China’s banking regulator orders loan checks on Wanda, Fosun, HNA, others

Several of China’s largest overseas asset buyers, including billionaire Wang Jianlin’s Wanda Group, are being placed under scrutiny, amid a government crackdown on money laundering and a grand campaign to check financial risks ahead of the 19th party congress.

Wanda, Fosun, Anbang, HNA and east China’s Zhejiang based Rossoneri Sport Investment — the vehicle used by Chinese businessman Li Yonghong to acquire Italian soccer club AC Milan in April — have been singled out for scrutiny by local banks, under a directive by the banking regulator, according to emails seen by the South China Morning Post on Thursday.

The reviews will be conducted by a number of banks, including Industrial & Commercial Bank of China, China Construction Bank, Bank of Communications and China Guangfa Bank, according to the emails.

“Last week we had received regulatory orders to check out our bank’s exposure to the overseas debts carried by the above companies,” a banking source said.

More from the South China Morning Post :

Wanda rejects rumours of bond sell-off by banks as prices slump

Meet Wu Xiaohui – the man behind Anbang’s big bang from no-name to heavy hitter

Billionaire Wang says Disney is no match for Wanda’s ‘wolf pack’

The China Banking Regulatory Commission (CBRC) in mid June required banks to check their credit exposure to the selected companies, and prepare a risk analysis.

Several banks have been taking a risk-off stance and selling down their holdings of corporate bonds

of the companies targeted, which triggered an intensive sell-off in Wanda’s debt and shares on Thursday morning, Chinese financial media Caixin reported on Thursday afternoon.

The CBRC did not reply to emailed questions by late afternoon on Thursday.

The company’s 2021 notes fell 220 cents to 94.7 yuan on the Shanghai bourse as of 1.30pm.

The group’s Shenzhen-listed Wanda Film dropped as much as 9.9 per cent on Thursday morning. It applied for trading suspension starting from the afternoon session.

Shanghai-listed shares of Shanghai Fosun Pharmaceutical,which trades as Fosun International, tumbled 8 per cent by 2.15pm, reflecting the biggest drop since February, while its Hong Kong-listed arm Fosun International plunged 6.4 per cent.

A senior Fosun executive, who asked that his identity not be revealed, told the Post that the company is proceeding with “business as usual”, regardless of the ongoing market speculation.

A spokesperson with Dalian Wanda Group declined to comment on the report.

Meanwhile, Wanda’s real estate unit dismissed speculation that the company faced leverage risks due to excessive borrowing, saying in a statement that it had abundant cash.

“The company is in [a] very benign financial state with optimal cash flows and no default risks. Our daily operations are normal,” according to the statement issued on Thursday evening by Wanda Commercial Properties, the real estate arm of Dalian Wanda Group. “There was no other information that the company deemed necessary to be brought to the attention of the public.”

While there’s no suggestion of wrongdoing, the heightened scrutiny of the companies underscores Beijing’s new attitude towards overseas mergers and acquisitions by private companies.

The number of major overseas asset purchases by mainland companies plunged by 80 per cent in the first quarter, as Beijing tightened controls on capital outflows and ratcheted up scrutiny into deal funding.

“Investors right now have to be political experts as much as valuation and financial ones – the political risk now is the highest I’ve seen in the 20 years I’ve been in China,” said Shaun Rein, founder of China consultancy Market Research Group, based in Shanghai.

China experts said the latest administrative measures pointed to the Beijing’s commitment to reduce financial risks ahead of an important political meeting this autumn.

“China has recently taken a series of moves with strong financial impact – restricting outbound capital flows, enacting de-leveraging policies, removing former CIRC Director Xiang Junbo, questioning Anbang CEO Wu Xiaohui, assessing commercial bank exposure to outbound mergers and acquisitions,” said Brock Silvers, managing director at Shanghai-based investment advisory Kaiyuan Capital.

“While these policies may individually discomfort casual market observers, they collectively reflect Beijing’s long-awaited attempt to address systemic economic risks. Managing important currency and debt issues will not only help to ensure a smooth run-up to the all-important 19th party congress this fall, but are also necessary for the longer-term growth and general health of the Chinese economy,” he said.

With additional reporting by Celine Ge

China’s banking regulator orders loan checks on Wanda, Fosun, HNA, others

Mortgage Loan Apps Increasing - The MReport

Mortgage loan applications increased this week, according to the Mortgage Banker’s Association’s (MBA) Weekly Mortgage Applications Survey released Wednesday.

