Mortgage rates dropped today after the weak January Jobs report and despite a big gain over in the Equity markets. The Labor Department reported that there were 113K jobs created in January, below the 175K expected. The 4% closed at 104.91 up 25bp. Stocks surged on the notion that after two weak job reports, the Fed may taper the taper.  We will continue to lock Mortgage Rates as long as the 4% Bond remains at or below resistance.   The Dow rose by 165.55 points to 15,794.08, the S&P 500 gained 23.59 points to end at 1,797.02 while the Nasdaq jumped 68.73 points to end the session at 4,125.86. Oil was last seen at $99.99/barrel up $2.15.

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 4.47 percent from 4.52 percent, with points decreasing to 0.25 from  0.40 (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 4.42 percent from 4.47 percent, with points decreasing to 0.11 from 0.27 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.53 percent from 3.59 percent, with points increasing to 0.28 from 0.26 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.

U.S. stocks fell hard on Monday, with the Dow Jones Industrial Average extending losses after its worst monthly percentage drop since May 2012, after factory data offered a disappointing take on the economy. Read more

Former Federal Reserve Chairman Ben Bernanke will join The Brookings Institution as a Distinguished Fellow in Residence, the think tank announced Monday.

Housing News

CoreLogic reports that home prices, including distressed sales, rose by 11% in December 2013 compared to December 2012. That is down from the 11.8% year-over-year gain seen from November 2012 to November 2013.

Economic News

The U.S. economy created 113,000 jobs in January, while the rate of unemployment was 6.6 percent. Economists had expected an increase of 185,000 jobs, with the jobless rate seen holding at a five-year low of 6.7 percent. December’s surprisingly weak 74,000 jobs number was revised to  75,000 net new jobs. read more

The Congressional Budget Office said the Affordable Care Act will lead to working hours reduction equal to 2.3 million full-time workers in 2021 versus a previous estimate of 800,000.

The final reading on the U.S. manufacturing sector in January came in at 53.7, matching the prior reading.  Economists in a consensus survey expected the ISM manufacturing index to dip to 56.0 in January, from the prior reading of 56.5.

Construction spending in December edged up 0.1 percent.

Economists polled by Reuters expected factory orders to decline 1.7 percent in December, following a gain of 1.8 percent in the month prior.

The ISM non-manufacturing index rose to 54 in January. Economists expected it to rise to 53.7, up from the previous reading of 53.0.

Weekly Jobless Claims decline by 20K to 331K in the latest week, which was slightly below the 335K expected.

The European Central Bank left its key interest rate unchanged at 0.25 percent and the Bank of England left its interest rate at 0.5% and left its asset purchase target unchanged.

Fourth-quarter productivity in the U.S. came in at 3.2 percent. It had been expected to fall to 2.5 percent from 3.0 percent.

Sources: CNBC, Bloomberg, MMG, Housingwire, MBA

Bring on the taper!!! Bonds continued to advance in what was feared to be the demise of Bonds…tapering. Today’s “Gap Open Higher” or “Rising Window” is important.. The old Japanese Trading adage suggests trading in the direction of the window, which in this case is higher. And seeing this gap up happen just above the 200-day MA, shows the Bond “freeing” itself from that ceiling of resistance. The next stop looks to be the price peaks seen last October. Great news for all the folks who missed the low interest rate boat back in October, they may just be presented with a mini Refi Boom and an opportunity to lock in at the same those same low rates very soon.  Next Friday’s Jobs Report may be the stimulus to push Bonds higher to another level and move Mortgage Rates even Lower.

Technically, the 200-day Moving Average now becomes support for Mortgage Bonds.  Prices have risen a beefy 219bp since the December 19 low, right when  the Fed started tapering.  Mortgage Rates, which move in the opposite direction of Bond Prices have fallen back to levels seen in Mid November.  Clearly exiting QE3 has only been helpful for Bonds. We will continue to float as Stocks perform poorly, thereby boosting Bonds.

