Mortgage Bonds traded higher during Friday’s session, but the gains were modest as Stock prices traded much higher for most of the session. But towards 4pm ET, Stocks turned negative. There were no economic reports released. The 4% coupon rose by 12bp to end the session at 103.81. The Dow lost 23.40 points to 16,307.39, the S&P fell by 5.38 points to 1,866.59, while the Nasdaq dropped by 42,49 points to 4,276.78. We will continue to recommend floating, not locking into Mortgage Rates as Mortgage Bonds seem to be stabilizing.

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 4.50 percent from 4.52 percent, with points decreasing to 0.26 from  0.29 (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 4.39 percent from 4.41 percent, with points decreasing to 0.19 from 0.20 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.52 percent from 3.53 percent, with points decreasing to 0.25 from 0.28 (including the origination fee) for 80 percent LTV loans.

Commercial Real Estate Lending

Commercial Mortgage backed Securities (CMBS)– The 10 Yr Swap rate moved lower to finish the week at 2.83%, down from last weeks 2.71%.

Fed tapers another $10 billion

At its first meeting under new Chair Janet Yellen, the Federal Reserve agreed to dial down its stimulus package another notch, and changed its view on when interest rates will rise.  In moves widely anticipated by financial markets, the Fed Open Market Committee voted to reduce the pace of its monthly asset purchase program by $10 billion to $55 billion—a continuing process in the market known as “tapering.” Read more

Housing News

U.S. Home Resales drop 0.4% to 19-month Low 

U.S. home resales dropped slightly in February to a 19 month-low as cold weather and a shortage of homes for sale continued to sideline potential buyers. A separate survey showed factory activity in the U.S. mid-Atlantic region expanded far more than expected in March.

The National Association of Realtors said on Thursday home sales dropped 0.4 percent to an annual rate of 4.60 million units, the lowest level since July 2012, and in line with economists’ expectations. January’s sales pace was unrevised at 4.62 million. Read more

Home builders still cold on spring market

Confidence among the nation’s home builders edged up slightly in March but is still mired in the negative, way down from recent highs.  After plummeting 10 points in February, a monthly sentiment index from the National Association of Home Builders (HMI) rose just 1 point to 47. The line between positive and negative sentiment is 50 on the survey.

“The March HMI mirrors last month’s sentiment, as builders continued to be affected by poor weather and difficulties in finding lots and labor,” said NAHB Chairman Kevin Kelly, a home builder from Wilmington, Del.  Read more

Housing starts slide for 3rd straight month; price pressure dormant

U.S. housing starts fell for a third straight month in February, but a rebound in building permits offered some hope for the housing market as it struggles to emerge from a soft patch.  The Commerce Department said on Tuesday groundbreaking slipped 0.2 percent to a seasonally adjusted annual rate of 907,000 units. That followed January’s revised 11.2 percent decline and suggested underlying weakness in housing activity apart from the drag of cold weather. January starts were previously reported to have tumbled 16 percent.

Economists polled by Reuters had expected starts to rise to a 910,000-unit rate last month. Read more

Economic News

U.S. Weekly Jobless claims tick higher; four week average hits 4- month low

The number of Americans filing new claims for unemployment benefits rose less than expected last week, pointing to some underlying strength in the labor market.

Initial claims for state unemployment benefits increased 5,000 to a seasonally adjusted 320,000, the Labor Department said on Thursday. Claims for the week ended March 8 were unrevised. Economists polled by Reuters had forecast first-time applications for jobless benefits rising to 325,000 in the week ended March 15.

The four-week moving average for new claims, considered a better measure of underlying labor market conditions as it irons out week-to-week volatility, fell 3,500 to 327,000, the lowest level since November. Read more

U.S. industrial production rose 0.6 percent in February. Economists polled by Reuters had expected industrial production to rise 0.2 percent. A separate report released earlier Monday showed factory activity in the New York state region accelerated in March.

Inflation tame at the consumer level – Consumer Price Index at 0.1% vs the 0.2% expected in February. Core at 0.1%, inline.  U.S. consumer prices rose marginally in February, but the lack of inflation pressures will probably not dissuade the Federal Reserve from dialing back its monetary stimulus.

The Labor Department said its Consumer Price Index nudged up 0.1 percent as a decline in gasoline prices offset an increase in the cost of food. The CPI had ticked up 0.1 percent in January and last month’s gain was in line with economists’ expectations. Read more

Sources: CNBC, Bloomberg, MMG, Housingwire, Reuters

Its a no brainer when it comes to lending on Single Tenant Investment grade Retail.  CMBS lenders are eagerly lending up to 75% LTVs.  We funded a CMBS loan on a CVS property located in MA. as part of a 1031 exchange for our client at the end of February.  The best part was the 159 basis point spread over the 10 year Swap rate, minimal fees and closing in only 18 days.

