Retail Sales, Refi Fees, Rates Increase

Retail Sales – improved to higher than pre-covid levels. Electronics and appliances for home remodels led the way in July. Clothing & gasoline sales also increased significantly.

Rates – bumped up this week after steadily decreasing for the last 70 days. The increase was minor but the 10 Year US treasury and Mortgage Backed Securities both moved out of their favorable (to lower mortgage rates) trading patterns. Rates are down 1% from this time last year.

Initial Jobless Claims –for the first time since Covid-19 business closures, the number of people that filed for unemployment during the previous week was less than 1M. While still a good clip above the highest level during the previous recession (0.6M) the trend continues to head south. This change did coincide with the dropoff in federal unemployment benefits of $600 weekly so it is possible that, for some families, it now makes more fiscal sense to return to the workforce. The number of people filing continuing claims is at approximately 15.5M

Competition – Redfin reported that 56% of of single-family homes faced competition (multiple offers), 54% of town homes, and 42% of condos.

Refinance Fees? FHFA – the organization the regulates Fannie Mae & Freddie Mac (who guarantee 50% of loans in the country) added a 0.5% fee to all refinance transactions they will purchase starting in September. For the consumer this means that pricing just got worse if you are looking to refinance. Depending on how you structured your refi the impact varies, higher impact if you were working the cost of the fees into your rate and lower impact if you were financing fees for a lower rate. For companies that sell directly to Fannie and Freddie – they just got hit with a fairly large ‘tax’ as all locked refinance loans that didn’t close last week will face this penalty – it takes approximately 2 weeks to sell a loan to Fannie/Freddie.

Applications – are up 6.8% from last week. Purchases are up 22% year over year and refinance are up 47%

Forbearance – the Mortgage Bankers Association (MBA) reported that the share of loans in forbearance decreased from 7.67% to 7.44%. This is the 8th consecutive week of decrease. The number of people requesting forbearance did increased – but more families exited forbearance.

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