Stocks and Mortgage Bonds are both slightly higher to start the day.
Later this afternoon at 1:00pm ET there will be a 20-year Bond Auction, which could impact the Bond market, depending on the level of demand.
Rental Reports
It's important to look at the real time rental data, as it has a big influence on the inflation reports that the market and Fed react to. Shelter is the largest single component within the inflation reports and can make a huge difference on whether we make progress or not. Currently, we are seeing the government data significantly lagging behind real time data and is much higher, but we can use the real time data to look forward and see if shelter should continue to catch up.
There are two types of rents - New Rents, where the property is new and vacant, and renewal rents. Realtor.com reported that asking or new rents in December fell 0.5% and are now down 1.1% year over year. This report is analogous to Apartment List, which is showing new rents -0.6% year over year, but Apartment List’s data is a bit more robust.
Zillow’s rental report showed that renewal rents are up 3.4% year over year.
Taking Zillow’s renewal rents figure, and blending it with Realtor.com’s new rents number, gives you a blended rend of 1.25%. This is in line with CoreLogic’s Blended rate of 1.7%...although CoreLogic's report is two months behind, so it appears blended rents should be trending lower in CoreLogic's report.
If you take Zillow's renewal rents figure and blend it with Apartment List’s -0.6% new rents number, you get a blended rent of 1.5%.
To recap - Realtor.com/Zillow blended rent is 1.25% and Apartment List/Zillow blended rent is 1.5%. Both of these figures could not be more at odds with the government data in the Consumer Price Index inflation report, which shows rents rising 4.6%.
This means that we should continue to see rents move lower, which will help inflation and in turn mortgage rates to move lower as well.
Mortgage Applications
The Mortgage Bankers Association (MBA) reported that mortgage rates decreased slightly from 7.09% to 7.02% last week. They were 0.25% higher than this same time last year.
Purchase applications rose 1% last week and are now up 7% year over year. Refinances fell 3% and are up 42% year over year.
Finally, with the average 30 yr mortgage rate above 7%, purchases were flattish, up by .6% w/o/w while refi's fell by 2.9%. Always, mortgage apps fall at the end of the year and rebound in the first few weeks of the year even though the data is seasonally adjusted. Now though it normalizes.
Technical Analysis
Mortgage Bonds are now trading in a new range between support at 100.43 and overhead resistance at the 50-day Moving Average. Bonds have broken above a few key levels of resistance and have room to improve.
The 10-year is still trading below important resistance at the 25-day Moving Average and 4.588% Fibonacci ceiling. So long as we stay beneath these levels, there is room for yields to move lower until testing the 50-day Moving Average at 4.459%.
Get notifications when agents you follow schedule open houses, complete a transaction with another loan originator, post a new listing, or share content on social media.Start your trial now so you never miss an opportunity to connect with new or existing referral partners.
Create 60 second videos for clients with Social Studio, and take advantage of social share assets that help you start conversations and highlight the benefits of buying.
Show clients how they can take advantage of a cash-out refinance or restructure their debt to save them years of mortgage payments, or demonstrate how debt consolidation can bridge the gap in payment differential on a more expensive home. With personal debt balances at an all-time high, use Debt Consolidation to help your clients achieve their financial goals and gain a better position to build wealth for their family.
Demonstrate how delaying a purchase for even a year or two could cost buyers thousands in appreciation, amortization, equity and more. Increase deal flow by showing clients how delaying their purchase could have more of an impact on their long-term wealth than they realize.
