From ETF Trends:
The number of mortgage applications last week fell 2.7 percent compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. However, volume was 3.3 percent higher than a year ago.
As rates crept higher, the number of refinances pulled back. Applications for refinances fell 5 percent for the week and 7 percent lower compared to the same time a year ago.
“Reversing the recent downward trend, borrowers saw increasing rates for most loan types last week, as better-than-expected unemployment claims, easing trade tensions and stabilization in the equity markets ultimately led to a rise in Treasury rates,” said Joel Kan, an MBA economist.
Markets headed lower on Tuesday after fears of a global economic slowdown caused investors to sell off U.S. equities. As such, investors piled their capital into the tried-and-true safe haven of bonds.
“Oftentimes, a big loss in equities markets can send money running to the bond market where it benefits interest rates,” said Matthew Graham, chief operating officer at Mortgage News Daily. “This was the case overnight with Chinese stocks leading the way. The strong start in bonds allowed lenders to keep rates roughly unchanged and — in some cases — slightly lower.”
Homebuilder Sentiment Rising
Just last month, the National Association of Home Builders/Wells Fargo Housing Market Index hit a three-year low. A combination of rising interest rates and low home affordability dented the housing market for much of 2018.
However, builder confidence rebounded as the index went up to 58 in January compared to the 56 reading in December. Furthermore, the central bank has been sounding increasingly dovish as of late, which could mean that less rate hikes than anticipated for 2019-something that could help give the sector a much-needed boost.
Rising in conjunction with mortgage rates have been home prices, putting prospective buyers out of reach. The latest data from the National Association of Realtors showed that the Quarterly Housing Affordability Index has been dropping thanks to a rise in median home prices.
However, it appears that prices are beginning to soften. Home prices in the month of November logged a 5.1 percent annual gain, which represents its smallest increase since August 2015.
The iShares MBS ETF (MBB) was trading at $104.58 per share on Friday afternoon, down $0.18 (-0.17%). Year-to-date, MBB has declined -0.94%, versus a -0.02% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of Yahoo Finance.