Nov 18, 2013 | Mortgage Rates
The Veterans Day holiday on Monday contributed to a quiet week for economic news. On Wednesday the reading for the federal budget deficit for October fell from September’s reading of -$120 billion to -$92 billion.
Freddie Mac Released Its Primary Mortgage Market Survey On Thursday
The average mortgage rates increased across the board, but remain below historical levels. The rate for a 30-year fixed rate mortgage rose by 9 basis points from 4.16 percent to 4.35 percent with discount points decreasing from 0.80 percent to 0.70 percent.
The average 15-year mortgage rate rose from 3.27 percent to 3.35 percent with discount points the same at 0.70 percent. The rate for a 5/1 adjustable rate mortgage increased from 2.96 percent to 3.01 percent with discount points moving from 0.50 percent to 0.40 percent.
Weekly Jobless Claims were released Thursday and were reported at 339,000 new claims. This was higher than the expected number of 335,000 new claims, but lower than the prior week’s reading of 341,000 new claims.
In other news, Janet Yellen, the President’s choice for chairing the Federal Reserve, defended the Fed’s quantitative easing policy during her first confirmation hearing before the Senate Banking Committee. QE, which involves Fed purchases of $85 billion monthly in Treasury and mortgage backed securities, was designed to keep long-term interest rates and mortgage rates low.
Credit Reporting Agency: Mortgage Defaults Reach 5-Year Low In Q3 2013
TransUnion, one of three major credit reporting agencies in the U.S., reported that mortgage defaults fell to a five-year low to a reading of 4.09 percent for the third quarter of 2013.
This reading is lower year-over-year than the revised reading of 5.33 percent for the third quarter of 2012. The reading for third quarter 2013 mortgage defaults is also lower than the reading of 4.32 percent for the second quarter of 2013.
A mortgage default is defined as a home loan that is at least two months past due on payments.
Analysts cite moderate but stable job gains, comparatively low mortgage rates and a short supply of available homes as factors contributing to improvements in the housing sector. Analysts noted that mortgage defaults have declined during the past five quarters.
As defaulted mortgage loans made before the economy crashed are foreclosed, mortgage defaults were expected to continue falling. TransUnion reported that it expects mortgage defaults to fall below 4.00 percent by year-end.
What’s Coming Up: NAHB Index, FOMC Minutes
This week, the National Association of Home Builders is scheduled to release its Home Builder Confidence Index for November.
Along with the weekly releases of Jobless Claims and Freddie Mac’s PMMS report on mortgage rates, the FOMC is expected to release the minutes of its last meeting. Existing Home Sales for October are also set for release.
May 20, 2013 | Mortgage Rates
Last week was jam-packed with economic news; here are some highlights with emphasis on housing and mortgage related news:
Monday: Retail sales for April increased to -0.1 percent from the March reading of -0.5 percent and also surpassed Wall Street’s downward forecast of -0.6 percent. Retail sales are important to economic recovery as sales of goods and services represent approximately 70 percent of the U.S. economy.
Tuesday: The National Federation of Independent Business (NFIB) released its Small Business Optimism Index for April with encouraging results. April’s index rose by 2.6 points to 92.1. A reading of 90.7 indicates economic recovery. This index is based on a survey of 1873 NFIB member businesses.
Wednesday: The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for May matched investor expectations with a reading of 44. At three points above the March reading of 41, this report suggests that builders are slowly gaining confidence in national housing markets. (more…)
May 13, 2013 | Mortgage Rates
Mortgage rates rose last week with average rates a 30-year fixed rate mortgage rising from last week’s 3.35 percent to 3.42 percent with buyers paying all closing costs and 0.7 percent in discount points.
Average rates for a 15-year fixed rate mortgage rose from 2.56 percent to 2.61 percent with buyers paying their closing costs and 0.7 percent in discount points.
Freddie Mac also reports that average rates for a 5/1 adjustable rate mortgage rose from 2.56 percent last week to 2.58 percent with buyers paying their closing costs and 0.5 percent in discount points.
Here are noteworthy points from last week’s economic news:
Monday: In spite of improving economic conditions, a majority of participants in the Senior Loan Officer Opinion Survey on Bank Lending Practices indicated that their lending institutions would not be relaxing residential mortgage lending standards. Lenders perceive a significant risk in terms of being required to absorb losses incurred on defaulted mortgage loans.
