What’s Ahead For Mortgage Rates This Week – January 19, 2021

What's Ahead For Mortgage Rates This Week - January 19, 2021Last week’s economic reports included readings on inflation, retail sales, and a speech by Federal Reserve Chair Jerome Powell. Weekly readings on mortgage rates and jobless claims were also released.

 Inflation Rises as Retail Sales Fall, Fed  Says Current Monetary Policy Won’t Change

The Consumer Price Index rose to 0.40 percent in December as compared to November’s reading of 0.20 percent. The CPI measures inflation and the Core CPI measures inflation without the volatile sectors of food and fuel. December’s Core CPI reading fell to a rate of 0.10 percent growth from November’s reading of 0.20 percent.

Retail sales were dampened by the coronavirus, but December’s negative reading of -0.70 percent sales was lower than the    -1.40  percent rate reported in November.  December sales excluding the automotive sector were -1.40 percent lower in December as compared to November’s reading of -1.30 percent.

Federal Reserve Chair Jerome Powell dispelled fears of rising inflation and said that the Fed’s Federal Open Market Committee will not raise its current federal interest rate range of 0.00 to 0.25 percent any time soon. Chair Powell also said that the Fed would not decrease its purchase of Treasury Bonds as a further measure to stabilize the economy.

Mortgage Rates, Jobless Claims Rise

Freddie Mac reported higher average mortgage rates last week. Rates for 30-year fixed-rate mortgages rose by 14 basis points to 2.79 percent. Rates for 15-year fixed-rate mortgages averaged 2.23 percent and were seven basis points higher. Rates for 5/1 adjustable rate mortgages rose by 37 basis points to 3.12 percent on average. Discount points averaged 0.70 percent for fixed-rate mortgages and 0.40 percent for  5/1 adjustable rate mortgages.

First-time jobless claims rose to 965,000 claims filed last week as compared to the prior week’s reading of 784,000 initial claims filed. Ongoing jobless claims also rose with 5.27 million claims filed as compared to the prior week’s reading of  5.07 million continuing claims filed.

The University of Michigan’s Consumer Sentiment Index was lower in January with a reading of 79.2.  Analysts expected an index reading of 79.2 based on the December reading of 80.7.

What’s Ahead

This week’s scheduled economic reports include the National Association of Home Builder’s Housing Market Index and reports from the Commerce Department on housing starts, building permits issued. Sales of pre-owned homes will also be reported along with weekly readings on mortgage rates and jobless claims.

What’s Ahead For Mortgage Rates This Week – December 28, 2020

Last week’s economic news included readings on sales of new and previously-owned homes and consumer sentiment. Weekly average mortgage rates were also released, but readings for jobless claims were not released due to the Christmas holiday. Single-Family Home Sales Fall in November Sales of new and previously owned homes were lower in November. Fear of rising covid-19 cases and the usual slump in home sales during the winter holidays contributed to fewer home sales. Rapidly rising home prices cooled buyer interest; short supplies of pre-owned homes for sale drove prices of new homes higher as demand increased. Inventory of new homes increased by 14 percent as the median price of a new single-family home rose to $335,000, which was five percent higher year-over-year. George Ratiu, a senior economist with Realtor.com, said that would-be homebuyers were dealing with an increased divide between their home-buying preferences and affordability. Rising materials costs continued to drive new home prices up; builders faced challenges in constructing affordable homes due to higher materials costs and lower profit margins. November sales of previously-owned homes were lower with 6.69 million sales reported on a seasonally-adjusted annual basis as compared to October’s reading of 6.86 million sales. Short inventories of available pre-owned homes caused a dip in sales as buyers competed for fewer available homes. Shortages of available homes are expected to persist into 2021 and to drive home prices higher. Affordability will challenge many buyers even as mortgage rates remain at or near record lows. Mortgage Rates Lower Rates for fixed-rate mortgages dipped last week according to Freddie Mac. The average rate for a 30-year fixed-rate mortgage was one basis point lower at 2.66 percent; rates for 15-year fixed-rate mortgages averaged 2.19 percent and were two basis points lower. The average rate for 5/1 adjustable rate mortgages was unchanged at 2.79 percent. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages, 0.50 percent for 15-year fixed-rate mortgages, and 0.20 percent for 5/1 adjustable rate mortgages. The University of Michigan reported a lower index reading of 80.7 for December as compared to an expected reading of 81.0 and November’s reading of 76.9. A post-Thanksgiving surge in Covid-19 cases caused consumer sentiment to fall. What’s Next This week’s scheduled economic readings include Case-Shiller’s Housing Market Indices, pending home sales, and weekly readings on mortgage rates and jobless claims. Last week’s economic news included readings on sales of new and previously-owned homes and consumer sentiment. Weekly average mortgage rates were also released, but readings for jobless claims were not released due to the Christmas holiday.

