Mortgage Rates dropped a bit as Mortgage Bonds rose modestly Friday, but the gains were muted as tough resistance levels kept prices in check. The 4% Bond rose by 15bp to end the session at 104.06. Stock prices were mixed – the Dow was up 41.55 points to end at 16458.56 the S&P 500 closed at 1838.70 down 7.19 points, while the Nasdaq lost 21.107 points to end the week at 4197.582. Oil closed at $94.25/barrel up 29 cents. The capital markets are closed on Monday in observance of Martin Luther King Day!

Weekly Survey of Rates from the Mortgage Bankers Association

Weekly Mortgage Applications Survey for the week ending January 10, 2014.  The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.66 percent from 4.72 percent, with points increasing to 0.33 from  0.28 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.58 percent from 4.66 percent, with points increasing to 0.24 from 0.12 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.72 percent from 3.77 percent, with points increasing to 0.37 from 0.34 (including the origination fee) for 80 percent LTV loans.

Another Chance to Refinance

If you missed the boat the last time rates were low, you may have another chance.  The Mortgage Rate Market has been volatile.  That volatility gave those looking to refinance an opportunity for lower rates once again.  You need to be nimble and prepared to get your application in quickly.  Check with your Broker or Banker to see if rates are low enough to make it worth your while to refinance.

The recent Kiplinger Letter reported- Fewer choices offered to jumbo home mortgage borrowers are likely.  Some repayment options would put the loans outside rules protecting lenders from claims that they knowingly put buyers in unaffordable homes.  So banks aren’t likely to allow options such as balloon payments and interest-only mortgages.And if a lender does lend outside qualifying mortgage rules…good odds that borrowers must buy private mortgage insurance even if they pony up a 20% down payment.

Housing News

Does Higher Mortgage Rates = Lower Real Estate Values ?

Many pundits are warning that there will be a drop in real estate values because mortgage rates are beginning to increase. The logic makes sense. However, history shows that increasing rates have not negatively impacted home values in the past.  Four times over the last 30 years mortgage interest rates have dramatically increased. Here is the impact the increases had on home values at the time:

Perhaps the impact of increasing rates on future home prices won’t be as dramatic as some are predicting.

Housing starts in the U.S. fell to 999,000 in December. Economists had expected housing starts to total 985,000, following the previous month’s 1.09 million.  Read more

The National Association of Home Builders sentiment index fell one point to 56.  A reading above 50 indicates positive sentiment.

Economic News

Wholesale Inflation Heats Up

The Labor Department reported this morning that the Producer Price Index (PPI) for December rose for the first time in three months by 0.4% versus the 0.3% expected on higher gasoline and tobacco prices.  Bond prices were pressured lower by the news, as any hint of inflation spooks Bond investors.

The Producer Price Index measures the average change over time in the selling prices received by domestic producers for their output. The prices included in the PPI are from the first commercial transaction for many products and some services.

New York region’s manufacturing activity came in at 12.51 in January. Economists had expected the January Empire State Index to rise to 3.0, from 0.98 in the prior month.

Consumer Sentiment  fell to 80.4 in January. Economists polled by Reuters had expected U.S. consumer sentiment to rise to 84.0.

U.S. industrial production increased by 0.3 percent in December, in line with analysts’ estimates.

Sources: CNBC, Bloomberg, MMG, Housingwire, KCM, Kiplingers

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

Weekly Survey of Rates from the Mortgage Bankers Association

For the week ending January 3rd. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) remained unchanged at 4.72 percent, with points unchanged at  0.28 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) remained unchanged at 4.66 percent, with points decreasing to 0.12 from 0.27 (including the origination fee) for 80 percent LTV loans.

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

Housing News

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

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

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

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

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

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

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

Home Prices Continue to Rise

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

Economic News

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

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

Read more

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

Sources: CNBC, Bloomberg, MMG, Housingwire, KCM

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

Weekly Survey of Rates from the Mortgage Bankers Association

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

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.63 percent, the highest level since September 2013, from 4.61 percent, with points remained unchanged at 0.24 (including the origination fee) for 80 percent LTV loans.

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

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

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

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

Housing News

Why 2014 is a good year to buy a home

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

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

Weekly Survey of Rates from the Mortgage Bankers Association

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

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.63 percent, the highest level since September 2013, from 4.61 percent, with points remained unchanged at 0.24 (including the origination fee) for 80 percent LTV loans.

