30-Second Update:  No Rate Hike from Federal Reserve!


On Wednesday, January 29th, the Federal Reserve unanimously voted to keep their benchmark federal funds rate unchanged.  The rate will remain in the 2.25%-2.5% range after being increased by 25 basis points in December.  The Federal Open Market Committee (FOMC), which determines the Fed’s rate policy, announced, “in light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.”

Mortgage Rate Impact:

Mortgage rates have remained near its six-month lows recently, and keeping the federal funds rate unchanged should hold them near those levels.  The Fed has, however, previously indicated that they intend to raise rates multiple times this year.  Greg McBride, Chief Financial Analyst for advised, “use this as an opportunity to keep paying down debt, refinancing into fixed rates, or grab low interest rate offers.”

Stock Market Impact:

In reaction to the announcement from the Fed, the Dow Jones Industrial Average reacted favorably and reached its high for the day.



Home Values and Mortgage Volume Increasing

The Federal Housing Finance Agency recently released their monthly Home Price Index (HPI), and it showed that home prices rose 0.4% on average across the country for the month of November.  For the year, the HPI is up a large 5.8!  The HPI analyzes data based on single family homes that were purchased with conforming conventional mortgages.

Mortgage application data just came in, and it showed that applications to purchase a home are up 13% from this time last year.  At this level, application volume is nearing nine year highs!  Applications to refinance slowed slightly by 5%, but are still near their highest level since the springtime.   Refinance application volume was much lower a few months back and is slowly getting back to its highs, mostly due to the recent decline in mortgage rates.



30 – Second Update:  Homeownership Still Viewed as the American Dream. Purchase Mortgage Applications Reach 8 Year High!


According to a study done by the National Association of Realtors (NAR), 75% of non-homeowners and 90% of current homeowners said homeownership was an essential aspect to the “American Dream”.  The survey was conducted across twelve months of last year, and consisted of 64% homeowners, 27% renters, and 9% non-homeowners living with family members without paying rent.   Affordability in housing was the main reason holding back potential homeowners.  In the 4th quarter of 2018, however, only 43% of non-owners stated they could not purchase a home due to being in a position to purchase, which is a 6% drop from the previous quarter, in which 49% answered the same.

On top of the NAR report, data from the Mortgage Bankers Association (MBA) from the week of January 11th, purchase mortgage applications increased for the sixth time in the last eight weeks.  That index was up 9% on a seasonally-adjusted basis, representing the highest level since April 2010.   In addition, the Refinance Index increased 19% from its previous week to its highest level since March 2018.   These numbers are strongly correlated to interest rates pulling back from recent highs, as homeowners are looking to capitalize.   Mike Frantantoni, MBA Senior Vice President and Chief Economist, stated, “The spring homebuying season is almost upon us, and if rates stay lower, inventory continues to grow, and the job market maintains its strength, we do expect to see a solid spring market.”


Strong Mortgage Application Data and Favorable Labor Market

Mortgage application numbers came in much hotter than predications.  Purchase applications increased for the week of 1/7/2019 by 17% and refinances increased by 35%.  Purchases are 4% higher than this time last year.   With the holidays coming to an end and interest rates improving, we are seeing much more mortgage application activity and very strong levels of demand.  This is the biggest gain in mortgage activity since 2015!  This data is compiled from the Mortgage Banker’s Association and focuses on single family homes sales and housing construction.


Positive conditions are seen so far for 2019 from the Jobless Claims report.  Claims fell last week by 17,000 to 216,000.  This is a strong number and lower than many market experts’ expectations.  This decline is also gaining attention because it is lower despite the government shutdown where we saw 4,760 claims for unemployment just last week from federal jobs.  Even though the government shut down adds unique variables to the equation, this report as a whole points to a favorable labor market.



U.S. Adds Most Private Sector Jobs in Almost 2 Years!

Automatic Data Processing (ADP) reported that private sector employment jumped significantly in December, adding 271,000 jobs.  This increase was well above the 175,000 that economists expected and was the most jobs gained since February of 2017.   This ADP report is used by economists to get a feel for the Labor Department’s employment report which will be released on January 11th and covers government jobs in addition to the private sector.   Amidst concerns from economists that we are on the brink of a slowing economy, the ADP report data suggested otherwise.   Mark Zandi, Chief Economist at Moody’s Analytics stated, “At the current pace of job growth, low employment will get even lower.”  In addition, he noted that businesses continue to add aggressively to their payrolls despite the recent stock market slump and the trade war between the U.S. and China.

ADP Report Highlights (Jobs Created)

  • 66,000 – Professional and Business Services
  • 61,000 – Education and Health Services
  • 39,000 – Leisure and Hospitality
  • 37,000 – Construction
  • 12,000 – Manufacturing


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