Single-Family Home Sales Fall in November

Sales of new and previously owned homes were lower in November. Fear of rising covid-19 cases and the usual slump in home sales during the winter holidays contributed to fewer home sales. Rapidly rising home prices cooled buyer interest; short supplies of pre-owned homes for sale drove prices of new homes higher as demand increased.

Inventory of new homes increased by 14 percent as the median price of a new single-family home rose to $335,000, which was five percent higher year-over-year. George Ratiu, a senior economist with Realtor.com, said that would-be homebuyers were dealing with an increased divide between their home-buying preferences and affordability.

Rising materials costs continued to drive new home prices up; builders faced challenges in constructing affordable homes due to higher materials costs and lower profit margins.

November sales of previously-owned homes were lower with 6.69 million sales reported on a seasonally-adjusted annual basis as compared to October’s reading of 6.86 million sales. Short inventories of available pre-owned homes caused a dip in sales as buyers competed for fewer available homes. Shortages of available homes are expected to persist into 2021 and to drive home prices higher. Affordability will challenge many buyers even as mortgage rates remain at or near record lows.

Mortgage Rates Lower

Rates for fixed-rate mortgages dipped last week according to Freddie Mac. The average rate for a 30-year fixed-rate mortgage was one basis point lower at 2.66 percent; rates for 15-year fixed-rate mortgages averaged 2.19 percent and were two basis points lower. The average rate for 5/1 adjustable rate mortgages was unchanged at 2.79 percent. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages, 0.50 percent for 15-year fixed-rate mortgages,  and 0.20 percent for 5/1 adjustable rate mortgages.

The University of Michigan reported a lower index reading of 80.7 for December as compared to an expected reading of 81.0 and November’s reading of 76.9. A post-Thanksgiving surge in Covid-19 cases caused consumer sentiment to fall.

What’s Next

This week’s scheduled economic readings include Case-Shiller’s Housing Market Indices, pending home sales, and weekly readings on mortgage rates and jobless claims.

What’s Ahead For Mortgage Rates This Week – September 21, 2020

What's Ahead For Mortgage Rates This Week - September 21, 2020Last week’s economic news included readings on housing market conditions, housing starts, building permits issued, and consumer sentiment. Weekly readings on mortgage rates and jobless claims were also released.

National Association of Home Builders Reports Record High Builder Confidence

The NAHB reported record high builder confidence in housing market conditions. The Housing Market Index had an index reading of 83 in September as compared to August’s reading of 78. Analysts said that this builder confidence reading was notable due to rising costs for building materials.

Component readings of the NAHB Housing Market Index also rose in September. Builder confidence in current single-family housing market conditions rose four points to an index reading of 88; builder confidence in housing market conditions in the next six months rose by six points to 84. Builder confidence in buyer traffic in single-family housing developments rose by nine points to a record index reading of 73.

