Mortgage Rates and Bonds ended the week on a positive note, but are still trapped in the sideways pattern. The Mortgage Bond rose by 16bp to end the session at 102.31. The Dow (16,947.08, +25.62) and the S&P (1,962.87, +3.39) both ended at fresh record highs. The Nasdaq closed at 4,368.03 up 8.71 points. Oil was last seen at $107.30/barrel up 83 cents.
Fed tapers another $10 billion
The Federal Reserve continued to reduce its monthly bond-buying program and held interest rates near zero even as it debated persistent conflicting signals in the economy.
In addition to continuing the scaleback of its monthly money-printing efforts, the Fed slashed its outlook for full-year economic growth, cutting gross domestic product from a 2.8 percent to 3 percent range expressed in March down to 2.1 percent to 2.3 percent. The change comes on the heels of a 1 percent drop in first-quarter GDP.
It also modestly lowered its unemployment rate expectations, from 6.1 percent to 6.3 percent—its current level—down to 6.0 to 6.1 percent.
Inflation projections remained relatively stable, from 1.5 percent to 1.6 percent, adjusting it just a notich to 1.5 percent to 1.7 percent. Read more
Weekly Survey of Rates from the Mortgage Bankers Association
For the week of June 20, 2014
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.36 percent from 4.34 percent, with points increasing to 0.24 from 0.16 (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 4.32 percent from 4.27 percent, with points decreasing to 0.09 from 0.12 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 3.50 percent from 3.43 percent, with points decreasing to 0.16 from 0.22 (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 2.672, down from last weeks 2.706%.
Housing News
Home builder sentiment surges 4 points in June
After hovering in a tight range since early February, sentiment among the nation’s home builders surged ahead in June and is now one point shy of crossing into positive territory on the National Association of Home Builders/Wells Fargo Housing Market Index. Confidence jumped four points to a reading of 49; 50 is the line between positive and negative territory. Read more
Housing starts fall as consumer prices log biggest jump in a year
U.S. housing starts and building permits fell more than expected in May, suggesting the housing recovery will likely remain slow for a while.
Groundbreaking for homes fell 6.5 percent to a seasonally adjusted annual pace of 1 million units, the Commerce Department said Tuesday. March’s starts were revised down to show a 12.7 percent increase instead of the previously reported 13.2 percent rise. Economists polled by Reuters had forecast starts slipping to a 1.03 million-unit rate last month. Read more
Economic News
US consumer sentiment slips in June
U.S. consumer sentiment fell in June as views by consumers with the lowest incomes soured, a survey released on Friday showed. The Thomson Reuters/University of Michigan’s preliminary June reading on the overall index on consumer sentiment came in at 81.2, down from 81.9 the month before. Read more
Consumer Prices Heat Up
The Labor Department reported on Tuesday that the inflation reading Consumer Price Index (CPI) rose by 0.4% in May to the highest one month rate since September 2012. The rise was led by higher prices for electricity, gasoline and food. The year-over-year CPI rose to 2.1%, the highest since the fall of 2012, and just above the Fed’s upper end target of 2%.
Factory activity growth accelerates in June
Factory activity in the U.S. mid-Atlantic region grew at a faster pace than expected in June, accelerating from the previous month, a survey showed on Thursday.
The Philadelphia Federal Reserve Bank said its business activity index jumped to 17.8 from 15.4 in May. Analysts were looking for a reading of 14.
US jobless claims dip, continuing recovery trend
The number of Americans filing new claims for unemployment benefits dipped more than expected last week, pointing to strengthening labor market conditions.
Initial claims for state unemployment benefits slipped 6,000 to a seasonally adjusted 312,000 for the week ended June 14, the Labor Department said on Thursday.
The prior week’s claims were revised to show 1,000 more applications received than previously reported. Economists polled by Reuters had forecast first-time applications for jobless aid falling to 314,000 last week.
The Federal Reserve said on Wednesday the job market would continue to improve gradually and hinted at a slightly faster pace of interest rate increases starting in 2015.
Sources: CNBC,Bloomberg, Housingwire, MMG, Reuters