Mortgage rates rose for the fifth consecutive week, but so far it has had limited influence on this year’s spring home purchase season, Freddie Mac commented.
The 30-year fixed rate mortgage increased by 5 basis points this week to 7.22%, tying a level last seen at the end of November, the Freddie Mac Primary Mortgage Market Survey found.
For April 25, the 30-year FRM was at 7.17%, while for the same week in 2023, it averaged 6.39%.
For the 15-year FRM, the average rose three basis points, to 6.47%, from 6.44% and a year ago at this time, the 15-year it averaged 5.76%.
“With two months left of this historically busy period, potential homebuyers will likely not see relief from rising rates anytime soon,” Sam Khater, Freddie Mac’s chief economist, said in a press release. “However, many seem to have acclimated to these higher rates, as demonstrated by the recently released pending home sales data coming in at the highest level in a year.”
According to LenderPrice data posted late morning on Thursday on the National Mortgage News website, the 30-year FRM was at 7.36%, nearly 10 basis points lower than it was at the same time last week, 7.457%.
One of the elements in pricing mortgages, the 10-year Treasury yield, has remained elevated, even though it was down from one week ago, when on April 25, it peaked at 4.74%. By April 29, it closed at 4.61%.
This reflects market conditions following the Federal Open Market Committee’s decision at its April/May meeting not to change short-term rates. Investors, who once thought a June cut was likely, have backed off that position.
Rates are likely to remain in the 7% range in the future, said Richard Martin, director, real estate lending solutions for analytics firm Curinos, which also tracks mortgage rate data. He added that while he expects rates to fall a bit by the end of the year, he is a little more bearish than Fannie Mae’s latest outlook.
In terms of the impact on mortgage rates, the Fed’s decision was anticipated and already priced in.
“I like to characterize it as no one predicted the level and pace of increases no one’s going to predict the level and paces of decreases,” Martin said. If the FOMC was to cut rates, it would likely be closer to the end of the year.
On April 30, the first day of the FOMC meeting, the yield moved higher again, by a little over 7 basis points to just shy of 4.68%. However, the next day, it went down to 4.60%.
As of mid-morning on Thursday, the 10-year yield was almost 4 basis points higher.
Where mortgage rates currently are makes the environment tough for mortgage originators and title underwriters, but is good for companies that are “servicing-heavy,” said Bose George in a commentary issued after the FOMC meeting.
“Despite the headwinds around mortgage volumes, stable home price appreciation should remain a positive for mortgage credit,” George said.
Martin expects rates to hold in the current range, as does Redfin’s economic research lead Chen Zhao.
“The Fed meeting is unlikely to push mortgage rates down — but the good news is that it won’t push them up, either, which could have happened if the Fed took 2024 rate cuts off the table,” Zhao said in a press release. “Even though housing costs shouldn’t climb much more, they will remain elevated for the foreseeable future, which could push more buyers away.”
Martin is leaning towards a mild recession occurring in the future, noting the U.S. economy is not yet out of the woods.
The 10-year Treasury is just one influence on mortgage pricing; the other is the primary-secondary market spreads related to securitization activity.
Federal Reserve Chairman Jerome Powell noted that the Fed will reinvest any proceeds from mortgage-backed securities run-off over $35 billion into Treasuries. That translates into lower purchase activity
“While this is in line with market expectations, we think this will continue to be negative technical for agency MBS,” George said.
It is not just those spreads that could influence pricing, Martin said, noting the record per-loan production losses originators suffered last year.
Homebuyers are still suffering from interest rate shock, said Jeremy Sicklick, CEO of real estate firm HouseCanary. “With mortgage rates creeping over 7%, many buyers and sellers alike seem to be holding out for rate cuts in the months ahead before jumping into the housing market,” Sicklick said in a press release.
HouseCanary data found the median price of all single-family listings rose 3.2% over a year ago, while closed listings rose 8%.
“With high mortgage rates and surging home prices tamping down market activity, we expect to see a subdued spring buying season continue throughout May, despite inventory increases,” Sicklick declared.
But besides higher rates, the problems around inventory and affordability remain.
“I think we’ve got to solve for those in concert,” Martin said. “Lower rates will help but I don’t think it’s enough to really materially move that needle.”