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

Housing

US new home sales fall modestly from 5-year peak

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

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

US pending home sales rise 0.2 percent

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

Economic News

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

US jobless claims fall in positive sign for labor market

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

10 year Treasury hits 3.002%

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

Sources: CNBC, Bloomberg, MMG, Housingwire, MBA

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

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

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

Weekly Survey of Rates from the Mortgage Bankers Association

For the week ending December 13, 2013.     

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

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

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

Fed Tapering Begins

FOMC enacts $10B in cuts per month

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

Housing News

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

Economic News

Initial Jobless Claims Increase

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

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

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

Read more

 

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

 

 

 

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

Weekly Survey of Rates from the Mortgage Bankers Association

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.61 percent, the highest rate since September, from 4.51 percent, with points decreasing to 0.26 from  0.38 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.59 percent, the highest rate since September, from 4.49 percent, with points decreasing to 0.15 from 0.24 (including the origination fee) for 80 percent LTV loans.

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

Fannie Mae: Americans Worried Economy is on Wrong Track

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

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

Housing

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

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

2014 Predictions

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

2014’s Hottest Housing Markets

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

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

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

Weekly Survey of Rates from the Mortgage Bankers Association

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.51 percent from 4.48 percent, with points increasing to 0.38 from  0.31 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.49 percent from 4.48 percent, with points increasing to 0.24 from 0.15 (including the origination fee) for 80 percent LTV loans.

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

Housing News

Are Home Sales Tanking

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

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

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

Bottom Line

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

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

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

October Home Sales Strongest in more than 33 Years

Economic News

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

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

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

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

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

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

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

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

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

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

Mortgage Bonds closed on Friday near unchanged in an uneventful abbreviated session closing at 2pm ET. The 4% finished at 104.31 up 3bp. Stocks closed lower but the losses were limited. The Dow – 16,086.41, the S&P – 1,805.81, the Nasdaq – 4,059.88. Oil was last seen at $92.78/barrel down 48 cents. Next week’s economic data includes housing, Q3 GDP and the November Jobs Report.

Weekly Survey of Rates from the Mortgage Bankers Association

For the week ending Nov. 20, 2013-  The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.46 percent from 4.44 percent, with points decreasing to 0.38 from  0.44 (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 4.47 percent from 4.48 percent, with points decreasing to 0.22 from 0.34 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for 15-year fixed-rate mortgages was unchanged at 3.52 percent, with points increasing to 0.33 from 0.27 (including the origination fee) for 80 percent LTV loans.

Fannie Mae and Freddie Mac 2014 base conforming loan limits will be maintained at the existing 2013 levels. The loan limits in designated high-cost areas will also remain unchanged with the exception of some counties where the loan limit will increase. The Fairfield County CT high-cost loan limit has increased to $601,450 from $575,000. The Guide Bulletin is in line with the Federal Housing Finance Agency (FHFA) announcement regarding the 2014 conforming loan limits.

Housing News

Home Sales Average Days on the Market

Pending Sales of U.S. Existing Homes Drop for Fifth Month

The number of contracts Americans signed to buy previously-owned homes unexpectedly fell in October for a fifth consecutive month amid higher borrowing costs that are denting the real-estate recovery.

The gauge of pending home sales decreased 0.6 percent after a 4.6 percent drop in September, the National Association of Realtors said today in Washington. The median projection in a Bloomberg survey of economists called for a 1 percent gain in the index from the month before. Read more

Negative Equity Rate Drops at Record Pace

The national negative equity rate plummeted at the fastest pace ever in the third quarter, with 21% of all mortgage homeowners in an underwater state, real estate website Zillow said.  The new rate is an improvement with it equating to more borrowers landing in positive territory, the latest data from Zillow says.  Since its peak in the first quarter of 2012, the rate has fallen by one-third, to 21% from 31.4%.

“Rising home prices and a greater willingness among lenders to engage in short sales have both contributed substantially to the significant decline in negative equity this quarter. We should feel good that we’re moving in the right direction and at a fast clip,” said Zillow Chief Economist Stan Humphries. Read more

Economist Elliot Eisenberg, Ph.D – In a sign that household deleveraging may be over, outstanding household debt grew by $127 billion in Q3 and now stands at $11.28 trillion. While down 11% from the peak of $12.7 trillion set in 2008, after essentially 20 straight quarters of deleveraging, this is great news.  Mortgage debt rose by $56 billion, credit card debt by $4 billion, auto loans by $31 billion and student loans by $33 billion.

