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Stocks are higher and Mortgage Bonds are both higher so far this morning.
CoreLogic Home Price Insights / Black Knight HPI
CoreLogic reported that home prices rose a very strong 1.2% in March after rising 0.7% in February, showing that home price appreciation not only continues, but is accelerating. Remember, CoreLogic only forecasted that it would rise by 0.4%, so they have been very conservative.
Year over year, home prices are now up 5.3%, which is a slight decrease from 5.5% in the previous report, but is due to a very tough comparison from last year – Meaning it went up 1.4% during the same month last year.
After the last two reports, CoreLogic has bumped up their forecast for next month to 0.8%. They anticipate home prices to rise 3.7% over the next 12 months, up from 3.1%. Again, they are always conservative, and we will likely see greater levels of appreciation.
Black Knight also reported that home prices also rose 1.2% in March and rose 5.6% year over year, down from 6%. Again, remember that the year over year number declined because of a very high comp from last year.
Bottom line – It’s important to educate your customers on the financial opportunity that still exists in home ownership. This report was for March, at the very beginning of the spring home buying season. We will likely continue to see strong appreciation in the coming months. It’s not your job to get your customers a low rate, but rather to illustrate the wealth they can create through purchasing a home.
Inflation Components
Inflation progress has stalled the last few months, but remains one of the most important economic indicators. Next week we will get the CPI inflation report for April, which can have a big impact on the markets.
While there are a lot of factors, The NY Fed Supply Chain Pressure Index, which can influence inflation, fell from -0.3% to -0.85% in April, which is the lowest figure we have seen since August of last year, when we were seeing really good progress on inflation. This is just one aspect of inflation, but a good sign.
Oil prices can have a big influence on headline inflation and some influence on the core readings as well. Over the last few weeks, we have seen oil prices decline by roughly 11%, which is a good sign. Part of the reason for this is an increase in production so far this year, which is running 7.1% higher than last year.
SLOOS (Senior Loan Officer Opinion Survey)
Credit conditions in Q2 tightened a little across the board for all types of loans, Residential Mortgages, C&I Loans, Commercial, Car Loans, and Credit Cards. Demand also was a bit lower for all loan types.
Technical Analysis
Mortgage Bonds are once again making a run at the 50-day Moving Average ceiling of resistance. If we can break above this level, the next stop is the 100.427 Fibonacci level. Momentum is on our side, and without any economic data this week that is market moving, we have a decent chance to continue higher. The 10-year is down to 4.43%, but is now approaching an important floor at 4.418% and the 50-day Moving Average. Later this afternoon there will be a $58B 3-year Treasury Note Auction – The level of demand can impact the overall Bond market, so it’s something we will be watching closely.
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