Mortgage Rates moved lower as Mortgage Bonds moved higher, with encouraging technical signs. We will float, not lock into Mortgage Rates into the weekend. However, if you’re closing soon, then lock.
Mortgage Bonds finished at 105.91 up 9bp. The S&P closed at another record high – 1,923.57 up 3.54 points. The Dow finished at 16,717.17 up 18.43 points, Nasdaq lower by 5.32 points to 4,242.61. Oil was last seen at $102.86/barrel down 72 cents. Next week’s economic calendar is full and ends with a bang on Friday with the May Jobs Report. Look for the switch to the 3.5% coupon as the main Bond late Monday.
Weekly Survey of Rates from the Mortgage Bankers Association
For the week of May 28, 2014
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.31 percent, the lowest level since June 2013, from 4.33 percent, with points decreasing to 0.15 from 0.20 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.23 percent, the lowest level since June 2013, from 4.24 percent, with points increasing to 0.16 from 0.09 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.42 percent, the lowest level since October 2013, from 3.43 percent, with points decreasing to 0.06 from 0.15 (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 2.541%, down from last weeks 2.619%.
Housing News
US 20-city home prices up 0.9% in March vs 0.7% est: S&P/Case-Shiller
U.S. single-family home prices rose in March, a closely watched survey said Tuesday, as the housing market extended its fragile recovery. The S&P/Case-Shiller composite index of 20 metropolitan areas rose 0.9 percent in March on a seasonally adjusted basis, up from the prior month’s gain of 0.8 percent. A Reuters poll of economists had forecast a 0.7 percent rise.
Year over year, the index jumped 12.4 percent, S&P/Case-Shiller said, a slightly slower rate than February’s 12.9 percent surge but well above Wall Street’s estimates.
Yet not all the news was encouraging. David Blitzer, chairman of the index committee at S&P, said that the report suggested price gains are moderating. Additionally, key markets such as Las Vegas, Los Angeles, Phoenix and San Francisco are showing “substantial slowdowns,” he added. Read more
Pending home sales up just 0.4% in April, missing expectations
Warmer weather and higher expectations failed to cause a meaningful surge in home sales.
Signed contracts to buy existing homes increased just 0.4 percent in April, according to a monthly report from the National Association of Realtors (NAR). The expectation had been for at least a two percent gain sequentially.
The Realtors’ so-called pending home sales index is now 9.2 percent lower than April of 2013.
“Higher inventory levels are giving buyers more choices, and a slight decline in mortgage interest rates this spring is raising prospective home buyers’ confidence,” said Lawrence Yun, chief economist for the NAR. “An uptrend in closed sales is expected, although some months will encounter a modest setback.” Read more
The Top 10 Markets for Luxury Homes
10. Long Island, N.Y.:
The price to purchase home: $2,200,000, Average monthly mortgage payment: $8,787
9. Boston, Mass.:
The price to purchase home: $2,313,000, Average monthly mortgage payment: $9,239
8. Ventura, Calif.:
The price to purchase home: $2,400,000, Average monthly mortgage payment: $9,586
7. San Diego, Calif.:
The price to purchase home: $2,400,000, Average monthly mortgage payment: $9,586
6. West Palm Beach, Fla.:
The price to purchase home: $2,466,000, Average monthly mortgage payment: $9,850
5. Miami:
The price to purchase home: $2,900,000, Average monthly mortgage payment: $11,583
4. San Jose, Calif.:
The price to purchase home: $3,380,000, Average monthly mortgage payment: $13,501
3. Orange County, Calif.:
The price to purchase home: $3,450,000, Average monthly mortgage payment: $13,780
2. Los Angeles:
The price to purchase home: $3,650,000, Average monthly mortgage payment: $14,579
1. San Francisco:
The price to purchase home: $5,350,000, Average monthly mortgage payment: $21,369
Economic News
Durable goods orders jump, but capital spending sags in April
Orders for long-lasting U.S. manufactured goods unexpectedly rose in April, but a drop in a measure of business capital spending plans could temper expectations for a sharp rebound in economic growth this quarter.
The Commerce Department said on Tuesday durable goods orders increased 0.8 percent as demand for defense capital goods surged and orders for fabricated metal products, transportation equipment and electrical equipment, appliances and components rose. Read more
US consumer confidence at 83.0 in May, matching expectations
Economists in a consensus survey expected The Conference Board’s gauge of U.S. consumer confidence to rise to 83 in May from 82.3 in the prior month.
The U.S. gross domestic product contracted by 1.0 percent in the first quarter. Economists had expected first-quarter GDP to show a contraction of 0.4 percent.
Weekly claims for state unemployment benefits came in at 300,000, compared with expectations of a drop to 326,000.
Consumer sentiment hits 81.9 in May, vs. 82.4 estimate.
Sources: Bloomberg, CNBC, Housingwire, MMG, Reuters, MBA