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MIG Market Watch, May 18th, 2020

MIG Market Watch, May 18th, 2020


MIG Market Watch, May 18th, 2020

MARKET COMMENT
Mortgage bond prices finished the week mixed with government prices near unchanged and conventional prices lower. Rates started the week higher Monday morning as the Fed announced continued reductions in MBS purchases. The tentative daily purchases were $5.08B. A month ago, the Fed bought $25B worth of MBSs daily. CPI fell 0.8% as expected. The core, which excludes volatile food and energy prices, fell 0.4% vs the expected 0.2% decrease. Producer prices fell 0.5% vs the expected 1.3% decline. The core was unchanged. Analysts looked for a 0.3% decline. Weekly jobless claims were 2.981M vs 2.475M. Retail sales fell 16.4% vs an 11% decline. Industrial production fell 11.2% vs 12%. Capacity use was 64.9% vs 64%. Consumer sentiment was a solid 73.7 vs 67.4. Mortgage interest rates finished the week worse by 1/8 to 1/4 of a discount point.

LOOKING AHEAD

Economic Indicator Release Date & Time Consensus Estimate Analysis
NAHB Housing Index Monday, May 18,
10:00 am, et
35 Moderately Important. A measure of single family housing. Weakness may lead to lower mortgage rates.
Housing Starts Tuesday, May 19,
8:30 am, et
980K Important. A measure of housing sector strength. Weakness may lead to lower rates.
Weekly Jobless Claims Thursday, May 21,
8:30 am, et
3M Important. An indication of employment. Higher claims may result in lower rates.
Philadelphia Fed Survey Thursday, May 21,
10:00 am, et
Down 4% Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Existing Home Sales Thursday, May 21,
10:00 am, et
4.4M Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.
10-year Treasury TIPS Auction Thursday, May 21,
1:15 pm, et
None Important. TIPS will be auctioned. Strong demand may lead to lower mortgage rates.

GAS & OIL PRICES
U.S. consumers benefitted from relatively tame oil and gas prices for some time. In the early 2000s consumers enjoyed low gas prices with a barrel of oil around $20. By the summer of 2008 oil prices hit all-time highs with prices over $140 a barrel and gas prices rose accordingly. Only a few years ago we were told that $100 a barrel was the new ‘normal.’ That all reversed and consumers once again benefitted from low prices. Some attributed the past highs to “peak oil” levels while others argued they were due to supply and demand. Others called it a “bubble” led by speculation and momentum trading.

The past two years we heard analyst warnings of rising oil prices when we hit $80 a barrel in 2018 and $63 a barrel last year. Only last year we were told that oil price levels escalated with a tightening market coupled with new Iran sanctions. The U.S. Energy Information Administration’s (EIA) reported “gas prices in California on May 6, 2019 averaged $4.01 per
gallon. Gasoline prices had not neared the $4/gal price in California since the high crude oil prices in 2014 and the Torrance refinery outage in 2015. The EIA revised its price forecast for Brent crude oil upward. Several supply constraints have caused oil markets to be generally tighter and oil prices to be higher so far in 2019.”

Fast forward to May 2020 and we see the coronavirus impact economies across the globe and oil and gas prices testing multi-year lows. The EIA reported the average price of a gallon of gasoline was $1.85 last week. Low gas prices typically help increase consumption in normal times. Unfortunately, the effects now are very uncertain.

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Mortgage Investors Group, based in Tennessee, offers residential financing in a number of states in the southeast, See MIG Service Areas. Terms and conditions to apply to home financing. We want to share with you the loan terms vary based on several characteristics and your financial profile. These include but are not limited to loan program, loan purpose, occupancy, credit history, credit score, assets, and other criteria per loan type. The repayment terms and interest rate may vary from time to time. The terms represented here are based on certain assumptions outlined below and/or noted on the loan outline page. Additional details concerning privacy, program disclosures, licensing specifics may be found at migonline.com Legal Information.

MIG Loan Officers will help gather the information needed for an individual assessment to provide home financing which matches the loan characteristics with your home financing needs based on your financial profile, when you are ready to begin a full loan application. For estimates and general information before that step, the basis for which the mortgage financing information are as follows:

  • Rates are subject to change at any time.
  • Rate locks are available at current terms for 30 to 180 days based on program type, credit profile, property location, etc. which will affect the available rate and term.
  • Rate locks are available at current terms for 30 to 180 days based on program type, credit profile, property location, etc. which will affect the available rate and term.
  • Payments will vary based on program selection, current rates, property location, etc.
  • Not all programs are available in all states.
  • Some loan programs may not be available to first time home buyers.
  • Terms and conditions apply, which may include restrictions or limits per loan program.
  • Information is generally based on primary residence occupancy with no cash out when refinancing.
  • Unless otherwise stated, terms shown are estimates based in part on credit score of 700 or higher; owner occupancy, escrow account is established for taxes and insurance(s); debt-to-income ratio no higher than 43.0%; PMI applies to conventional loan programs over 80.0% LTV; VA,FHA & RD require insuring fees included in loan and/or payment; fixed rate, 30 year term.

An MIG Loan Officer is available to help with your financial details to determine which characteristics apply to your situation for a personalized look into which loan program best fits your home financing needs. Please use the Find a Loan Officer link or reach out to Mortgage Investors Group at 800-489-8910. Equal Housing Lender 1.2020