Recent reports have continued to show reasons for positivity related to the economy in job growth and inflation, but many investors continue to worry about the long-term effects leading into the rest of the year.
Mortgage Rates Continue to Rise
Mortgage rates have been on an upward path this year and stronger-than-expected economic data has caused this trend to continue.
It was another rough month for mortgage markets as investors attempted to determine the appropriate level of yields for the current economic environment and mortgage rates ended the week higher.
Home Sales and Construction Pace Fall
Home sales bounced back from the shutdown of much of the economy last spring far quicker than expected and have remained at extremely high levels for many months. The pace slowed a bit in February, however, due to higher mortgage rates and severe weather in many regions.
Existing home sales fell 7% from January, a larger decline than expected, but still were 9% higher than a year ago.
The median existing-home price was 16% higher than last year currently. Inventory levels were down 30% from a year ago, also.
Promising Economic Activity’s Impact on Inflation
With the vaccine rollout and massive government stimulus, the outlook for economic activity looks extremely promising, which means that inflationary pressures could increase.
The latest figures revealed that current inflation remains at historically low levels. The Consumer Price Index (CPI) was just 1.3% higher than a year ago, down from an annual rate of increase of 1.4% last month and 2.3% in February 2020.
Despite this tame report, investors worry that inflation may increase significantly later in the year. As the vaccine rollout progresses, pent up demand may be unleashed, causing prices to spike.
Fannie Mae Limits Loan Acquisition
Fannie Mae announced that they will limit their acquisition of loans secured by second home and investment properties to 7% of total loans. As a result, they have changed eligibility requirements for these types of loans. In addition, to limit volume and comply with the new limit, many lenders announced immediate and significant pricing adjustments for these types of loans, and it is expected that others will follow suit.
Economy Gains Jobs; Unemployment Falls
The economy gained a solid 379,000 jobs last month which was roughly double the consensus forecast. The unemployment rate unexpectedly fell to 6.2% but average hourly earnings, an indicator of wage growth, were an impressive 5.3% higher than a year ago, matching expectations.
The Department of Labor’s total number of new unemployment claims was 684,000, the lowest level in over a year.
Retail Sales Fall Due to Weather
Retail sales were extremely volatile during the first half of 2020 due to the pandemic, but they then held relatively steady each month during the second half.
After soaring an upwardly revised 7.6% due to the distribution of stimulus checks, retail sales unexpectedly declined 3.0% in February, restrained by severe weather in many regions.
For further information on the mortgage rates get in touch with one of the title and escrow specialists at Plymouth Title Guaranty Corporation.
Information accredited to MBSQuoteline.
Please note: The safety of our staff and clients is our highest priority. Effective immediately, Plymouth Title Guaranty Corp. will be taking the following precautions to limit the spread of the COVID-19 virus:
All purchase transactions need to take place at a Plymouth Title Guaranty Corp. closing office.
- If a party to the closing is not feeling well, please contact your closer before the closing so appropriate precautions can be taken.
- We ask visitors to utilize the restroom in our building upon arrival to thoroughly wash their hands before entering our office.
- Only individuals required to sign and/or deliver documents at closings will be allowed in our office. Specifically, closings will be limited to borrower(s), seller(s), agents, and lenders.
- All pens used in the closing will be given to the client after use.
- All closing rooms will be cleaned and disinfected in-between each closing.
- Those picking up checks at our office will be instructed to call our main line and request to speak to a staff member who will plan for delivery to the lobby or parking lot of our office.
- All staff will refrain from shaking hands before or after closings and ask clients to do the same.
Please be advised that our staffing may be impacted during this unprecedented event. While we are committed to continuing to provide outstanding service, we ask for your patience in the face of this pandemic.