With the Cyprus headlines easing and Mortgage Bonds at the upper end of the current trading range, we will continue to recommend a short term locking bias.  The 3% coupon closed just near unchanged at 103.12.

Remember Mortgage Rates move in the opposite direction of Mortgage Bond Prices.

Stocks were slightly higher at midday with the big news being that the closely watched S&P 500 is trading at its all-time closing high, now at 1,565. The capital markets will be closed tomorrow in observance of Good Friday.

Housing News

S & P Case-Shiller Home Prices Jump the Most Since 2006

Home prices during the 12-month period ending January 2013 jumped closer to 10%, recording the largest annual leaps in both S&P Case-Shiller Home Price Indices in the past seven years.  S&P’s 10-city composite index shows home prices increasing 7.3% year-over-year during the 12-month period, while the 20-city composite index soared 8.1%.  The same indices edged up 0.2% and 0.1%, respectively, month-over-month.

The recovering market of Phoenix alone saw price gains of 23.2% for the 12-month period, while 19 U.S. cities experienced significant acceleration in home price growth.

“Economic data continues to support the housing recovery,” said David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices. “Single-family home building permits and housing starts posted double-digit year-over-year increases in February 2013. Despite a slight uptick in foreclosure filings, numbers are still down 25% year-over-year. Steady employment and low borrowing rates pushed inventories down to their lowest post-recession levels.”

Detroit, one of the hardest hit markets, continued to see price deceleration, while New York finally experienced price appreciation after 28 months in negative annual price growth.

The latest update to the indices follow the upward trend set in 2012. In January, home prices rose in 19 of the 20 U.S. cities, falling only in New York, for the 12-month period ending in November.

The Next Housing Bubble is Coming

According to Forbes, this rapid increase in the number of buyers and their purchasing power will likely drive home prices into a bubble. Likely not as large as 2005, but it’s not out of the question that the bubble could be even larger.

Read the full story

Economic News

Weekly Jobless Claims rose by 16K to 357K and above the 338K that was expected.

The final reading for Gross Domestic Product (GDP) for the 4th quarter of was raised to 0.4% from 0.1%, but still an anemic number.  The 0.4% was the slowest growth since the 1st quarter of 2011.

Source: MMG ,CNBC, Housingwire, Bloomberg

We will continue to recommend a short term locking into Mortgage Rates headed into the holiday shortened week. Mortgage Bonds traded in a tight range today and
finished marginally higher, which kept Mortgage Rates steady. The benchmark 3% coupon settled at 102.84 up 6bp in quiet trading. Stocks rose on
news that Cyprus will most likely reach a bailout from the European Union. The Dow gained 90.54 points to 14,512.03, the Nasdaq rose by 11.09 points to 3,245.00 while the closely watched S&P was up 11.09 points to end at 1,556.89. Oil was last seen at $93.80/barrel up $1.35.

Timing is Everything.  Many try to time locking into a Mortgage Rate only to find out how frustrating it can be.  We have many resources in the financial markets that keep us informed and give us ample warning as to movements in Mortgage Rates.  This helps us to know when rates are moving higher or lower, before lender’s re price.  This information has been critical in helping our clients obtain a low interest rate.

The chart below shows Bond Prices remain in a stubborn longer term down trend.  Hence, Mortgage Rates are in a stubborn longer term up trend.  As Bond Prices pull back from the ceiling, you need to consider short term locking into Mortgage Rates.  If support is breached at the $102 level for the benchmark 3% coupon,Bond Prices could continue to move lower and Mortgage Rates higher.

Bernanke: Fed Worries About Tight Lending Standards

The Federal Reserve worries the tightening of mortgage credit has gone too far and is now working on policies to ease lending fears, Fed Chairman Ben Bernanke said Wednesday.  After the Federal Open Market Committee verified its continued commitment to aquiring mortgage-backed securities and Treasuries at the same pace, Bernanke told reporters the Fed is seeing “much higher credit-quality requirements” from potential borrowers.

