Trading was halted multiple times as First Republic Bank’s stock slid 43% on Friday (down 97% this year) in response to diminished hope for a rescue deal. Rumors are pointing towards the FDIC taking the bank into receivership. The FDIC is asking other banks for potential bid and there is still a possibility of a solution outside of receivership.

Mortgage Rates improved slightly this week as the price of Mortgaged Backed Securities (MBS) moved up nicely and flirted with breaking above the 200 day moving average. Rates are up 1.125% from this time last year.

Inflation – the Fed’s favorite measure of inflation ticked up 0.1% this month but declined from 5.1% to 4.2% year over year increase. The core rate which excludes food and energy declined 0.1% to 4.6% year over year. The shelter costs in this report were up 0.6% but this is a lagging indicator as shelter costs peaked in November of 2021 (16 months ago) and we expect this number to finally start to decline and impact the index in next month’s release.

Rents – Apartment List’s Rent Report Index showed rents increased 0.5% in April up only 1.7% year over year (down from 2.6% in previous report.) This shows deceleration in shelter cost inflation which we anticipate will start to be reflected in inflation reports moving forward.

Homes Sales – declined by 5.2% in March, the first month over month decline since November. Year over year sales are down 23%. Current inventory shows 200,000 fewer active listings than November.

Loan Performance – Core Logic released their loan performance insights for February showing that loans continue to perform incredibly well. Year over year the numbers look nearly identical, with a slight drop in 20-day lates and 120+ day lates. During the housing crash total delinquencies were over 6 times higher.

Home Values – increased 0.2% in February after following for 7 straight months. Year over year home prices are up 2% which is a moderation from 3.7% in the previous report. From the peak in June 2022 home prices have declined by 2.9% and are already starting to increase again.

GDP – the first look showed 1.1% gain which was much lower than the anticipated. 2-2.5% increase. While this number will be revised a couple of times it is another sign the economy is slowing.

Mortgage Applications to purchase homes rose 4.6% last week after falling 10% the previous week. Purchase applications are down 28% from this time last year. Refinances increased 2% last week and are down 51% year over year.

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