Economic News

Jobless claims surprise

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

Mortgage Rates increased in the past week, as Mortgage Bonds lost $1.375.  Lenders were quick to re price rates, as economic data and talk of the Fed Taper is responsible for the increase.  However, its important to note that rates have been volatile for some time. So, as long as the rates stay range bound, then it is still possible to lock into a low rate.

The S&P 500 (1,804.74, +8.91) closed above 1,800 for the first time and had a record close today. The Dow closed at a new all-time record of 16,064.77 up 54.78 points while the Nasdaq finished at 3,991.64 up 22.49 points. Oil was last seen at $94.79/barrel up 54.78 points. Remember, next week is holiday shortened with Thanksgiving on Thursday – markets are closed. On Friday, Bonds are open and close at 2:00pm ET. Stocks are closed Thursday and are open Friday with a 1:00pm ET close.

Weekly Survey of Rates from the Mortgage Bankers Association

For the week ending Nov. 15th- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.46 percent from 4.44 percent, with points decreasing to 0.38 from  0.44 (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 4.47 percent from 4.48 percent, with points decreasing to 0.22 from 0.34 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for 15-year fixed-rate mortgages was unchanged at 3.52 percent, with points increasing to 0.33 from 0.27 (including the origination fee) for 80 percent LTV loans.

Christmas Taper Coming?

On Wednesday, St. Louis Fed President James Bullard said tapering is on the table in December, according to reports from an address in Chicago. A strong November jobs report would increase chances of a December taper, he said. He also said he would like to study impact of negative deposit rates, which could make sense to boost bank lending.

Bernanke didn’t offer any surprises in a speech Tuesday evening at the National Economic Club in D.C. saying that easy money policy (Fed Funds Rate) will stay low for as long as needed and the Fed will only begin to taper Bond buying once it is assured that the improvements in the labor markets would continue.

The Kiplingers Letter reported that the odds are good that the Federal Reserve will dial back stimulus later, not sooner.  The retreat from its massive bond buying program had been expected to begin as early as the end of this year. But it’s likely to be put off well into 2014, based on Fed Chm.-to-be Janet Yellen’s interpretation of the underlying data.  Despite recent improvement in job creation numbers, Yellen sees the job market as underperforming and inflation as staying stable. Those are some broad hints that the Fed will stay the course and keep buying $85 billion in bonds each month.  Next to no chance, though, of the central bank raising short-term rates soon.  No matter when the weaning begins, no official hike is likely until sometime in 2015.

Senate Committee Backs Yellen for Fed Chief

Janet Yellen’s candidacy to become the first woman to lead the Federal Reserve Board got a boost Thursday, as the Senate Banking Committee sent her nomination to the full Senate by a 14-8 vote.  Not that the vote was without contentiousness. The political nature of monetary policy in the modern economy was on full display Thursday:

The committee’s vote showed how the Federal Reserve’s policies to keep money flowing to the ailing economy have made the Fed a part of the ongoing partisan wars in Washington. It broke largely along party lines, with three Republican senators — Bob Corker of Tennessee, Mark Kirk of Illinois and Tom Coburn of Oklahoma — voting in favor of her nomination. One Democrat, Senator Joe Manchin III of West Virginia, voted against her.

If Yellen assumes Ben Bernanke’s seat, most in the financial markets expect her to continue with much of her predecessor’s policies and maintain quantitative easing, keeping mortgage rates low.

Housing News

Home Prices Post Strong Growth in Q3

Home prices experienced strong growth in the third quarter as the housing recovery continued to broaden across the country, the latest FNC Residential Price Index posted.  The index increased 2.5% between the second and third quarters, making third-quarter growth the fastest in the current recovery.  The firm attributed the uptick to rising home sales and relatively low foreclosure sales.  Read more

Existing Home Sales fall by -3.2% in October to 5.12M units annualized, below the 5.20M expected.  Earlier Tuesday, existing home sales volume fell, disappointing economists who were expecting a better result.  That drop may have had something to do with upcoming Qualified Mortgage and Ability-to-Repay rules affecting mortgage underwriting already, one analyst claims.

