MIG Market Watch, August 24th, 2020
MARKET COMMENT Mortgage bond prices finished the week higher which put downward pressure on rates. Rates improved slightly Monday through Wednesday. We saw some selling pressure both Wednesday and Thursday afternoons into Friday morning. The 20 Year Treasury bond auction showed poor demand. The data was mixed. NAHB housing came in at 78 vs 74. Housing starts were 1496K vs the expected 1230K. Weekly jobless claims were 1.106M vs the expected 925K. Philadelphia Fed was 38.8 vs 21. Leading Economic Indicators rose 1.4% vs the expected 1.1% increase. Existing home sales rose 5.86M vs the expected 5.38M increase. Mortgage interest rates finished the week better by approximately 1/4 of a discount point despite the up and down trading.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| FHFA House Price Index | Tuesday, Aug. 25, 10:00 am, et | Up 0.4% | Moderately Important. A measure of single-family house prices. Weakness may lead to lower rates. |
| New Home Sales | Tuesday, Aug. 25, 10:00 am, et | 750K | Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
| Consumer Confidence | Tuesday, Aug. 25, 10:00 am, et | 93.6 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| Durable Goods Orders | Wednesday, Aug. 26, 8:30 am, et | Up 3.2% | Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
| Weekly Jobless Claims | Thursday, Aug. 27, 8:30 am, et | 1.1M | Important. An indication of employment. Higher claims may result in lower rates. |
| Q2 GDP | Thursday, Aug. 27, 8:30 am, et | Down 32.5% | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| Personal Income and Outlays | Friday, Aug. 28, 8:30 am, et | Down 0.3%, Up 1.5% | Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Core Inflation | Friday, Aug. 28, 8:30 am, et | Up 1.1% | Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve. |
| U of Michigan Consumer Sentiment | Friday, Aug. 28, 10:00 am, et | 72.8 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
ADDED REFINANCE FEE Fannie Mae and Freddie Mac recently announced an additional fee for borrowers that refinance mortgages. The 0.5% of the loan amount fee will result in an additional $1400 to $1500 on an average mortgage today. Freddie’s release stated, “As a result of risk management and loss forecasting precipitated by COVID-19 related economic and market uncertainty, we are introducing a new Market Condition Credit Fee in Price.”
Many mortgage industry professionals and consumer advocates are upset about the fee and are lobbying to prevent it before the September 1st implementation. Federal Housing Finance Agency Director Mark Calabria is being asked to step in and stop it. Calabria has pushed to end the U.S. Government control of the entities so there is doubt that he will intervene.
