The Current Mortgage Market

Continue to float and not lock into rates, but be aware that if a cliff deal is struck before January 1, you could see Bond prices fall and rates rise in the short term. The Dow suffered its worst loss since mid-November with little progress to avert falling off the cliff next week. The fall did help to buoy Bond prices but the gains were minimal as Bond holders feel that if an 11th hour deal is made, riskier assets may be back in play.

The 3% coupon rose by 9bp to end at 104.84, up modestly for the week. The Dow fell by 158.20 points to 12,938.11, the Nasdaq lost 25.59 points to 2,960.31 while the S&P dropped 15.67 points 1,402.43. Oil was last seen at $90.67/barrel near unchanged. Next week features the Nonfarm payrolls report where it is expected that 150K new jobs were created in December.

Big Banks Still Don’t Get it

A study by the Consumer Finance Protection Bureau (CFPB) between July 21, 2011 and September 30, 2012, U.S. consumers filed 36,403 mortgage-related complaints against various lenders, banks, servicers, and other mortgage companies. Bank of America accounted for 27% of complaints, the most out of any bank accounted for in CFPB’s data – of the 9,930 mortgage complaints filed against Bank of America, 6,430 related to loan modifications, collections and foreclosures. Loan servicing, payments and escrow accounts recorded 2,044 complaints, while complaints regarding application, originator or mortgage broker issues tallied 542. BofA received nearly twice as many complaints as runner up Wells Fargo who recorded 5,051 mortgage-related complaints in the CFPB study’s time frame.

30 Year Fixed Rate Mortgage Finishes Year Near Record Lows

The 30-year, fixed-rate mortgage hovered at 3.35% for the week ending Dec. 27, down from 3.37% a week earlier and 3.95% last year, according to Freddie Mac’s Primary Mortgage Market Survey.

What Will Happen To Mortgage Rates in 2013? The Washington Times (Henry Savage)

Low mortgage rates are one of the silver linings of the housing crisis. Many families can now afford homes with interest rates so low. So heading into 2013, analysts are beginning to ask themselves whether rates in 2013 will finally rise.

Read the full story

Housing News

New Survey Predicts 2013 Home Prices To Rise 3.1% 

A new survey of 105 economists and real estate industry experts is forecasting home prices to rise 3.1% in 2013.
The survey – which was conducted by Pulsenomics LLC between Nov. 30 and Dec. 12 and published by Zillow Inc. – finds increasing optimism on the near-term future of housing. The survey respondents said they expect home prices to increase in full-year 2012 by 4.6%, up from their more modest forecast of 2.3% in a previous survey released in September. Respondents also indicated they expect home prices to rise 3.1% in 2013, up from an expectation of 2.4% in September, and by more than 3% annually through 2017.
“An organic recovery in the housing market really took hold in the latter half of 2012, and this improvement is echoed in some of the most optimistic price projections we’ve seen in years from this group,” says Zillow Chief Economist Stan Humphries. “Record levels of affordability and an improving overall economic picture have really helped buoy the market and have us well-positioned for continued growth, albeit slightly slower, in 2013 and beyond.”

Sources: MMG, Bllomberg, CNBC,HousingWire, Mortgageorb

Headed into the weekend it may be wise to think of short-term locking into Mortgage Rates given that pricing has improved over the past two days. Stocks were down Friday but some of that was due to year-end tax selling. If a deal is struck sometime next week in the cliff saga, short term, you could see a rally in stocks and a pullback in Bond prices which will move Mortgage Rates higher.

Remember that Mortgage Rates are tied to Bond prices.  Mortgage rates rise when the price of Bonds move lower. We closely monitor the Bond market daily and advise our clients of the most oppotune time to lock the rate on a home loan.

Bonds spent the session in positive territory after the failed talks in Washington led Stocks lower. Mixed economic data didn’t have much of an impact on trading today with better than expected income and spending and durables with lower consumer sentiment and tame inflation. The 3% coupon only wound up with a 12bp gain at 104.56 and finished near the lower end of the day’s trading range after being up by 34bp earlier in the session. The Dow dropped 120.88 points to 13,190.84, the S&P fell 13.54 points to 1,430.15, the Nasdaq settled at 3,021.01 down 29.38 points. Our offices are closed on Monday and Tuesday for the holiday. We wish you all a Very Merry Christmas.