Mortgage Bonds rose again Friday for the 9th time in 11 trading days despite a mixed bag of economic data. The 4% closed at the highs of the session at 104.81 up 22bp. Stocks tanked again on European fears, emerging market problems and last but not least, tapering. The Dow fell 149.76 points to 15,698.85, the S&P was down 11.60 points to 1,782.59 while the Nasdaq dropped 19.42 points to end at 4,103.87. Oil was last seen at $97.48/barrel down 75 cents. The big event next week will be Friday’s January
Jobs report, where it is expected that employers added 175K workers.

Bye Bye Bennie

Friday we bid adieu to Fed Chairman Ben Bernanke as Janet Yellen takes over the  reigns as Fed Chief on Monday.  Mr. Bernanke steered the US financial system  through one of its worst periods in history after the financial and housing  markets blew up in 2008.  Ms. Yellen becomes the first woman to head the central  bank in its 100-year history and she obviously has been dealt a tough hand as  the Fed navigates it’s QE3 exit strategy.  

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 4.52 percent, the lowest rate since the week ending November 29, 2013, from 4.57 percent, with points increasing to 0.40 from  0.36 (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 to 4.47 percent, the lowest rate since the week ending November 15, 2013, from 4.57 percent, with points increasing to 0.27 from 0.18 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.59 percent, the lowest rate since the week ending November 29, 2013, from 3.68 percent, with points decreasing to 0.26 from 0.29 (including the origination fee) for 80 percent LTV loans.

Fed Eases up on QE by another $10 billion

As it said goodbye to the man who led it through eight history-making years, the Federal Reserve did as it was expected Wednesday, voting to reduce the monthly stimulus program by another $10 billion.  Chairman Ben Bernanke led his last Fed meeting as the Open Markets Committee decided to continue unwinding a program that has expanded the U.S. central bank’s balance sheet to more than $4 trillion.  The unanimous decision—a rare Fed occurrence—came amid a tumultuous background of emerging market currency tremors and an uncertain though gradually improving future for the U.S. economy.  Read more

However inflation is still cool, and if this trend continues, we may just  see the Fed step back in and take action – a la Japan – “to create” inflation.

Trust big banks for your mortgage? BOA to Pay $2.1 B in Penalties over mortgage fraud charges

The U.S. government has asked a judge to order Bank of America to pay $2.1 billion, sharply increasing its request for penalties stemming from a jury’s finding that the bank was liable for fraud over defective mortgages sold by its Countrywide unit. Read more

Housing News

Signed contracts to buy existing homes dropped 8.7 percent in December as abnormally cold weather hit much of the U.S., according to a new report from the National Association of Realtors. Read more

New US home sales drop 7 percent, miss estimates

Sales of new U.S. single-family homes fell more than expected in December, but lean inventories and steady price gains suggested sufficient strength in the housing market to support the economy.  The Commerce Department said on Monday sales fell 7.0 percent to a seasonally adjusted annual rate of 414,000 units.  November’s sales were revised to a 445,000-unit pace from the previously reported 464,000-unit rate.  Economists polled by Reuters had expected new home sales, which are measured when contracts are signed, to slow to a 457,000-unit pace in December.The second straight month of declines in sales was likely payback after October’s outsized 14.9 percent increase and may have reflected some drag from cold weather that blanketed most parts of the country last month. Read more

Winter Shows No Signs of Cooling in Home Prices Shiller Home Price Indices New York, January 28, 2014 – Data through November 2013, released today by S&P Dow Jones Indices for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, showed that the 10-City and 20-City Composites increased 13.8% and 13.7% year-over-year. Dallas posted its highest annual return of 9.9% since its inception in 2000. Chicago also stood out with an annual rate of 11.0%, its highest since December 1988.  For the month of November, the two Composites declined 0.1%. After nine consecutive months of gains, this marks the first decrease since November 2012. Nine out of 20 cities recorded positive monthly returns; of these nine, Boston and Cleveland were the only cities not in the Sun Belt.  Minneapolis and San Diego remained relatively flat. After declining last month, Dallas edged up to set a new index high. Denver is 0.6% off of its highest level due to two consecutive months of declines.

