New York, NY (October 15, 2015) – A soft opening in the bond and mortgage markets this morning after a strong rally yesterday. It was another knee jerk reaction for mortgage rates as the Mortgage Bond market increased 32 basis points, causing lenders to drop rates later in the day. This is the second time in two weeks that the market moved significantly intraday. Is it possible these big swings in Bond prices resulting in lower rates will continue? Thats anyones guess. But one thing is for sure, the only way to lock into a rate when it drops intraday, is to be sure you’re working with a broker that monitors the market in real time and can help you take advantage of a momentary drop in rates. Most banks do not work in real time and price their rates once a day or once every few days.
WASHINGTON, D.C. (October 14, 2015) -The Mortgage Bankers Association Survey for the week ending October 9, 2015. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) remained unchanged at 3.89 percent, with points increasing to 0.41 from 0.25 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.20 percent from 3.24 percent, with points increasing to 0.39 from 0.38 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 5/1 ARMs increased to 3.00 percent from 2.96 percent, with points increasing to 0.46 from 0.32 (including the origination fee) for 80 percent LTV loans.
Next up for markets, the debt ceiling. Today reports out saying Treasury will run out of money on Nov 3rd, 2 days earlier than Jack Lew thought. Last March Congress set the debt limit at $18.1 trillion (that’s trillion). Since then, the Treasury has been using extraordinary measures, such as the suspension of certain pension investments, to conserve cash. After Nov 3rd Treasury will fund the government only with daily cash flow if the debt limit isn’t increased. the Bipartisan Policy Center estimates that the Treasury would run out of cash between Nov. 10 and Nov 19.
WASHINGTON (September 21, 2015) — Following three straight months of gains, existing–home sales dipped in August despite slowing price growth and a positive turnaround in the share of sales to first–time buyers, according to the National Association of Realtors®. None of the four major regions experienced sales increases in August.
Total existing–home sales1, which are completed transactions that include single–family homes, townhomes, condominiums and co–ops, fell 4.8 percent to a seasonally adjusted annual rate of 5.31 million in August from a slight downward revision of 5.58 million in July. Despite last month’s decline, sales have risen year–over–year for 11 consecutive months and are 6.2 percent above a year ago (5.00 million).
Lawrence Yun, NAR chief economist, says home sales in August lost some momentum to close out the summer. “Sales activity was down in many parts of the country last month — especially in the South and West — as the persistent summer theme of tight inventory levels likely deterred some buyers,” he said. “The good news for the housing market is that price appreciation the last two months has started to moderate from the unhealthier rate of growth seen earlier this year.”
The median existing–home price2 for all housing types in August was $228,700, which is 4.7 percent above August 2014 ($218,400). August’s price increase marks the 42ndconsecutive month of year–over–year gains.
Total housing inventory3 at the end of August rose 1.3 percent to 2.29 million existing homes available for sale, but is 1.7 percent lower than a year ago (2.33 million). Unsold inventory is at a 5.2–month supply at the current sales pace, up from 4.9 months in July.
“With sales and overall demand higher than a year ago and supply mostly unchanged, low inventories will likely continue to limit options for those looking to buy this fall even with the overall pool of buyers shrinking because of seasonal factors,” adds Yun.
The percent share of first–time buyers rebounded to 32 percent in August, up from 28 percent in July and matching the highest share of the year set in May. A year ago, first–time buyers represented 29 percent of all buyers.
According to Freddie Mac, the average commitment rate for a 30–year, conventional, fixed–rate mortgage declined to 3.91 percent in August after climbing above 4 percent in July (4.05 percent) for the first time since November 2014 (4.00 percent).
“When the Federal Reserve decides to lift short–term rates — likely later this year — the impact on mortgage rates and overall housing demand will likely not be pronounced,” says Yun. “With job growth holding steady, prospective buyers can handle any gradual rise in mortgage rates — especially if today’s stronger labor market finally leads to a boost in wages and homebuilding accelerates to alleviate supply shortages and slow price growth in some markets.”
NAR released a study earlier this month that examined new home construction in relation to job gains. The findings revealed that homebuilding activity is currently insufficient in a majority of metro areas and is contributing to the ongoing housing shortages and unhealthy price growth in many markets.
Properties typically stayed on the market for 47 days in August, an increase from 42 days in July but below the 53 days in August 2014. Short sales were on the market the longest at a median of 124 days in August, while foreclosures sold in 66 days and non–distressed homes took 45 days. Forty percent of homes sold in August were on the market for less than a month.
All–cash sales decreased slightly to 22 percent of transactions in August (23 percent in July) and are down from 23 percent a year ago. Individual investors, who account for many cash sales, purchased 12 percent of homes in August, down from 13 percent in July and unchanged from a year ago. Sixty percent of investors paid cash in August.
Matching the lowest share since NAR began tracking in October 2008, distressed sales4— foreclosures and short sales — remained at 7 percent in August for the second consecutive month; they were 8 percent a year ago. Five percent of August sales were foreclosures and 2 percent were short sales. Foreclosures sold for an average discount of 18 percent below market value in August (17 percent in July), while short sales were discounted 12 percent (unchanged from July).
NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark., says Realtors® worked hard over the summer to prepare for the Oct. 3 implementation of Know Before You Owe, also known as the TILA–RESPA Integrated Disclosure rule. “A large majority of Realtors® have taken some form of training5 to prepare for the new disclosure requirements,” he said. “As the ruling goes into effect next month, communication is crucial between all parties involved in a real estate transaction to ensure consumers get to closing seamlessly and without delay. NAR will monitor the progress of the rule in the weeks ahead and will share any concerns that arise as part of our continued partnership with the Consumer Financial Protection Bureau.”
Sources: CNBC, Bloomberg, NAR, MBA, TBWS