Bank of America & Citibank Don’t Want Your Mortgage Business » Bloomberg

Mortgage originators may be making money on loans today, but Bank of America and Citigroup are noticeably absent from the line-up of firms that are using new momentum in the mortgage market to drive profits… Read the Full Story

Government Study Blows Up the Consumer Finance Protection Bureau (CFPB)

                           A MUST WATCH FOR EVERY CONSUMER

Read the Full Report

Housing News

Property Values Continue to Gain Momentum

Home prices in the U.S. were up for the eighth consecutive month in October by 0.4%, leading to a total appreciation rate of 5.1% year to date. On the other hand, foreclosures dropped from 26.7% at the beginning of the year to 17.6% in October. See the full Index

RE/MAX: Home Sales Up In November

November home sales saw the second-highest year-over-year increase this year, with a 15.7% rise from last November, according to new data from RE/MAX. RE/MAX reports that the median price for homes sold in November was $163,750, up 3.6% from October and 6.9% higher than the price seen in November 2011.

Housing Starts Down In November

Single-family housing starts in November were at a rate of 565,000, which is 4.1% below the revised October figure of 589,000, according to new data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. Privately-owned housing starts were at a seasonally adjusted annual rate of 861,000, which is 3% below the revised October estimate of 888,000 but 21.6% above the November 2011 rate of 708,000.

Sources: MMG, Housingwire,Bloomberg,CNBC

We will continue to Float into the weekend. The capital markets were on the quiet side today with not much action for most of the session. The 3% coupon finished the week at 104.69, up 12bp, so there was little change in mortgage Rates. Stocks closed lower due to no deal being struck yet and without any progress in the fiscal cliff talks. The Dow dropped 35.71 points to 13,135.01, the S&P 500 fell by 5.87 points to 1,413.58 while the Nasdaq lost 20.83 points to 2,971.33.

Our hearts and prayers go out to those families impacted by the tragic shootings in Connecticut.

There was no change in the Fed Funds Rate at the Feds meeting on Wednesday. The Fed said they will keep the Fed Funds Rate at 0.25% as long as the Unemployment Rate remains above 6.5%  and will continue to purchase MBS to the tune of $40B per month and will also purchase $45B in Treasury securities when Operation Twist ends at the end of December.  Bernanke said the Fed doesn’t have the tools to offset falling off the fiscal cliff and that the labor markets may be weaker than what the unemployment rate suggests.

Economic News

Earlier this week the National Federation of Independent Business (NFIB) reported that its small-business optimism index plunged in November after two major events took place…Superstorm Sandy and the National Elections.  However, most small business owners cited the election as the major factor in declining optimism and expect worse business conditions in the next six months.  The feeling is that Washington does not have the needs of small businesses in mind.

Housing News

In housing news, Freddie Mac released its National Housing Survey yesterday saying that home loan rates will remain near record lows for the first half of 2013, but will slowly rise in the second half although remaining below 4%.  Freddie said that home prices could increase by as much as 3% nationally next yearwith some localized areas showing even larger gains.

Mortgage Bonds fell today after the recent post election runup.  The 3% coupon fell 19bp to end the session at 105.25 down 22bp. A 22 bp loss in price equates to about .125% increase in Mortgage Rates. Stocks closed near unchanged – the Dow closed at 12,815.39, the S&P 500 settled at 1,379.85 while the Nasdaq saw a 9.29 point gain to finish the week at 2,904.87. The Bond markets are closed on Monday in observance of Veteran’s Day while Stocks are open for a normal session. I continue to recommend locking into rates at this time.

Our thoughts and prayers are with those who are suffering from the two recent storms that have devistated the east coast.