The chart above depicts the annual returns of the 20-City Composite Home Price Indicex.  In November 2013, the 20-City Composites posted annual increase of 13.7%.  Read more

Freddie Mac says in its January U.S. Economic and Housing Market Outlook that house-price gains will likely moderate from last year’s pace but rise about 5% in national indexes.

Economic News

First time claims for unemployment benefits totaled 348,000 in the most recent week. Initial claims had been seen rising by 2,000 to 328,000.

Fourth-quarter gross domestic product came in at 3.2 percent, compared with estimates of a reading of 3.3 percent and down from the prior reading of 4.1 percent.

Orders for long-lasting U.S. goods fell 4.3 percent in December. Economists had expected durable goods orders to rise 1.5 percent, compared to the prior month’s 3.4 percent surge.

December  Personal Incomes were unchanged versus the 0.2% expected. Personal Spending rose  0.4%, above the 0.2% anticipated.  The inflation reading Core PCE in December  rose by 0.1%, inline, while year-over-year PCE rose by1.2%, up from 1.1% in  November.  Inflation is real cool – if this trend continues, we may just  see the Fed step back in and take action – a la Japan – “to create” inflation. 

The Chicago PMI in January fell to 59.6 from 60.8 recorded in December and had  little impact on trading. Consumer Sentiment will be released at 10:00.

Sources: CNBC, Bloomberg, S&P Dow Jones, MMG, Housingwire

Mortgage Rates dropped as Mortgage Bonds successfully broke above resistance at the 50, 100 and closed just above the 200-day Moving Average.  Investing dollars fled to the safe haven of the Bond markets today aided by a plunge in Stock prices both here in the States and abroad. The push lower was sparked by declining emerging markets, which fueled a worldwide sell-off. The 4% Mortgage Bond closed at 104.47 up 41bp.

Many say a correction in the Stock Market is long over due.  Further decline in Stock Prices, can push Mortgage Rates back down to historical lows.  Hence, creating opportunities for the housing market and those who missed refinancing the last time rates were low.

The Dow fell 318.24 points to 15,879.11, the S&P 500 fell 38.17 points to 1,790.29, the Nasdaq dropping 90.71 points to end the week at 4,128.17. Next week the FOMC meeting will be front and center with the monetary policy statement being released on Wednesday at 2:00pm ET.

Weekly Survey of Rates from the Mortgage Bankers Association

Mortgage loan application volume, increased 4.7 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 7 percent compared with the previous week.  The Refinance Index increased 10 percent from the previous week.  The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 15 percent lower than the same week one year ago.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.57 percent, the lowest level since November 2013, from 4.66 percent, with points increasing to 0.36 from  0.33 (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 4.57 percent, the lowest level since November 2013,  from 4.58 percent, with points decreasing to 0.18 from 0.24 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.68 percent, the lowest level since December 2013, from 3.72 percent, with points decreasing to 0.29 from 0.37 (including the origination fee) for 80 percent LTV loans.

Housing News

Existing Home Sales Rebound

The National Association of Realtors reported today that Existing Home Sales rose by 1% from November to December to an annual rate of 4.87M units, which was the first monthly gain in three months. For all of 2013, there were 5.09 million sales, which was 9.1% higher than 2012.

The Existing-Home Sales data measures sales and prices of existing single-family homes for the nation overall, and gives breakdowns for the West, Midwest, South and Northeast regions of the country. These figures include condos and co-ops, in addition to single-family homes.  Current sales rates, actual totals and median prices by month going back 12 months.

The most overvalued housing market in America

Fitch: Here’s also what rising mortgage rates will do to home prices

Housing markets gaining high self-esteem from juiced up home prices may be at risk in 2014 if those dramatic price swings are not supported by economic fundamentals.  Housing markets resting on the laurels of juiced up home prices may be at risk in 2014 if those dramatic price swings are not supported by economic fundamentals.