There are those that prefer not to use CMBS financing, as they believe that the underwriting requirements are to demanding.  However,  common sense underwriting seems to be playing more of a role in the CMBS market as of late.

CMBS loans have become more available and easier to underwrite in recent months and as rates climb, they become a more competitive choice for commercial financing.

We will continue to float Loan Rates, but we are extremely cautious given that Stocks fell on Friday as did Mortgage Bonds. If rates are favorable we recommend locking short term, measured in a few days to a few weeks. Otherwise, float if you can.
Tame inflation, a weak reading from Consumer Sentiment and a declining Stock market couldn’t boost Bond prices
today as traders grow jittery after the recent Bond rally. The 4% coupon finished at 104.41 down 12bp. Stocks got roughed up this week – for the week, the Dow fell 2.3% to end at 16,065.67, the S&P lost 2% to 1,841.13, while the Nasdaq dropped 2.1% to 4,245.39. Oil was last seen at $99.03/barrel up 81 cents.

Bond Prices struggle to stay above the important 200-Day Moving Average.   Remember that Mortgage Rates take their direction from Mortgage Bond Prices.  Lower Mortgage Rates are the result of higher Bond Prices, which in turn is the result of investors seeking the safe haven of U.S. Bonds due to uncertainty in global financial markets or global unrest, like the concerns over Crimea, as evidenced with the spike in Thursday’s Bond Prices, noted by the tall green candle in the chart below.  Seasoned mortgage professionals use these technical signals to help their clients lock into a low interest rate.

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 4.52 percent from 4.47 percent, with points increasing to 0.29 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) increased to 4.41 percent from 4.37 percent, with points unchanged at 0.20 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.53 percent from 3.52 percent, with points increasing to 0.28 from 0.18 (including the origination fee) for 80 percent LTV loans.

Commercial Real Estate Lending

Commercial Mortgage backed Securities (CMBS)– The 10 Yr Swap rate moved lower to finish the week at 2.71%, down from last weeks 2.871%.

Still trust big Banks with your loan? –  Don’t.  US FDIC sues 16 banks for rigging Libor

The Federal Deposit Insurance Corporation sued 16 of the world’s largest banks on Friday, accusing them of collusively suppressing interest rates.  The lawsuit, filed in the federal district court in New York, was the latest to accuse financial institutions of conspiring to manipulate Libor, or the London Interbank Offered Rate.

The FDIC said the defendants’ conduct caused substantial losses to 38 banks that the U.S. regulator had taken into receivership since 2008, including Washington Mutual Bank and IndyMac Bank.

Among the banks named as defendants include Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank AG, HSBC Holdings, JPMorgan Chase, the Royal Bank of Scotland Group and UBS.

The lawsuit also named as a defendant the British Banks’ Association, the U.K. trade organization which during the period at issue administered Libor.

Housing News

Buying A Home Is Now 38% Cheaper Than Renting

Is renting or buying a better financial bet? Every six months, Trulia’s chief economist Jed Kolko runs the numbers to answer that question and help you stay on top of the trends.  So what does Trulia’s Winter 2014 Rent vs. Buy Report tell us? Although the gap between renting and buying is narrowing across the U.S., homeownership is still 38% cheaper than renting. Read more

Economic News

Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 315,000, the Labor Department said on Thursday. That was the lowest reading since late November. Economists had expected a reading of 323,000. Read more

Despite the harsh winter weather, employers created more jobs than expected in February.  The Labor Department reported that Non-farm Payrolls rose by 175,000 last month, above the 163,000 expected. This was the largest gain in three months.

U.S. retail sales rose slightly more than expected in February, pointing to some strength in the economy after harsh weather abruptly slowed activity in recent months.

Producer prices rose by 0.2 percent in February, the same rate of increase as the prior month. Core prices were seen gaining by 0.1 percent, versus the previous rise of 0.2 percent.

Consumer sentiment dipped modestly in early March to 79.9, from the 81.6 final reading in February. That was below analyst expectations for a reading of 82 and the lowest level since November.

Sources: CNBC, Bloomberg, Forbes, MMG, Housingwire, Reuters

After Friday’s fireworks supplied by the Jobs Report, we will float, not lock Mortgage Rates into the new week as Mortgage Bonds seems to have found support at the 200-day Moving Average.
The better than expected jobs data pushed Mortgage Bonds considerably lower Friday morning, but they did manage to cut some of the losses before the close of trading. The Mortgage Bond closed down 25bp to end the session at 104.16. The Dow finished at 16.452.72 up 30.83 points, the S&P 500 gained 1.01 points to end at 1,878.04, another record close. The Nasdaq fell by 15.90 points to end at 4,336.22. Oil was last seen at $102.55/barrel up 96 cents.

