Mortgage Rates dropped a bit as Mortgage Bonds rose modestly Friday, but the gains were muted as tough resistance levels kept prices in check. The 4% Bond rose by 15bp to end the session at 104.06. Stock prices were mixed – the Dow was up 41.55 points to end at 16458.56 the S&P 500 closed at 1838.70 down 7.19 points, while the Nasdaq lost 21.107 points to end the week at 4197.582. Oil closed at $94.25/barrel up 29 cents. The capital markets are closed on Monday in observance of Martin Luther King Day!
Weekly Survey of Rates from the Mortgage Bankers Association
Weekly Mortgage Applications Survey for the week ending January 10, 2014. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.66 percent from 4.72 percent, with points increasing to 0.33 from 0.28 (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 4.58 percent from 4.66 percent, with points increasing to 0.24 from 0.12 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.72 percent from 3.77 percent, with points increasing to 0.37 from 0.34 (including the origination fee) for 80 percent LTV loans.
Another Chance to Refinance
If you missed the boat the last time rates were low, you may have another chance. The Mortgage Rate Market has been volatile. That volatility gave those looking to refinance an opportunity for lower rates once again. You need to be nimble and prepared to get your application in quickly. Check with your Broker or Banker to see if rates are low enough to make it worth your while to refinance.
The recent Kiplinger Letter reported- Fewer choices offered to jumbo home mortgage borrowers are likely. Some repayment options would put the loans outside rules protecting lenders from claims that they knowingly put buyers in unaffordable homes. So banks aren’t likely to allow options such as balloon payments and interest-only mortgages.And if a lender does lend outside qualifying mortgage rules…good odds that borrowers must buy private mortgage insurance even if they pony up a 20% down payment.
Housing News
Does Higher Mortgage Rates = Lower Real Estate Values ?
Many pundits are warning that there will be a drop in real estate values because mortgage rates are beginning to increase. The logic makes sense. However, history shows that increasing rates have not negatively impacted home values in the past. Four times over the last 30 years mortgage interest rates have dramatically increased. Here is the impact the increases had on home values at the time:
Dates |
Mortgage Rate |
Home Values |
| May ‘83 – July ‘84 |
12.63 – 14.67 |
+ 6.6% |
| March – Oct ‘87 |
9.04 – 11.26 |
+ 5.2% |
| Oct ’93 – Dec ‘94 |
6.83 – 9.2 |
+ 1.2% |
| April ’99 -May 2000 |
6.92 – 8.52 |
+ 10.9% |
Perhaps the impact of increasing rates on future home prices won’t be as dramatic as some are predicting.
Housing starts in the U.S. fell to 999,000 in December. Economists had expected housing starts to total 985,000, following the previous month’s 1.09 million. Read more
The National Association of Home Builders sentiment index fell one point to 56. A reading above 50 indicates positive sentiment.
Economic News
Wholesale Inflation Heats Up
The Labor Department reported this morning that the Producer Price Index (PPI) for December rose for the first time in three months by 0.4% versus the 0.3% expected on higher gasoline and tobacco prices. Bond prices were pressured lower by the news, as any hint of inflation spooks Bond investors.
The Producer Price Index measures the average change over time in the selling prices received by domestic producers for their output. The prices included in the PPI are from the first commercial transaction for many products and some services.
New York region’s manufacturing activity came in at 12.51 in January. Economists had expected the January Empire State Index to rise to 3.0, from 0.98 in the prior month.
Consumer Sentiment fell to 80.4 in January. Economists polled by Reuters had expected U.S. consumer sentiment to rise to 84.0.
U.S. industrial production increased by 0.3 percent in December, in line with analysts’ estimates.
Sources: CNBC, Bloomberg, MMG, Housingwire, KCM, Kiplingers