And while Fitch Ratings expects most of the U.S. to experience modest and slow home price appreciation in 2014, a few markets have the research firm’s bubble radar going off, according to Rui Pereira, managing director of structured finance for the ratings giant. Read more

Economic News

US claims inch up, suggesting gradual labor thaw

The number of Americans filing new claims for unemployment rose marginally last week, but the underlying trend suggested the labor market continued to steadily improve.  Initial claims for state unemployment benefits ticked up 1,000 to a seasonally adjusted 326,000, the Labor Department said on Thursday. Claims for the prior week were revised to show 1,000 fewer applications received than previously reported.  Economists polled by Reuters had expected first-time applications for jobless benefits to hold steady at 326,000 in the week ended Jan. 18.  Read more

U.S. Manufacturing Purchasing Managers Index dipped to 53.7 from December’s reading of 55.0. Economists polled by Reuters expected no change.

Sources: CNBC, Bloomberg, MMG, Housingwire, MBA

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:

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

Mortgage Rates moved lower as Mortgage Bond prices rose sharply on Friday after the December Jobs report revealed that employers added just 74K new workers vs the 197K expected, which shifted investing dollars over into the safe haven of the Bond markets. The 4% coupon rose by 81bp to end the session at 103.72. Despite the weak jobs report, Stocks were able to close near unchanged levels – the Dow lost 7.71 points to end at 16,437.05, the Nasdaq was up 18.47 points to close at 4,174.66 while the S&P 500 Index was up 4.24 points to 1,842.37. Oil was last seen at $92.79/barrel up $1.23.

Weekly Survey of Rates from the Mortgage Bankers Association

For the week ending January 3rd. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) remained unchanged at 4.72 percent, with points unchanged at  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) remained unchanged at 4.66 percent, with points decreasing to 0.12 from 0.27 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.77 percent from 3.73 percent, with points decreasing to 0.34 from 0.40 (including the origination fee) for 80 percent LTV loans.

Housing News

Predictions for 2014: Housing Supply Will Struggle to Keep Up with Demand

With a dramatic increase in demand for housing expected this year, it will be up to real estate professionals and builders to make sure there is the necessary inventory to satisfy this demand. This will be a challenge for much of 2014.

For a balanced real estate market, there should be approximately 5-6 months of inventory for sale (example: if 100 homes sold last month, we would need 500-600 homes available for sale). Nationally, we are just now hitting the five month level. As the spring selling season begins to heat up, a new wave of housing inventory would have to come to market to keep up with the increasing demand of buyers.

If we couple this seasonal increase with the other dynamics that will increase demand for housing in 2014, we believe that housing inventory could drop substantially. This, in our opinion, is the biggest threat to a full blown surge in sales this year.

Some experts have looked at the recent monthly decline in existing home sales nationally as evidence that a lack of consumer confidence or the increase in interest rates has buyers back up on the fence. However, a closer look at existing home sales reveals that sales remained unchanged in one of the four regions of the country (the Midwest) and actually increased in two other regions (the Northeast and the South). The only region that had a decrease in sales was the Western region (down over 10%).

If it was a matter of consumer confidence or mortgage rates, there would have been a similar decrease in sales throughout all four regions. The fall-off in sales in the West is directly attributable to a lack of salable inventory in the hottest markets in the region.

It is up to the builders and real estate agents in each community to make sure this doesn’t happen.  KCM

Home Prices Continue to Rise

CoreLogic reports that its Home Price Index, which includes distressed sales, rose by 11.8% from November 2013 compared to November 2012.  This marks the 21st consecutive month of year-over-year gains.  However, the 11.8% is just below the 11.9% recorded from October 2012 to November 2012.  CoreLogic said that the outlook for 2014 “is a bit less robust as regulatory complexities and tight credit can be expected to cool the housing market.”