Yet, he worries any concerns over “put-backs that banks may have — and uncertainties about regulation — have tightened the mortgage credit box more than desirable.”  Still, the Fed Chair said one of the key tools in combating tight lending is the lowering of mortgage rates by keeping the Fed’s federal funds rate near zero.  “I would say one thing is that as the housing industry has strengthened and home prices have gone up, that has brought some people into the credit box,” Bernanke said.  As people build more equity or pull themselves above water, they become more creditworthy and increase their options, Bernanke suggested.

MBA CEO Predicts 4% Mortgage Rates by Year-End

David Stevens, President and CEO of Mortgage Bankers Association, said the purchase market could easily withstand a 4% mortgage rate, which is expected to hit by the end of the year.  Stevens was interviewed for CNBC Squawk Box Friday morning to discuss the upcoming spring housing market.  “As we head into the spring home buying and selling season, the housing comeback is showing signs of accelerating more rapidly than most anybody had thought at this point,” Stevens said.  He added, “The peak housing era of 2005 through 2007, those couple years produced some very dangerous characteristics we can’t allow to ever come back. But the market is clearly improving [now] and could weather rising interest rates should the Federal Reserve start tightening at some point.”

Housing News

The National Association of Home Builders Housing Market Index comes in at 44, below the 47 expected and the lowest since October.

JPMorgan Chase expects home prices to rise 7% in 2013 as investors continue to take interest in nonperforming loans and distressed properties. The forecast for 2013 is more optimistic than initially expected.  Although most investors still believe home prices will increase by less than 5%, some investors expect home price growth to increase as much as 15%, according to JPMorgan’s  February investor survey.  “As we pointed out in our 2013 outlook, the distressed sale discount should continue to decline. Indeed, the quantitative easing program has not done much for mortgage rates, but the resulting reach for yield is now firmly grounded in the housing market,” the company said.

Housing Starts rose slightly in February to 917K, above the 911K expected and are up 28% since last year this time.  Single family starts rose to 618K units, the highest level since June of 2008 while Building permits, a sign of future construction, jumped 4.6% to 946K, also the highest level since June of 2008.  Housing continues to improve.

Existing Home Sales rose by 0.8% in February from January to 4.98 million units, just below the 5 million expected.

Economic News

So far in 2013, the Fed has bought up more U.S. government debt than the U.S. Treasury has issued.

Sources: CNBC, Bloomberg, MMG, Housingwire

Mortgage Rates finally got some releif Wednesday through Friday as Bond Prices bounced of levels of support. I recommend cautiously floating, not locking into rates for the long term.  Positive economic reports helped Bonds reverse direction.  Consumer inflation for February was higher than consensus estimates and consumer sentiment was lower than analysts expected. Mortgage Bonds moved higher from the start and ended near the best levels of the day on Friday. The 3% coupon finished at $102.72, up 31bp. Remember, Mortgage Rates move in the opposite direction of Bond Prices.

The Dow’s ten day winning streak ended as the average lost 25.03 points to close at 14514.11. The S&P 500 was lower by 2.53 points, to end at 1560.70, while the Nasdaq dropped 9.86 points, to finish the session at 3249.07. Oil was last seen at $93.51/barrel up 48 cents. There are no major economic reports due out Monday.

Freddie Mac’s Primary Mortgage Market Survey showed the 30-year, fixed-rate mortgage for the week ending March 14 rose to 3.63%, up from 3.52% a week earlier, but down from 3.92% last year.  The 15-year, FRM averaged 2.79%, up from 2.76% last week, but down from 3.16% a year ago.  The survey’s rates factor in a cost of 1.50 points.  Meanwhile, the 5-year Treasury-indexed adjustable-rate mortgage averaged 2.61% this week, down from 2.63% last week and down from 2.83% a year earlier.  Additionally, the 1-year Treasury-indexed ARM averaged 2.64%, up from 2.63% a week ago and a drop from 2.79% last year.