New York-area officials are concerned about the residents left after last week’s storm. 30,000 to 40,000 people in New York alone will be forced to find new homes, reported Mayor Michael R. Bloomberg. “I don’t know that anybody has ever taken this number of people and found housing for them overnight,” the mayor said. “We don’t have a lot of empty housing in this city. We are not going to let anybody go sleeping in the streets or go without blankets, but it’s a challenge, and we’re working on that as fast as we can.”

Unfortunately, New York is not the only area that will be affected by the cold weather. Residents in New Jersey and Connecticut can expect a similar problem. “This is going to be a massive, massive housing problem,” Gov. Andrew M. Cuomo said.

Housing News

S&P/Case-Shiller: Home prices rise 0.9%

U.S. home prices edged up 0.9% in August as 19 of the 20 cities studied in the Standard & Poor’s/Case-Shiller index posted positive monthly gains from July.

The price jump beat analysts’ expectations with Deutsche Bank forecasting a more modest 0.4% home price increase in August.

The 10-city composite index experienced an annual price gain of 1.3%, while the 20-city composite grew by 2% over last year.

Eighteen of the metros studied posted price gains from July, an indicator in line with reports of a market turnaround in real estate.

Merrill Lynch predicts that the Case/Shiller Home Price Index will increase by 5% in Q4 of ’12 from Q4 of ’11.

QE3 is Boosting Housing

Freddie Mac said that thanks to QE3, it is boosting its outlook for the US housing market, according to Bloomberg Business Insider.

Author Joe Weisenthal admits he heard the news first on FT Seeking Alpha, but he also links to the full release, for those Business Insider readers who can not find a way to navigate to the Freddie Mac website.

“The gradual turnaround in housing activity reflects, in part, the Federal Reserve’s accommodative monetary policy,” the report states. “With mortgage rates at their lowest levels since at least the 1940s, housing demand has begun to improve.”

Trulia Reports Housing is 43% Normal

An article in Forbes is giving Trulia space to put a percentage on the housing recovery.

It’s a fun, fun piece, with great graphics.

Trulia concludes the “housing market is now 43% of the way back to normal – compared with 42% in August and 24% in September 2011.  For the second month in a row, the Housing Barometer is at a post-crisis high.” Rise up, housing barometer, rise!

Economic News

Personal Spending rose by more than expected while inflation remained tame last month, which is giving Bonds added support this morning.

Jobless Claims Fall by 8,000 to 355,000; Survey Called for Jobless Claims of 365,000

The European Central Bank (ECB) has left its key lending rate unchanged at 0.75 percent as it waits to deploy its new “unlimited” bond-buying program.  Spain, seen as the prime candidate for the ECB’s bond purchases, has so far delayed a decision on asking for help.

Sources: Bloomberg, Forbes, Housingwire,MMG

Mortgage Bonds made a sharp move higher today. The 3% coupon rose 44bp to end the session at 104.69, just above resistance at 104.65.  This was welcomed news for Mortgage Rates, as they improved by days end. I recommend floating, not locking into rates at this time.

Stocks ended near flat, the Dow closed at 13,107.21, the S&P 500 finished at 1,411.94 while the Nasdaq settled at 2,987.95. Oil was last seen at $86.10/barrel near unchanged.

If you take a look at the chart below – you can see how Bond Prices are moving down a staircase after a double top a few weeks ago. You can also see the former support at $104.65 is now serving as resistance… if prices can break above this ceiling then Mortgage rates might reverse back down. Remember that Mortgage Rates move in the opposite direction of Bond Prices.

Chart of Mortgage Bond Prices

Housing News

Why Aren’t the Candidates Talking About Housing

The silent campaign issue

More press outlets are starting to wonder why it is that neither the Republican nor Democratic candidates for the presidency will discuss housing.

PBS Newshour aired a segment Wednesday night that asked: why is it that housing, and in particular the ongoing foreclosure crisis, are missing from the campaign conversation? You can view the video and transcript here, and it’s worth your time.

And PBS isn’t alone.

Nobel Prize-winning economist Joseph Stiglitz took both the Democratic President and the Republican presidential candidate to task in an interview with Reuters yesterday, as well, saying it’s “shocking” that neither has discussed housing on the campaign trail.