Economic News

The U.S. private sector created 238,000 jobs in December, according to the ADP/Moody’s Analytics report. Economists had expected the survey to show the private sector created 200,000 positions, down slightly from the 215,000 initially reported the previous month. Read more

Weekly claims for state unemployment benefits totaled 330,000. Economists polled by Thomson Reuters had expected initial claims to come in at 340,000.

Read more

U.S. employers added far less jobs in December as the labor market continues to muddle along. The Labor Department reported that there were just 74,000 jobs created last month, well below the 197,000 expected and was the smallest increase since January of 2011. The Unemployment Rate fell to 6.7%, the lowest since the 6.5% recorded in October of 2008, which was partly due to 347,000 Americans leaving the workforce.

Sources: CNBC, Bloomberg, MMG, Housingwire, KCM

Mortgage Bonds traded in a tight range throughout the session in the absence of any economic data or major headlines. The 4% coupon closed near unchanged at 103.0. Stocks traded higher early in the day, but did give gains near the close. The Dow finished at 16,469.99 up 28.64 points, the S&P closed near unchanged at 1,831.37 while the Nasdaq fell by 11.16 points to end at 4,131.90. Oil was last seen at $94.18.barrel down $1.32 and lost more than 6% this week. Next week’s economic calendar is light, but the Labor Department will report the closely watched December Jobs Report on Friday morning where it is expected that employers added 197K jobs. We recommend floating, not locking rates into next week.

Weekly Survey of Rates from the Mortgage Bankers Association

For the week ending December 24, 2013. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.64 percent, the highest level since September 2013,  from 4.62 percent, with points increasing to 0.41 from  0.38 (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) increased to 4.63 percent, the highest level since September 2013, from 4.61 percent, with points remained unchanged at 0.24 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.29 percent from 4.25 percent, with points decreasing to 0.24 from 0.32 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.74 percent, the highest level since September 2013, from 3.66 percent, with points decreasing to 0.29 from 0.35 (including the origination fee) for 80 percent LTV loans.

Bernanke: Tapering doesn’t affect Fed’s commitment to low rates

The Federal Reserve remains committed to keeping interest rates low, even as it begins to taper its monthly purchases of bonds, Fed Chairman Ben Bernanke said on Friday.The Federal Reserve is no less committed to highly accommodative policy now that it has trimmed its bond-buying stimulus, Ben Bernanke said on Friday in what could be his last speech as Fed chairman.Bernanke, who steps down as head of the U.S. central bank at month’s end, gave an upbeat assessment of the U.S. economy in coming quarters. But he tempered the good news in housing, finance and fiscal policies by repeating that the overall recovery “clearly remains incomplete” in the United States.  Read more

Housing News

Why 2014 is a good year to buy a home

If you didn’t buy a home in 2013, you may be kicking yourself now. Home prices climbed nationally an average of 13.6 percent in the past 12 months, according to Tuesday’s release of the Standard & Poor’s/Case-Shiller 20-city home price index.  Don’t make the same mistake in 2014, suggests Benjamin Weinstock, real estate attorney and partner at the firm Ruskin Moscou Faltischek in Uniondale, N.Y.

Mortgage Bonds endured another very quiet trading day today. The 4% coupon managed to improve from their opening, staying above support, and closing unchanged. Our Benchmark 4.0% coupon closed at $102.84. While MBS remain above support, we will continue to recommend floating.  Stocks were unable to end on a positive note. The Dow closed down 1.47 points to 16478.41, the S&P 500 lost .62 points to 1841.40 and the Nasdaq lost 10.586 points to 4156.594. Oil closed at $100.14/barrel up 59 cents.

Weekly Survey of Rates from the Mortgage Bankers Association

For the week ending Dec. 20th, 2013. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased  to 4.64 percent, the highest level since September 2013,  from 4.62 percent, with points increasing to 0.41 from  0.38 (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) increased to 4.63 percent, the highest level since September 2013, from 4.61 percent, with points remained unchanged at 0.24 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.74 percent, the highest level since September  2013, from 3.66 percent, with points decreasing to 0.29 from 0.35 (including the origination fee) for 80 percent LTV loans.

