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Compliments of

Mark Williams

Sr. Loan Officer | NMLS #205465

Fairway Independent Mortgage Corp.

NMLS #2289

Cell: 206.399.9636

 
 

Retail Sales Rise

 

Stronger than expected inflation data and a new fee on refinances were negative for mortgage rates this week, while the key report on retail sales caused little reaction. After reaching record low levels last week, rates have moved higher.

 

Due to the shutdown of much of the economy to slow the spread of the coronavirus, consumer spending dropped sharply in March and April, but a strong rebound has taken place since then. In July, the gains continued with an increase of 1.2%, and the results for June were revised significantly higher. Strength was seen in a wide range of areas including electronics, appliances, and health products. 

 

The reduced economic activity resulting from the pandemic has caused a significant decline in inflation, but there are signs that it may be on its way back up. The Consumer Price Index (CPI) is a widely followed monthly inflation report that looks at the price change for goods and services. In July, core CPI still was just 1.6% higher than a year ago, down from readings consistently above 2.0% prior to the pandemic. This was much stronger than expected, however, and up from a reading of 1.2% last month. Since higher inflation is negative for mortgage rates, they rose after the news. 

 

On Wednesday, the Federal Housing Finance Agency (FHFA) announced that a new refinance fee of 0.5% will be assessed for cash-out and no-cash-out refinances sold to Fannie Mae and Freddie Mac after September 1. Lenders have varied in how quickly they are passing along this fee to consumers, influenced in part by their current pipeline and their capacity to handle additional volume.

 
 

Looking ahead, investors will continue watching for news about medical advances, government stimulus programs, Fed monetary policy changes, and plans for reopening the economy. Beyond that, it will be a very light week for economic data with the housing sector in the spotlight. Housing Starts will be released on Tuesday and Existing Home Sales on Friday. 

 

Weekly Change
10yr Treasury rose 0.15
Dow rose 400
NASDAQ rose 100

Calendar
Tue 8/18 Housing Starts
Thu 8/20 Jobless Claims
Fri 8/21 Existing Home Sales

 
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