New-Home Sales Jumped in September to 2-Year High 

New U.S. single-family home sales surged in September to their highest level in nearly 2-1/2 years, further evidence the housing market recovery is gaining steam.  The Commerce Department said on Wednesday sales increased 5.7 percent to a seasonally adjusted 389,000-unit annual rate — the highest level since April 2010, when sales were boosted by a tax credit for first-time homebuyers. Read more

Pending Home Sales Essentially Flat in September

In a sign of a still struggling housing market, signed contracts to buy existing homes were essentially flat in September from August, edging up just 0.3 percent according to a monthly index from the National Association of Realtors

Sellers Gaining in NYC Northern Suburbs

A new study by Siena Research Institute found that New Yorkers, particularly those in the northern suburbs, are feeling better about their prospects when it comes to selling their home.

Since the market crashed four years ago, buyers have had a huge advantage over sellers – assuming that they could afford the purchase or were able to acquire financing.  Read more

 NY Housing Market Posts Strong Third Quarter

The New York state housing market posted its fifth consecutive quarter of year-over-year home sales gains in the third quarter. The 3Q statewide median sales price increased by 4.4% and the number of pending sales grew for its fifth consecutive quarter, according to the New York State Association of Realtors.

NYSAR CEO Duncan Mackenzie said year-to-date home sales are up 6.2% and pending sales are up 15% compared to the year-ago period. The year-to-date median sales price of $215,000 is unchanged from a year ago.

“As we enter the final quarter of the year, New York state’s housing market continues to move in a positive direction as closed and pending sales continue to increase compared to a year ago,” he said. “While we have a seasonal market in our state, which tends to slow down in the fall and winter months, we are positioned to exceed the 2011 closed sales total and project that we will do so. Click to see the full report

Economic News

Banking giant UBS said to be cutting up to 10,000 jobs.

Jobless Claims Slide

Initial claims for state unemployment benefits dropped 23,000 to a seasonally adjusted 369,000, the Labor Department said on Thursday. The prior week’s figure was revised slightly higher to show 4,000 more applications than previously reported.

The 3rd Quarter Gross Domestic Product (GDP) came in at 2 percent, better than expectations of 1.8 percent.

Durable Goods Jumps, Spending Flat

The Commerce Department said on Thursday that non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, was unchanged last month at $60.3 billion. That was short of economists’ expectations for a 0.7 percent gain.

Sources: CNBC, MMG, Housingwire, LoHud Real Estate

The Bond markets started the week lower due to a jump in Retail Sales in September along with a strong earnings report from Citigroup. While most beleive that Mortgage rates aren’t moving higher anytime soon, I have a different take on rates.

The Fed’s implimentation of QE3 (buying $40B in Bonds per month) is to get the economy going.  Unfortunately, if successful, will spur on inflation.  Infaltion is the the arch enemy of Bonds and Mortgage rates.  Inflation is already near the top of the Fed’s normal confort level.  If inflation moves higher it will be impossible for Mortgage rates to move lower.  It is equally important to understand that investors will not buy Bonds with the 10-year Note yielding only 1.70%, which is below the current and long-term inflation rate.  Therefore, either prices need to contract and deflation continues, or the Fed succeeds in creating inflation which in turn hurts Bond prices and increases Mortgage rates.  So, waiting and hoping that mortgage rates will move lower from hear is  risky, especially if you stand to save by refinancing at these current levels.  I do not recommend gambling with some of the lowest Mortgage rates in history and recommend locking into rates at this time.

Bonds recoverd a bit today, Friday as Bonds were helped by a plunge in the Stock markets. The Stock market sell-off was caused by weak earnings reports from big companies like Microsoft, GE and Google along with a poor report for Existing Home Sales. The 3% coupon rose 34bp to end the session at 104.53. The Dow fell 205.43 points to end at 13,343.50, the S&P 500 lost 24.15 points to 1,443.19 points while the Nasdaq dropped 67.25 points to end the week at 3,005.62.

Housing News

Existing home sales fall 1.7% in September from August to 4.75M units but up 11.3% from September of 2011.

