30- Second Update:  US Jobless Claims Drop & Interest Rates Remain Low!

For the week ending April 6th, initial jobless claims fell 8,000 to a seasonally-adjusted 196,000, marking the lowest levels in almost 50 years.  These numbers are welcome and surprising, since economists polled by Reuters had previously forecasted that claims would rise to 211,000 in the latest week.  This report is indicative of a strong economy with sustained labor market strength.  Bloomberg Economist Eliza Winger stated, “Employers are adding jobs at a pace that is well above the natural growth rate of the labor force, and job openings continue to exceed the number of job seekers.”

This report came a day after the Federal Reserve officials signaled they’re prepared to move interest rates higher or lower as needed, but due to fluctuations in the economy and overall market risk, it is expected that interest rates will remain on hold all year.  Currently, interest rates are hovering near 15-month lows, a welcome sign for borrowers looking to purchase or refinance a home this Spring.



Low Rates, Refis and Strong Appreciation, Oh My!

The Mortgage Bankers Association has released their application report for the week of March 29th.  In this release, we see that single-family home sales increased by 3% and refinances increased by a whopping 39%!   This tremendous surge in refinances, which is now nearly half of all submitted mortgage applications, certainly has to do with the recent decline in interest rates. 


CoreLogic is forecasting homes across the nation will appreciate in value, on average, by 4.7% over the next year. They are seeing a slight decrease in appreciation currently, but that won’t last long.  Homes from this time last year have appreciated by approximately 4% across the nation.  The CoreLogic data is derived for their Home Price Index which is calculated on owner-occupied houses from every state. 


With historically low interest rates and strong forecasts of appreciation in the housing market, the numbers are pointing to a very fruitful time to purchase or refinance a home.  Also, if you purchase, not only can this investment create a lot of wealth, it also gives you a place to live and call a home!


30-Second Update:  Mortgage Applications Surge on Lower Rates

According to data from the Mortgage Bankers Association’s (MBA) weekly applications survey for the week ending March 22nd, mortgage applications increased 8.9% from the previous week and 5.7% from a year earlier.  Within the 8.9% overall increase, a 12% increase was attributed to the refinance index, while 6% was tied to the Purchase Index.  The surge in applications appear to be a direct correlation to the large drop in mortgage rates following last week’s Federal Reserve announcement, in which all indications point to no more interest rate hikes in 2019.   In addition, some analysts are even predicting that the Central Bank could lower rates during the year.

This is a strong overall indication that the spring buying season is off to a good start.  Lower rates instantly increase a buyer’s housing affordability.  MBA’s Vice President of Economic and Industry Forecasting also noted, “Rates dropped across all loan types, and the 30-year fixed-rate mortgage is now more than 70 basis points below last November’s peak.”   Homebuyers who purchased during that period are in prime position to capitalize on these lower rates and lower their monthly payment with a rate-term refinance.

Now may be the perfect time to reach out to your Advisors Mortgage loan officer to discuss all of your purchasing or refinancing options!!!







The Fed’s New Game Plan

Despite the Fed’s tightening plan and a surging economy in 2018, interest rates have remained relatively steady over the last six months.  Recently, the Federal Reserve announced a new plan that will help support a low interest rate environment.  The Federal Reserve discussed their balance shet, reinvestment policy, and their plan of no rate hikes for 2019.

The Fed has mentioned that for 2019, it will not be moving quickly to raise the Federal Funds Rate in 2019.  The Fed Funds rate, which is the rate that banks charge to lend to one another will stay at 2.25%-2.5% for now.  Also, the Fed is currently letting about $50 billion dollars roll off their balance sheet, and beginning in May they will reinvest $15 billion of their “balance sheet” towards the purchase of treasuries per month.  On top of this, they will stop the reduction of their balance sheet come September and hold it instead of sell it.  This change of plans is very bond friendly and certainly points to a lower interest rate market by making mortgage bonds more attractive to investors, therefore helping to keep a lid on long term interest rates.


30-Second Update:  Jobs Report Exceeds Expectations/Wages Continue Higher

Despite a 35-day government shutdown, U.S. employers added 304,000 jobs in January, exceeding Wall Street’s expectation for an increase of 165,000 jobs.  The January increase represents 100 consecutive months of job additions!  Recently the Fed unanimously voted to keep the federal funds rate unchanged, along with a cautious approach to future interest rate hikes.  Josh Wright, the Chief Economist for iCIMS and former Federal Reserve staffer believes that, “The blowout jobs number could convince the Fed to reverse course before the end of the year.”

In addition to the exceptional jobs report, worker average hourly wage earnings in January rose 1.7% year-over-year, representing the largest gain since mid-2016.  Cleveland Fed President Loretta Mester commented, “This is a welcome increase.  It gives workers more purchasing power, but because the pickup has been in line with productivity growth and inflation, it has not added to inflationary pressures.”



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