The following Prime Opinion Review is a sponsored partnership with Prime Opinion. Welcome to my Prime Opinion Review! If you want to earn extra cash from home on your own schedule, I recommend trying out Prime Opinion. This honest review of Prime Opinion is going to explain what Prime Opinion is, how Prime Opinion works,…
The following Prime Opinion Review is a sponsored partnership with Prime Opinion.
Welcome to my Prime Opinion Review!
If you want to earn extra cash from home on your own schedule, I recommend trying out Prime Opinion.
This honest review of Prime Opinion is going to explain what Prime Opinion is, how Prime Opinion works, and how you can make extra money with paid online surveys on Prime Opinion each month.
I have been taking surveys for years, and I think it’s an easy way to make extra money in your spare time at home.
Yes, you can actually earn PayPal cash and free gift cards for something that you can do while watching TV or when you just have a few spare minutes.
All you need is an internet connection and a device like a phone, laptop, computer, or tablet to get started with Prime Opinion.
Quick summary: Prime Opinion is a survey website that allows people to earn money by sharing their opinions from home. It’s a simple concept: you share your thoughts, and they pay you for it.
I signed up for Prime Opinion personally and have started taking surveys to test it out for you, my reader. One thing I really love about Prime Opinion so far is the amount of surveys that are available. Already on the first day, there were 49 surveys that I could get started with, with more being added all the time. This is a lot more than I usually see available on survey sites!
Please click here to sign up for Prime Opinion and get up to a $5 free bonus (500 free bonus points). You can also use the code “MakingSenseofCents10” to get 10% more points for each completed survey in the following 7 days after signing up.
Prime Opinion Review
Below is my Prime Opinion review.
What Is Prime Opinion?
Prime Opinion is a website where you can earn money by sharing your opinions through online surveys. These surveys often ask about everyday things like household products, TV shows, or sports teams. It’s a way to make money from home just by taking surveys on the internet.
Prime Opinion has several user-friendly features that make it easy for people to earn extra money. If you’re getting into paid surveys, here are some things you’ll like about Prime Opinion:
The platform is easy to use, so you won’t have trouble navigating it. You can easily find and complete surveys without getting lost on the site.
Whenever you log on to Prime Opinion, you’ll find a lot of available surveys where you can earn real money. It doesn’t matter if it’s morning or night; you can earn money in your free time.
There is a welcome bonus of up to $5 for signing up.
You can complete daily streaks and participate in their leaderboard contests to earn even more points and prizes.
They have a referral program where you can receive a 10% commission on all points that your friends earn when they sign up through your referral link.
Instant payments (literally less than 2 minutes) via PayPal, Venmo, ACH or via hundreds of gift cards available.
24/7 live chat support in case you have any questions.
According to Prime Opinion, as I was writing this review on Prime Opinion, there were 1083 surveys available in the United States. Plus, the average user earned $11 the day before. So, as you can see, there are definitely surveys to be found here!
Now, I do want to say that Prime Opinion will not make you rich. No survey site will do that. But, you can easily earn a little extra money in your spare time from home.
How Prime Opinion works
Joining Prime Opinion is easy and free and many users even start earning on their first day!
Here’s how to sign up for Prime Opinion and make extra money taking surveys:
Join the panel – Registration is easy. Just sign up with your email by clicking here.
Find surveys – Once logged in, you’ll find a list of surveys you’re eligible to take. You pick the surveys you want to work on based on the time you have and the earnings you’re aiming for.
Pre-survey questions – Before starting a survey, you’ll need to answer some initial questions. Don’t worry, this is just to make sure the survey fits you.
Take the survey – After qualifying, you’ll be directed to the actual survey. Fill it out, have your say, and once finished, you’re taken back to the Prime Opinion site.
Get rewarded – For each completed survey, you earn points immediately. These can be turned into cash or gift cards whenever you want.
You can comfortably take surveys with Prime Opinion using any online device, such as your smartphone or computer. You have control over when and which surveys to take based on information like estimated time and payout for each survey.
It’s common to come across situations where you don’t qualify for a survey. You might answer a few questions and then see a message saying that you’re not the right fit for that particular survey. This is normal with survey sites. Keep trying, and look for other surveys that you may qualify for.
Note: The answers for the pre-survey questions need to be accurate and detailed so the you have more relevant surveys available.
Why does Prime Opinion pay you?
When you share your thoughts on Prime Opinion, you’re helping brands and companies improve their products and services. Companies pay Prime Opinion for the market research that they collect.
Your feedback is important to them because it gives them insight into what people like and don’t like.
