Homes More Affordable, Consumer Sentiment Strong by Ron Schulz


Brought to you by Ron Schulz




For the week of october 14, 2019




  How do you fix a broken pumpkin? With a pumpkin patch.  





With today’s interest rates, housing affordability is near a three-year high. Black Knight’s Mortgage Monitor [] reports it only takes 20.7% of the national median income to make monthly principal and interest payments on an average-priced home.

Fannie Mae’s chief economist adds, “Consumer sentiment remains relatively strong,” the Home Purchase Sentiment Index staying 3.8 points above 2018, with ‘Good Time to Buy’ and ‘Good Time to Sell’ components up in September.

Last year, millennials took out 45% of all new mortgages, the biggest share of any generation. In August, many millennial homeowners sprang for lower rates, as refinances made up 25% of all mortgages from that age group.






TRADERS LIKE THE TRADE OUTLOOK… Life on Wall Street remains volatile. Starting the week down, stocks rallied at the end as the President announced the U.S. and China had reached a “substantial phase-one deal.”

It will take three to five weeks to finalize the agreement in which China will buy $40-$50 billion more of U.S. agricultural products in exchange for our scuttling the next round of tariff hikes scheduled for tomorrow. 

Meanwhile, the median household income hit a new high of $65,014, with the  lowest 10% of paid workers enjoying the biggest gains. Plus, University of Michigan Consumer Sentiment hit a way better than expected 96.

The week ended with the Dow UP 0.9%, to 26,817; the S&P 500 UP 0.6%, to 2,970; and the Nasdaq UP 0.9%, to 8057.

Optimism about a U.S.-China trade deal sparked a flight away from safety that sent bond prices south. The 30YR FNMA 4.0% bond ended down .24, at $103.64. The national average 30-year fixed mortgage fell in Freddie Mac’s Primary Mortgage Market Survey, staying more than 1% below a year ago. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?… CoreLogic []‘s chief economist reports, “Borrower equity rose to an all-time high in the first half of 2019 and has more than doubled since the housing recovery started.” At the end of Q2, the average homeowner’s equity had grown by 4.8% year-over-year.






HOME BUILDING OFF A TICK, RETAIL KEEPS GROWING… For September, Housing Starts are expected to come in down a little, but still north of a 1.3 million annual rate. Consumers, whose spending drives 70% of the U.S. economy, should keep it growing, as Retail Sales are forecast up for September.

NOTE: Weaker economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and higher loan rates.






Forecasting Federal Reserve policy changes in coming months… Wall Street sees a rate cut in October, which should hold through the first Fed meeting of the new  year. Note: In the lower chart, a 73% probability of change is only a 27% probability the rate will stay the same.

Current Fed Funds Rate: 1.75%-2.00%

Oct 30 1.50%-1.75%
Dec 11 1.50%-1.75%
Jan 29 1.50%-1.75%


Probability of change from current policy:

Oct 30    73%
Dec 11    43%
Jan 29    39%






  Stay focused on the value you’re delivering to clients. Keep asking yourself: What am I doing that differentiates me from my competitors, and is adding value to this client’s specific needs?  


  Ron Schulz
Senior Loan Officer
NMLS# 266128

6060 North Central Exp #462
Dallas, TX 75206

Office: 214-346-5279
Mobile: 214-794-4014 []







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