“Fixed mortgage rates rose this week  (March 4th) on stronger signs of jobs growth and consumer spending. The economy added 236,000 new workers in February which helped push down the unemployment rate to 7.7%,” said Frank Nothaft, vice president and chief economist of Freddie Mac.

The Average Mortgage in 2012

While we’re on the subject of credit, take a look at real estate blog Keeping Matters Current’s use of stats (from mortgage automation company Ellie Mae) to describe the average mortgage loan in 2012:

• Time to close — 48 days.
• Down payment — 21%.
• Credit score — 748 (37% of 200 million Americans have scores of 748 or higher.)
• Debt to income — Monthly house payment, 23%; total household debt, 34%.
• Interest rate — 3.90%.

Housing News

The Time & Place to Buy

By LISA PREVOST Published: March 7, 2013, New York Times

As both mortgage rates and housing prices head higher, home buyers may be wondering whether they ought to settle for whatever property they can get now, rather than risk paying more later.  The answer depends on where you’re buying. Interest rates aren’t expected to rise much this year, but the same cannot be said for prices.  Economists in recent interviews agreed that the rate for a 30-year fixed mortgage was unlikely to rise much above 4 percent this year. House prices, however, are rising nearly everywhere, and nowhere as rapidly as in the Sunbelt states. Read more

Economic News

First-time Jobless claims Fell by 10,000 to 332,000 in the week ended March 9, the fewest since mid January, according to data today from the Labor Department in Washington. The median forecast of 49 economists surveyed by Bloomberg called for an increase to 350,000. The four-week average declined to a five- year low.  “The rate of job destruction is pretty low,” said Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Florida, who projected the number of claims would drop to 338,000. “The labor market is in continued-recovery mode, though there is still a lot of ground to make up.”

Retail sales increased 1.1% in February, up from 0.2% in January. This marked the biggest gain in the retail sales number in 5 months.
The retail sales report is a measure of the total receipts of retail stores from samples representing all sizes and kinds of business in retail trade throughout the nation. It is the most timely indicator of broad consumer spending patterns and is adjusted for normal seasonal variation, holidays, and trading-day differences.

Consumer Sentiment falls to 71.8 vs the 77.6 expected and down from 77.6 February.

CPI a bit hotter than expected at 0.7% vs the 0.5% expected. Core inline at
0.2%. Empire Manufacturing better than expected at 9.2 vs 6.5.

Sources: CNBC, Bloomber, MMG, Housingwire, NY Times

It has been a bad week for Mortgage Rates as better than expected economic news helped to fuel Stocks which pressured Mortgage Bond prices, which moved Mortgage Rates higher. The better than expected Jobs report caused a plunge in Bond prices and and moved Stocks higher.  The downtick in the unemployment rate was due to more people leaving the labor force – not a great statistic, but it was taken with a grain of salt in what otherwise was an OK Jobs Report.

Bonds have fallen 5 days in a row while Stocks have rallied for the past 6 days that one sided trend can’t continue. Mortgage Bonds continue to slide in the Falling Channel with prices making new lows over time, not a good sign.  Mortgage Bond prices are now lower (Mortgage Rates higher) than when QE3 was announced back in September.  Even though the Fed is buying up $85B worth of Bonds every month, there is a lot of selling pressure in the Bond Market as investors seek higher returns in Stocks.

Its possible Bonds can recover,  but for now the trendline is down for Bond Prices and the reverse is true for Mortgage rates, which have been inching higher.  Bonds have suffered a lot of technical damage over the last few days.  Therefore, the advise is to lock into rates at this time.

The 3% coupon fell by 50bp to end at 102.25. The Dow hit yet another closing high of 14,397.07 up 67.58 points. The
S&P rose 6.92 points to 1,551.18 while the Nasdaq was up 12.28 points to end the week at 3,244.37. Oil was last seen at $91.81/barrel up 25 cents.

