Inflation reaches 40 year high

 

US Inflation Quickens to 40-Year High, Pressuring Fed and Biden

Olivia Rockeman

(Bloomberg) -- US inflation accelerated to a fresh 40-year high in May, a sign that price pressures are becoming entrenched in the economy. That will likely push the Federal Reserve to extend an aggressive series of interest-rate hikes and adds to political problems for the White House and Democrats.

The consumer price index increased 8.6% from a year earlier in a broad-based advance, Labor Department data showed Friday. The widely followed inflation gauge rose 1% from a month earlier, topping all estimates. Shelter, food and gas were the largest contributors.

https://www.bloomberg.com/news/articles/2022-06-10/us-inflation-unexpectedly-accelerates-to-40-year-high-of-8-6

Interest rate status

 You can't go a day without hearing that interest rates have risen this year and these higher rates are making it harder on the average consumer. 

Yet, there are some positive sides of higher interest rates.  #economy

 https://t.co/NDZEp6jkHv

Bobby Darvish 

Fixed mortgage rates reverse course for the first time this year

A Freddie Mac sign stands outside the company's headquarters in McLean, Virginia, U.S., on Tuesday, April 8, 2014. Senator Sherrod Brown, an Ohio Democrat and a member of the Senate Banking Committee, said a bipartisan bill to replace Fannie Mae and Freddie Mac is too complicated and doesn't do enough to address too-big-to-fail concerns or provide assistance for affordable housing. The panel will consider the measure on April 29. Photographer: Andrew Harrer/Bloomberg (Andrew Harrer/Bloomberg News)

Fixed mortgage rates moved lower for first time in 2018.

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average slipped to 4.44 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 4.46 percent a week ago and 4.3 percent a year ago.

The 15-year fixed-rate average fell to 3.9 percent with an average 0.5 point. It was 3.94 percent a week ago and 3.5 percent a year ago. The five-year adjustable rate average rose to 3.67 percent with an average 0.4 point. It was 3.63 percent a week ago and 3.28 percent a year ago.

[ Financial planning can help reduce anxiety of buying a home ]

“After holding steady for much of the week — even through Friday’s exceptionally strong jobs report — rates fell for the first time this year after inflation data reported Tuesday were weaker than anticipated, and news of the firing of Secretary of State Rex Tillerson prompted some financial market flight to safety,” said Aaron Terrazas, senior economist at Zillow. “Beyond the continued risk of geopolitical developments, the Fed is expected to raise short-term interest rates at next Wednesday’s [Federal Open Market Committee] meeting. The press conference following the meeting will be Chairman [Jerome] Powell’s first since taking over in mid-February and markets will study the FOMC’s quarterly forecasts for signals about the committee’s unspoken monetary policy leanings.”

Bankrate.com, which puts out a weekly mortgage rate trend index, found that nearly two-thirds of the experts it surveyed say rates will remain relatively stable in the coming week. Shashank Shekhar, the chief executive of Arcus Lending, is one who expects rates to hold steady.

“Rates went up too quickly at the beginning of the year and are now simply taking a pause,” Shekhar said. “Mortgage-backed securities, the trading of which directly influences the rate, seems to be agnostic even to big personnel changes in the White House and Britain’s action against Russia. It would take something even more dramatic and unexpected for the mortgage rates to move by a big margin either way, up or down.”

[ Know your mortgage options when searching for a new home ]

Meanwhile, mortgage applications were flat again last week, according to the latest data from the Mortgage Bankers Association. The market composite index — a measure of total loan application volume — increased 0.9 percent from a week earlier. The refinance index fell 2 percent, while the purchase index rose 3 percent.

The refinance share of mortgage activity accounted for 40.1 percent of all applications, its lowest level since September 2008.

“Although the purchase market continues to be constrained by a lack of supply, applications for home purchase loans increased 3 percent last week to the highest level in over a month, as demographic and economic conditions remain favorable for housing demand,” said Joel Kan, an MBA economist. “Refinance activity remains weak as rates have increased in essentially every week of 2018 thus far, reducing the benefit of a refinance for those borrowers currently in the market.”

