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