The Market Composite Index, which measures loan application volume, increased 0.6 percent on a seasonally adjusted basis compared to last week, ending June 16, 2017. Unadjusted, the Index decreased 0.4 percent. The Refinance Index increased by 2 percentage points bringing it to its highest level since November 2016. The seasonally adjusted Purchase Index decreased 1 percent from last week and 2 percent on an unadjusted basis.

At 46.6 percent of total applications, refinance shares of mortgage activity increased from 45.4 percent last week. Adjustable Rate Mortgages (ARM) increased to 7.5 percent of total applications.

The FHA share of total applications decreased from 11.2 percent last week to 10.1 percent this week. The VA total share decreased to 10.4 percent from 11.1 percent. Total applications from USDA decreased to 0.7 percent from 0.8 percent the week prior.

30-year fixed-rate mortgages with conforming loan balances, which are $424,100 or less, remained unchanged at 4.13 percent, with points decreasing to 0.34 from 0.35, including the origination fee, for 80 percent LTV loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.40 percent from 3.37 percent, with points increasing to 0.38 from 0.34, including the origination fee, for 80 percent LTV loans, according to MBA.

Contract interest rates for 5/1 ARMs remained unchanged at 3.26 percent, with points increasing to 0.22 from 0.20 for 80 percent LTV loans. The effective rate for 5/1 ARMs, 30-year fixed-rate mortgages, and 30-year fixed-rate mortgages increased from the week prior.

MBA’s survey covers over 75 percent of all U.S. retail residential mortgage applications and has been conducted weekly since 1980. Mortgage bankers, commercial banks, and thrifts are included in the respondents.

Mortgage Loan Apps Increasing - The MReport

Mortgages Rates Continue to Fall – Market Update - Zing! Blog by Quicken Loans (blog)

It’s starting to heat up in the city of Detroit as the weather hit a high point yesterday, reaching 94 degrees. However, while the weather might be on the rise, mortgage rates continue to fall. Let’s discuss.

Headline News

MBA Mortgage Applications: The average interest rate on 30-year fixed-rate conforming mortgages fell 3 basis points to 4.14%, the lowest rate since November 2016. On the flip side, mortgage applications rose 7.1%, with purchase applications rising 10.0% and refinance applications rising 3.0%.

Jobless Claims: Initial jobless claims came back down 10,000 last week to 245,000. The four-week average is up slightly at 242,000. Continuing claims were slightly lower at 1.917 million in lagging data with the four-week average at 1.915 million, a new low since the 1970s.

Mortgage News

Mortgage rates continue to fall to the lowest levels in nearly seven months. All things considered, now is a great time to lock a low rate.

This week, 30-year fixed-rate mortgages (FRMs) averaged 3.89% with an average 0.5 point for the week ending June 8, 2017, down from last week when they averaged 3.94%. A year ago at this time, 30-year FRMs averaged 3.60%.

Next, 15-year FRMs this week averaged 3.16% with an average 0.5 point, down from the last week when they were at 3.19%. A year ago at this time, 15-year FRMs averaged 2.87%.

Lastly, 5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 3.11% this week with an average 0.5 point, the same as last week. A year ago at this time, 5-year ARMs averaged 2.82%.

Stock Market

The S&P and NASDAQ both experienced the impact of tanking tech stocks, pulled down by Apple, Facebook, Amazon, Netflix and Google-parent Alphabet, which all fell at least 3%. On the other hand, the Dow Jones Industrial Average posted closing records.

The Down Jones Industrial Average rose 0.42% for the week, after finishing at 21,271.97, up 89.44 points for the week. The S&P 500 slipped 2.02 points to end at 2,431.77, up 0.63%. Lastly, the Nasdaq pulled back 113.80 points, or 1.8%, ending the week with 6,207.92 points.

The Week Ahead

Tuesday, June 13

Quicken Loans Home Price Perception Index (HPPI) (10:00 a.m. ET) – Quicken Loans, the nation’s second-largest retail mortgage lender, releases data every month comparing what people think their homes are worth through appraisals. Similar opinions of value often make for smoother purchase and refinance transactions.

Producer Price Index (PPI) (8:30 a.m. ET) – The Producer Price Index measures the average change over time in prices received by domestic producers for the sale of goods and services.

Wednesday, June 14

MBA Mortgage Applications (7:00 a.m. ET) – The mortgage applications index measures applications to mortgage lenders. This is a leading indicator for single-family home sales and housing construction.

