Inside Lending
Brought to you by Mel Patterson
For the week of march 18, 2019
YOUR WEEKLY SMILE
What grows up while growing down? A goose.
MARKET UPDATE
Starting 2019 slowly, New Home Sales receded 6.9% in January, to a 607,000 annual rate. This followed their strong December read, revised up to 652,000, giving 2018 the highest annual average sales pace since 2007.
Good news for buyers, prices are also receding. Both the median and average prices of new homes sold in January are down from a year ago. The strong labor market, with rising wages, should also support demand.
New home sales are well below where they should be relative to population, which would be around 820,000, annually. Add today’s lower mortgage rates to this picture, and the housing market should continue expanding.
REVIEW OF LAST WEEK
GOOD CHINA, BETTER FED… China’s No. 2 leader was optimistic about both a U.S. trade deal and stimulating his slowing economy, and Fed Chair Powell promised rate hike patience, so investors sent stocks to four-month highs.
All was not perfect, as disappointing New Home Sales were joined by Industrial Production and the Empire State Index showing slower manufacturing growth, nationally and in the New York region.
Yet job openings rose to 7.58 million, third highest on record, Retail Sales gained in January, Durable Goods Orders show rising business investment, and U. of Michigan Consumer Sentiment shot up to 97.8 in March.
The week ended with the Dow UP 1.6%, to 25849; the S&P 500 UP 2.9%, to 2822; and the Nasdaq UP 3.8%, to 7689.
That lower than expected manufacturing data boosted bonds. The 30YR FNMA 4.0% bond ended UP .11, to $102.36. In Freddie Mac’s Primary Mortgage Market Survey, the national average 30-year fixed mortgage rate fell to its lowest level since February last year. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW?… CoreLogic reports that even with slower home price appreciation, the average U.S. homeowner saw a $9,700 gain in equity from Q4 2017 to Q4 2018.
THIS WEEK’S FORECAST
EXISTING HOME SALES, FACTORY ACTIVITY UP, BUT NOT RATES… February Existing Home Sales should rebound to a more than 5 million unit annual rate. The Philadelphia Fed Index is expected to show factory activity heading up in that region. Fortunately, not going up will be the FOMC Rate Decision.
NOTE: Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and higher loan rates.
FEDERAL RESERVE WATCH
Forecasting Federal Reserve policy changes in coming months… Virtually no one on Wall Street sees the Fed touching rates at this week’s FOMC meet. Same goes for the two confabs after that. Note: In the lower chart, a 1% probability of change is a 99% probability the rate will stay the same.
Current Fed Funds Rate: 2.25%-2.50%
AFTER FOMC MEETING ON: CONSENSUS
Mar 20
2.25%-2.50%
May 1
2.25%-2.50%
Jun 19
2.25%-2.50%
Probability of change from current policy:
AFTER FOMC MEETING ON: CONSENSUS
Mar 20
1%
May 1
3%
Jun 19
10%
BUSINESS TIP OF THE WEEK
Small hinges swing big doors. Focus on the key 20% of your pursuits that deliver 80% of your results. Don’t be distracted by activities with a low return on the time and effort you invest in them.
Mel Patterson Mel Patterson
Loan Officer – MLO 71633
NMLS – CO. ID 42661
3324 N Visscher St
Tacoma, WA 98407
253-761-2929 – Direct
253-988-8809 – Cell
253-761- 2930 – Fax
mel@melpatterson.com
www.melpatterson.com
The Patterson Company
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This e-mail is an advertisement for Mel Patterson. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice, or a commitment to lend. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in this message is the property of The Patterson Company and cannot be reproduced for any use without prior written consent. This message is intended for business professionals only and is not intended for distribution to consumers or other third parties. The material does not represent the opinion of The Patterson Company. The Patterson Company NMLS 42661. MLO 71633
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