Housing

US new home sales fall modestly from 5-year peak

Sales of new U.S. single-family homes fell modestly in November from a five-year high and prices pushed higher, indicating the housing market is weathering higher mortgage rates.  The Commerce Department said on Tuesday sales fell 2.1 percent to a seasonally adjusted annual rate of 464,000 units.  Despite the fall from October’s revised 474,000 pace, which was the highest level since July 2008, home sales retained the bulk of the previous month’s revised 17.6 percent increase.

Sales had previously been reported to have increased 25.4 percent in October but to a 444,000 annual pace.  Economists had expected new home sales, which are measured when contracts are signed, to show a 445,000 unit pace in November. Compared with November last year, sales were up 16.6 percent.  Read more

US pending home sales rise 0.2 percent

Signed contracts to buy existing homes rose slightly in November, breaking a five-month negative streak, according to the National Association of Realtors.  Pending homes sales ticked 0.2 percent higher from a downwardly revised reading in October but are still down 1.6 percent below November 2012, the association reported. These signed contracts are an indicator of closed sales in December and January.  Economists polled by Reuters had forecast signed contracts to rise 1 percent in November.  Despite the soft ending to 2013, Lawrence Yun, the association’s chief economist, said that 2013 will end with the best sales total in seven years. Read more

Economic News

Durable orders soar in November, fan new hopes for US economy

US jobless claims fall in positive sign for labor market

The number of Americans filing new claims for unemployment benefits fell last week to the lowest level in nearly a month, a hopeful sign for the labor market.  Initial claims for state unemployment benefits decreased 42,000 to a seasonally adjusted 338,000, the Labor Department said Thursday.  Claims for the prior week were revised to show 1,000 more applications received than previously reported. Economists polled by Reuters had expected first-time applications to fall to 345,000 last week. Read more

10 year Treasury hits 3.002%

U.S. benchmark Treasury yields edged higher on Thursday, touching their two-year high of 3 percent, in light trading as most investors stayed out of the market after the Christmas holiday.On light trading volume, benchmark 10-year Treasury notes yielded 3.002 percent in the morning, but ticked lower to 2.994 percent in the afternoon. Yields extended their climb after U.S. jobless claims fell to their lowest in nearly a month, stoking new speculation abut the strength of the recovery.  “Three-point-five percent is probably fair value, or where the 10-year should be, as it tends to track nominal GDP over time,” said Jack Ablin, chief investment officer at BMO Private Bank. “The question is, can the stock market overcome that head wind, or the battle between accelerating top-line growth and accelerating interest rates.”  Thirty-year bond yields edged higher, yielding 3.926 percent.

Sources: CNBC, Bloomberg, MMG, Housingwire, MBA

Merry Christmas, Happy Holidays and a Happy, Healthy and Prosperous New Year.

For the week Mortgage Bonds are down 21 basis points.  For Mortgage Rates that’s the equivalent of .125% higher in rate. With the cloud of uncertainty lifted after the taper announcement, players jumped in with both fists chanting, “Don’t Fear the Taper”. Despite a surge in Q3 GDP (4.1%), Bonds were able to move into positive territory and close higher, making up for some of the losses earlier in the week. The 4% Bond finished the week at 103.25 up 25bp.

Stocks also closed higher – the Dow finished at 16,221.14 up 42.06 points, the S&P settled at 1,818.32 up 8.72 points, while the Nasdaq was up
46.06 to end at 4,104.74. Oil was last seen at $99.12/barrel near unchanged.

Weekly Survey of Rates from the Mortgage Bankers Association

For the week ending December 13, 2013.     

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.62 percent, the highest level since September 2013, from 4.61 percent, with points increasing to 0.38 from 0.26 (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) increased to 4.61 percent, the highest level since September 2013,  from 4.59 percent, with points increasing to 0.24 from 0.15 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 3.66 percent, with points increasing to 0.35 from 0.31 (including the origination fee) for 80 percent LTV loans.