Mortgage owners including Fannie Mae and Freddie Mac, along with mortgage insurance companies can require mortgage lenders to buy back defaulted loans or make them whole for losses related to foreclosed and otherwise defaulted mortgage loans.
Tuesday: CoreLogic reported an increase of 1.9 percent in national home prices for March. This news represents the 13th consecutive increase and a year-over-year increase of 10.5 percent.
Home prices were boosted by strong increases in the West; Nevada posted a 22.2 percent gain from last March and California posted a 17.2 percent year-over-year gain.
CoreLogic predicted a year-over-year increase of 9.6 percent for home prices for April, with a monthly increase of 1.3 percent increase expected between March and April. (more…)
May 6, 2013 | Mortgage Rates
Mortgage rates fell last week and approached or reached record low levels.
According to Freddie Mac, the average rate for a 30-year fixed rate mortgage (FRM) fell from 3.40 percent to 3.35 percent. Average rates for a 15-year FRM moved from 2.61percent to 2.56 percent.
Average rates for a 5/1 adjustable rate mortgage (ARM) fell to 2.56 from last week’s average of 2.58 percent Discount points for last week’s mortgage rates ranged from 0.7percent for 30 and 15 year FRM loans to 0.5 percent for a 5/1 ARM.
Rock-bottom mortgage rates can offset the impact of rising home prices.
Last Week Was A Strong Showing For The US Economy
Last week’s economic news provided further indications of economic recovery, with housing related reports contributing to overall confidence in a stronger economy.
Highlights of last week’s news include:
Monday: Pending home sales moved up to 1.50 percent in March from February’s -1.07 percent. This reading also surpassed Wall Street’s forecast of 0.90 percent for March.
Tuesday: The Case-Shiller Home Price Index for February reported that the national average home price had increased by 9.3 percent year-over-year between February 2012 and February 2013. By comparison, the average national home price between January 2012 and January 2013 increased by 8.1 percent year-over-year. Rising home prices are contributing to the economic recovery, but in some areas demand for homes exceeds supply, which also contributes to rising home prices.
Wednesday: The Federal Open Market Committee (FOMC) issued its scheduled statement after its meeting concluded. Committee members noted signs of an improving economy, and cited housing markets as a leading contributor to the recovery. The FOMC statement also indicated that economic conditions were not sufficiently improved for the FOMC to change or cease the Federal Reserve’s quantitative easing policy. The Fed’s goal for its current quantitative easing program is keeping long-term interest rates including mortgage rates low.
Thursday: The weekly Jobless Claims Report brought better-than-expected news with new jobless claims coming in at 324,000, less than the expected reading of 345,000 new jobless claims and also higher than the previous report’s reading of 342,000 new jobless claims.
Friday: The Bureau of Labor Statistics issued its monthly “Jobs Report,” which consists of the Non-farm Payrolls Report and the national Unemployment Rate. Again new jobs added exceeded expectations for April with 165,000 jobs added against expectations of 135,000 new jobs added. April’s reading also surpassed the March reading of 138,000 new jobs.
The unemployment rate dropped to 7.5 percent as compared to a consensus of 7.6 percent and last month’s reading of 7.6 percent. To put this reading in perspective, the FOMC has targeted an unemployment rate of 6.5 percent as a benchmark for adjusting its current policies including quantitative easing.
What To Look For This Week
This week’s economic events include latest Jobless Claims report on Thursday. It will be interesting to see if this week’s reading will be lower than last week’s reading of 324,000 new jobless claims.
On Friday, the Federal Budget will be released; this could influence financial markets depending on what programs and services are cut or reduced.
Apr 22, 2013 | Mortgage Rates
Mortgage rates fell for the third consecutive week.
According to Freddie Mac, the average rate for a 30-year fixed rate mortgage fell by two basis points to 3.41 percent as compared to last week’s 3.43 percent and 3.90 percent year-over-year.
The average rate for a 15-year fixed rate mortgage was 2.64 percent as compared to last week’s 2.65 percent and 3.13 percent year-over-year.
Falling mortgage rates were attributed to reduced consumer spending.