What kind of questions are asked in surveys?
You might be wondering what kind of questions are asked in surveys – makes sense!
Usually, you’ll be asked about your opinions on different products or services, your preferences on different things, and sometimes, more personal details like whether you have pets or kids at home.
Here are examples of the types of questions you might be asked in paid online surveys:
Frequency activities – “How often do you dine out each month?”
Value importance – “When considering products, how much does price influence your decision?”
Feature preferences – “What specific features do you look for when buying [insert product]?”
Usage patterns – “How frequently do you use [insert service/product]?”
Income details – “What is your annual income?”
Lifestyle choices – “What activities do you enjoy during your free time?”
Recent purchases – “Have you bought any gadgets or home appliances recently? What did you choose and why?”
Research habits – “Do you research products before making a purchase?”
Grocery shopping – “How often do you shop for groceries each month?”
Media consumption – “How many hours per week do you spend watching TV or movies?”
These questions are straightforward and don’t require any special expertise to answer! Sometimes the answers are multiple-choice, and sometimes you will be asked to write a sentence or two.
The goal is to gather information about your needs and interests, which helps companies determine what products or services might appeal to you. Your feedback is helpful because it influences how companies develop and sell products.
How to cash out with Prime Opinion
The withdrawal process from Prime Opinion is simple. You can withdraw your money through many different options once you reach the required points for cash-out.
You can redeem your points for PayPal cash, direct bank transfer, Venmo, virtual Visa card, as well as for gift cards to retailers and places such as Amazon, Apple, eBay, Kroger, Starbucks, Target, Walmart, and more.
There are even 46 different options for charity donations that you can choose from.
Before you withdraw your earnings, you’ll need to reach the redemption threshold. This is the minimum number of points you must have to start the cash-out process.
The redemption threshold depends on the method you want to use. For example, bank transfer redemptions start as low as 125 points ($1.25) and some gift card transactions start at 100 points ($1.00).
Note: The higher the welcome bonus chosen, the higher the threshold will be for the first redemption. After that the redemption threshold is low.
Frequently Asked Questions
Below are answers to common questions about getting paid to take surveys with Prime Opinion.
Is Prime Opinion legit?
Yes, Prime Opinion is a legitimate survey site. On TrustPilot, Prime Opinion has 11,000 reviews with an excellent rating of 4.5 out of 5 stars. Some of the positive Prime Opinion reviews that I read on TrustPilot talked about how users liked the low payout amount, how there are always a lot of surveys available, and how easy the site is to use.
How much does Prime Opinion pay?
Your earning potential on Prime Opinion can vary and surveys typically pay between $0.50 and $5.00 each ($5 is the highest-paying survey they have available).
How much is 1,000 points on Prime Opinion?
Each point on Prime Opinion is worth $0.01. 1,000 points are equal to $10. 500 Prime Opinion points are equal to $5.
Is my personal information safe with Prime Opinion? Is Prime Opinion safe?
Prime Opinion prioritizes user privacy and implements measures to keep your personal information secure. However, I always recommend that you read the privacy policy for any survey company that you join.
How long does it take for Prime Opinion to pay out?
Before you can withdraw your earnings on Prime Opinion, you’ll need to reach the redemption threshold. This threshold varies based on the redemption method you choose. For example:
Bank transfer redemptions start as low as 125 points ($1.25).
Gift card reward options start at 100 points ($1.00).
Once you reach the required points, you can start the cash-out process using your preferred redemption method. This may be one day or it may be a week or more. It just depends on how many surveys you answer and the length.
How do you get paid on Prime Opinion?
You get paid in points on Prime Opinion, which you can redeem for PayPal cash, gift cards, or donations to charities.
How do I withdraw money from Prime Opinion?
Once you’ve reached the payout threshold, you can withdraw your earnings directly to your PayPal account or choose other redemption options such as free gift cards.
Is Prime Opinion free?
Yes, joining and using Prime Opinion is completely free. There are no hidden fees.
Prime Opinion Review – Summary
I hope you enjoyed my Prime Opinion Review.
If you want to earn extra money without committing to a lot of hours or another job, answering fun surveys at home could be a good option for you to explore.
Prime Opinion is a legitimate survey platform that pays you to complete surveys, and that’s their sole focus. They have plenty of surveys for you to answer and you have many options to redeem your points, including different gift cards and cash payouts.
Plus, this site also has a monthly leaderboard contest so that top earners can get additional bonus earnings.