Fed Tapering Begins

FOMC enacts $10B in cuts per month

The Federal Open Market Committee announced Wednesday that it will in fact begin tapering purchases of both Treasurys and mortgage-backed securities (MBS) by $5 billion each.  Defying conventional wisdom from analysts, beginning in January, the committee will add to its holdings of agency mortgage-backed securities at a pace of $35 billion per month rather than $40 billion per month – a 12.5% cut. read more

Housing News

US Existing Home Sales Fall to Lowest Level in Nearly a Year

Economic News

Initial Jobless Claims Increase

The number of Americans filing new claims for unemployment benefits rose last week to the highest level in nearly nine months, casting a shadow on the labor market.

Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 379,000, the Labor Department said on Thursday. That was the highest level since March and marked the second straight week that claims have risen.

Claims for the prior week were revised to show 1,000 more applications received than previously reported. Economists polled by Reuters had expected first-time applications to fall to 334,000 last week.  The four-week moving average for new claims, which irons out week-to-week volatility, increased 13,250 to 343,500.

Read more

 

Final Q3 GDP rises to 4.1% from 3.6% due in part to a ramp up in inventories.

 

 

 

The markets were on the quiet side Friday with little volatility. Low inflation from the PPI supported Bond Prices and kept Mortgage Rates tame throughout the session. The 4% Mortgage Bond rose by 9bp to end the session at 103.31.  Stocks were essentially unchanged today – S&P at 1,775.32, the Dow gained 15.93 points to end at 15,775.36 while the Nasdaq was up a meager 2.57 points. Oil was last seen at $96.44/barrel down $1.06. A packed economic calendar next week. We recommend floating mortgage rates at this time.

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) increased to 4.61 percent, the highest rate since September, from 4.51 percent, with points decreasing to 0.26 from  0.38 (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) increased to 4.59 percent, the highest rate since September, from 4.49 percent, with points decreasing to 0.15 from 0.24 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.66 percent, the highest rate since September, from 3.56 percent, with points decreasing to 0.31 from 0.32 (including the origination fee) for 80 percent LTV loans.

Fannie Mae: Americans Worried Economy is on Wrong Track

Nearly two thirds of American’s believe the economy is on “the wrong track,” as concerns over personal finances and the state of the economy heighten, the latest Fannie Mae November Housing Survey revealed.  However, this is still low compared to a year earlier. Meanwhile, the share of people expecting their personal finances to worsen during the next year has increased during the past few months to 22%.

The survey polled 1,002 Americans to assess their attitude towards owning and renting a home. “We continue to see caution as the defining feature of Americans’ attitudes toward the economy and their personal financial situation. In this environment, the housing recovery is likely to improve, but only at a gradual pace,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. Read more

Housing

Zillow Predicts Home Values to Rise 3% in 2014; Mortgages Will Be Easier to Get

Zillow is making four, bold housing predictions for 2014, and has determined which housing markets will be the hottest this coming year.

2014 Predictions

1. U.S. home values will increase by 3 percent.
2. Mortgage rates will reach 5 percent by the end of the year.
3. It will be easier for borrowers to get a mortgage in 2014.
4. Homeownership rates will fall to their lowest point in nearly two decades.

2014’s Hottest Housing Markets

To determine which markets will be the hottest in 2014, Zillow combined data on unemployment rates, population growth and the Zillow® Home Value Forecast.¹ The list is intended to give an early view into housing markets that are likely to experience heavy demand for homes, as well as increasing home values.

Earlier in the week, Positive Economic data, such as the better than expected Jobs numbers, forced Mortgage Rates higher, as Bond Price continue to drop.  The chart below shows how Bonds continue their down escalator pattern after peaking in price on November 18th, as noted in the chart below. Fed’s Lockhart says positive data justifies taper considerations.  Lockhart says reasonable for market to expect Fed to wind down QE over coming year.

