeling market as “good,” “fair,” or “poor,” with each question measured on a scale from 0 to 100. An index number above 50 indicates that a higher share view conditions as good than poor. “The RMI is an average of two major component indices, measuring remodeler sentiment about current conditions and indicators of future activity,” says Emrath. “The Current Conditions Index, in turn, is an average of three subcomponents: the current market for large remodeling projects ($50,000 or more), moderately-sized projects ($20,000 to $49,999), and small projects (under $20,000).”

He goes on to say that in the first quarter, the Current Conditions Index was 89, a 31 point increase from the first quarter of 2020. Readings were all up substantially year-over-year, indicating strong demand for remodeling across all types of projects.

While the large year-over-year increases in the RMI signals a very strong recovery in remodeling activity as the economy accelerates with an easing of the pandemic, prices, and availability of building materials continue to be a stumbling block.

Source: NAHB | EyeOnHousing | 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 so far today.  Last week the MBS market improved by +60 bps.  This was enough to move rates or frees lower last week. We saw moderate rate volatility through the week.

This Week's Rate Forecast: Neutral

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

1) Domestic: The two major focus points this week will be Tuesday's CPI, which will be closely monitored for inflation both on a MOM and a YOY basis after last week's huge surge in PPI. Next up is Thursday's Retail Sales report, which after the prior's month's negative reading, is also expected to surge because this period does not have the bad weather as the prior period. Plus, this period has the impact of the $1,400 per person checks and reopenings of some parts of our economy. The high-frequency Initial Weekly Jobless Claims data will be largely ignored due to Spring Break and other seasonality factors.

2) The Fed: We get more soothing-dovish tones from Fed Chair Powell this week, who seemingly pops his head up each week to offset the strong economic data and spread his "transitory" message and dovish cheer. We also hear from several other prominent Fed's, here is this week's schedule:

  • 04/12 Eric Rosengren
  • 04/13 Esther George, Mary Daly, and Raphael Bostic
  • 04/14 Fed Chair Powell, John Williams, Robert Kaplan, Fed's Beige Book
  • 04/15 Loretta Mester

3) Treasury Dump: We have a huge week for dumping our debt into the marketplace; how well it is received will have an impact on the yield curve:

  • 04/12 $58B 3 year note, $38B 10Y note
  • 04/13 $24B 30 year Bond

This Week's Potential Volatility: High

We're not expecting a lot of volatility today, but we could see a spike depending on how the 10-year note auction goes this afternoon. However, we expect a good deal of rate volatility this week with the important inflationary data. We'll pay particularly close attention to Tuesday's CPI and Thursday's retail sales. The stronger those reports, the more likely we'll see rate volatility spike and rates push higher.

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 by Richard Sardella MLO.100007700/NMLS 233568 on April 12th, 2021 10:01 PM



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