Bonds closed below the 200-day Moving Average, which makes us very cautious. If you were one of those that headed our advise on Friday and locked into a rate, you locked in at the right time. Mortgage Bonds continued to drift lower and Mortgage Rates higher on fears that the recent strong manufacturing data could prompt the Fed to taper sooner rather than later. The better than expected ISM Index numbers helped to push Bond prices lower throughout the session. The 4% coupon fell by 28bp to end the session at 105.00. Stocks were able to close in positive territory – the Dow was up 69.80 points to 15,615.55, the Nasdaq was up 2.33 points to 3,922.04 while
the S&P 500 rose by 5.10 points to end at 1,761.4. Oil was last seen at $94.64/barrel down $1.74. Next week brings the delayed October Non-farm payrolls report where employers are expected to have hired 100K workers, down from the 148K created in September.
Weekly Survey of Rates from the Mortgage Bankers Association
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.33 percent, the lowest rate since June 2013, from 4.39 percent, with points decreasing to 0.26 from 0.41 (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 4.36 percent, the lowest rate since June 2013, from 4.43 percent, with points increasing to 0.27 from 0.26 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.42 percent, the lowest rate since June 2013, from 3.51 percent, with points remaining unchanged at 0.30 (including the origination fee) for 80 percent LTV loans.
The Fed’s Meeting
The Federal Open Market Committee had their meeting Wednesday. The Fed said it has “decided to await more evidence that progress will be sustained before adjusting the pace of its purchases. Accordingly, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40B per month and longer-term Treasury securities at a pace of $45B per month.” This means that QE Unlimited will rage on. Good news for Mortgage Rates and the Housing Market. Read more
Housing News
U.S. Home Prices Rise at Fastest Pace Since February 2006
The Case Shiller 20-city Index on a year-over-year basis rose to 12.8% in August versus the 12.4% expected and above the 12.4% recorded in July. From July to August there was a 1.3% increase. Overall it was a solid report, but double digit gains are not expected going forward as the uptick in rates have slowed price appreciation in many parts if the country. Read more
Pending Home Sales Fall on Declining Home Affordability
Pending home sales declined 5.6% from August to September, as home affordability receded under the influence of higher mortgage rates, home prices and consumer uncertainty over the state of the U.S. government and national economy. Read more
Economic News
Retail Sales in September fell by 0.1%, but was inline with estimates and when stripping out autos, sales rose more than expected by 0.4% versus 0.2%. The government shutdown and debt ceiling issues impacted consumer spending habits.
Inflation at the wholesale level remained tame at the Producer Price Index (PPI) declined by 0.1% and was inline with expectations as was the Core PPI coming in at 0.1%.
Social Security benefits to rise 1.5% after inflation adjustment in 2014.
Consumer Confidence in October came in at 71.2, below the 73.1 expected and well below the 80.2 recorded in September due to the impact of the government shutdown.
Weekly Jobless Claims for state unemployment benefits totaled 340,000. Economists in a consensus survey had expected initial claims to dip to 335,000, following last week’s 350,000 jobless claims.
Sources: Bloomberg, Reuters, Fox News, CNBC, MMG, Housingwire