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 4.53 percent, with points decreasing to 0.28 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) decreased to 4.37 percent from 4.47 percent, with points increasing to 0.20 from 0.13 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.52 percent from 3.56 percent, with points decreasing to 0.18 from 0.28 (including the origination fee) for 80 percent LTV loans.

Commercial Real Estate Lending

Commercial Mortgage backed Securities (CMBS)  – The 10 Yr Swap rate moved higher to finish the week at 2.871%.

Housing News

Home Prices Continue to Rise

CoreLogic reported that home prices, including distressed sales, rose by 12.02% in January 2014 compared to January 2013.  January marks the 23rd consecutive month of year-over-year prices gains.  The 12.02% year-over-year gain in January is up from the 11.02% rise recorded from December 2012 to December 2013.  In addition, prices increased 0.9% month-over-month from December to January.

Kiplingers– The housing recovery will remain somewhat spottyin the months ahead.  Mass., N.Y., Md., W.Va., Minn., Iowa, the Dakotas, Neb., Texas,
Colo., Utah and Mont…plus Washington, D.C., the median home price now matches or fell…
that much.) By the end of the year, Vt., Pa., Va., N.C., Tenn., Ky., Ind., Kan., Ark. ll take till 2016 or so before that benchmark is hit in Fla., Ariz. and Nev., states where the median is still 20% below the 2007 level.

By Jan. 1, 2015: 8 million home mortgagors still underwater, owing more on their loans than their properties are worth. With price gains slowing to 4%-4.5% on average this year, fewer mortgages will be pulled out of the depths than in 2013, when home values gained an average of 11% nationwide. Nearly 10 million borrowers…
representing 19% of all mortgaged homes…are trapped by such circumstances now.

Economic News

Surprise Rise in February Job Creation

Despite the harsh winter weather, employers created more jobs than expected in February.  The Labor Department reported that Non-farm Payrolls rose by 175,000 last month, above the 163,000 expected. This was the largest gain in three months.

New orders for U.S. factory goods fell 0.7 percent in January, slightly more than the 0.5 percent drop that was expected.  It’s another sign of slowing manufacturing activity.

The European Central Bank left its benchmark interest rate unchanged at 0.25%, euro briefly rises to session high

In its latest report on economic conditions around the country, the Federal Reserve said the effects of severe winter weather can be seen throughout the U.S. economy. Despite those headwinds, the economy continues to expand, with eight Fed districts showing improvement.

Sources: CNBC, Bloomberg, Kiplingers, Housingwire, MMG

We will continue to float Mortgage Rates into next week , but be prepared to lock ahead of next Friday’s Jobs Report.  Mortgage Bond Prices took a breather Friday from their recent run higher closing slightly lower due to a mixed bag of economic data this morning. The Bond fell by just 6bp to end the session at 104.81 and near the upper end of Friday’s range.   Remember Mortgage Rates move opposite Bond Prices.

Stocks had a seesaw day, trading positive, then negative and back to positive by day’s end. The Dow rose by 49.06 points to 16,321.71, the S&P 500 finished at 1,859.45 while the Nasdaq closed lower by 10.81 points to end the trading week at 4,308.11. Oil was last seen at $102.45/barrel near unchanged. Next week, the government will release the February Jobs Report where
it is expected that employers added 163K workers.

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 4.53 percent, the highest rate since week ending January 17, 2014, from 4.50 percent, with points increasing to 0.31 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 4.47 percent, the highest rate since week ending January 24, 2014, from 4.45 percent, with points increasing to 0.13 from  0.11 (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, the highest rate since week ending January 24, 2014, from 3.55 percent, with points decreasing to 0.28 from 0.33 (including the origination fee) for 80  percent LTV loans. The effective rate increased from last week.

Commercial Real Estate Lending

After three years of momentum building in commercial property lending, analysts are projecting that institutional lenders will place what could be record amounts of capital into commercial real estate in 2014.  Commercial Mortgage backed Securities (CMBS)  – The 10 Yr Swap rate move down from 2.80% earlier in the week to finish the week at 2.728%.

