Mortgage Rates have revisited lows not seen since May 2013. We will continue to recommend floating/not locking rates headed into the weekend.
Mortgage Bonds drifted higher in the shortened session, shrugging off a better than expected New Home Sales. The 4% closed at 105.56, up 3bp. Stocks close at 4pm and are currently holding decent gains. All capital markets will be closed on Monday in observance of Memorial Day.
Weekly Survey of Rates from the Mortgage Bankers Association
For the week of May 21, 2014
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.33 percent, the lowest rate since November 2013, from 4.39 percent, with points decreasing to 0.20 from 0.22 (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 4.24 percent, the lowest rate since May 2013, from 4.29 percent, with points decreasing to 0.1 from 0.16 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.43 percent, the lowest rate since October 2013, from 3.48 percent, with points increasing to 0.15 from 0.12 (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 2.619 2.586%, up from last weeks 2.586%.
Housing News
New home sales hit 433,000 in April
Economists in a consensus survey expected new home sales to rise to 420,000 in April, up from the prior month’s reading of 380,000.
Sales of new U.S. single-family homes rose more than expected in April and the stock of houses on the market hit a 3-1/2 year-high, further signs the sputtering housing recovery was poised to regain steam. The Commerce Department said on Friday sales increased 6.4 percent to a seasonally adjusted annual rate of 433,000 units, ending two straight months of declines. March’s sales pace was revised up to 407,000 units from a previously reported 384,000 units. Read more
Existing home sales rise 1.3% to 4.65M rate in April
U.S. home resales rose in April and the supply of properties on the market increased, suggesting the housing market was regaining its footing. The National Association of Realtors said on Thursday existing home sales increased 1.3 percent to an annual rate of 4.65 million units, marking the second increase in sales in nine months. Read more
Economic News
US jobless claims surge unexpectedly, back above 300,000
The number of Americans filing new claims for unemployment benefits rose last week but stayed close to a seven-year low and pointed to ongoing healing in the labor market. Initial claims for state unemployment benefits rose 28,000 to 326,000 for the week ended May 17, the Labor Department said on Thursday.
The prior week saw the lowest reading since May 2007 and brought claims back to a level last seen before the deep 2007-09 recession. Economists say the cumulative reduction in new claims could point to stronger hiring, although one metric in Thursday’s report cast a shadow over the upcoming monthly employment report for May. Read more
Fed’s Kocherlakota: Below-target inflation signals significant economic problem
A below-target inflation rate signals a significant economic problem, Minneapolis Fed president Narayana Kocherlakota said on Wednesday. Kocherlakota, a voting member of the Fed’s Open Market Committee, suggested the Fed could target an inflation rate above 2 percent to make up for the recent shortfall. His comments come just minutes before the closely watched minutes of the last Fed meeting are released. Last month Kocherlakota warned that his colleagues were letting the economy waste “lots of resources” by leaving inflation too low and unemployment too high. Read more
Sources: CNBC, Bloomberg, Reuters, Housingwire, MMG