February 10, 2020 at 8:33am | Darel Ansley
Brought to you by Darel Ansley 
Inside Lending
Builder confidence hit 75 in December, a ten-year high. So it was no surprise that residential construction spending rose 1.4% for the month. This should start to relieve the tight supply in many markets.
That's important as buyer demand increases. Black Knight's latest Mortgage Monitor notes that  even with rising home prices, there is an environment of increased affordability, thanks to falling interest rates.
Their Data & Analytics President said, "prospective homebuyers can now purchase a home that is $48,000 more expensive than a year ago, while still paying the same in principal and interest...a 16% increase in buying power."

BUYING THE DIP... After stocks tanked the week before, traders grabbed the bargains, bolstered by solid economic data and less economic concern over the coronavirus. The market posted its biggest weekly gain in six months. 
China shored up its economy to offset negative impacts from the coronavirus, and announced, as part of the phase-one trade agreement, it would cut tariffs by 50% on $75 billion of U.S. imports on February 14.   
Then we got a solid 225,000 new jobs in January, higher wages, and a larger workforce. Manufacturing is expanding again, the services sector grew more than expected, and weekly jobless claims sank to their lowest level in nine months.

The week ended with the Dow UP 3.0%, to 29,103; the S&P 500 UP 3.2%, to 3,328; and the Nasdaq UP 4.0%, to 9,521.

Traders bid up bonds, feeling down about the coronavirus and weak Industrial Production in Germany and France. The 30YR FNMA 4.0% bond ended UP .39, to $104.84. The national average 30-year fixed mortgage rate hit a three-year low in Freddie Mac's Primary Mortgage Market Survey. Remember , mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW?... Last week's three-year low in mortgage rates drove the number of refi-eligible borrowers to 11.3 million, the second-highest on record. Savings per borrower would average $268 a month.

INFLATION is OK, RETAIL SALES UP, CONSUMERS CONFIDENT... Economists say Consumer Price Index (CPI) inflation will remain mild, Retail Sales will keep growing, and the  University of Michigan Consumer Confidence will stay strong.
NOTE: Weaker economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and higher loan rates.

Forecasting Federal Reserve policy changes in the coming months... The Fed Funds Futures market now sees present rates holding through the first half of the year.  Note: In the lower chart, a 10% probability of change is a 90% probability the rate will stay the same.

Current Fed Funds Rate: 1.50%-1.75%
Mar 18  1.50%-1.75%
Apr 29  1.50%-1.75%
Jun 10 1.50%-1.75%
Probability of change from current policy:
Mar 18     10%
Apr 29      31%
Jun 10     46%
  Darel Ansley Darel Ansley
Senior Real Estate Loan Officer
NMLS# 500247

901 North Mission Street
Wenatchee, WA 98801
Office: (509) 664-5324
Mobile: (509) 860-3301
Fax: (509) 664-5315
  Peoples Bank  



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