If you’re interested in earning money by sharing your opinions and thinking about signing up, learning about Prime Opinion is a great way to begin increasing your income.
I really like how easy it is to earn money by answering online surveys. You can take surveys while watching TV, waiting for food to cook, doing chores, and more. It’s super flexible and convenient, allowing you to do it right from your phone or computer.
Please click here to join Prime Opinion and get up to a $5 free bonus.
Do you like to take surveys to earn extra cash? What other questions do you have for my Prime Opinion Review?
A mortgage rate is highly subjective and can vary for a variety of reasons. A news story that provides an outright level like 7.5% requires context and qualification. Some online advertisements (especially among builders) could still be showing rates in the high 6’s. Some borrowers will be seeing rates of 7.625 or higher.
Loans with less than 25% down will have higher and higher costs, either in terms of upfront closing costs or the rate itself. Investment properties incur significant extra costs as do lower credit scores (you start getting hit for anything under 780 in many cases these days).
These are just a few considerations to illustrate the point that a 30yr fixed rate isn’t necessarily apples to apples. Fortunately, we can control for most of the variables by only ever looking at the same scenario, free from most of the subjective adjustments. We can also control for the practice of advertising lower rates by quoting them with implied discount points (extra upfront cost that goes toward “buying down” the prevailing rate). That’s one of the reasons the MND index is higher than Freddie Mac’s weekly survey.
All that to say, 7.5%+ might not be the exact rate you see today, but after adjusting for everything we can control, that’s the most prevalently quoted top tier conventional 30yr fixed rate again today. It’s the 3rd time we’ve seen 7.5 in the past 2 weeks.
Today’s increase followed the release or the Employment Cost Index–one of the economic reports the Fed watches closely in determining rate policy. In not so many words, it suggested higher momentum in price pressures than previously expected. This wasn’t necessarily out of line with any of the other recent inflation-related reports, but the confirmation was worth a bit of extra weakness in rates nonetheless.
Speaking of Fed rate policy, we’ll get the latest Fed announcement tomorrow. There’s zero chance of a cut (or a hike), but the Q&A portion is always worth some potential volatility in the afternoon.
The idea of a four-day workweek is so popular with some workers that they’d be willing to take a pay cut to make it happen, according to a new survey.
The survey, which included 1,250 people who work full time, was conducted in April by Resume Builder, a career services company. It found that 8 in 10 workers would be excited to work 32 hours a week instead of 40 because they believe it would help them achieve better work-life balance, improve their health, mitigate burnout, be more productive and reduce commuting costs.
The survey results suggest some workers feel pretty desperate for that better work experience. Even though nearly all the survey participants (94%) said they could do the same amount of work in fewer hours, about 21% said they would take a pay cut if it meant they could work the equivalent of one less day per week.
In addition, 83% of respondents said they would prefer a four-day, 40-hour workweek to the current standard of 40 hours in five days.
“I think people value time now more than they ever have — especially younger generations,” says Julia Toothacre, resume and career strategist with Resume Builder.
Idea of a four-day workweek is catching on
The four-day workweek is still a long way from becoming the norm in the U.S., Toothacre says. But the idea has picked up steam in recent years because it’s seen as a way to address the impact of work stress and long hours.
Roughly 3 out of 4 workers said they experienced work-related stress in the last month, according to the 2023 Work in America Survey by the American Psychological Association. More than half said that stress resulted in an array of negative effects, including emotional exhaustion, lack of motivation, a desire to quit, lower productivity and irritability.
There’s some interest in making the four-day workweek a national policy. In March, Sen. Bernie Sanders, I-Vt., introduced a bill that would standardize a 32-hour workweek without cutting workers’ pay or benefits. But it’s not expected to go anywhere.
Pilot programs show promising results
Instead, the four-day workweek has gained the most traction through companies’ participation in pilot programs. Organizations around the world have tested it out, and the results are pretty positive. In 2022, a pilot program that included 33 U.S. companies found that most of them wanted to continue with the 32-hour schedule after the trial period ended.
The companies involved in this pilot didn’t make any changes to workers’ pay. And it turns out that’s for good reason: The companies reported that productivity was positively affected by the new schedule. Workers at the participating companies said their job performance improved during the course of the trial.
