Brian Egan's Blog - Philadelphia Mortgage Advisors

Plymouth Meeting, PA 19462

Philadelphia Mortgage Advisors is a licensed mortgage lender by the PA Department of Banking & Securities, NJ Department of Banking and Insurance, the State of DE and the Florida Office of Financial Regulation. NMLS #128570.

Budget Plan Passes

The passage of a budget plan was negative for mortgage rates this week. The economic data had little impact. As a result, mortgage rates ended the week higher.

Late Thursday, the Senate voted in favor of a 2018 budget plan. This was a key early step along the path to tax reform. Investors viewed the progress on tax reform as negative for mortgage rates for a couple of reasons. First, a new tax plan likely would boost economic growth, which would raise the outlook for future inflation. In addition, it would increase the budget deficit. The added supply of bonds needed to fund the deficit would push yields higher.

The headline figures released on Wednesday for housing starts in September were disappointing. However, digging deeper it was clear that the data was heavily influenced by the impact of the recent hurricanes, and the market reaction was small.

After three months of strong results, single-family housing starts in September fell 5% from August, which was a much larger than expected drop. While starts rose in the Northeast, the West, and the Midwest, they suffered a massive 15% decline in the South, where the bulk of the hurricane damage took place.

Looking ahead, the big event next week likely will be Thursday's meeting of the European Central Bank (ECB). Investors expect that the ECB will announce its future plans for its bond purchase program. In the U.S., Durable Orders and New Home Sales will be released on Wednesday. Pending Home Sales will come out on Thursday. The first estimate for third quarter GDP, the broadest measure of economic growth, will be released on Friday.

Mortgage News for the week ended October 13, 2017

Oct 13

4:29

Category | General

Mortgage Time

Mortgage Market News for the week ended October 13, 2017

Compliments of

Philadelphia Mortgage Advisors

Plymouth Meeting, PA 19462

Core Inflation Steady

The two big economic reports this week were released on Friday. Investors placed more weight on tame inflation data than on strong retail sales figures, causing mortgage rates to improve. Wednesday's minutes from the September 20 Fed meeting contained little new information and the reaction was small. As a result, mortgage rates ended the week a little lower.

In September, the Consumer Price Index (CPI), a widely followed monthly inflation indicator, posted its largest monthly increase since June 2009. This was mostly due to a hurricane-related 13% increase in gas prices during the month.

However, most investors prefer to look at core CPI for a clearer indication of the underlying trend. Core CPI, which excludes food and energy, rose less than expected in September. While several other recent indicators have pointed to rising inflation, core CPI has held steady at an annual rate of 1.7% for five straight months. The tame core inflation data was good for mortgage rates.

Retail sales posted better than expected results in September, rising 1.6% from August. Car sales, in particular, were strong as people replaced vehicles lost in the hurricanes. Overall, though, it was difficult to determine the impact of the hurricanes. According to the Commerce Department, companies reported that "the hurricanes had both positive and negative effects on their sales data." Consumer spending accounts for about 70% of economic activity in the U.S., and the retail sales data is a key indicator, so this report was good news for the economy.

Looking ahead, it will be a light week for economic data. The housing sector reports will be featured. Housing Starts will be released on Wednesday and Existing Home Sales on Friday. Beyond that, Industrial Production will be released on Tuesday.

Mortgage News for the week ended October 6, 2017

Oct 6

3:45

Category | General

Mortgage Time

Mortgage Market News for the week ended October 06, 2017

Compliments of

Philadelphia Mortgage Advisors

Plymouth Meeting, PA 19462

Hurricanes Affect Data

Over the past week, the major economic data and comments from an important Fed official were viewed as negative for mortgage rates. This was partially offset by Friday's report of possible plans for a long-range missile test by North Korea. As a result, mortgage rates ended the week slightly higher.

Much of the data in Friday's key Employment report was affected by the recent hurricanes. While the consensus forecast called for gains of 100,000, the economy lost 33,000 jobs in September. Job losses were seen mainly in the areas most affected by the hurricanes such as the restaurant industry. By contrast, wage growth rose far more than expected. Average wages were 2.9% higher than a year ago, up from an upwardly revised annual rate of 2.7% last month. This was the highest reading since December 2016. The wage figures likely received a boost from the hurricanes, since many of the lost jobs were lower paying ones.

According to the Labor Department, the survey data used to calculate the unemployment rate was not affected by the hurricanes. The unemployment rate in September unexpectedly declined to 4.2% from 4.4% in August. This was the lowest level since February 2001. Investors reacted to the unemployment rate and wage data by pushing mortgage rates higher.

On Thursday, comments from Federal Reserve Bank of San Francisco President John Williams were more hawkish than expected. Williams thinks that the decline in inflation in recent months has been mostly due to factors which have just a "temporary effect." He believes that it will be appropriate to continue to raise the federal funds rate even if inflation remains low. His surprisingly strong support for tighter monetary policy caused mortgage rates to move a little higher.

Looking ahead, Friday will be the big day for economic data with Retail Sales and CPI. Consumer spending accounts for about 70% of economic activity in the U.S., and the retail sales data is a key indicator. The Consumer Price Index (CPI) is a widely followed monthly inflation report. Before that, the minutes from the September 20 Fed meeting will come out on Wednesday. These detailed minutes provide additional insight into the debate between Fed officials and have the potential to significantly move markets. Mortgage markets will be closed on Monday in observance of Columbus Day.

Mortgage News for the week ended September 29, 2017

Sep 29

1:19

Category | General

Mortgage Time

Mortgage Market News for the week ended September 29, 2017

Compliments of

Philadelphia Mortgage Advisors

Plymouth Meeting, PA 19462

Progress on Tax Plan

Additional threats from North Korea were positive for mortgage rates early in the week. However, the announcement of a tax reform plan on Wednesday was negative. The two events were roughly offsetting, and mortgage rates ended the week just slightly higher.

On Monday, North Korean officials said that they interpreted recent comments made by President Trump as a declaration of war. Investors reacted to this by shifting to relatively safer assets, including mortgage-backed securities (MBS). The increased demand for MBS caused mortgage rates to decline.

The volatility seen this week continued on Wednesday, but the movement was in the opposite direction from Monday. It took place after President Trump released additional details about his proposed tax reform plan. If passed, this plan is expected to boost economic growth and to increase the budget deficit. Faster economic growth raises the outlook for future inflation, which is negative for mortgage rates. A larger deficit increases the supply of bonds, which also is bad for mortgage rates.

In August, core PCE was just 1.3% higher than a year ago, down from an annual rate of 1.4% in July and from 1.9% in February. This is the inflation indicator favored by the Fed. Most Fed officials expect that inflation will gradually rise toward their target level of 2.0% over the medium term, but each additional month of low readings adds doubt that their forecasts are correct.

Looking ahead, the important monthly Employment report will be released on Friday. As usual, this data on the number of jobs, the unemployment rate, and wage inflation will be the most highly anticipated economic data of the month. Before that, the ISM national manufacturing index will be released on Monday, and the ISM national services index on Wednesday. In addition news about North Korea or tax reform again could influence mortgage rates.

Mortgage News for the week ended September 22, 2017

Sep 22

4:06

Category | General

Mortgage Time

Mortgage Market News for the week ended September 22, 2017

Compliments of

Philadelphia Mortgage Advisors