It has now been 4 years that the Federal Reserve has been predicting inflation would “soon” move to 2.0%; 4 yrs of wishful thinking and 4 yrs that the Fed doesn’t understand. Once again expect Yellen to say 2.0% inflation will happen in 2016. The truth is, the Fed isn’t able to predict it as in history. Some believe the Fed’s models no longer are reliable since the economic crash in 2008. In a speech in Sept Yellen commented and acknowledged “significant uncertainty” about her prediction that inflation would rise. Conventional models, she said, have become “a subject of controversy.” Central banks praying for inflation to increase or wages won’t increase and the feeble economic growth and the tedious outlook will increasingly be questioned.
No news that this is a key week. The FOMC set to increase rates, the bank needs to do it for numerous reasons, the number one reason, so the Fed has room to lower the rate again if (when) the economy stumbles again. Markets today are not buying the Fed’s belief of continued growth, markets expect China’s economy to continue to weaken, the ECB is worried enough to continue buying €60B a month in stimulus moves. The Fed is saying Dec 2016 FF rate will be 1.375%, a rather astounding forecast; markets in the mean time looking for just 0.76%.
WASHINGTON, D.C. (December 9, 2015) – Mortgage applications increased 1.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 4, 2015.
The refinance share of mortgage activity increased to 58.7 percent of total applications from 56.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.2 percent of total applications.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.14 percent from 4.12 percent, with points decreasing to 0.43 from 0.50 (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 4.02 percent from 3.99 percent, with points increasing to 0.40 from 0.33 (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 3.91 percent from 3.89 percent, with points decreasing to 0.43 from 0.49 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 3.39 percent from 3.36 percent, with points decreasing to 0.39 from 0.44 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 5/1 ARMs decreased to 2.98 percent from 3.11 percent, with points decreasing to 0.30 from 0.44 (including the origination fee) for 80 percent LTV loans.
WASHINGTON (November 23, 2015) — With mortgage rates remaining below 4 percent for the third straight month, existing-home sales in October were at a healthy pace but failed to keep up with September’s jump, according to the National Association of Realtors®. All four major regions saw no gains in sales in October.
Total existing-home sales1, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 3.4 percent to a seasonally adjusted annual rate of 5.36 million in October from 5.55 million in September. Despite last month’s decline, sales are still 3.9 percent above a year ago (5.16 million).
Lawrence Yun, NAR chief economist, says a sales cooldown in October was likely given the pullback in contract signings the last couple of months. “New and existing-home supply has struggled to improve so far this fall, leading to few choices for buyers and no easement of the ongoing affordability concerns still prevalent in some markets,” he said. “Furthermore, the mixed signals of slowing economic growth and volatility in the financial markets slightly tempered demand and contributed to the decreasing pace of sales.”
Adds Yun, “As long as solid job creation continues, a gradual easing of credit standards even with moderately higher mortgage rates should support steady demand and sales continuing to rise above a year ago.”
October existing-home sales in the Northeast were at an annual rate of 760,000, unchanged from September and 8.6 percent above a year ago. The median price in the Northeast was $248,900, which is 1.3 percent above October 2014.
In the Midwest, existing-home sales declined 0.8 percent to an annual rate of 1.30 million in October, but are 8.3 percent above October 2014. The median price in the Midwest was $172,300, up 5.7 percent from a year ago.
Existing-home sales in the South decreased 3.2 percent to an annual rate of 2.14 million in October, but are still 0.5 percent above October 2014. The median price in the South was $188,800, up 6.2 percent from a year ago.
Existing-home sales in the West fell 8.7 percent to an annual rate of 1.16 million in October, but are still 2.7 percent above a year ago. The median price in the West was $319,000, which is 8.0 percent above October 2014.
Sources: WSJ, Teno, CNBC, Bloomberg