Mortgage Bond prices plunged early Friday morning after the better than expected November Jobs Data (203K vs 188K expected), but then rallied big throughout the session to close up 34bp to 103.75 and up 72bp from the session low. Stocks rallied on the positive news – the Dow closed at 16,020.20 up 198.69, the S&P 500 gained 20.06 to 1,805.09 while the Nasdaq rose by 29.35 points to 4,062.52. Oil was last seen at $97.71/barrel up 32 cents. Next week’s economic calendar is light, but the Treasury will be selling a total of $64B in Notes and Bonds.  I recommend floating, not locking Mortgage Rates into the weekend.

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) increased to 4.51 percent from 4.48 percent, with points increasing to 0.38 from  0.31 (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) increased to 4.49 percent from 4.48 percent, with points increasing to 0.24 from 0.15 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.56 percent from 3.52 percent, with points increasing to 0.32 from 0.31 (including the origination fee) for 80 percent LTV loans.

Housing News

Are Home Sales Tanking

If you read some of the headlines about home sales over the last few weeks, you may believe that sales of houses in the U.S. are beginning to slow dramatically. There have been some that have used the recent Existing Home Sales Reports (EHSR) from the National Association of Realtors’ as proof of this supposition. We should be careful not to put too much credence in these reports of impeding doom.

It is true that the last EHSR revealed that sales were down 3.2% from the previous month. However, there are two crucial points that are not being addressed:

1. Home Sales are up 6% over the same time last year.
2. Part of the downturn in recent sales can be traced to the falling inventory of distressed property sales (foreclosures & short sales). Distressed homes accounted for 14% of October sales as compared to 25% in October 2012.

Bottom Line

Sales of non-distressed properties are increasing nicely.  However, as the inventory of distressed properties continues to shrink, the number of overall properties sold may diminish over the next few months.  This is a sign that we are entering a much healthier housing market.

Home Prices Rose by 12.5% from October 2012 to October 2013 and less than 1% Month over Month in October

CoreLogic(R) (NYSE: CLGX), a leading residential property information, analytics and services provider, today released its October CoreLogic Home Price Index (HPI(R) ) report. On a month-over-month basis, including distressed sales, home prices increased by only 0.2 percent in October 2013 compared to September 2013*. Year over year, home prices nationwide, including distressed sales, increased 12.5 percent in October 2013 compared to October 2012. This change represents the 20(th) consecutive monthly year-over-year increase in home prices nationally.
Read more

October Home Sales Strongest in more than 33 Years

Economic News

U.S. employers added 203,000 jobs in November, according to the Labor Department, with the unemployment rate at 7%. Economist were expecting the Bureau of Labor Statistics to report 180,000 new jobs created in November, down from an initially reported 204,000 in October.

Jobs- The private sector created 215,000 jobs in November. Economists expected ADP to report the private sector created 173,000 jobs, up from the 130,000 initially reported for October.

Employers plan to cut 45,314 jobs in November, down 0.9 percent from the previous month, according to a report from Challenger, Gray & Christmas.

The U.S. trade deficit narrowed to $40.6 billion in October. Economists had expected the trade deficit to narrow to $40 billion in October from $41.8 billion.

Jobless Claims – Weekly claims for state unemployment benefits fell to 298,000. Economists had expected initial claims to rise to 320,000.

U.S. gross domestic product (GDP) was up 3.6 percent in the third-quarter, compared with estimates of a 3 percent increase and compared with a prior reading of 2.8 percent.

Consumer Sentiment at 82.5 in early December, above the 75.1 expected.

The European Central Bank (ECB) left its benchmark interest rate unchanged at 0.25 percent after surprising markets with a rate cut last month.

The Bank of England maintains its key interest rate at 0.5 percent and leaves its asset purchase target unchanged at £375 billion.

Sources: CNBC, Bloomberg, Reuters, Housingwire, MMG, KCM, Wall St. Journal