Consumer Price Index (CPI) (8:30 a.m. ET) – The consumer price index measures changes based on the price of a fixed basket of goods and services purchased by consumers.

Retail Sales (8:30 a.m. ET) – Retail sales measure total receipts from stores selling merchandise and related services to final consumers. Sales are measured by retail and food service stores. Data is collected from the Monthly Retail Trade Survey conducted by the U.S. Census Bureau.

Thursday, June 15

Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to show the number of individuals filing for unemployment insurance for the first time. An increasing trend suggests a deteriorating labor market. The four-week moving average of new claims smooths out weekly volatility.

Industrial Production (9:15 a.m. ET) – The Federal Reserve’s monthly index of industrial production – and the related capacity indexes and capacity utilization rates – covers manufacturing, mining, and electric and gas utilities.

Housing Market Index (10:00 a.m. ET) – The National Association of Home Builders produces a housing market index based on a survey where respondents from the organization are asked to rate the general economy and housing market conditions. The index is a weighted average of separate diffusion indexes, including present sales of new homes, sales of new homes expected in the next six months and traffic of prospective buyers in new homes.

Friday, June 16

Housing Starts (8:30 a.m. ET) – A housing start is registered when the construction of a new residential building begins. The start of construction is defined as the beginning of excavation of the foundation for the building.

Consumer Sentiment (10:00 a.m. ET) – The University of Michigan’s Consumer Survey Center questions 500 households each month on their financial conditions and attitudes about the economy. Consumer sentiment is directly related to the strength of consumer spending.

While mortgage rates continue to fall, the weather is starting to heat up, setting the summer season off with sweltering bang. That being said, now’s the time to make sure your air conditioning unit is operational and able to beat the summer heat. As always, be sure to subscribe to the Zing Blog below and check out our other home, money and lifestyle content.

Mortgages Rates Continue to Fall – Market Update - Zing! Blog by Quicken Loans (blog)

schedule-for-week-of-june-11-2017

The key economic reports this week are May Housing Starts, Retail Sales and the Consumer Price Index (CPI).

For manufacturing, May industrial production, and the June New York, and Philly Fed manufacturing surveys, will be released this week.

The FOMC meets this week and is expected to announce a 25bps increase in the Fed Funds rate.

—– Monday, June 12th —–

No major economic releases scheduled.
—– Tuesday, June 13th —–

6:00 AM ET: NFIB Small Business Optimism Index for May.

8:30 AM: The Producer Price Index for May from the BLS. The consensus is for 0.1% increase in PPI, and a 0.2% increase in core PPI.

—– Wednesday, June 14th —–

7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM ET: Retail sales for May will be released. The consensus is for a 0.2% increase in retail sales.

This graph shows retail sales since 1992 through April 2017.

8:30 AM: The Consumer Price Index for May from the BLS. The consensus is for no change in CPI, and a 0.2% increase in core CPI.

10:00 AM: Manufacturing and Trade: Inventories and Sales (business inventories) report for April. The consensus is for a 0.1% decrease in inventories.

2:00 PM: FOMC Meeting Announcement. The FOMC is expected to increase the Fed Funds rate 25 bps at this meeting.

2:00 PM: FOMC Forecasts This will include the Federal Open Market Committee (FOMC) participants’ projections of the appropriate target federal funds rate along with the quarterly economic projections.

2:30 PM: Fed Chair Janet Yellen holds a press briefing following the FOMC announcement.

—– Thursday, June 15th —–

8:30 AM ET: The initial weekly unemployment claims report will be released. The consensus is for 242 thousand initial claims, down from 245 thousand the previous week.

8:30 AM: The New York Fed Empire State manufacturing survey for June. The consensus is for a reading of 5.0, up from -1.0.

8:30 AM: the Philly Fed manufacturing survey for June. The consensus is for a reading of 27.0, down from 38.8.

9:15 AM: The Fed will release Industrial Production and Capacity Utilization for May.

This graph shows industrial production since 1967.

The consensus is for a 0.2% increase in Industrial Production, and for Capacity Utilization to increase to 76.8%.

10:00 AM: The June NAHB homebuilder survey. The consensus is for a reading of 70, unchanged from 70 in May. Any number above 50 indicates that more builders view sales conditions as good than poor.

—– Friday, June 16th —–

8:30 AM: Housing Starts for May. The consensus is for 1.221 million, up from the April rate of 1.172 million.

