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MIG Market Watch, May 17th 2021

MIG Market Watch, May 17th 2021


MIG Market Watch, May 17th 2021
Market Comment

Mortgage bond prices finished the week sharply lower which put significant upward pressure on rates. We started the week on a negative note and did not receive any reprieve until Thursday and Friday. Inflation fears reignited and rates worsened. The consumer and producer inflation readings were higher than expected. The rest of the data was mixed. Retail sales were unchanged vs the expected 2.2% increase. Industrial production rose 0.7% vs the expected 1% increase. Capacity use was 74.9% vs 75.1%. Consumer sentiment was 82.8 vs 91. Weekly jobless claims were 473K vs 490K. The cyber-attack on a major east coast pipeline caused widespread gas disruptions and economic instability. Mortgage interest rates finished the week worse by approximately 7/8 to one full discount point.


Looking Ahead
Economic Indicator Release Date & Time Consensus Estimate Analysis
NAHB Housing Index Monday, May 17,
10:00 am, et
84 Moderately Important. A measure of single-family housing. Weakness may lead to lower mortgage rates.
Housing Starts Tuesday, May 18,
8:30 am, et
1.72M Important. A measure of housing sector strength. Weakness may lead to lower rates.
Philadelphia Fed Survey Thursday, May 20,
8:30 am, et
66.6 Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Weekly Jobless Claims Thursday, May 20,
8:30 am, et
575K Important. An indication of employment. Higher claims may result in lower rates.
Leading Economic Indicators Thursday, May 20,
10:00 am, et
Up 1.2% Important. An indication of future economic activity. A smaller increase may lead to lower rates.
Existing Home Sales Friday, May 21,
10:00 am, et
6.06M Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.

Inflation Fears

Inflation fears hit mortgage bonds last week which pushed mortgage interest rates higher. We recently received warnings from major market participants such as Warren Buffett that inflation is already being felt across a multitude of businesses. Until recently, the official government statistics did not show any surges. That all changed last week.

Producer prices rose 0.6% vs the 0.3% increase. The core, which excludes volatile food and energy prices, rose 0.7% vs 0.4%. The consumer and producer price data often diverges as it is thought that producers can hold back price increases for a little before passing them to consumers. The data this week showed inflationary pressures on both sides. The consumer price index rose 0.8% vs the expected 0.2% increase. The core rose 0.9% vs the expected 0.3% increase.

Inflation, real or perceived, erodes the value of fixed income investments such as mortgage-backed securities. This causes prices to fall and rates to rise.

Of course, nobody needs government data to understand that prices have risen on most things recently. The prices of gasoline, lumber, building materials, and even groceries are evidence of that. The same is true for mortgages last week.

While nobody can predict the future, the possibility of continued mortgage interest rate volatility is real. Now is a great time to take advantage of rates and avoid future uncertainty.

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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.

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  • 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.
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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