Commercial property lending is fundamentally strong, and lenders still maintain disciplined underwriting standards,  according to comments by Jones Lang LaSalle (JLL) executives attending the Mortgage Bankers Association’s Commercial Real Estate Finance/Multifamily Housing Convention on Feb.3, 2014.  At the same time, they said, fundamentals in the real estate market are improving due to growth in housing markets, construction, industrial production and improved consumer sentiment. Read more

Housing News

Home Prices in 2013 Post Biggest Annual Gain Since 2005 -S&P Case-Shiller

Home prices posted their largest annual gain last year since 2005, according to a report released Tuesday, amid a frenzy of sales activity, low mortgage rates, and reduced inventories during the first half of the year.  U.S. prices increased 11.3% in the fourth quarter compared to a year earlier, according to the S&P/Case-Shiller price index. An index that measures home prices in 20 major metro areas rose 13.4%.  But there are growing signs that, amid a slowdown in sales activity that began last fall, the pace of price gains could soon moderate. Read more

Toll Brothers revenue surges as home selling prices jump – the largest U.S. luxury home builder reported a 52% increase in quarterly revenues.

Upside Surprise for New Home Sales

Despite the harsh weather last month, New Home Sales rose by 9.6% from December to January to an annual rate of 468,000, well above the 400,000 expected.  The 468,000 was the highest level since July of 2008 and eases concerns of a housing slowdown.

US pending home sales up 0.1% in January vs. 2.0% estimate

Amid harsh weather that battered much of the U.S., signed contracts to buy existing homes held steady last month, according to the National Association of Realtors.  The nearly-flat reading caught economists by surprise.  Pending home sales edged up 0.1 percent to 95.0 in January, disappointing analysts who had expected sales to gain 2.0 percent, according to a consensus estimate from Reuters. Read more

Economic News

Unemployment Claims Spike

The number of Americans filing new claims for unemployment benefits unexpectedly rose last week, but the underlying trend suggested no shift in labor market conditions.  Initial claims for state unemployment benefits increased 14,000 to a seasonally adjusted 348,000, the Labor Department said on Thursday. Claims for the prior week were revised to show 2,000 fewer applications received than previously reported.

Economists polled by Reuters had forecast first-time applications for jobless benefits slipping to 335,000 in the week ended Feb. 22, which included the Presidents Day holiday. While last week’s increase pushed them to the upper end of their range so far this year, it probably does not signal labor market weakness as claims tend to be volatile around federal holidays. Read more

Consumer Confidence dips to 78.1 in February, versus 80 estimate. The January Consumer Confidence Index was revised to 79.4 from 80.7.

U.S. gross domestic product growth in the fourth quarter was lowered to 2.4 percent. GDP had been expected to be lowered to a 2.4 percent annual rate, according to a Reuters poll of economists. That would be down sharply from the 3.2 percent pace reported last month and the 4.1 percent logged in the third quarter.

The February Chicago Purchasing Managers’ Index, a gauge of regional manufacturing activity, came in at 59.8. Chicago PMI had been expected to come in at 57.0, following the prior month’s 59.6. A reading above 50.0 indicates expansion in the sector.

Sources: CNBC, Bloomberg, MMG, Housingwire, KCM, Reuters, WSJ, NAR

Good day for Mortgage Rates and Bonds –but the gains stopped right at a ceiling of resistance at the 200-day MA.  The 200-day MA is falling in value each day, if the Bond continues to cling to the 200-day MA, Mortgage rates will continue to move higher and worsen. With that said… consider locking into rates at this time. Mortgage Bonds were able to bounce back today as the seesaw battle between Stocks and Bonds continued. Weak Existing Home Sales was a catalyst to push prices higher and rate lower as the Bond closed near resistance at the 200-day Moving Average at 104.19 up 16bp.  The Dow finished at 16,103.30 down 29.93 points, the S&P 500 lost 3.53 points to 1,836.25 while the Nasdaq lost 4.13 points to end the week at 4,263.41. Oil was last seen at $102.26 down 49 cents.

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 4.50 percent from 4.45 percent, with points decreasing to 0.26 from  0.34 (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 4.45 percent from 4.40 percent, with points decreasing to 0.11 from 0.14 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.55 percent from 3.49 percent, with points increasing to 0.33 from 0.25 (including the origination fee) for 80 percent LTV loans.

Housing News

Housing Starts in January declined by 16% from December, while Building Permits, a sign of future construction, fell by 5%.

Existing home sales down 5.1% in January, versus -3.5% estimate

Existing home sales fell more than expected in January and hit an 18 month-low as the combination of cold weather and a lack of housing stock sidelined potential buyers. The National Association of Realtors cites the disruptive and prolonged winter weather patterns, tight credit, limited inventory, higher prices and higher mortgage rates for the slip in Existing Home Sales.  Read more

Home builder sentiment tumbled in February to 46 from 56, according to the National Association of Home Builders’ monthly sentiment index, the largest drop in the history of the survey.  Fifty is the line between positive and negative sentiment.