This graph shows total and single unit starts since 1968.

The graph shows the huge collapse following the housing bubble, and then – after moving sideways for a couple of years – housing is now recovering.

10:00 AM: Regional and State Employment and Unemployment (Monthly) for May 2017

10:00 AM: University of Michigan’s Consumer sentiment index (preliminary for June). The consensus is for a reading of 97.1, unchanged from 97.1 in May.

schedule-for-week-of-june-11-2017

fannie-mae-just-increased-what-you-can-borrow

Fannie Mae Raises Maximum Debt-To-Income Ratio

Government-sponsored mortgage giant Fannie Mae will raise its debt-to-income limit from 45 percent to 50 percent on July 29, 2017. This would increase the pool of approvable borrowers for home sellers, and allow homebuyers to spend more.

Click to see today’s rates (Jun 10th, 2017)

What Is Your DTI?

The decision came on the heels of a study that concluded higher DTI ratios don’t increase the rate of mortgage default. Fannie Mae researchers examined over 15 years of data from borrowers with DTI ratios between 45 and 50 percent. They found that many of these borrowers had good credit and were not likely to default.

Read: How Much Home Can You Afford?

This change is a big deal, because according to the Washington Post, a too-high DTI is the most common cause of mortgage denial.

Your debt-to-income ratio compares your gross (before tax) monthly income to your total monthly debt payments on all debt accounts. Accounts include auto financing, credit cards, and student loans, plus the projected payment for the new mortgage.

How DTI Affects Your Loan Amount

If you earn $4,000 a month, previous guidelines allowed you to have total payments of $1,800 per month. If you had accounts totaling $700, your housing expense, including mortgage principal, interest, taxes and insurance (PITI) couldn’t exceed $1,100 per month.

Read: Affordable Homes: Best Cities For Home Buyers

After July 29, you’d be able to have payments totaling half of your gross income. If you earn $4,000 a month, you can have bills and housing payments up to $2,000 a month. If your other payments equal $700, you could qualify for a PITI of up to $1,300 a month.

How Much More Can You Borrow?

The new change will let some applicants with DTI ratios over 45 percent borrow more. How much more? That depends on your income and monthly debt.

You can see how allowing higher DTIs would increase what people can borrow. The borrower in the example above, earning $4,000 a month, can spend up to $1,100 a month for housing. Under new guidelines, the borrower can spend up to $1,300 a month.

Read: How To Buy A House With No Money Down In 2017

Assuming that taxes and insurance come to $250 a month, this homebuyer can pay $850 a month for PITI under the old guidelines, and $1,050 under the new ones.

At a four percent mortgage rates, you could borrow $178,000 under the old rule. And $220,000 under the new one. That’s a loan amount over 20 percent higher!

Who Qualifies For Larger Loans?

To qualify for a mortgage with high debt-to-income ratios, you’ll need a strong application. That usually means a substantial down payment, or really great credit scores. Another plus is having savings after you close on your loan — enough to make several months’ mortgage payment if your income stops temporarily.

Read: Priced Out Of The City? Check Out Today’s Suburbs

You’ll know if you qualify in seconds, once your loan officer or broker submits your file for automated underwriting.

That’s the beauty of Fannie Mae’s Desktop Underwriter software. You can get a decision quickly. In addition, your lender can run the program again and again. You can try out several scenarios until you find a way to get approved.

What Are Today’s Mortgage Rates?

Current mortgage rates edged up slightly after James Comey testified and the White House didn’t burn down. Political and economic uncertainty in Europe has been affecting interest rates here, but investors have remained optimistic about US markets.

Stocks ended yesterday with mixed results, changes that you’d not expect to warrant a major change in mortgage rates.

Click to see today’s rates (Jun 10th, 2017)

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

Try the Mortgage Calculator

fannie-mae-just-increased-what-you-can-borrow

Is a Covered Call Strategy Right for Your Stock Portfolio?

I’ve had a number of conversations over the years with investors looking to generate income from their portfolios or possibly unwind large positions by selling covered calls.

SEE ALSO: A Word of Caution to Retirees Tempted by Stock Market Records

Covered calls can be a powerful component to a larger investment strategy — but it’s important to understand them first. Read on for a brief primer on the strategy and how to know if it might be right for you.

What are covered calls, and how do they work?

When you own a call option, you have the right to buy shares of a particular security at a pre-determined price, the strike price. By extension, when you sell a call option, you’ve given someone else that right — so you’re agreeing to sell your shares of a security at the stated strike price.

