Another volatile week for Mortgage Rates as Bonds tried clawed their way higher. Bonds started the day Friday in positive territory only to give back gains at 1pm. The 3% coupon traded as high as 100.88 and as low as 100.38 closing at 100.47 up 6bp. Remember when the Bond was just below $105. Bonds will have to make up that spread in order for rates to revisit their lows.
Thursday afternoon Mortgage Bonds soared in the last hour and a half of trading (closing 66 basis Points higher on the day) after a source close to the Fed at the Wall Street Journal suggested that the Fed members may not talk of tapering at next week’s FOMC meeting. Considering the volatility, Bonds may be slowing inching their way back and Mortgage Rates will continue to move sideways and lower as long as the fed doesn’t talk about ending their Bond purchasing program and as long as reports on the economy are not to positive.
The advise is to lock into rates short term -days to weeks and Float them longer term- weeks to months.
Freddie Mac reported on Thursday that the 30-yr fixed rate rose to 3.98% in the latest week and to obtain that rate an average point of 0.7 must be paid. If not paying
the point, the rate would be 4.16%.
Home Price Growth Expected to Exceed 7% in 2013
Home prices could grow as high as 7.2% in 2013, JPMorgan Chase concluded in a new report. Analysts with the bank claim prices are posting historically strong gains as the market moves into the more active summer season. With high investor demand contributing to booming home prices as well as growth in prices of lower-tiered units posting stronger gains than higher-tiered units in major metropolitans, JPMorgan is confident in its 7.2% growth projections. Furthermore, the banking giant has revised its projections to 3.9% in 2014 and 3.2% in 2015, with surprises likely to be on the upside. “Despite the lack of data for investor demand, we saw all-cash sales remain higher than 30% of housing sales,” analysts at JPMorgan said.
Given the limited housing inventory, net demand in April has climbed to the highest level since 2006. At the same time, the market share of distressed sales declined below 20% for the first time since 2008, accounting for 18% of April’s sales, which is 10% lower than last year, JPMorgan explained.
Economic News
Initial Jobless Claims fall 12K to 334K, below the 345K expected.
Retail Sales rise by 0.6% in May, above the 0.3% expected and up from the 0.1% registered in April, x-autos sales rose by 0.3%, inline with expectations.
Wholesale inflation rises as the Producer Price Index rose by 0.5% in May, above the 0.1% expected.
The University of Michigan’s consumer sentiment index came in at 82.7 for June. Economists polled by Reuters were expecting the index reading to remain flat at 84.5, the highest level since 2007.
Sources: CNBC, Bloomberg, Housingwire, MMG,