Home Sales Up in 3 of 4 Regions

Some industry gurus are questioning whether the housing momentum we saw early in 2013 began to dissipate later in the year. The more dramatic have claimed the housing sector is still on shaky ground. Others have blamed the slowdown in sales on a lack of consumer confidence or rising interest rates.

The National Association of Realtors (NAR) just released their 2013 4th Quarter Housing Report. The report revealed that home sales numbers barely outperformed (an .08% increase) those in the 4th quarter of 2012.  We believe the leveling in home sales is directly attributable to a lack of salable listing inventory; specifically in the West.

Three of the four regions in the NAR report had an increase in sales: Northeast (+7.1%), Midwest (+2%) and South Regions (+3.6%). A big fall-off in sales occurred in the Western Region. The dramatic fall-off in the West (-8.1%) can be directly linked to a shortage of inventory in their hottest markets.  If the decrease in sales was caused by an eroding of consumer confidence and/or rising interest rates, we believe each region would have seen similar decreases.

Economic News

Inflation at the wholesale level continues to be nearly non-existent.

A revamped U.S. government reading on producer prices rose by 0.2 percent in January. Economists had expected January producer prices to rise by 0.1 percent, the same rate as the prior month’s advance.

U.S. household debt posted its largest quarterly increase since before the recession, according to the New York Fed.  Read more

A reading on New York State manufacturing activity came in at 4.48 in February. The Empire State manufacturing survey had been expected to show a reading of 9, down from 12.51 in January, according to a Reuters survey of economists.

Weekly claims for state unemployment benefits totaled 336,000. Economists had expected initial claims to dip by 4,000 to 339,000.

January’s consumer price index rose 0.1 percent, in line with expectations and against the previous month’s 0.3 percent gain.

Sources: CNBC, Bloomberg, KCM, MMG, Housingwire

We will continue to float Mortgage Rates, as Mortgage Bonds desperately cling to support.  Mortgage Bonds declined today and fell for the week after failing
to break above resistance levels from mid-November. Better than expected   Consumer Sentiment coupled with rising Stocks the culprits behind the move
lower. The Bond finished at 104.19 down 16bp, closing just beneath support at the 25/100/200-day Moving Averages. Stocks rose – the Dow was up 126.80 points to
16,154.39, the S&P gained 8.80 points to 1,838.63, while the Nasdaq had just a slim gain of 3.35 points to end the trading week at 4,244.02. Oil was last
seen at $100.27/barrel near unchanged.

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 4.45 percent from 4.47 percent, with points increasing to 0.34 from  0.25 (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 4.40 percent from 4.42 percent, with points increasing to 0.14 from 0.11 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.49 percent from 3.53 percent, with points decreasing to 0.25 from 0.28 (including the origination fee) for 80 percent LTV loans.

Yellen Says Recovery in Labor Market Far From Complete

Federal Reserve Chairman Janet Yellen said more work is needed to restore the labor market to health and pledged to maintain her predecessor’s policies by scaling back stimulus in “measured steps.”

While growth has picked up, “the recovery in the labor market is far from complete,” Yellen said today in the text of remarks to the House Financial Services Committee. “I am committed to achieving both parts of our dual mandate: helping the economy return to full employment and returning inflation to 2 percent while ensuring that it does not run persistently above or below that level.” Read more

Economic News

Retail Sales in January fell by 0.4% versus the 0.0% expected.  Retailers cited the harsh January weather for the decrease, which slowed shopping and auto buying. It was the second straight monthly decline.

Optimism among owners of small business in the U.S. crept higher in January, continuing a trend, amid hopes for higher sales.  The National Federation of Independent Business’s small business optimism index rose to 94.1 from 93.9 the previous month. It was the third straight month in a row that the index has improved.

Despite the upbeat direction, the NFIB said in a statement that the “index is still just treading water.”  The industry group said its real sales expectations subindex jumped to 15 percent in the month.  Hopes for an increase in sales resulted in expectations of a pick up in hiring. The employment-plans subindex climbed to 12 percent, its highest level since 2007. The NFIB said small firms added an average 0.12 workers per small business in the last three months.

U.S. weekly claims for unemployment benefits totaled 339,000, while retail sales in January fell 0.4 percent. Economists had expected initial claims to dip to 330,000. Meanwhile, January retail sales were expected to fall by 0.1 percent, against the prior month’s 0.2 percent rise.

Economists in a consensus survey expected business inventories to rise by 0.4 percent in December, the same rate of increase as November.

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