Freddie Mac reports that the rate on the average 30-yr fixed home loan rate is at 3.37%. To obtain that rate, a borrower would have to pay a 0.7 point.

US home construction jumped 15 percent in September to a four-year high of 872,000, while permits rose as well, according to economic data released Wednesday.  The Commerce Department said on Wednesday housing starts increased 15 percent last month to a seasonally adjusted annual rate of 872,000 units. That was the quickest pace since July 2008, though data on housing starts is volatile and subject to substantial revisions. August’s starts were revised to show a 758,000-unit pace instead of the previously reported 750,000. Economists polled by Reuters had forecast residential construction rising to a 770,000-unit rate.  The housing starts rate is now about 40 percent of its peak in January 2006.

Economic News

Weekly Jobless Claims Drop Proves to Be Short Lived

Weekly applications for U.S. unemployment benefits jumped 46,000 last week to a seasonally adjusted 388,000, the highest in four months. The increase represents a rebound from the previous week’s sharp drop. Both swings were largely due to technical factors.

Many economists believe a reading below 400,000 points to an improving labor market. The four-week moving average of new claims, which smoothes out volatility and is considered a better measure of labor market trends, rose just 750 last week to 365,500.

Today marks the 25th anniversary of the worst Stock market crash in history. The Dow fell 22.61%, 508 points, for the largest one-day percentage loss, which still stands to this day.

The Consumer Price Index (CPI) was reported and both the headline and more closely watched Core CPI were reported at 2%, above expectations.

Sources: CNBC,MMG,Housingwire

Today was the 3^rdFriday in a row since the Fed began buying Bonds (QE3 program), that Bonds could not hold onto gains made earlier in the day. Bonds are trading in a tightening range, between support at the 25-day MA, currently at $104.86 and resistance at the $106 all-time high range. If Bonds break through the nearest level of support, they could fall  a lot further, which could move Mortgage Rates higher. The 3% coupon lost 6bp to end the week at 105.22.

It’s important to note that if your in the market for home financing and just can’t seem to get around to it, that these rates may not be this low when your ready.  So, don’t procrastinate.  Its too important and for many, the savings are very significant.  I am recommending locking into rates at this time.

Stocks closed near uncharged – the Dow ended at 13,328.85, the S&P 500 Index fell by 4.25 points to 1,428.59 while the Nasdaq dropped 5.30 points to end at 3,044.11.

Interview with Kathleen Hays on Bloomberg

Kathleen Hays of the “Hays Advantage ” and John Sauro discuss the state of the Real Estate & Credit Markets…

Listen here: http://tinyurl.com/8ekc3gc

Housing News

Housing is Firmly on the Upswing

According to “The Kiplinger Letter”; Housing will add half a percent to GDP Nest year. By 2014…once again a significant contributor to job creation, consumer spending and economic gains, bolstering this weak recovery. Every $100 bump in average home prices lifts consumer spending by $5.

Sales of new and existing homes are climbing: 20% for new homes this year; 18% next year. For existing homes…an 8% jump in 2012; 2% in 2013. Buying by investors is helping to fuel the gain, with many of them paying cash for the properties. But they’re not get-rich-quick, buy-and-flip purchasers of the sort who fanned last decade’s boom and bust.

It’s strong rental demand that’s the lure, with leased homes earning a profit month after month. About 36% of renters are now opting for houses instead of apartments. That’s up from 31% in 2006. The pace of building is picking up as well, with housing starts in some states…Wash., Iowa, Neb.,Texas and S.C., for example…approaching the levels of 2000-2003. Nationwide, they’ll climb 17% next year.

Builders are more optimistic than they’ve been since mid-2006, at the peak of the boom. Some are busy enough to be hiring and are having trouble finding help. Many of the 2 million or so construction workers who lost their jobs in the recession are driving trucks, or doing landscaping or other work now. Some who immigrated during the housing boom returned to their homelands when their jobs disappeared.

The number of unsold homes is easing and the foreclosure tsunami, fading, with the share of mortgages delinquent by 90 or more days a third lower than in 2010. Distressed sales are now a fourth of the total…lower than last year, though still high.