Builder confidence readings over 50 reflect growing builder confidence in housing market conditions. March and April fell below 50 but rebounded as demand for larger suburban homes took hold as working from home increased. Record low mortgage rates are allowing home buyers to buy larger homes with more amenities. Robert Dietz, the chief economist for the NAHB, said that “Builders in other areas of the country have reported receiving calls from customers in high-density markets asking about relocating.”

Housing Starts and Building Permits Drop in August

The Commerce Department reported 1.42 million housing starts on a seasonally-adjusted basis in August as compared to July’s reading of 1.49 million housing starts. 1.47 million building permits were issued on a seasonally-adjusted annual basis;

Mortgage Rates Mixed, Jobless Claims Fall

Freddie Mac reported mixed changes in mortgage rates; rates for 30-year fixed-rate mortgages averaged 2.87 percent and rose by one basis point. Rates for 15-year fixed-rate mortgages were two basis points lower on average at 2.35 percent. Rates for 5/1 adjustable rate mortgages averaged 2.96 percent and were 15 basis points lower. Discount points averaged 0.80 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

Initial jobless claims fell to 860,000 from the prior week’s reading of 893,000 new claims filed. Ongoing jobless claims also fell; 12.63 million were filed as compared to the prior week’s reading of 29.67 continuing jobless claims filed.

The University of Michigan’s Consumer Sentiment Index also indicated economic growth with an index reading of 78.9 as compared to August’s reading of 74.1. Analysts expected am index reading of 75.9 for September.

What’s Ahead

This week’s scheduled economic readings include reports on new and existing home sales along with weekly reports on mortgage rates and jobless claims.

 

What’s Ahead For Mortgage Rates This Week – July 27, 2020

What's Ahead For Mortgage Rates This Week - July 27, 2020Last week’s economic reporting included readings on sales of new and previously owned homes. State and federal data on new and continuing jobless claims were released along with Freddie Mac’s weekly report on mortgage rates.

Sales of New and Existing Homes Rise in June

Sales of new homes rose at their highest rate in 13 years according to the Commerce Department. New homes sold at a seasonally-adjusted annual pace of 776,000 sales, which exceeded the expected reading of 710.000 new single-family homes sold and May’s reading of 682,000 new homes sold. Analysts said that increased interest in relocating to suburban areas and low mortgage rates fueled buyer interest in new homes.

The National Association of Realtors® reported a sharp increase in sales of previously-owned homes during June. Sales were nearly 20.70 percent higher than in May; 4.72 million previously-owned homes were sold in June at a seasonally-adjusted annual pace. May’s reading for pre-owned homes sold was 3.91 million homes sold. June’s sales pace for previously owned homes was the highest month-to-month gain since 1968.

Sales of previously-owned homes were sharply lower than pre-pandemic levels; potential home buyers were sidelined by concerns over jobs and the general economy.

Mortgage Rates Rise, Jobless Claims Mixed

Freddie Mac reported higher mortgage rates last week. Rates for 30-year fixed-rate mortgages averaged 3.01 percent and were three basis points higher. Rates for 15-year fixed-rate mortgages rose by six basis points to an average of 2.54 percent; Mortgage rates for 5/1 adjustable rate mortgages averaged 3.09 percent and were three basis points higher. Discount points averaged 0.80 percent for 30-year fixed-rate mortgages and 0.70 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.30 percent.

Initial jobless claims rose to 1.42 million claims from the prior week’s reading of 1.31 million claims. State and federal jobless claims fell to 2.35 million state and federal jobless claims from the prior week’s reading of 2.47 million initial jobless claims filed. Ongoing state jobless claims fell to 16.20 million claims as compared to the prior week’s reading of 17.30 million ongoing jobless claims. State and federal continuing jobless claims fell to 31.80 million claims from the prior week’s reading of 32.00 million ongoing claims for state and federal jobless claims.

What’s Ahead

This week’s scheduled economic reports include readings from S&P Case-Shiller Home Price Indices, data on pending home sales and the Fed’s FOMC post-meeting statement and press conference. Weekly readings on mortgage rates and new and continuing jobless claims will be released along with a monthly report on consumer sentiment.

