Weekly Rate & Market Update 7-14-17

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Question of the week:  Do you write your update every Friday?

Answer: Yes. Well almost every Friday, I have been known to not compile a Weekly Rate &Market Update Thanksgiving week or if Christmas and New Year’s fall on a Friday or if on vacation and it is not possible to compile and distribute, otherwise it goes out every Friday.

This Friday it is coming to you from our quaint cabin-room at an old fashioned motor court in Three Rivers, California just a few miles from Sequoia National Park. Leslie and I are on the middle leg of a trip to Yosemite, Sequoia and San Luis Obispo. With the preamble written the night before and the economic and rate update plugged in this morning I am able to quickly get you the vital information you need, absolutely need and wait for every week, before we go wandering in the wilderness.

One reason I write every Friday is that several years ago I missed an update due to major computer issues and several people contacted me to see if I am okay—so here is the update and I am okay!

Thank you for reading and next week we will have a more traditional question of the week involving mortgages and real estate.

Have a question? Ask me!

Remember, with Dennis it’s not just a mortgage, it’s your complete financial picture.

The data on prices and consumer spending this week were bleak. The Producer Price Index was up only 0.1% in June and up 2.0% from last June. Stripping out volatile food and energy to arrive at the “core” price index the monthly growth was the same and year over year wholesale prices managed only 1.9% gain. Following the almost flat growth in PPI, the Consumer Price Index was flat in June and as reported by the Wall Street Journal one of the “very weakest 4-month stretch in 60 years of records.” Year over year consumer prices rose only 1.6%, well below the Fed’s targeted inflation rate, with core prices up only 0.1% for the month and 1.7% for the year. Housing which has driven much of CPI the past year and more was up only 0.1% for the month, offset by dropping prices in apparel and vehicle prices.

Despite soft prices consumers have not taken advantage by increasing their purchases. Retail sales in June were down 0.2% following May’s drop in sales (revised from down 0.3% to down0.1%). The decline in consumer’s buying will have a negative impact on second quarter GDP, which is due to be released the last Friday of the month.

The third and final major data that influences the Gross Domestic Product for the nation was consumer sentiment. The sentiment for current conditions remains high, however the component of future economic expectations has fallen to its lowest since before the election in November.

Individually and combined the data points to economic slowdown in the second quarter. How much of a slowdown we shall see at the end of the month. Investors see the inflation numbers, consumer purchasing habits and sentiment and will anticipate smaller growth than the 1.4% in the 1st Quarter growth, and a negative number is not out of the question. This news, while negative for the economy is positive for lower interest rates.

Rates for Friday July 14, 2017: Rates were edging up this week as investors anticipated stronger numbers on prices and consumer purchasing. The data coming in below expectations has caused a run on mortgages this morning putting downward pressure on rates, enough to reverse the increase we saw last Friday. With lower GDP expectations in the market we can expect a soft rate environment ahead.

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS:

30 year conforming                                            3.75%             Down 0.125%

30 year high-balance conforming                        3.875%           Down 0.125%

30 year FHA                                                      3.25%             Down 0.125%

30 year FHA high-balance                                  3.75%             Down 0.125%

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down (3.5% for FHA) with 740 FICO score for purchase mortgages.

We are off to walk through the giant Sequoias!

Have a great week,

Dennis

 

 

 

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