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Mark Hemingway

Mortgage Market Update for February 5th

Thursday, February 6, 2020 - Article by: Mark Hemingway - Security Financial Services, LLC - Message

The low mortgage rate environment boosted mortgage application activity in the latest week due in part to fears that China's economy will slow driven by the spread of the coronavirus. The MBA reports that the 30-year fixed-rate mortgage fell by ten basis points to 3.71% with 0.28 in points. It was the lowest rate since October 2016. The MBA's Market Composite Index rose 5, the Refinance Index jumped 15% though the Purchase Index fell dropped 10%. "Prospective buyers weren't as responsive to the decline in mortgage rates - likely because of suppressed supply levels. Purchase applications took a step back, but still remained 11% higher than a year ago," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting.

The service sector of the U.S. economy continues to hum along as the outlook remains favorable for 2020. The ISM Service Index came in at 55.5 in January, the highest level since August and grew for the 120th consecutive month. A reading above 50 indicates the non-manufacturing sector economy is generally expanding; below 50 indicates the non-manufacturing sector is generally contracting. Most respondents to the survey said the outlook remains favorable for growth in 2020.

Private job growth surged in January and was the best monthly gain in nearly five years. ADP Private Payrolls surged by 291,000 last month, well above the 160,000 expected. Private job growth was robust across a large portion of industries. The 291,000 was the best monthly gain since May 2015. "The labor market experienced expanded payrolls in January. Job creation was strong among midsized companies, though small companies enjoyed the strongest performance in the last 18 months," said Ahu Yildirmaz, vice president and cohead of the ADP Research Institute.

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