Mortgage rates are sure to remain near historical lows for a year or more, thanks to ongoing monthly buying of mortgage-backed bonds by the Federal Reserve. And a surge in pent-up housing demand is inevitable, once the economy starts to pick up some more steam and young folks who delayed home buying plunge in.

Household formation is currently 4 million under trend. The climb back will be neither swift nor uniform. It’ll be a few years yet before housing starts and sales return to the long-term trend, much less regain peaks. For Las Vegas, Tampa, Fla., and others where prices have sunk up to 50% since 2006…an even longer slog.

And today’s tight lending standards won’t help. But, after six painful years, the tide is finally turning.

Wells Fargo Can’t be Trusted – U.S. Attorney in Manhattan sues Wells Fargo for FHA-backed mortgages

A U.S. Attorney out of Manhattan slapped Wells Fargo with a multi-million dollar lawsuit Tuesday, claiming the bank concealed the condition of FHA-insured toxic loans, costing the government money when the loans eventually defaulted.
Overall, the suit claims Wells Fargo’s concealment of the true condition of 6,320 loans insured by FHA shielded the bank from having to pay HUD $190 million to indemnify some of the FHA insurance coverage on the toxic loans.

Economic News

Jobless Claims Fall less Than Expected, Down 3,000 to 382,000; Analysts Expected Claims to Drop to 373,000.  Analysts with Econoday call it the “best reading of the recovery,” but warn the drop may be tied to seasonal adjustments and will have to remain for several weeks to suggest true improvement when it comes to jobs.

The IMF lowered its projections for growth in the global economy for 2012 and 2013, citing policy uncertainty in the U.S. and Europe.  The IMF now expects the world economy to grow 3.3 percent this year, down from the 3.5 percent growth it predicted in July. It projects growth of just 3.6 percent in 2013, down from its prior estimate of 3.9 percent.

Source CNBC, Housingwire, MMG, Kiplinger Letter

Bonds ended the week higher and Mortgage Rates lower, after a dismal jobs report. Employers added 80,000 jobs in June, below the 100,000 expected as job growth continues to weaken. The 3.5% coupon closed at yet another record high of 105.75 up 28bp.  Remember Mortgage rates move in the opposite direction of Mortgage Bond prices. I Continue to recommend short-term locking, longer-term floating.

Housing

The Kipplinger Letter reported-“The housing outlook is brightening, but improvement will be uneven in 2013. Construction of single-family homes in May confirms signs of a comeback,and overall starts, including apartments, will give a mild lift to 2012 economic growth.  Foreclosures will continue to be a drag on sales and prices for some time.  Builders say a third of deals unravel due to low appraisals caused by distressed sales”.

Home Prices Rise for Third Consecutive Month

The Core Logic research firm said when excluding distressed home sales, prices actually shot up 2.7% over year-ago levels and rose 2.3% from April. Figures from May show home prices nationwide increasing for the third consecutive month in a row.

“The recent upward trend in U.S. home prices is an encouraging signal that we may be seeing a bottoming of the housing down cycle,” said Anand Nallathambi, president and chief executive officer of CoreLogic. “Tighter inventory is contributing to broad, but modest, price gains nationwide and more significant gains in the harder-hit markets, like Phoenix.” CoreLogic’s Pending Home Price Index suggests that home prices will rise another 1.4% from May to June. When excluding distressed sales, that number is expected to jump by 2%. Mark Fleming, CoreLogic’s chief economist, said home price appreciation in the lower-priced segment of the market is growing at a faster rate than the upper end.

“Home prices below 75% of the national median increased 5.7% from a year ago, compared to only a 1.8% increase for prices 125% or more of the median,” he said.

The five states experiencing the most price appreciation include Arizona (prices up 12%); Idaho (up 9.2%); South Dakota (up 8.7%); Montana (up 8.2%); and Michigan (up 7.9%). Areas with the greatest price depreciation include Delaware (prices down 9%); Rhode Island (prices down 4.4%); Illinois (prices down 4.2%); Alabama (prices down 4.1%); and Georgia (prices down 4%). Source,The Housing Wire