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Market Update October 12th

Market Update October 12th
October 12, 2015 wpengine

Please enjoy this quick update on what happened this week in the housing and financial markets.

 

The question on Wall Street is “are the bulls back?”

Despite the fact that the Fed has not raised interest rates as originally planned, which is an indication that the economy is not as strong as they would like, investors don’t seem to care much. The stock market over the last five trading days is up over one thousand points. The corporate profit reports for the 3rd quarter are coming out now and they are likely to set the tone for the market direction over the next couple of weeks.

This week there was little news for investors to chew on as far as economic reports.

  • The few reports that were available were essentially positive which further supported the recent market rally.
  • First time jobless claims are showing signs of moving even lower.
  • For quite some time the claims have been in a holding pattern at a healthy level of slightly under 300,000 per week.
  • The most recent report released for the week ending October 3rd show claims dropping down to 263,000.
  • This is the lowest point in 2-1/2 months.

In what is one of the largest jumps on record for mortgage loan applications, the Mortgage Bankers Association of America reported double digit increases in both purchase and refinance applications for the week of October 2nd.

  • Purchase applications soared 27.0 percent while refinance apps jumped 24.0 percent.
  • The driver of the tremendous increase is primarily due to the new lending disclosure laws that went into effect on October 2nd.
  • Because of the new lending disclosure requirements, lenders and loan officers pushed incredibly hard to get as many loans into the system prior to the rule implementation.

There continues to be much discussion and frustration in the mortgage industry pertaining to the implementation of the new disclosure rules.

  • The new rule known as TRID places even more work on lenders and loan officers to disclose information to borrowers, some of it being redundant.

I am not suggesting that these new disclosure rules are not beneficial or necessary.

  • What I am saying is that the government, as they typically do, creates new requirements for disclosure but do not provide adequate guidance in the implementation which creates chaos for the industry.
  • The mortgage industry is resourceful and we will adapt quickly to the new rules and business will resume a sense of normalcy in the coming weeks and months.

Next week’s potential market moving reports are:

  • Wednesday October 14th – MBA Mortgage Applications, Retail Sales & PPI
  • Thursday October 15th – First Time Jobless Claims & FOMC Minutes
  • Friday October 16th – Industrial Production and & Consumer Sentiment