Robert Bobby Darvish Platinum Lending Solutions Orange County California

Mortgage applications jump 4.5% as buyers rush to beat higher rates

• Mortgage applications rose 4.5 percent last week from the previous week, the Mortgage Bankers Association says.
• Application volume was 6.1 percent higher than one year ago.

Mortgage applications are up 4.5%   3 Hours Ago | 00:39

Spring has sprung early in this housing market. Buyers, seeing a new trend toward higher interest rates, are rushing in before the first buds appear.
Mortgage applications rose 4.5 percent last week from the previous week, according to the Mortgage Bankers Association's seasonally adjusted report. Application volume was 6.1 percent higher than the same week one year ago.
Applications to purchase a home led the charge, rising 6 percent for the week to the highest level since April 2010. These loan applications are now 7 percent higher than the same week one year ago.
"A combination of being left on the sideline last summer due to a lack of inventory for sale and the prospect of slowly rising interest rates over the near term appears to have buyers in a hurry to start the spring buying season," said Lynn Fisher, MBA's vice president of research and economics.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $453,100 or less increased to 4.36 percent, its highest level since March. That's up from 4.33 percent, with points remaining unchanged at 0.54, including the origination fee, for 80 percent loan-to-value ratio loans. The 15-year fixed rate climbed to its highest level since September 2013.
Mortgage applications to refinance a home loan also rose, up 1 percent for the week, despite higher rates. Refinance volume usually moves in the opposite direction of interest rates, but borrowers are clearly worried that the direction now is only going to be higher, and they may miss an opportunity with rates still near multiyear lows. Mortgage rates loosely follow the yield on the 10-year Treasury.
"Last week, 10-year Treasury yields increased by 10 basis points over the course of holiday-shortened week, due to a mixed bag of economic and political headlines," Fisher said, referring to Martin Luther King Day.
Not only are homebuyers facing higher mortgage rates, they are looking at a spring season with precious few homes for sale, especially in the starter and mid-level categories. Inventory has been falling for more than two years and homebuilders are not even close to meeting today's strong demand. That means higher home prices even amid higher mortgage rates.
"The increases that we've seen so far have only gotten people off the couch and into the market," Glenn Kelman, CEO of Redfin, told CNBC's "Power Lunch" on Tuesday. "People are worrying that they need to hurry and buy a house now before rates go up further."

Mortgage applications shoot up 8.3% to start the year

• Homebuyers this year are facing a new landscape on the tax front.
• Total mortgage application volume rose 8.3 percent during the first week of the year.
• Refinance applications led the charge, rising 11 percent from the previous week.

Ty Wright | Bloomberg | Getty Images

Potential home buyers walk past an 'Open House' sign displayed in the front yard of a property for sale in Columbus, Ohio, on Sunday, Dec. 3, 2017.

Pent-up demand from the holidays likely fueled the solid jump in mortgage applications last week.
Total application volume rose 8.3 percent during the first week of the year from the previous week, as mortgage rates held below year-ago levels, according to the seasonally adjusted Mortgage Bankers Association report.

Refinance applications led the charge, rising 11 percent from the previous week. Homeowners may be taking advantage of lower rates now, concerned that rates will move higher this year. Rates were higher at the start of 2017 than they are now. Homeowners also saw big gains in home equity last year and may be taking advantage of that in cash-out refinances.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $453,100 or less was basically unchanged during the week, increasing just 1 basis point to 4.23 percent, with points decreasing to 0.35 from 0.37, including the origination fee, for 80 percent loan-to-value ratio loans.

Economic news was mixed during the week, which kept interest rates in check.

"For example, the ISM's nonmanufacturing index showed that growth in the services sector was down for the second month, and the BLS' December jobs report was weaker than expected," said Joel Kan, an MBA economist. "However, these were partially offset by slightly stronger factory orders for November and continued optimism of positive impacts from the tax reform plan."

Homebuyers also came back to the market after the holiday break. Mortgage applications to purchase a home rose 5 percent for the week but were 1 percent lower than the same week one year ago.

"This was likely a catch-up week for potential borrowers as we head into the new year," Kan said.

Homebuyers this year are facing a new landscape on the tax front. The Republican tax plan reduced the deductions that homeowners can take for property taxes and mortgage interest. In higher-priced housing markets and in states with high property-tax rates, that makes homebuying more expensive than it was just a few weeks ago.

