Mortgage Rates increased in the past week, as Mortgage Bonds lost $1.375. Lenders were quick to re price rates, as economic data and talk of the Fed Taper is responsible for the increase. However, its important to note that rates have been volatile for some time. So, as long as the rates stay range bound, then it is still possible to lock into a low rate.
The S&P 500 (1,804.74, +8.91) closed above 1,800 for the first time and had a record close today. The Dow closed at a new all-time record of 16,064.77 up 54.78 points while the Nasdaq finished at 3,991.64 up 22.49 points. Oil was last seen at $94.79/barrel up 54.78 points. Remember, next week is holiday shortened with Thanksgiving on Thursday – markets are closed. On Friday, Bonds are open and close at 2:00pm ET. Stocks are closed Thursday and are open Friday with a 1:00pm ET close.
Weekly Survey of Rates from the Mortgage Bankers Association
For the week ending Nov. 15th- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.46 percent from 4.44 percent, with points decreasing to 0.38 from 0.44 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.47 percent from 4.48 percent, with points decreasing to 0.22 from 0.34 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages was unchanged at 3.52 percent, with points increasing to 0.33 from 0.27 (including the origination fee) for 80 percent LTV loans.
Christmas Taper Coming?
On Wednesday, St. Louis Fed President James Bullard said tapering is on the table in December, according to reports from an address in Chicago. A strong November jobs report would increase chances of a December taper, he said. He also said he would like to study impact of negative deposit rates, which could make sense to boost bank lending.
Bernanke didn’t offer any surprises in a speech Tuesday evening at the National Economic Club in D.C. saying that easy money policy (Fed Funds Rate) will stay low for as long as needed and the Fed will only begin to taper Bond buying once it is assured that the improvements in the labor markets would continue.
The Kiplingers Letter reported that the odds are good that the Federal Reserve will dial back stimulus later, not sooner. The retreat from its massive bond buying program had been expected to begin as early as the end of this year. But it’s likely to be put off well into 2014, based on Fed Chm.-to-be Janet Yellen’s interpretation of the underlying data. Despite recent improvement in job creation numbers, Yellen sees the job market as underperforming and inflation as staying stable. Those are some broad hints that the Fed will stay the course and keep buying $85 billion in bonds each month. Next to no chance, though, of the central bank raising short-term rates soon. No matter when the weaning begins, no official hike is likely until sometime in 2015.
Senate Committee Backs Yellen for Fed Chief
Janet Yellen’s candidacy to become the first woman to lead the Federal Reserve Board got a boost Thursday, as the Senate Banking Committee sent her nomination to the full Senate by a 14-8 vote. Not that the vote was without contentiousness. The political nature of monetary policy in the modern economy was on full display Thursday:
The committee’s vote showed how the Federal Reserve’s policies to keep money flowing to the ailing economy have made the Fed a part of the ongoing partisan wars in Washington. It broke largely along party lines, with three Republican senators — Bob Corker of Tennessee, Mark Kirk of Illinois and Tom Coburn of Oklahoma — voting in favor of her nomination. One Democrat, Senator Joe Manchin III of West Virginia, voted against her.
If Yellen assumes Ben Bernanke’s seat, most in the financial markets expect her to continue with much of her predecessor’s policies and maintain quantitative easing, keeping mortgage rates low.
Housing News
Home Prices Post Strong Growth in Q3
Home prices experienced strong growth in the third quarter as the housing recovery continued to broaden across the country, the latest FNC Residential Price Index posted. The index increased 2.5% between the second and third quarters, making third-quarter growth the fastest in the current recovery. The firm attributed the uptick to rising home sales and relatively low foreclosure sales. Read more
Existing Home Sales fall by -3.2% in October to 5.12M units annualized, below the 5.20M expected. Earlier Tuesday, existing home sales volume fell, disappointing economists who were expecting a better result. That drop may have had something to do with upcoming Qualified Mortgage and Ability-to-Repay rules affecting mortgage underwriting already, one analyst claims.
… NAR and LaVorgna pointed to the impact of the upcoming Qualified Residential Mortgage rules that “will require a lot more time, documentation and scrutiny to process loans,” according to NAR.
“Lenders may be hesitating in order to ensure compliance with the new measures which take effect in January of next year,” said LaVorgna. “In general, lending standards for anything other than prime mortgages remain relatively restrictive.” Read more
U.S. Homebuilder Confidence stabilized in November after falling for two straight months, though steady home demand was tempered by worries about further fiscal battles in Washington, the National Association of Home Builders said on Monday. The NAHB/Wells Fargo Housing Market Index came in at 54 in November. The October figure was downwardly revised to 54 from the originally reported 55. Economists polled by Reuters had predicted a November reading of 55.
Economic News
Import prices fell 0.7 percent in October, while export prices declined 0.5 percent. Import prices were forecast by economists to have fallen by 0.4 percent, with export prices expected to rise 0.1 percent.
The U.S. employment cost index rose 0.4 percent in the third quarter, following a 0.5 percent increase the previous quarter. Economists polled by Thomson Reuters had expected employment costs to rise 0.5 percent in the period.
Weekly claims for state unemployment benefits totaled 323,000 in the latest week. Economists had expected initial claims at 335,000. In a separate report, October producer prices fell 0.2 percent, matching estimates and faster than the prior month’s dip of 0.1 percent.
Chain Store Sales rose by 0.1% in the latest week and was the second straight week of gains. Year-over-year, sales were up 2.8%, the biggest gain since October 19, 2013.
U.S. retail sales rose 0.4 percent in October, while consumer prices ticked down 0.1 percent. Economists had expected retail sales to rise 0.1 percent in the month, and consumer prices were forecast to have been unchanged.
Inflation remains tame – CPI in October declines by -0.1% when the Street was looking for 0.0%. Core CPI at 0.1%, below the 0.2% expected.
A report alleges that the Unemployment Rate was faked ahead of the 2012 Presidential Election. It went from 8.1% in August to 7.8% in September. This according to a recent probe and documents from the Census Bureau. The manipulation could be because of time constraints and not for political gain. More to come on this subject.
Sources: Bloomberg, CNBC, Business Insider, MBA, Housingwire, MMG, Kiplingers