While mortgage rates have moved substantially higher on concerns of the central bank beginning to taper its monetary stimulus, issues in Syria had the adverse effect of pushing rates back down this week.
On Friday, the 4% fell by 16bp to end the session at 103.06 in light holiday trading. We recommend locking short term, longer term floating. Stocks got roughed up this month due to the taper talk and profit taking. For the month the Dow was down 4.1% to 1,4810.31, the S&P 500 lost 4.5% to 1,632.97 while the Nasdaq fell 2.3% to end the month at 3,589.86. Oil was last seen at $107.65/barrel down $1.15. Next week the big event will be Friday’s Non-farm payrolls report.
September has been historically bad for the Stock markets, but historical trends tend to take a backseat when artificial occurrences like Quantitative Easing (QE) are currently in place. If Stocks were to correct, this could have a positive impact on Mortgage Bonds and home loan rates.
Freddie Mac reports that the average fixed rate for a 30-yr conventional mortgage is 4.51% and to obtain that rate, a potential borrower would have to pay 0.7 in points and fees.
US demands JPMorgan to pay over $6B to settle allegations that the banking giant missold securities to govt-backed mortgage companies (Fannie/Freddie) in run-up to financial crisis.
Housing News
The Case/Shiller Home Price 20-city Index rises 12.1% from a year ago down from the May year-over-year number of 12.2%.
Signed contracts to buy existing homes faltered in July, as home buyers faced significantly higher interest rates along with rising home prices. So-called “pending home sales” index from the National Association of Realtors fell 1.3 percent month-to-month but is 6.7 percent higher than July of 2012. These contracts indicated lower closed home sales in August and September.
Foreclosures across the nation fell 25% from July 2012 to July 2013, as reported by Core Logic.
Economic News
Durable Orders or products lasting at least three years, plunged by -7.3% in July, below the -5.0% expected and down from the +3.9% registered in June. It was the biggest drop since August 2012 with declines seen in computers, electronics and other equipment.
Consumer Confidence rises to 81.5 in August, up from the 80.3 registered in July and better than the 77.0 expected.
The U.S. Gross Domestic Product rose by 2.5 percent in the second quarter, up from 1.7 percent. Economists polled by Thomson Reuters had expected 2.2 percent.
Weekly Claims for State Unemployment Benefits fell to 331,000, compared with expectations of a drop to 332,000.
U.S. personal income and consumer spending both rose 0.1 percent in July. Economists in a consensus survey projected personal income to rise 0.1 percent, against a prior reading of 0.3 percent. Consumer spending was forecast to have risen 0.3 percent, versus the prior month’s 0.5 percent.
The Chicago PMI comes in at 53.0 for August, inline.
Consumer Sentiment at 82.1 in August, above the 80.0 expected.
Core PCE inflation indicator remains tame at 0.1% in July.
Sources: CNBC, Bloomberg, Housingwire, MMG