Housing News

Six Reasons Housing Inventory Keeps Declining- Wall Street Journal

Home sales in December dropped by 1% from November, the National Association of Realtors reported on Tuesday, but still stood nearly 13% above the levels of one year ago. That means home sales have risen from the year-ago month for 18 straight months. For 2012 as a whole, sales were up 9% to 4.65 million units, the highest annual total since 2007.

Prices, meanwhile, are picking up because the number of homes for sale continues to drop despite the sales volume gains. The number of homes for sale fell to 1.82 million at the end of 2012, an 8.5% drop from November and a 21.6% decline from one year earlier, the Realtors’ group said on Tuesday.

Home Prices Rose Nationwide by 6%

Clear Capital reported on Tuesday that home prices nationwide rose by 6% year-over-year in the month ended in February, but did say that short term gains will moderate.  The firm cites rising consumer confidence as the catalyst in the housing recovery.  Clear Capital serves the mortgage and lending industries, offering clients intelligent valuation solutions for properties nationwide.  This is just another industry metric highlighting that Housing is indeed improving.

CoreLogic reports that home prices rose by 0.7% in January from February and have surged 9.7% compared to a year ago.

Economic News

Employers Add 236K Jobs in February; Jobless Rate Drops to 7.7%

Employers added 236,000 jobs in February, far more than analysts had  expected, offering some much-needed momentum to the long-sluggish U.S. labor  market. The headline unemployment rate dropped to 7.7% last month from 7.9% in  January.  Construction jobs led the way, as they have for several months.  Recovery  efforts from Superstorm Sandy in the fall have provided work in that sector. With the positive gains in unemployment, combined with record highs in stock  markets, many analysts are going to start calling for the Federal Reserve to  pull back on its loose fiscal policies.

But that’s not likely to happen anytime soon.  Fed Vice Chair Janet Yellen said in a speech earlier this week that economic  conditions still require an “accommodative” strategy and Fed Chairman Ben  Bernanke took a similar position last week in testimony before Congress.

In fact, this is the sort of momentum the Fed has been looking for for  months, ever since pinning their policies to the struggling housing and labor  sectors.  The Fed’s bond buying purchases, known as quantitative easing, plus  historically low interest rates, are designed to stimulate mortgage lending in  an effort to kick start the important housing sector. Once that sector awakens, the impact will be felt across the economy, from  the financial services to retail and construction.  The Fed would seem to be in a position to take some credit today for the  positive jobs report.

Weekly Initial Jobless Claims fall 7K to 340K in the latest week and below expectations of 350K.

ADP says private sector jobs increased by 198K in February vs the 150K expected.  January ADP number revised to 215K vs the 192K that was first reported.

Beige book reports economic activity expanding at a moderate pace.

Sources: CNBC,Bloomberg, Fox Business News, Reuters, MMG, Housing Newswire

Short-term locking, which is measured by days to a few weeks. MARKET WRAP:

The recommendation is to lock into Mortgage Rates for the Short-term, which is measured by days to a few weeks.  Remember that Mortgage Rates move in the opposite direction of Mortgage Bond Prices.  Hence, it is important to monitor the Bond Market. Bond prices have been able to improve considerably over the past 8 trading sessions, but were halted by ceiling of resistance.

Mortgage Bonds started the week to the downside but quickly rallied as Stocks tanked on Italian political concerns and as investors looked to take some
profits. The 3% Bond rose 59bp to end the session at 103.56. The 3% coupon finished the week at 103.62, +3bp. Stocks tanked on concerns as the Dow fell 216.40 points to 13,784 in reaction to the Italian elections and as investors looked to cash in some chips.

Stocks saw meager gains and the Dow wasn’t able to hit a new fresh record high. The S&P 500 closed at 1,518.20 up 3.52 points, the Dow gained 35.17 points to 14,089.66 while the Nasdaq was up 9.55 points to end at 3,169.74. Oil was last seen at $91/barrel down $1.09. Next week’s big data point is Nonfarm payrolls where it is expected that employers added 165K new jobs in February.

