December 20th, 2021 12:58 PM by Richard Sardella MLO.100007700/NMLS 233568
Building Permits, Housing Starts and Housing Completions all showed big gains in November.
Building Permits, an indicator of future housing starts, were up 3.6% from October with an annualized pace of 1.712M units. Single Family Residences (SFR) were the lions-share of the permits with 1.103M units. Multi-family were at 560K units.
Housing Starts were up 11.8% in November from October's pace with 1.679M units on an annualized basis. That breaks down to SFR of 1.173M units and Multi-family at 491K.
Housing Completions were up 4.1% with 1.282M units hitting the market on a yearly basis. SFR represented 910K with Multi-family hitting 364K
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 moving slightly lower today. The MBS market improved by +22 bps last week. This may have been enough to improve mortgage rates or fees. The market experienced high volatility last week.
This Week's Rate Forecast: Neutral
Three Things: These are the three areas that have the greatest ability to impact rates this week: 1) Covid, 2) Inflation and 3) Domestic News
1) Covid: Last week, the CDC and the White House said to expect a surge of 600K to 1.3M new cases due to the quick spread of the Omicron variant. Rising numbers domestically and globally will be a factor in hedging against lockdowns, restrictions, and scaled back demand by consumers (services).
2) Inflation: We get the Fed's key measure of inflation, Core (ex food and energy) PCE on Thursday which is projected to be more than double the Fed's target rate. The headline PCE rate is expected to top 5.5%
3) Domestic News: We have a lot big economic releases crammed into a holiday-shortened week. Consumer Confidence, GDP, Durable Goods Orders, Initial Weekly Jobless Claims, Personal Income and Spending will get a lot of attention from bond traders.
Treasury Sales: We have a 20 year Treasury bond Auction on Tuesday at 1 pm ET.
This Week's Potential Volatility: High
This morning we're seeing things settle into mostly sideways movement. Volatility is high as markets try in settle into a new week with minimal economic data to start.
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.
Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.
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.