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Mortgage rates are still uncomfortably high for many would-be homebuyers & sellers, but recent declines have contributed to a significant boost in demand for refinancing. The Mortgage Bankers Association (MBA) reported that refinancing applications soared 35% last week, when rates for the average 30-year & 5-year fixed-rate mortgages hit their lowest point in more than a year, according to Freddie Mac. The surge in refinancing demand was the driving force behind the increase in overall demand for mortgage applications, which was up 15% on the week. For comparison, purchase applications only increased by 3%. Year-over-year, refinancing demand was up 118%. There was a particular jump in refinance applications for VA loans, which were up 77% from last week. "Given the bond market’s sensitivity to data, this should only be a temporary bump in refinance applications, as mortgage bond prices have come down about 0.625 points from their highs on August 2nd," said Emily Overton, Capital Markets Analyst at major VA lender Veterans United Home Loans. Overton noted that, according to industry data, it's estimated that approximately 200K VA loan borrowers have a mortgage rate of 7% or higher. The latest data from Freddie Mac showed that the average 30-year fixed rate mortgage is at 6.49% this week. The surge in refinancing demand was the driving force behind the increase in overall demand for mortgage applications, which was up 15% on the week. For comparison, purchase applications only increased by 3%. According to Holden Lewis, NerdWallet's mortgage expert, the surge in refinances over the past few weeks is a direct response to the sharp decline in interest rates rather than folks looking to cash out their equity. Most of the jump in refinancing comes from what are called rate-and-term refinances," Lewis said. "These are homeowners who merely want to snag a lower monthly payment on their house. They aren't looking to pay off high-rate credit card debt." Still, he noted, "Plenty of people do refinance their mortgages for more than they owe so they can pay off their credit cards and other high-interest debt."
Mortgage refinancing demand surges as rates fall for second straight week
US consumer sentiment rose in Aug, driven by developments in the race for the White House, while inflation expectations remained unchanged over the next year & beyond, a survey showed. The University of Michigan's preliminary reading on the overall index of consumer sentiment came in at 67.8 this month, compared to a final reading of 66.4 in Jul. The forecast had forecast a preliminary reading of 66.9. In terms of the Nov 5 US presidential election, the survey noted that sentiment for those who identified as Dems jumped 6% in the wake of Pres Biden's decision to drop out of the race & VP Kamala Harris' emergence as the party's presidential nominee, the first rise since Mar. For Reps, sentiment declined 5% in Aug to the lowest level since last Nov. Sentiment among those who self-identified as independent voters, whose views of the economy so far this year have more closely aligned with the sour view of Reps, rose 3%, the first increase since Jan. The survey's reading of 1-year inflation expectations was unchanged at 2.9% in Aug, matching the reading in Jul. Its 5-year inflation outlook remained at 3.0% for the 5th straight month. Earlier this week, an alternative sentiment survey run by the New York Federal Reserve showed medium-term inflation expectations eased substantially among consumers in Jul, even as their near- & longer-term outlooks for price pressures held steady.
US consumer sentiment rises in August; inflation expectations steady
On a recent weekday morning, John Case heard a familiar buzzing outside
his quiet suburban home in College Station, Texas. He recognized it
immediately as 1 of Amazon's (AMZN) Prime Air drones, whizzing by on its delivery route to unload small packages of batteries, vitamins & dog treats. “It
sounds like a giant hive of bees,” Case, a semi-retired orthodontist,
said. “You know it’s coming because it’s pretty loud.” Case
has lived in College Station for the past 40 years. The drones are a
common sight when he & his wife go on their regular walks around the
neighborhood. Nurses, police officers & firefighters who work the
nightshift talk about it disrupting their sleep during the day. Noise complaints are just the latest challenge for AMZN's
drone program that's been struggling to get off the ground since the
company started testing deliveries in 2022. A mix of regulatory hurdles, missed deadlines & layoffs last year, coinciding with widespread cost-cutting efforts by CEO Andy Jassy, has halted progress of the ambitious service, which was conceived of by AMZN founder Jeff Bezos more than a decade ago. As
AMZN prepares to scale up Prime Air & expand it to more areas, it's
encountering another reason why that won't be so easy. In a Jul letter
to the Federal Aviation Administration, College Station Mayor John
Nichols wrote that residents in his city, home to Texas A&M
University, have grown tired of the drones loudly buzzing near their
homes. “Since locating in College Station, residents in
neighborhoods adjacent to Prime Air’s facility have expressed concern to
the City Council regarding drone noise levels, particularly during
take-off and landing, as well as in some delivery operations,” Nichols
wrote. His letter followed a proposal from AMZN to the FAA to allow the company to increase deliveries to
469 flights per day, up from its current level of 200 flights per day. AMZN is asking for the ability to operate between 7 AM - 10 PM,
rather than being limited to daylight hours as the program is today, &
to expand its delivery area to up to 174 square miles surrounding the
company's drone port, up from its current operating range of 44 square
miles. If AMZN gets its wish, there would be up to 940 combined takeoffs &
landings, all so the drones can deliver 1 package at a time, weighing
no more than 5 pounds. The stock fell 53¢.
Amazon’s troubled drone delivery program faces latest challenge in Texas: Annoyed residents
Gold prices soared to an all-time high as the $ weakened on growing expectations for an interest-rate cut from the Federal Reserve in Sep & as tensions in the Middle East bolstered demand for bullion. Spot gold was up 1.7% to $2498 per ounce, after hitting a record high of $2500 earlier & US gold futures settled 1.8% higher at $2537. Bullion rose 2.8% this week. The $ index fell 0.4% & posted a 4th week of losses, making gold more appealing for buyers overseas. Federal Reserve Chair Jerome Powell is scheduled to deliver remarks on the economic outlook next Fri, the first full day of the Kansas City Fed's annual economic symposium in Jackson Hole, Wyoming. The Jul releases of the producer price index & consumer price index this week indicated inflation was subsiding, which could keep the Fed on track for a 25-basis-point rate cut next month.
Gold Rallies To Record High On Softer Dollar, Rate-Cut Expectations
West Texas Intermediate (WTI) crude oil slumped on concerns over the health of China's economy & easing geopolitical worries. West Texas Intermediate crude for Sep closed down 1.51 to settle at $76.65 per barrel, while Oct Brent crude, the global benchmark, was last seen down $1.02 to $80.02. The drop comes as China, #1 importer of crude oil, released the latest in a series of weak economic reports as its economy continues to falter amid a debt crisis linked its real-estate sector, high youth unemployment & tepid consumer spending. The weak performance from the world's 2nd-largest company comes as concerns over a wider Middle Eastern war ebb as Iran continues to hold off from its promise to retaliate against Israel for the assassinations earlier this month of key leaders in the Hezbollah & Hamas militant groups. Iran indicated it is waiting as ceasefire talks to end Israel's war on Hamas in Gaza intensify & the Biden Administration pushes for an end to the conflict.
WTI Oil Closes With a Loss as China's Economy Continues to Weaken and Geopolitical Tensions Ease
Stocks were modestly higher today as consumer sentiment ticked higher in Aug. Once again, stock averages & gold are at or next to record highs. For the week, Dow rose 1162.
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