In the trial, companies got rid of meetings and other unnecessary activities to free up workers’ time, according to Boston College researchers who evaluated the results. Wen Fan, a sociology professor, said in a December 2022 news release that the program worked as expected. “Hours reduced, well-being improved, and key organizational bottom-lines sustained — all of these happened without the need for workers to intensify their work demands.”
95% of Parents Saving for Kids’ College Expenses Expect to Cover Over Half the Costs, According to Northwestern Mutual Planning & Progress Study 2 in 3 parents who are helping their kids cover college costs expect their children to pay for part of the educational expenses; 1 in 3 say the parents will pay for … [Read more…]
America’s housing crisis is real, and it’s getting worse. Home prices have shot up by anaverage of 30 percent over the past several years, and in 2023 home sales were lower than they had been in almost 30 years. A recent survey revealed that only 53 percent of non-homeowners believe they could one day own a home, while 12 percent say the possibility of owning a home feels “hopeless.” The Cold And Uncared For Society (CAUFS) defines housing as unaffordable if it costs more than 30 percent of an individual’s income, yet more than 18 million households in the U.S. currently pay more than half their income for housing.
In response to this crisis, independent presidential candidate Robert F. Kennedy Jr. has proposed a new federal home loans program, aiming to provide government-backed 3 percent mortgage bonds to anyone unable to afford a house.
“If you have a rich uncle who co-signs your mortgage, you will get a lower interest rate because the bank looks at his credit rating,” Kennedy said at a town hall in South Carolina. “I’m going to give everyone a rich uncle, and his name is Uncle Sam.”
This should ring an ominous bell to anyone trying to pay off federal college loans. Kennedy’s plan is essentially a clone of the federal student loans program but for first-time home buyers instead of teenage college students. The concept is that if you can’t buy a house because of insufficient funds, the government will lend you the money. What could possibly go wrong?
To answer this question, just look at what happened with federal student loans. Colleges know that students have access to easy loans, so they raise tuition with little fear of losing enrollment. This has resulted in a vicious cycle where college tuition far outpaces inflation, leaving millions burdened with crippling debt and limited financial opportunities after graduating.
As student loan debts ballooned, so did tuition rates. The Congressional Budget Office reports that between 1995 and 2017 federal student loan debt grew “from $187 billion to $1.4 trillion (in 2017 dollars).” This is because colleges kept raising tuition, knowing that students could borrow to cover it.
Al Lord, the former CEO of Sallie Mae—once the largest federal student loans lender—explained the phenomenon simply: “Schools were able to hike tuition since students now had expanded access to loans.” Lord further admitted that colleges raise tuition rates “because they can, and the government facilitates it.”
A study from the Federal Reserve Bank of New York revealed that each additional dollar in student aid corresponds to a 60-cent increase in tuition. The pattern is clear: more student aid means higher tuition.
Applying this logic to Kennedy’s home loan plan, it’s easy to see the potential pitfalls. If the government makes it easier to buy homes, will it lead to higher prices? Almost certainly, because Kennedy’s proposal doesn’t address the core problem: There aren’t enough houses in the market for people to buy.
Construction of multifamily housing units in America has declined by one-third since 1987, and of those built in 2021, only 5.4 percent were for sale as condominiums rather than rental apartments. This scarcity drives prices up, creating a market where even modest homes are out of reach for many.
Onerous regulations, such as single-family zoning, height restrictions, and permitting delays make it difficult to build more housing, which is the key to solving the crisis. Yet, these harmful rules persist because local politicians are afraid to upset residents who fear that new developments will raise housing costs. However, research shows in reality, these developments reduce the cost of housing.
A basic grasp of economics makes clear that when supply is low, prices go up. To lower prices, we certainly shouldn’t replicate the student loans debacle by giving people federal bonds that will undoubtedly lead to further price increases. We should build more homes.
If Kennedy wants to solve the housing crisis, he should start by understanding it.
Mortgage rates continued their climb past the 7% threshold this week, sidelining price-sensitive buyers in their wake.
The rate on the 30-year fixed rate mortgage rose to 7.17% on Thursday, up from 7.1% the week prior, according to Freddie Mac. Rates surged past 7% last week for the first time this year following a government report showing inflation remained hotter than expected.
A separate measure, which tracks rate changes daily, revealed even bigger swings. The daily rate on the popular 30-year fixed loan was 7.52% on Thursday, the highest reading since November 2023, according to Mortgage News Daily.
The uptick in rates was a sour note for would-be buyers hoping to get into the spring market, forcing some first-time and repeat buyers back on the sidelines.