The “covered” part just means that you already own the shares: You wouldn’t need to go out into the market to get them if your option-holder exercises their right to buy.

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Here’s an example of how this might look:

Say you own shares of the (fictional) Bradford Pine Wealth Group Corp (fictional ticker: BPWG), which is trading at $30 per share. You decide that you want to write, or sell, a call option that gives the holder the right to buy 1,000 shares from you at $33 per share.

The option is sold through the Options Clearing Corp., the official clearinghouse for these trades. The market price of your BPWG option will usually be a fraction of how much it would cost to buy the 1,000 shares. Option prices vary and depend on how close the strike price is to the current share price, the option’s expiration date and a number of related factors.

After selling your BPWG option, you receive a payment (so-called income), and the option-holder will start monitoring the stock price to see what happens next.

If the option doesn’t go “in the money,” meaning the share price doesn’t rise above the strike price, you’ll keep your income from the sale, and the option itself will expire on the specified date you chose when you purchase the option.

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If the stock price rises to $33 or higher, it might make sense for the option-holder to exercise the right to buy the shares. At that point, the Options Clearing Corp. will match the order with an appropriate seller (you or someone else) and initiate the transaction. (There are many other scenarios here however, for the purpose in keeping this simple, I will leave it at that).

Why was I careful to say that it might make sense for the option-holder to buy?

It’s important to keep in mind that option-holders don’t always exercise their rights, even if the share price is above the agreed-upon sales price.

That’s because there are a few other factors involved. In addition to the stock’s share price, the option-holder needs to consider how much they paid for the option and any additional transaction costs they’ll face in buying and reselling the shares.

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How can covered calls be used?

Covered call writing is not for everyone. But for certain investors it can make sense.

Generally speaking, there are three main benefits to writing covered calls:

1. Immediate income from selling the option.


2. The potential to lock in a certain gain when the option is exercised.


3. The ability to manage share sales by limiting the quantity sold and specifying the sale price.

For example, say you have a large position in a publicly traded stock that you want to slowly wind down. Writing covered calls can be a good way to divest your position over time at prices you’re comfortable with, while generating some income in the meantime. Some investors find that using covered calls can make the sales process a little more orderly and less emotional than trying to time the market or manage sales decisions in the moment.

Similarly, covered calls can be a good option for those who are seeking income on a larger portfolio of stocks. Selling options provides income and can help you maintain exposure to equity growth potential while offering some downside protection against price volatility. These portfolio-level strategies require a careful balancing act between generating income, keeping growth potential in place, and softening the impact of potential drops in share price.

What are the risks?

If you decide to write covered calls, you must be willing to:

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1. Sell your shares at the agreed-upon price.


2. Accept the possibility that you could lose out on upside potential.


3. Maintain exposure to the typical risks involved in equity investing (i.e., a loss of share value).

The key risk to keep in mind is that you’re capping upside potential. If the option-holder exercises their right to buy your shares, it’s usually because the share price rose higher than the agreed-upon price — and you won’t get the benefit of that extra growth.

It’s also important to remember that covered calls do not eliminate the risks involved in owning shares. You’ll still be exposed to the risk that the value of your shares might fall. While the impact of price volatility can be reduced through the income gained by selling shares, it is never completely eliminated.

Finally, keep in mind that there are tax implications to writing covered calls. These transactions can generate significant taxable income, which is why they are often better-suited to tax-advantaged accounts.

Using covered calls wisely

Covered call writing can be powerful. It can help investors unwind large positions in an orderly manner or generate income on a relatively stable and balanced portfolio of equities. In other words, it can offer both practical and financial benefits.

But it’s important to be prudent, careful, and certain that it’s a good strategy for your particular situation.

That’s why I almost always recommend working with an experienced and specialized professional. Options are complicated, even if you’re dealing with a single stock that you’re very familiar with. A professional can help manage the analytics, balance the risk-reward profile, and make pricing decisions that maximize your potential gains while helping to protect you from greater losses.

Want to learn more? Please take a look at my more detailed article on covered calls, or visit the Chicago Board Options Exchange for more information.

See Also: The True Cost of Financial Procrastination

Written by Bradford Pine with Anna B. Wroblewska

Brad is a wealth adviser and president of Bradford Pine Wealth Group, based in Garden City, N.Y. BP Wealth Group assists individuals and entrepreneurs to create wealth, simplify their lives and plan for retirement. Honesty, integrity and reliability are the foundations of Brad’s investment philosophy.