Smart Ways to Use Your Tax Refund

What will you do with your income tax refundIf you are expecting a large tax refund this year, what will you do with it?

It might be tempting to spend this large windfall on shopping, eating out and other fun things.

However, a tax refund is also an opportunity to gain some financial headway and set you up in a better situation for the future.

Here are a few smart ways to use your tax refund this year:

Create an Emergency Fund

If you are currently living from paycheck to paycheck, you are treading water on the surface of your finances and any unexpected disaster can pull you under and cause you to start drowning in debt.

If your car breaks down, you lose your job, or you get ill or injured, you will need to borrow money to get your head above water again and this can take you on a downward spiral which is hard to get out of.

It is essential to have an emergency fund of at least six to eight months of savings to protect you for the unexpected situations which might arise in life.

Use your tax refund to get this savings account started and then slowly build it up more by adding a percentage from every paycheck.

Pay Off Your Credit Cards

Another very smart thing to do with your tax refund is to pay off any high interest debt which you have accumulated.

Credit card debt is draining your finances every month with high interest payments, so it should be the first debt that you pay off.

If you think about it, paying off a credit card charging interest at 18% or more is the same as buying a high-flying investment that gains at least 18% on the same amount of money.

The difference is that by paying down expensive debt, you actually are guaranteeing yourself that return on investment.

You can also contribute it towards paying down student loans, car loans and any other debt you might have.

Make Home Improvements

If you already have an emergency fund and you have paid off your credit cards, spending your tax refund on home improvements can also be a smart way to invest the money.

Renovations can help to increase the value of your property when you eventually resell it, especially when you upgrade the most important rooms such as the kitchen and the bathroom.

Also, green renovations such as adding sealed windows or energy-efficient appliances can save you money in the long run on your utility bills.

These are just a few clever ways that you can use your tax return to set yourself up for the future.

Do you have any other good ideas that you’d like to share?

 

How Diverse Streams of Work Can Help You Keep Your Cash Flowing

Here is a different approach to financial security that you might not have thought of:

Imagine a full time job is like a large flowing river of income. With this one source, you have all of the financial flow that you could possibly need, and your expenses are covered in comfort. However, what about when something happens and the river ceases to flow? Your industry could experience a drought, or you could lose your job, causing the flow of that river of income to be dammed up forever.

Since you only relied on one source of income, now that it has dried up you are completely up the creek without a paddle. To start another river of that magnitude flowing will take time, and every day that no money flows in you are digging yourself deeper into debt.Living on a one-source income is great while the money is flowing, but it can be risky business because you never know what is coming around the river bend.

Establish Diverse Streams of Income

So how can you avoid the risk of relying completely on one income source? The solution is to restructure the way you make money, and divide your earning power into several diverse streams of income rather than just one. This could mean going freelance in your industry, working on several side projects, publishing something that generates royalties, or working two part time jobs rather than just one. Just like stock experts advise you to diversify your portfolio, diversifying your career is just as advantageous.

Let’s take the example of the freelancer. Although it might seem that their income is much less stable, because they are not in a conventional job, however their diversity is what keeps them afloat. Imagine that a freelancer is simultaneously working on 10 different small projects for 10 clients. If one of those 10 clients suddenly decides to pull the plug and let the freelancer go, they don`t panic. They will not even have to suffer financially because they still have 90% of their income to rely on while they search for a new client. A loss of income is only crippling if you only have one source to cover all of your needs.

When we bring it back to the river analogy, this strategy is like having several small streams, tributaries, creeks and brooks all flowing into one river. The volume of water is the same, but if one stream suddenly dries up the river will not stop flowing. The bonus advantage to this style of working is that you will be constantly invigorated by the diversity of your work, and you will be much less likely to become bored because you are engaged in such a variety of exciting projects.

Think about it, how can the concept of diverse streams of income help you?  What have you done to create stability in your income?