Any hope of seeing rates stabilize will be contingent on inflation, said Jiayu Xu, an economist at Realtor.com.
“Unfortunately, the rising mortgage rates occurred during what is typically a busy time in the housing market, potentially giving pause to prospective homebuyers as they weigh their purchasing decisions,” Xu said. “Despite the increased mortgage rates leading to higher costs, it could also suggest a less competitive market where opportunities may exist for some homebuyers.”
Read more: Mortgage rates today, April 25: Rates increase for the 4th straight week
Buyers backpedal as rates soar
Demand for mortgages slowed last week as mortgage rates hit their highest levels since late 2023.
The volume of applications to purchase a home fell 1% during the week ending April 19, according to the Mortgage Bankers Association (MBA) weekly survey of applications. Overall, applications were down 15% compared to one year ago.
Those purchasing turned to government-backed loans or adjustable-rate mortgages (ARMs), which offer slightly lower interest rates.
The ARM share of applications increased nearly 8%, the MBA noted, which was consistent with the uptick in rates as buyers searched for any measure of relief. The FHA share of applications also registered a modest uptick, rising roughly 13% for the week ending April 19.
But homebuyers weren’t the only ones halted by the uptick in mortgage rates. Refinance applications fell 6% last week, the MBA found, as homeowners lost hope of snagging a lower rate.
While mortgage rates are partially to blame for the lull in demand, the limited supply of homes on the market is a big factor. There’s still more demand than there is supply, keeping home prices from edging down.
It’s also fed the lock-in effect.
“The jump in mortgage rates has taken the wind out of the sails of the mortgage market,” said Bob Broeksmit, CEO and MBA president. “Along with weaker affordability conditions, the lock-in effect continues to suppress existing inventory levels as many homeowners remain unwilling to sell their home to buy a new one at a higher price and mortgage rate.”
Read more: Mortgage rates top 7% — is this a good time to buy a house?
A silver lining in new construction
While inventory of previously owned homes continues to hover near 30-year lows, sales of newly built homes in March surpassed expectations, seeing the largest increase since December 2022.
Sales of newly built, single-family homes in March rose nearly 9% to 693,000 on a seasonally adjusted annual rate, according to data released this week by the US Census Bureau and US Department of Housing and Urban Development.
The pace of new home sales last month was up just over 8% from a year earlier, though experts predict it may moderate.
Still, new homes represent a cushion for buyers facing low inventory on the existing home side.
New single-family home inventory in March sat at 477,000, up nearly 3% from February. That represents about 8 months of supply at the current building pace. As for existing single-family homes, data from NAR shows there were just over 3 months of supply in March — at least 5 to 6 months represent a balanced market.
Overall, the inventory of newly built homes in March was up just over 10% annually.
According to Sam Khater, Freddie Mac’s chief economist, buyers are coming to terms with higher rates, as evidenced by the recent uptick in sales for new homes.
“Despite rate increases more than half a percent since the first week of the year, purchase demand remains steady,” said Khater. “With rates staying higher for longer, many homebuyers are adjusting.”
Gabriella Cruz-Martinez is a personal finance and housing reporter at Yahoo Finance. Follow her on X @__gabriellacruz.
Click here for real estate and housing market news, reports, and analysis to inform your investing decisions.his
As 2024 has progressed, economic data–especially inflation data–have made it increasingly clear that rates will not be coming down nearly as soon as the Fed (and the market) expected.
Rates are driven by multiple factors. At present, inflation is chief among those, followed by the economy. In general, higher inflation and economic strength coincide with higher rates.
Inflation and economic data evolved in such a way as to offer some light at the end of the high rate tunnel at the end of 2023. Even the Fed acknowledged the shift by lowering its 2024 rate projection by half a percent in December.
But 2024 has proven to be a frustrating year so far for everyone who’d been hoping that inflation and rates were finally on the way back down. We weren’t necessarily expecting to see any new fireworks this week, but we got them anyway.
The trouble began on Thursday morning with the release of the quarterly GDP data. One component of GDP is “personal consumption expenditures” (PCE). One manifestation of the PCE data is a price index which in turn has a variation that excludes food and energy to give us the Core PCE Price Index.
