Mortgage Premium increases appear to have driven demand for government loans and gave a boost to applications.

Mortgage Premium increases appear to have driven demand for government loans and gave a boost to applications.

It appears that the stock market rally that we have been experiencing over the last month has lost some of its momentum.  For the week the market has remained in a fairly narrow range of plus or minus 100 points.  The media loves to sensationalize events so you will hear on some days that the market has hit new record highs.  However, when you look at the numbers you will see that the records being achieved are coming from minimal gains in the markets.

This week there has not been many economic reports released that have had a significant impact on the markets however the few that were released were:

• U.S. Manufacturing – This sector continues to grow however the pace of the growth has slowed down.  The index has grown for four straight months and this past month has increase was only 1.6% from the prior month.

• The scheduled FHA Mortgage Insurance Premium increase on April 1 appears to have driven demand for government loans and gave a boost to purchase applications in the March 29 week, according to the Mortgage Bankers Association. The increase in demand for these loans however only lifted total purchase applications by 1.0 following the prior week's 7.0 percent gain. Purchase applications are up about 4 percent from a year ago which reinforces the upward trend for home sales. Refinance applications are down 6 percent despite mortgage rates declining over the last 2 weeks.

• The steady improvement in the labor market may be slowing as ADP reported that private payrolls only increased 158,000 which is significantly below February’s upward revised figure of 237,000.  This newsletter is coming out prior to the U.S. national unemployment figures due to be released at 8:30AM on Friday.  The expectations for the report are that unemployment will remain the same at 7.7%.

• Another indicator in the weakening job market is that first time jobless claims have been rising again.  Last week the report was 357,000 and this week the number of claims jumped to 385,000.  Once again we appear to be approaching the 400,000 mark which if hit will undoubtedly stir up more feelings that the economy is heading in the wrong direction.

Happenings throughout the world keep reminding us of just how fragile the market is.  Europe continues to be very volatile and unstable keeping many U.S. investors and employers on edge.  North Korea’s recent threat of a nuclear attack against the U.S. is making headlines further enhancing emotional instability in the U.S. consumer base as well as stock markets.

JJ Mack
916-517-1800
jj.mack@apmortgage.com
www.apmcroseville.com