First Team’s Weekly Mortgage Watch (October 7th, 2018) This Week Highlights the Following Updates:

  • Mortgage rates marched higher as last week ended. Many experts have been waiting for markets to finally feel the convergence of a number of factors.
  • We’re almost to a record for the longest economic expansion in recorded US history.
  • The Fed has begun moving rates higher and providing less “forward guidance” to the market, which tends to create more uncertainty.
  • Additionally, the US government will have to borrow significantly more money to finance its activities after the tax cuts.
  • Data from last week only reinforced the need for rates to increase. Both ISM indices continue to show strong growth readings, consumers are taking on more debt, and the unemployment rate just matched a reading from 1969 – with adjustments to August’s reading that put it at 270K.
  • Against this backdrop, rates are likely to continue moving upward this week.
  • Both the Producer and Consumer Price Indices are due this week. If these reports show an unexpected flare-up in inflationary pressures, then it is very likely that all interest rates will continue to climb rather quickly.

Housing Affordability Hits a 10-Year Low

With all the factors at play in the housing market, it comes as no surprise that housing affordability has been difficult. US incomes have simply not risen as quickly as the combination of increasing prices and mortgage rates. We are now at the same level of affordability as we were during the 3rd quarter of 2018. Almost one-third of the population now lives in an area where an annual income of $100K is required to buy a median-priced home, according to ATTOM Data Solutions.