Housing News

“Home prices ended 2012 with solid gains,” said David Blitzer, chairman of the index committee at S&P Dow Jones Indices. “Housing and residential construction led the economy in the 2012 fourth quarter. In December’s report all three headline composites and 19 of the 20 cities gained over their levels of a year ago. Month-over-month, 9 cities and both composites posted positive monthly gains. Seasonally adjusted, there were no monthly declines across all 20 cities.”

Pending Home Sales rose by 4.5% in January, well above the 1.0% expected.

New Home sales in January jump 16% to 437K units annually vs the 383K expected.

Top 2013 Real Estate Trends

“Its tough to make predictions, especially about the future.” Yogi Berra

Wouldn’t the real estate business be so much easier if we had a crystal ball? Guess what? You do have one if you choose to pay attention to everything around you. Use it and you’ll be better off in 2013 and beyond.

Here are some reasonable predictions about what we might see in 2013, and more importantly, how you might capitalize on them.

1. Interest rates will begin to rise slowly. Let me say right up front, I’m not an economist but many of them, along with lots of other industry analysts, say there’s little doubt rates will rise. And by the fourth quarter of 2013 we’re liable to see them a full point higher than they are right now. How do you capitalize on this? You have to go at your business with a stronger sense of urgency. Yes, you’ll find some sellers who’ll tell you they want to wait till prices raise more. The thing they’re not taking into account is that the longer they wait, the more they themselves will be paying in interest for their new home. So it works both ways. Buyers – and sellers – need to have a sense of urgency during low interest rates.
2. Home sales will rise between six to eight percent. Bullish analysts predict upwards of 10 percent increases; bears say go as low as two percent. Somewhere in the middle is reasonable. Now, how do you cash in on this information? It’s easier to sit on a stool with three legs instead of one. If you broaden your base with some of the residual REO and short sale business with rising traditional home sales, you’ll be sitting pretty – and not fall on your face. Last year was a tough year on the REO side because of the election year and everything was up in the air.  There was a lot of uncertainty, but now I believe we’ll see more distressed properties entering the market along with a strengthening traditional position.
3. We’ll see more activity among second-time homebuyers. Now that the election is over and the economy is showing some positive signs, I think we’ll see more “move up” buyers looking for bigger, nicer homes. NAR says markets across the country will have upwards of 75 percent of second-time buyers during 2013. That’s an awesome market to target so don’t miss out.
4. Consumers will continue to use the latest technology in their search for real estate. We’ve known for years people search properties online before they talk to agents, but now they’re using mobile devices (iPads, iPhones, etc.). How does your website appear on an iPhone? If you don’t know, find out. There’s a chance it may not look the same way it does on a computer. That means users will leave your site and find one that does look right. Get it fixed or lose business. It’s just that simple.

Economic News

Consumer Confidence in February surges to 69.0 from 58.6 in January and above the 62.0 expected.

Durable Orders in January fell 5.2%, below the -3.5% expected. The previous month was revised lower to 3.7% from 4.3%.

Sources: Tracey C. Velt Real Trends, Bloomberg,MMG, Housingwire, CNBC

On Wednesday, the 3% coupon has stepped down another level on the Down Escalator… not good.  Contributing to the Bonds decline was a poor  10-yr $24B Note auction that garnered a “C-” rating.  Clearly investors are moving money out of Bonds and into stocks.  Thursdays Auction of 30 year Bonds garnered a B+ rating, the best of three Auctions this week, which bolsterd Bond prices.  Mortgage Bonds end the week not much lower  than where they ended last Friday.

Remember Low Bond Prices means Higher Mortgage Rates.  The 3% settled at 102.88 down 6bp and off their worst levels of the session.  Short term locking into Mortgage Rates is the advise as the 3% Bond Price continues to trade below the 200-day Moving Average.

Stocks are due for a pause from their rally and it might just happen once prices test the all-time highs – but until that time, clients only need to see the Down Escalator and consider locking.  We can’t be bullish or optimistic on Bonds until the 3% Coupon steps off this clear and ugly downtrend.

