We continue to recommend locking into Mortgage Rates in the short term, measured by days to a few weeks until Mortgage Bond Prices can find a bottom.
Mortgage Bonds Prices have drifted lower all week and fell hard today due to better than expected economic data. The 4% closed at 104.0 down 44bps. At 2pm ET, Stock prices are mixed with equities closing at 4pm. The Bond markets are now closed and all markets will be closed tomorrow in observance of Good Friday. Happy Easter.
Yellen: Fed will keep interest rates low even when economy recovers
The length of time the Federal Reserve keeps its key interest rate near zero will depend on how far the U.S. economy remains from the central bank’s employment and inflation goals, and how long it will likely take to meet them, Fed Chair Janet Yellen said on Wednesday.
Yellen, in her second public speech as Fed chair, largely restated the central bank’s stance, stressing that it would respond to shifting economic conditions as it judges when to finally tighten monetary policy.
The central bank, frustrated with the slow U.S. recovery from recession, aims for maximum sustainable employment and a rise in inflation from just above 1 percent now to 2 percent. Read more
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 4.56 percent, with points decreasing to 0.32 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 4.39 percent from 4.49 percent, with points increasing to 0.18 from 0.14 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.54 percent from 3.62 percent, with points decreasing to 0.24 from 0.31 (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 2.732%, down from last weeks 2.798%.
Housing News
US housing starts climb in March, but trends point to slump
U.S. housing starts rose less than expected in March and building permits fell, pointing to underlying weakness in the housing market that could persist despite better weather. The Commerce Department said on Wednesday groundbreaking increased 2.8 percent to a seasonally adjusted annual rate of 946,000.
February’s starts were revised to show a 1.9 percent rise rather than the previously reported 0.2 percent fall. Economists polled by Reuters had expected starts to rise to a 973,000-unit rate last month. While a brutally cold winter weighed on home building in December and January, activity has also been hampered by shortages of building lots and skilled labor as well as rising prices for materials. Read more
Confidence among homebuilders in the market for new, single-family homes remained in a holding pattern in April, ticking up just one point to 47, according to the National Association of Home Builders/Wells Fargo Housing Market Index. The reading disappointed analysts who had expected it to rise to 49, according to a Reuters poll.
Benefits of Buying a Home Now
“Buying costs less than renting in all 100 large U.S. metros… Now, at a 30-year fixed rate of 4.5%, buying is 38% cheaper than renting nationally.” Trulia
“One thing seems certain: we are not likely to see average 30-year fixed mortgage rates return to the historic lows experienced in 2012…Yes, rates are higher than they were a year ago – and certainly higher than two years ago. But if you look at the averages over the last four decades, today’s rates remain historically low.” Freddie Mac
Economic News
Consumer Prices on the Rise
The Labor Department reported on Tuesday that the April Consumer Price Index (CPI) on a year-over-year basis jumped by 1.5%, led higher by increased costs for food and shelter. The numbers come after the hotter than expected Producer Price Index (PPI) last week. Both the CPI and PPI measure inflation at the consumer and wholesale levels, respectively. And yes it is just one month of hotter inflation, but the Fed will be closely watching the numbers for April for any signs of a trend.
U.S. industrial production rose 0.7 percent in March. Economists had expected industrial output to climb by 0.5 percent, compared with the prior month’s 0.6 percent gain.
U.S. retail sales increased 1.1 percent in March. Economists had expected sales to rise by 0.8 percent, up from the prior reading of 0.3 percent.
Consumer sentiment in the U.S. came in at 82.6. Economists had expected April’s advance reading of consumer sentiment to check in at 81.0, up slightly from March’s 80.0 reading.
Sources: CNBC, Bloomberg, Housingwire, Reuters, MMG
