Today was the 3rdFriday in a row since the Fed began buying Bonds (QE3 program), that Bonds could not hold onto gains made earlier in the day. Bonds are trading in a tightening range, between support at the 25-day MA, currently at $104.86 and resistance at the $106 all-time high range. If Bonds break through the nearest level of support, they could fall a lot further, which could move Mortgage Rates higher. The 3% coupon lost 6bp to end the week at 105.22.
It’s important to note that if your in the market for home financing and just can’t seem to get around to it, that these rates may not be this low when your ready. So, don’t procrastinate. Its too important and for many, the savings are very significant. I am recommending locking into rates at this time.
Stocks closed near uncharged – the Dow ended at 13,328.85, the S&P 500 Index fell by 4.25 points to 1,428.59 while the Nasdaq dropped 5.30 points to end at 3,044.11.
Interview with Kathleen Hays on Bloomberg
Kathleen Hays of the “Hays Advantage ” and John Sauro discuss the state of the Real Estate & Credit Markets…
Listen here: http://tinyurl.com/8ekc3gc
Housing News
Housing is Firmly on the Upswing
According to “The Kiplinger Letter”; Housing will add half a percent to GDP Nest year. By 2014…once again a significant contributor to job creation, consumer spending and economic gains, bolstering this weak recovery. Every $100 bump in average home prices lifts consumer spending by $5.
Sales of new and existing homes are climbing: 20% for new homes this year; 18% next year. For existing homes…an 8% jump in 2012; 2% in 2013. Buying by investors is helping to fuel the gain, with many of them paying cash for the properties. But they’re not get-rich-quick, buy-and-flip purchasers of the sort who fanned last decade’s boom and bust.
It’s strong rental demand that’s the lure, with leased homes earning a profit month after month. About 36% of renters are now opting for houses instead of apartments. That’s up from 31% in 2006. The pace of building is picking up as well, with housing starts in some states…Wash., Iowa, Neb.,Texas and S.C., for example…approaching the levels of 2000-2003. Nationwide, they’ll climb 17% next year.
Builders are more optimistic than they’ve been since mid-2006, at the peak of the boom. Some are busy enough to be hiring and are having trouble finding help. Many of the 2 million or so construction workers who lost their jobs in the recession are driving trucks, or doing landscaping or other work now. Some who immigrated during the housing boom returned to their homelands when their jobs disappeared.
The number of unsold homes is easing and the foreclosure tsunami, fading, with the share of mortgages delinquent by 90 or more days a third lower than in 2010. Distressed sales are now a fourth of the total…lower than last year, though still high.
Mortgage rates are sure to remain near historical lows for a year or more, thanks to ongoing monthly buying of mortgage-backed bonds by the Federal Reserve. And a surge in pent-up housing demand is inevitable, once the economy starts to pick up some more steam and young folks who delayed home buying plunge in.
Household formation is currently 4 million under trend. The climb back will be neither swift nor uniform. It’ll be a few years yet before housing starts and sales return to the long-term trend, much less regain peaks. For Las Vegas, Tampa, Fla., and others where prices have sunk up to 50% since 2006…an even longer slog.
And today’s tight lending standards won’t help. But, after six painful years, the tide is finally turning.
Wells Fargo Can’t be Trusted – U.S. Attorney in Manhattan sues Wells Fargo for FHA-backed mortgages
A U.S. Attorney out of Manhattan slapped Wells Fargo with a multi-million dollar lawsuit Tuesday, claiming the bank concealed the condition of FHA-insured toxic loans, costing the government money when the loans eventually defaulted.
Overall, the suit claims Wells Fargo’s concealment of the true condition of 6,320 loans insured by FHA shielded the bank from having to pay HUD $190 million to indemnify some of the FHA insurance coverage on the toxic loans.
Economic News
Jobless Claims Fall less Than Expected, Down 3,000 to 382,000; Analysts Expected Claims to Drop to 373,000. Analysts with Econoday call it the “best reading of the recovery,” but warn the drop may be tied to seasonal adjustments and will have to remain for several weeks to suggest true improvement when it comes to jobs.
The IMF lowered its projections for growth in the global economy for 2012 and 2013, citing policy uncertainty in the U.S. and Europe. The IMF now expects the world economy to grow 3.3 percent this year, down from the 3.5 percent growth it predicted in July. It projects growth of just 3.6 percent in 2013, down from its prior estimate of 3.9 percent.
Source CNBC, Housingwire, MMG, Kiplinger Letter