Buyers are also facing higher prices due to a severe lack of supply. More homes should begin to come on the market this month and next, with sellers hoping to get the jump on the spring market, especially those who are selling in order to buy another home. Unfortunately for buyers, there is so much demand for housing right now that any new supply will likely be swallowed up quickly with competition and prices remaining high.

Robert Bobby Darvish Platinum Lending Solutions Orange County california

Mortgage refinance applications surge 9 percent as rates fall back

• Total mortgage applications rose 4.7 percent last week.
• The Mortgage Bankers Association's report showed a 9 percent weekly jump in applications to refinance.

Luke Sharrett | Bloomberg | Getty Images

Houses stand near the former Bethlehem Steel plant, now occupied by Gautier Steel Ltd., in downtown Johnstown, Pennsylvania.

Interest rates on home loans are now significantly lower than a year ago, and that may be bringing more homeowners back to their lenders to refinance.
Total mortgage applications rose 4.7 percent last week from the previous week.
The increase in the Mortgage Bankers Association's seasonally adjusted report was largely due to a 9 percent weekly jump in applications to refinance. Lenders suddenly have a strong sales pitch, now that rates are significantly lower than they were a year ago.
Rates jumped dramatically following the presidential election and remained higher for much of the past year, until now. Refinances are now down just 10 percent from a year ago because volume dropped by half for much of last year.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $424,100 or less decreased to 4.19 percent from 4.20 percent, with points increasing to 0.40 from 0.34, including the origination fee, for 80 percent loan-to-value ratio loans. The rate stood at 4.27 percent one year ago.

"The refinance share is at its highest level since September," said Mike Fratantoni, chief economist at the MBA. "Purchase volume continues to be supported by a strengthening job market."

Mortgage applications to purchase a home increased 2 percent for the week and are now 8 percent higher than a year ago. While buyer demand remains strong, the supply of affordable homes for sale is not, and that is holding back a more robust market for purchase loans.

Mortgage rates have not been moving much for the past two months, but they are now becoming slightly more volatile. The Republican tax plan, nearing a final form and vote in Congress, could cause a reaction in rates. Industry watchers expect rates to move higher in 2018, although that was the expectation in 2017, and they are now lower.

By Robert Bobby Darvish Platinum Lending Solutions Orange County

U.S. home prices soar by the most in 3 years, led by Seattle

WASHINGTON (AP) — U.S. home prices rose at the fastest pace in more than three years in September, lifted by a record-low supply of houses for sale. Seattle posted the highest year-over-year increase, topping all other cities by a hefty margin.

The Standard & Poor's CoreLogic Case-Shiller national home price index released Tuesday rose 6.2 percent in September from a year earlier, the largest gain since June 2014. In 13 of the 20 cities tracked by the index, yearly price gains in September were faster than in August.
Home buyers are desperately bidding up prices because so few properties are available. The number of homes for sale in September was the fewest for that month on records dating back to 2001, according to the National Association of Realtors. And home builders aren't yet putting up enough new homes to reduce the supply crunch.

Seattle, Las Vegas and San Diego reported the highest year-over-year gains. Home prices jumped 12.9 percent in Seattle, 9 percent in Las Vegas and 8.2 percent in San Diego. Las Vegas, one of the hardest-hit cities in the housing bust, has been making a comeback since prices bottomed out in 2012.
Home prices rose in all 20 cities. The smallest gains were in Washington D.C., where prices rose 3.1 percent; Chicago, with a 3.9 percent gain; and Miami, at 5 percent.
Unemployment is low and the economy is growing at a solid clip, fueling demand for homes. Mortgage rates also remain historically low, with the average rate on a 30-year mortgage below 4 percent.

Yet Americans are remaining in their homes longer, according to a recent survey by the Realtors. Many are reluctant to sell because there are so few other homes to buy.
Builders are responding to the pent-up demand by building more houses. The construction of new homes jumped nearly 14 percent in October to the fastest pace in a year. But home builders are struggling to find the workers and land they need to ramp up construction more quickly.
"The past two months have shown promising signs of life from builders," Svenja Gudell, chief economist at real estate data provider Zillow, said. "But it's going to take a lot more than two good months to fully erase the housing deficit we're facing after years of underbuilding."
The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The September figures are the latest available.

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