Stocks ended slightly lower, the Dow rose 8.37 points to 13,981.76, the S&P 500 fell 1.59 points to 1,519.79, while the Nasdaq closed the week at 3,192.03 down 6.63 points. Oil was last seen at $95.92/barrel down $1.38. The capital markets are all closed Monday in observance of Presidents’ Day. Our office is also closed.

Housing News

President Obama gave his first State of the Union address for his second term last night and one of his points was a refinancing bill that is sitting in Congress.  The bill calls for those homeowners with loans backed by Fannie Mae and Freddie Mac can refinance as long as they are current on their monthly mortgage payments.

The National Association of Realtors reported on Monday that the national median existing single-family home price surged 10% since last year this time to $178,900.  The year-over-year increase of 10% was the largest gain since the fourth quarter of 2005 and signals that the housing recovery continues to gather some steam.

Foreclosure starts decline to a six-year low.

Freddie Mac says the housing sector is recovering with room for growth due to record-high home-buyer affordability.

Economic News

The National Federation of Independent Business reports that its optimism index rose by 0.9% to 88.9 in January, up from its 2 1/2 year low registered in November.

The Labor Department’s December Job Openings and Labor Turnover Survey (JOLTS) report showed that job openings, hires, and separations were little changed from November.

“The average interest rate paid by the US government on the country’s interest-bearing debt has been cut in half over the last 6 years, dropping from 5.034% on 12/31/06 to 2.534% as of 11/30/12.” If rates were to rise, that would cause larger payouts on the debt held by the US, which at the present time it can’t afford. It is also a message for our profligate government to reign in our debt and not be complacent with the present rate environment…if rates rise, the debt service will be overwhelming.

Sources: Bloomberg, MMG, Housing wire, CNBC

On Monday, lower Bond prices ushered in buyers with modest volume levels. Strong Durable Orders helped to lead prices lower, moving Mortgage Rates higher, while the weak Pending Home Sales data and a decent 2 – year note sale helped Bonds recover and bring Mortgage Rates back down.. Tuesday’s Bullish Hammer candle leads us to offer a cautiously floating bias.

At Fridays close, the Bond chart showed a  long upper wick piercing through the 200-day Moving Average tells us that the Bond is still unable to break above that level…not a good sign for Mortgage Rates. The only positive signal is that we have not made a new low in the trend lower. If that happens, meaning that prices move below $103.12. If we do move below that level, more selling could take place.

MARKET WRAP: Mortgage Bonds started the day to the upside on the mixed jobs data but quickly reversed course after positive data from the Consumer Sentiment report and the ISM Index. The 3% coupon hit 103.75 before closing at 103.16 down 9bp. Stocks were higher in premarket trading as the momentum in the equity markets continues to build and surged after the strong economic data. The Dow rose by 149.21 points to 14,009.79 closing above the 14,000 for the first time since October 12, 2007. The S&P gained 15.06 points to end at 1,513.17 while the tech heavy Nasdaq jumped 36.97 to end the week at 3,179.10. Oil was last seen at $97.63/barrel near unchanged levels.

Housing News

The Case-Shiller report showed that 19 of the 20 metropolitan areas it tracks registered year-over-year price increases, with New York as the sole city to see prices fall. The improvement has been considerable in much of the nation: 11 cities in the Case-Shiller index saw year-over-year price gains of 7% or more.

Many economists expect home prices to keep rising in 2013 because those two forces—low interest rates and a slender inventory of homes for sale—are expected to persist throughout the year. “We’re not building enough at a high enough rate,” said Patrick Newport, an economist at IHS Global Insight.

 National Forclosure Inventory Falls 19.5%

“The most encouraging foreclosure trend reported here is that the inventory of foreclosed properties is almost 20% smaller than a year ago,” said Mark Fleming, chief economist for CoreLogic. “This big improvement indicates we are working toward resolving the backlog of the most distressed assets in the shadow inventory.”