Core PCE is akin to Core CPI and it happens to be preferred by the Fed when it comes to tracking the 2% inflation target. There are several different Core PCE measurement methods, which can make things fairly confusing on weeks when the data is released. They include:
Annualized quarterly Core PCE, which takes an average of 3 monthly readings and determines the % change versus the average of the 3 months in the previous quarter before multiplying the result by 4 to get an annualized figure (i.e. this is what annual core inflation would look like if the quarter over quarter trajectory were maintained for an entire year. This number is only released once per quarter, but it is revised on each of the next 2 months as new monthly data comes in.
Monthly Core PCE, which is released every month and serves as the raw ingredient for quarterly PCE
Annual Core PCE, which is just a year-over-year version of the monthly data
All of the above come from the same report, but all can send different signals. To make matters more confusing, the quarterly number is released with GDP one day BEFORE the monthly number, but without the same level of detail.
Long story short, the annualized quarterly Core PCE, which had been back in the Fed’s target range until this week, suddenly did this:
Markets knew it would be moving up. They’d guessed the number would be 3.4%, in fact (which makes sense based on the 2 months of data we already had for Q1 compared to Q4’s tamer numbers). But the actual number was 3.7%, which is quite a big “beat” when it comes to inflation indices.
Markets panicked initially, with stocks selling off and bond yields spiking to the highest levels since early November. Traders who bet on the Fed Funds rate quickly increased their levels for the end of 2024.
A day later, however, and the more detailed, monthly PCE data painted a slightly softer picture. With March numbers now able to be compared to March 2023, the true year over year number was 2.8% (still too high, but not as high as the previous day’s data might have suggested).
The news was slightly better when viewed in month over month terms. Here too, inflation is still almost twice as hot as the Fed would like to see, but it was actually slightly lower than last month (after revisions). To be clear, we’re saying that the pace of price increases is lower–not prices themselves.
Some people get upset when economic data is revised in a way that makes it seem like the government tried to paint a rosier picture for initial releases. In addition to numerous examples of past revisions having a completely opposite effect, rest assured, the financial market sees all the moving parts and trades accordingly. Specifically, even after the softer data came out on Friday, bond yields (a fancy word for “rates”) were still higher than they were before the previous day’s data and significantly higher than the lows seen on Tuesday after PMI data.
The PMI data refers to S&P Global’s Purchasing Managers Indices (PMIs). This is another version of the highly regarded PMIs from the Institute for Supply Management (ISM). Both firms produce PMIs that track the manufacturing and services sector. Tuesday’s version from S&P Global came in unexpectedly lower on both fronts. It may not look like much of a drop on a chart, but markets are intently focused on economic momentum as it could speak to the prospects for inflation and rates in the future.
The prospects for mortgage rates have not been great in April. While we did see some relief on Friday, Thursday’s reaction to the quarterly PCE data brought the average 30yr fixed rate to new 5 month highs–a fact that is not yet reflected in Freddie’s weekly survey numbers.
In this week’s other economic news, Pending Home Sales rose more than expected (which is a good sign for next month’s existing home sales). They’re now no longer losing ground in year over year terms.
The major caveat is that the outright level of pending home sales remains near the lowest in decades.
New Home Sales are a different story. While they’re certainly not as high as they were a few years ago, they’ve held up much better on a combination of available inventory and builder incentives.
The week ahead brings several key events.
Monday:
Treasury will issue a quarterly update on borrowing needs in stages on Monday and Wednesday. This has been a hot button for rates the last few cycles.
Wednesday:
The Fed announcement (2pm, ET) is important because it will likely contain an update on how the Fed is handling its balance sheet run-off. This doesn’t mean the Fed is going to buy new bonds again, but they will soon announce that they’ll maintain more of their existing bond holdings. Experts disagree on whether this will matter for rates, but that could depend on the details. More importantly, we’ll get updated thoughts from Powell in the press conference (2:30pm ET) that follows the announcement. Even before this week’s data, the Fed was already questioning whether it would be able to cut rates at all in 2024. The PCE data arguably writes those questions in ink.
ISM’s version of the manufacturing PMI will be released at 10am ET as well as the Job Openings data for March. Treasury releases the more detailed stage of the borrowing announcement at 8:30am ET.
Friday
The big monthly jobs report will be released on Friday morning at 8:30am ET followed 90 minutes later by ISM’s service sector PMI
WASHINGTON, D.C. (April 26, 2024) – Homebuyer affordability declined in March, with the national median payment applied for by purchase applicants increasing slightly to $2,201 from $2,184 in February. This is according to the Mortgage Bankers Association’s (MBA) Purchase Applications Payment Index (PAPI), which measures how new monthly mortgage payments vary across time – relative to income – using data from MBA’s Weekly Applications Survey (WAS).