… NAR and LaVorgna pointed to the impact of the upcoming Qualified Residential Mortgage rules that “will require a lot more time, documentation and scrutiny to process loans,” according to NAR. 

“Lenders may be hesitating in order to ensure compliance with the new measures which take effect in January of next year,” said LaVorgna. “In general, lending standards for anything other than prime mortgages remain relatively restrictive.”  Read more

U.S. Homebuilder Confidence stabilized in November after falling for two straight months, though steady home demand was tempered by worries about further fiscal battles in Washington, the National Association of Home Builders said on Monday.  The NAHB/Wells Fargo Housing Market Index came in at 54 in November. The October figure was downwardly revised to 54 from the originally reported 55.  Economists polled by Reuters had predicted a November reading of 55.

Economic News

Import prices fell 0.7 percent in October, while export prices declined 0.5 percent. Import prices were forecast by economists to have fallen by 0.4 percent, with export prices expected to rise 0.1 percent.

The U.S. employment cost index rose 0.4 percent in the third quarter, following a 0.5 percent increase the previous quarter. Economists polled by Thomson Reuters had expected employment costs to rise 0.5 percent in the period.

Weekly claims for state unemployment benefits totaled 323,000 in the latest week. Economists had expected initial claims at 335,000. In a separate report, October producer prices fell 0.2 percent, matching estimates and faster than the prior month’s dip of 0.1 percent.

Chain Store Sales rose by 0.1% in the latest week and was the second straight week of gains. Year-over-year, sales were up 2.8%, the biggest gain since October 19, 2013.

U.S. retail sales rose 0.4 percent in October, while consumer prices ticked down 0.1 percent. Economists had expected retail sales to rise 0.1 percent in the month, and consumer prices were forecast to have been unchanged.

Inflation remains tame – CPI in October declines by -0.1% when the Street was looking for 0.0%. Core CPI at 0.1%, below the 0.2% expected.

A report alleges that the Unemployment Rate was faked ahead of the 2012 Presidential Election. It went from 8.1% in August to 7.8% in September. This according to a recent probe and documents from the Census Bureau. The manipulation could be because of time constraints and not for political gain. More to come on this subject.

Sources: Bloomberg, CNBC, Business Insider, MBA, Housingwire, MMG, Kiplingers

Mortgage Bonds and Rates had a good week as the 4% coupon gained back nearly 100bp closing at 104.75 up 9bp. Today’s weaker than expected Empire State Index helped to support Bonds.

The Dow (15,961.70, +85.48) and the S&P (1,798.18, +7.56) both closed at record highs as the printing presses at the Federal Reserve rage on. The Nasdaq gained 13.22 points to 3,985.96. Next week’s economic calendar is packed with a broad array of data that will encompass a large portion of the U.S. economy.  I recommend floating interest rates, not locking into rates at this time.

Weekly Survey of Rates from the Mortgage Bankers Association

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.44 percent, the highest level in a month, from 4.32 percent, with points increasing to 0.44 from  0.42 (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 4.48 percent, the highest level in a month,  from 4.37 percent, with points increasing to 0.34 from 0.26 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.52 percent, the highest level in a month, from 3.44 percent, with points decreasing to 0.27 from 0.30 (including the origination fee) for 80 percent LTV loans.

Housing News

Despite Improvements, Housing Remains Fragile

Although the market has exhibited strong improvement in home prices, purchases of new homes and sales of existing homes, officials caution that the overall recovery remains fragile. Read more

Mortgage Delinquency Rates Improve Across the Nation

The housing market continued to heal as the national mortgage delinquency rate plummeted 4.09% in the third quarter, a drop of more than 23.3% when compared to the same time period last year, according to TransUnion’s quarterly report.  The mortgage delinquency rate dropped on a quarterly basis, 5.33% from 4.32% — the seventh straight quarterly decline. Read more

Economic News

Weekly claims for state unemployment benefits totaled 339,000, compared with economists’ expectations of a drop to 331,000. Meanwhile, in separate reports, the September U.S. trade deficit came in at $41.78 billion, compared with a forecast of $38.8 billion, while third-quarter productivity rose by 1.9 percent, compared with expectations of a 2.4 percent increase.

The Empire State Manufacturing Index falls by -2.2 in October, below the 4.3 expected.

Sources: CNBC, Bloomberg, MBA, Housingwire, MMG