Economic News

The jobs recovery continued to crawl forward at a slow pace in January, and there’s little hope it will pick up any time soon.

The U.S. economy added 157,000 jobs in January, according to a Labor Department report released Friday. That’s slower growth than in December, when employers hired 196,000 workers. Call it “Groundhog Day in the labor market,” said Heidi Shierholz, economist with the Economic Policy Institute. “It’s the same old crap. We’ve been waking up to this same story for two years.”

The unemployment rate was 7.9% in January, as 12.3 million people were counted as unemployed. Overall, hiring is barely keeping pace with population growth, and the Labor Department noted that the unemployment rate has barely changed since September.

A Look Ahead

It’s a good bet that Uncle Sam will close up shop come late March, as the White House and House Republicans lock horns over federal spending and budget matters. Current stopgap spending authorization runs out on March 27. But the shutdown will be short…no more than a week or two, probably less. And critical government functions will continue. The Defense Dept., intelligence offices, key portions of the Federal Reserve, Homeland Security Dept. and Treasury Dept., for example, will remain open. Ditto, the Federal Aviation Admin., which oversees airports and controls air traffic. Amtrak trains will run, the Postal Svc. will continue to deliver mail, and no one’s Social Security benefits will be interrupted. Most agencies will go dark. A million federal employees in the D.C. area and around the country won’t report to work and won’t be paid for the duration. You won’t be able to get a passport, visit a national park or get an SBA loan. Federal courts won’t be in session. USDA meat inspections and DHS inspections of imported commercial cargo will be slowed but not stopped. IRS tax refund checks will likely be stalled, but probably not electronic refunds. And federal contractors won’t receive payments, leaving them holding the bag for payments to subcontractors. For most people, it’ll be a nuisance. But for some…a significant disruption, causing delays and loss of business every day that the federal government is closed.   Source Kilinger Letter

Sources: MMG, Housing Wire, CNBC, Bloomberg, Wall Street Journal,CNN Money

Short term locking mortgage Rates ahead of the long weekend. Longer term Floating Mortgage Rates.

The capital markets were quiet today ahead of the extended holiday weekend. The markets are closed on Monday in observance of Martin Luther King Day. The 3% coupon rose by 22bp with most of the gains occurring earlier in the session and traded in a narrow range for most of the trading day finishing at 104.12. Stock also had a lackluster day and traded near unchanged throughout the day but the Dow and the S&P 500 did manage to finish with gains while the Nasdaq was capped by a decline in shares of Apple. The Dow rose by 53.68 points to 13,649.70, the S&P 500 rose 5.04 points to 1,458.98 while the Nasdaq fell by 1.30 points to end at 3,134.71. Oil was last seen at $95.29/barrel down 20 cents.

Mortgage Applications Jump 15.2% 

Refinancing applications increased 15% from a week ago, while the seasonally adjusted purchase index climbed 13%, the Mortgage Bankers Association said.

According to Frank Nothaft, vice president and chief economist, Freddie Mac: “Mortgage rates ended this year near record lows. The 30-year fixed-rate mortgage averaged 3.66 percent for 2012, the lowest annual average in at least 65 years. Rates on 30-year fixed mortgages were nearly 0.6 percentage points below that of the beginning of the year, which translates into an interest payment savings of nearly $98,600 over the life of a $200,000 loan.”

Home prices nationwide, including distressed sales, grew 7.4% year-over-year in November, representing the largest annual gain since May 2006, according to the latest Home Price Index report from CoreLogic. This change represents the ninth consecutive month of year-over-year price gains and the largest increase since May 2006.

Housing Starts Rise 12.1%

U.S. homebuilders presumably ended 2012 on a high note, with data showing housing starts jumping 12.1% from November to December, the Department of Commerce said.

Furthermore, housing starts – a measure of new construction activity – grew 36.9% from the previous December, backing up widespread reports of blooming homebuilder confidence.