“Homebuyer affordability conditions remain volatile as recent economic data continues to show that the economy and job market are strong. These factors will keep mortgage rates at elevated levels for the near future, sidelining some prospective buyers from entering the housing market,” said Edward Seiler, MBA’s Associate Vice President, Housing Economics, and Executive Director, Research Institute for Housing America. “While rates remain elevated and housing supply is low, we do expect to see renewed activity as mortgage rates decline to low-to-mid 6 percent range by the end of the year.”
An increase in MBA’s PAPI – indicative of declining borrower affordability conditions – means that the mortgage payment to income ratio (PIR) is higher due to increasing application loan amounts, rising mortgage rates, or a decrease in earnings. A decrease in the PAPI – indicative of improving borrower affordability conditions – occurs when loan application amounts decrease, mortgage rates decrease, or earnings increase.
The national PAPI (Figure 1) increased 0.8 percent to 174.2 in March from 172.8 in February. Median earnings were up 3.5 percent compared to one year ago, and while payments increased 5.2 percent, the strong earnings growth means that the PAPI is up 1.6 percent on an annual basis. For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment increased to $1,488 in March from $1,473 in February.
The Builders’ Purchase Application Payment Index (BPAPI) showed that the median mortgage payment for purchase mortgages from MBA’s Builder Application Survey increased to $2,556 in March from $2,534 in February.
Additional Key Findings of MBA’s Purchase Applications Payment Index (PAPI) – March 2024
The national median mortgage payment was $2,201 in March—up $17 from February. It is up by $108 from one year ago, equal to an 5.2% increase.
The national median mortgage payment for FHA loan applicants was $1,898 in March, up from $1,872 in February and up from $1,755 in March 2023.
The national median mortgage payment for conventional loan applicants was $2,222, up from $2,194 in February and up from $2,145 in March 2023.
The top five states with the highest PAPI were: Nevada (261.5), Idaho (256.9), Arizona (229.9), Florida (219.1), and Washington (218.2).
The top five states with the lowest PAPI were: Connecticut (128.5), Louisiana (130.7), Alaska (137.3), DC (138.6), and New York (138.6).
Homebuyer affordability decreased for Black households, with the national PAPI increasing from 179.0 in February to 180.4 in March.
Homebuyer affordability decreased for Hispanic households, with the national PAPI increasing from 165.1 in February to 166.4 in March.
Homebuyer affordability decreased for White households, with the national PAPI increasing from 175.5 in February to 176.8 in March.
About MBA’s Purchase Applications Payment Index
The Mortgage Bankers Association’s Purchase Applications Payment Index (PAPI) measures how new mortgage payments vary across time relative to income. Higher index values indicate that the mortgage payment to income ratio (PIR) is higher than in a month where the index is lower. Contrary to other affordability indexes that make multiple assumptions about mortgage underwriting criteria to estimate mortgage payment level, PAPI directly uses MBA’s Weekly Applications Survey (WAS) data to calculate mortgage payments.
PAPI uses usual weekly earnings data from the U.S. Bureau of Labor Statistics’ Current Population Survey (CPS). Usual weekly earnings represent full-time wage and salary earnings before taxes and other deductions and include any overtime pay, commissions, or tips usually received. Note that data are not seasonally adjusted.
MBA’s Builders’ Purchase Application Payment Index (BPAPI) uses MBA’s Builder Application Survey (BAS) data to create an index that measures how new mortgage payments vary across time relative to income, with a focus exclusively on newly built single-family homes. As with PAPI, higher index values indicate that the mortgage payment to income ratio (PIR) is higher than in a month where the index is lower. To create BPAPI, principal and interest payment amounts are deflated by the same earnings series as in PAPI.
The rent data series calculated for MBA’s national mortgage payment to rent ratio (MPRR) comes from the U.S. Census Bureau’s Housing Vacancies and Homeownership (HVS) survey’s median asking rent. The HVS data is quarterly, and as such, the mortgage payment to rent ratio will be updated quarterly. The HVS data is quarterly, and as such, the mortgage payment to rent ratio will be updated quarterly. MPRR data was not included in the March 2024 data.
For additional information on MBA’s Purchase Applications Payment Index, click here.