FRM Update

May 21, 2018



MBS yield spreads versus Treasuries widened, as Treasury yields rose across the curve.  Mortgage rates rose significantly last week, continuing the trend higher this year.  Mortgage applications fell for the fourth consecutive week, as both purchase and refinance applications declined.  Refinance activity continues to be historically low and range-bound, driven lower by increasing mortgage rates in 2018.

 

MBS

 





CMOs

 

Mortgage Rates and Refinance Activity

 

 

 

Housing: 

Housing Starts and Building Permits Fall:  April Housing Starts disappointed expectations, falling 3.7% (exp. -0.7%) but March’s figures were revised up from +1.9% to +3.6%.  By region, starts were notably weak in the Midwest (-16.3%), the West (-12.0%), and the Northeast (-8.1%), while the South showed a gain of 6.4% driven by a 17% gain in single family starts, the only region to register gains in single family activity.  Building permits beat low expectations for April, falling just 1.8% (exp. -2.1%).  The trends in permits were similar to those of starts with weakness in the Midwest (-4.4%), the West (-13.2%), and the Northeast (-31.9%).  Permits in the South rose 12.0% including a 5% gain in single family and a 29% gain for multi-family.

 

 

Home Builder Confidence Rises: The NAHB’s Home Builder Index rose from a revised-lower 68 to 70 in April, the first monthly improvement this year and only four points shy of a nearly two-decade high from last December. While construction costs and rising mortgage rates should serve as headwinds for demand, the NAHB’s Chief Economist said, “Tight housing inventory, employment gains and demographic tailwinds should continue to boost demand for newly-built single-family homes. …With these fundamentals in place, the housing market should improve at a steady, gradual pace in the months ahead.”

 

 


Dan Stimpson, CPA

Senior Vice President

Vining Sparks

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