Last week’s economic news includes the NAHB Wells Fargo Housing Market Index (HMI), with a reading of 42 for March.
This is four points below investor expectations and two points below February’s results.
A reading of 50 or above indicates that more of the builders surveyed have a positive outlook.
March results were impacted by builder concerns over tight builder credit, a lack of available lots and increasing construction costs.
Housing Starts Increased In March
More good news for housing arrived Tuesday when the U.S. Department of Commerce issued its monthly Housing Starts report.
Housing starts for March came in higher than anticipated at a seasonally adjusted annual rate of 1.04 million, against a consensus of 933,000 and also beat February’s reported 968,000 housing starts.
Housing starts rose by 7 percent over February, and rose 47 percent over March 2012, the highest year-to-year increase since 1992.
The Federal Reserve issued its Beige Book Report which is compiled from reports by the 12 districts of the Federal Reserve.
5 districts reported moderate economic growth, 5 districts reported modest growth, and 2 reported slight economic growth.
Based on the data contained in the Beige Book Report, economists are not expecting the Fed to make changes to its current quantitative easing (QE) program of purchasing $85 billion monthly in bonds and MBS; this may help mortgage rates remain steady; when MBS prices fall, mortgage rates typically rise.
What‘s Coming Up Next
The National Association of REALTORS® releases its Existing Home Sales report for March today.
The consensus is for 5.03 million homes sold on a seasonally adjusted annual basis, and against February’s 4.98 million existing homes sold.
Tuesday brings more housing news with the FHFA Home Price Index for February; FHFA is the federal agency overseeing Fannie Mae and Freddie Mac.
The U.S. Department of Commerce releases its New Home Sales for March on Tuesday.
The consensus is 421,000 new homes sold against February’s reading of 411,000 new homes sold.
Thursday’s Weekly Jobless claims are expected to come in at 351,000 as compared to last week’s 352,000.
Employment is a key factor in terms of consumers buying homes and qualifying for mortgage loans
Apr 15, 2013 | Mortgage Rates
Mortgage rates saw little change last week amidst mixed economic news.
Treasury auctions held on Tuesday, Wednesday and Thursday saw weak demand; this could have been caused by the FOMC minutes that were released on Wednesday.
The minutes indicated that some FOMC members supported ending the current quantitative easing (QE) program within a few months.
The Fed is currently purchasing $85 billion monthly in bonds and Mortgage Backed Securities.
If the QE program is ended, demands for bonds and MBS will decline, which usually raises mortgage rates.
Employment Numbers Show Promise For Housing Market
Thursday’s jobless claims offered some positive news for the Massachusetts real estate market.
Jobless claims fell to 346,000, which is well below Wall Street’s estimate of 365,000 jobless claims and the prior week’s report of 385,000 jobless claims.
As more people find work, more families become able to buy homes.
Demand for homes will boost the housing market, which is already expanding in many areas.
While higher home prices are good for the economy, higher mortgage rates may be likely to follow.
This potentially presents a “double-edged sword” to home buyers with little financial flexibility.
Slower Retail Sales Largely Due To Autos
Retail Sales, which represent approximately 70 percent of the U.S. economy, moved from February’s level of 1.1 percent to -0.4 percent in March.
Expectations were for 0.0 percent change.
The Retail Sales report exclusive of the volatile automotive sector was nearly identical except for the February’s reading of 1.0 percent.
These reports suggest that while the economy is improving in some areas, it has a way to go before it has truly recovered.
What‘s Coming Up Next?
This week, investors will be paying attention to the Consumer Price Index (CPI) and the closely-related Core CPI, which is nearly identical except for its excludes the more volatile food and energy sectors.
These reports will be released on Tuesday for March, with little change expected for the CPI and no change expected for the Core CPI as compared to February.
The CPI is considered an important indicator of inflation.
Unexpected changes in inflationary growth can cause rapid and volatile responses in the financial markets.
Wednesday brings the Fed’s Beige Book, which presents key economic data for each of the Fed’s 12 regions.
Investors watch the Beige Book for signs of the Fed’s position on economic policy during the upcoming FOMC meeting.
Jobless claims will be released Thursday with the expectation of 350,000 claims filed as compared to last week’s 346,000 jobless claims.