Comments are suppressed in compliance with industry guidelines. Click here to learn more and read more articles from the author.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Is a Covered Call Strategy Right for Your Stock Portfolio?

Luxury Goods You Can Buy on a Subscription Plan

If you are an eco-conscious consumer, home textile company Coyuchi has started a subscription service, Coyuchi for Life, that saves you 15% on the company’s 100% organic cotton sheets, duvet covers and towels and promises to recycle the used linens.

You keep the linens for six, 12 or 24 months, then trade them for new ones. Prices range from $5 per month for a 24-month towel subscription to $42 per month for a six-month duvet or sheet plan.

SEE ALSO: 10 Secrets to Shopping at the Apple Store

Luxury Goods You Can Buy on a Subscription Plan

Mortgage rates are stuck in a monthlong slide - Chicago Tribune

Mortgage rates fell for the fourth week in a row as long-term bond yields continued their extended slide.

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average sank to 3.89 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.94 percent a week ago and 3.6 percent a year ago. The 30-year fixed rate has fallen 16 basis points in the past month. (A basis point is 0.01 percentage point.)

The 15-year fixed-rate average dropped to 3.16 percent with an average 0.5 point. It was 3.19 percent a week ago and 2.87 percent a year ago. The five-year adjustable rate average remained the same as it was a week ago, at 3.11 percent. It was 2.82 percent a year ago.

Mortgage rates tend to follow the path of long-term bond yields. As investors buy up bonds, sending prices higher, that drives yields down. The yield on the 10-year Treasury plunged to a seven-month low this week, slumping to 2.14 percent Tuesday. In less than three months, it has dropped 46 basis points from its peak this year at 2.6 percent.

“The 30-year mortgage rate moved in tandem with Treasury yields, falling 5 basis points to 3.89 percent,” Sean Becketti, Freddie Mac chief economist, said in a statement. “Mixed economic data and increasing uncertainty are continuing to push rates to the lowest levels in nearly seven months.”

Events here and around the world are having an impact on mortgage rates — the elections in the United Kingdom, testimony by former FBI Director James B. Comey on Capitol Hill and Gulf region countries cutting ties with Qatar, which raised tensions in the Middle East. Then there’s the near certainty of a rate hike at next week’s Federal Reserve meeting.

With the central bank likely to raise rates for the third time in six months, home loan rates should be trending higher, not lower. Instead, they appear likely to continue their downward course no matter what the Fed does next week.

Bankrate.com, which puts out a weekly mortgage rate trend index, found the experts it surveyed almost equally split between rates remaining relatively stable or falling in the coming week. Shashank Shekhar, chief executive of Arcus Lending, is one who says rates will move slightly lower.

“Slow yet steady movements in last few weeks have now brought the mortgage rates to their lowest level of the year,” Shekhar said. “There are several geopolitical news (events) in the coming week that could have a substantial impact on the rates. There is British election results, Comey testimony, European central bank policy decision and even a possible Fed interest rate hike. With such market-moving news in the mix, it is very difficult to predict mortgage rates, but I am leaning towards a slight decline.”

Meanwhile, mortgage applications surged last week as rates fell, according to the latest data from the Mortgage Bankers Association. The market composite index – a measure of total loan application volume – increased 7.1 percent. The refinance index rose 3 percent, while the purchase index grew 10 percent to its highest level since May 2010.

The refinance share of mortgage activity accounted for 42.1 percent of all applications.

“Mortgage application volume increased strongly coming out of the Memorial Day holiday,” said Joel Kan, an MBA economist. “With mortgage rates at their lowest level since November 2016, and the unemployment rate at its lowest level since May 2001, purchase application volume increased to its highest level since May 2010. Refinance activity bumped up as well in response to moderating rates, but remained generally subdued.”

The MBA also released its mortgage credit availability index (MCAI) this week, which showed lending standards tightened in May. The MCAI decreased 1.1 percent to 181 last month. A decline in the MCAI indicates that lending standards are tightening, while increases indicate loosening of credit.

“Credit availability slipped in May, primarily driven by investors consolidating their offerings for government insured loans,” said Lynn Fisher, MBA’s vice president of research and economics. “These decreases were partially offset by continued expansion among jumbo loan programs. The Jumbo MCAI has increased in 13 of the last 15 months.”

Mortgage rates are stuck in a monthlong slide - Chicago Tribune