In December alone, the U.S. recorded 954,000 new home starts, up from 851,000 starts in November and a significant increase from 697,000 starts a year earlier. Economists with MarketWatch noted December housing starts reached a level not seen since June 2008.

Completed construction also grew in December. The nation saw 686,000 homes completed last month, up from 675,000 units in November and a rise of 13.2% when compared to the 606,000 properties completed in December 2011.

Economic News

The Commerce Department reported this morning that Retail Sales in December rose by 0.5%, above the 0.2% expected – thanks to a big holiday shopping boost.  Consumer spending, which accounts for a large portion of our GDP still remains tepid overall.

 Sources: Bloomber, Mtg Master, MMG, Housing Wire, CNBC

The fall below and subsequent close above that level paints a bullish scenario. Float, don’t lock into the weekend.  Mortgage Bonds were able to bounce back today as Stocks took a breather after their recent run higher. The 3% coupon rose by 22bp to end the session at 104.31. Stocks closed near unchanged – the Dow at 13,488.43, the S&P 500 at 1,472.05 while the Nasdaq settled at 3,125.64. Oil was last seen at $93.64/barrel near flat levels. Next week features a boatload of economic data

Mortgage rates kicked off the new year with high readings, following December’s employment report.

The 30-year, fixed-rate mortgage hovered at 3.40% — it’s highest reading in the last two months — for the week ending in Jan. 10, up from 3.35% a week earlier, but down from 3.89% last year, according to Freddie Mac’s Primary Mortgage Market Survey.

“Fixed mortgage rates increased slightly following a positive employment report for December. The economy added 155,000 jobs, above the consensus market forecast, and November’s job growth was revised upward by another 24,000 workers,” said Frank Nothaft, vice president and chief economist with Freddie Mac.

He added, “This helped keep the unemployment rate steady at 7.8 percent, the lowest since December 2008. For all of 2012, 1.86 million jobs were created and represented the largest annual gain since 2006.”

With the Fed still a buyer of Mortgage Bonds, it is certain that volatility will be the name of the game.

Another Bank Settlement

Monday, Bank of America struck deals to settle lending complaints, sell rights to service $300 billion of mortgages and repair relations with regulators. For Chief Executive Officer Brian T. Moynihan, it offers his best chance to rebuild the home lending business.  read the full bloomberg story

Sources: Bloomberg,CNBC,Housingwire,MMG

Mortgage Rates went on a bit of a ride this week as the Bond market suffered losses due to a positive reaction from the Stock Market regarding the Fiscal Cliff resolution.

The technical signals are currently bullish for Mortgage Rates, therefore I am recommending floating, not locking into Mortgage Rates at this time. But the market can change quickly, so stay tuned.

The 3% coupon rallied back big today after losing 141bp from the high hit on 12/28 until this morning’s low of 103.56. Yesterday’s Fed comments could be a distant memory next week as investors see that the economy still has a lot of wood to chop. The 3% ended at 104.16, up 16bp and up 59bp from the 103.56 hit this morning.

Stocks had a decent day – the Dow rose 43.85 points to 13,435.21, the S&P 500 rose 7.10 points to 1,466.47 while the Nasdaq rose 1.09 points to end the week at 3,101.66. Oil was last seen at $93.07/barrel near unchanged.

Economic News

Friday’s Job’s report shows the U.S. economy created 155,000 new jobs in December, compared to 161,000 in November. The November figure was revised up from 146,000.

The December report also shows a 30,000 jump in construction jobs, including 12,000 residential specialty trade contractors. In November, the bureau reported a 20,000 decline in construction workers which surprised many economists. One private economist said BLS is revising the way it estimates construction jobs.

The report shows mortgage brokers hired 1,200 new employees in November while other mortgage lenders trimmed their payrolls for the second straight month.

BLS reported that employment in the mortgage banking and brokerage sector edged up to 284,900 in November from 284,600 in October.

Mortgage companies have added 22,800 full-time employees to their payrolls since January 2012. Mortgage brokerage firms are responsible for 14,200 of those new hires.