It’s important to remember that Mortgage Rates move in the opposite direction of Bond Prices, and Bond’s stabilized last week and are now testing resistance at the 100 and 200-day Moving Averages. With Stocks taking a breather at record levels and investors looking to cash in some profits. We are Cautiously Floating, Not Locking Mortgage Rates at this time, as the trend is our friend. However, this can quickly change in this fast moving market.
Fixed Mortgage Rates Continue to Drop
Fixed-Mortgage Rates moved lower for the second consecutive week, aligning with weak employment reports, Freddie Mac said in its latest Primary Mortgage Market Survey. “Mortgage rates fell further this week following a lackluster employment report for March. The economy added just 88,000 net new jobs last month, about one-third as many as February and the fewest since June 2012,” said Frank Nothaft, vice president and chief economist of Freddie Mac.
He continued,”In addition, approximately 496,000 people left the workforce causing the unemployment rate to fall to 7.6%. Further, average hourly earnings were unchanged in March, indicating income growth remains tepid.”
The 30-year, fixed-rate mortgage continued to drop, coming in at 3.43%, down from 3.54% last week and 3.88% a year earlier. Similarly, the 15-year, FRM also slipped to 2.65% from 2.74%, significantly lower than the 3.11% level reached last year. The 5-year Treasury-indexed adjustable-rate mortgage came in at 2.62%, slightly down from 2.65% last week and a drop from 2.85% a year ago. Meanwhile, the 1-year Treasury-indexed ARM fell back to 2.62% this week, after increasing to 2.63% last week and falling from 2.80% a year earlier. These rates are the national average and reflect a cost of 1.50 points.
When the Fed Hikes Rates- The last time the Federal Reserve began raising interest rates was almost 9 years ago. The Federal Reserve raised short-term interest rates 17 times over 2 years, from 6/30/04 to 6/29/06.
Housing News
Easing Credit Standards
Laurie Maggiano of the Treasury’s Homeownership Preservation Office, is supporting the push for easing credit standards as potential homebuyers find it difficult to meet the high credit criteria. In November, Fed Chairman Bernanke stated that mortgage lending standards appeared to be overly tight and is preventing borrowers from purchasing homes. Ms. Maggiano said that from 2007 to 2012, for those with a FICO score of over 780, new home sales dropped by 30% and in that same timeframe, those with credit scores between 620 and 680 saw a 90% drop. Ms. Maggiano went on to say that the industry needs to get to a place where it’s no longer just the buyers with perfect credit scores and 25% to 30% down to be able to get financing.
The Wall Street Journal pointed out that rising home prices coupled with high unemployment, low savings, high debt loads and tighter credit standards is making it hard for the first time homebuyer. There already has been some guideline relaxation and we think we will see more of it to help remedy this situation.
Vacation Home Sales Up 10.1% In 2012
Vacation home sales rose 10.1% to 553,000 last year, up from 502,000 in 2011, according to new data from the National Association of Realtors (NAR). Investment home sales declined 2.1% to 1.21 million from 1.23 million in 2011, while owner-occupied purchases jumped 17.4% to 3.27 million last year from 2.79 million in 2011.
Vacation home sales accounted for 11% of all transactions last year, unchanged from 2011, while the portion of investment sales was 24% in 2012, down from 27% in 2011, marking the second highest share since 2005.
The median investment-home price was $115,000 in 2012, up 15% from $100,000 in 2011, while the median vacation-home price was $150,000, compared with $121,300 in 2011. All-cash purchases remain common in the investment- and vacation-home market – half of investment buyers paid cash in 2012, as did 46% of vacation-home buyers. Forty-seven percent of investment homes purchased in 2012 were distressed homes, as were 35% of vacation homes.
“We had a strong stock market recovery, which helps more people in the prime ages for buying vacation homes,” says Lawrence Yun, NAR’s chief economist. “Attractively priced recreational property is also a big draw. Investors have been very active in the market over the past two years, attracted mostly by discounted foreclosures that could be quickly turned into profitable rentals. With rising prices and limited inventory, notably in the low price ranges, investors are likely to step back in coming years.”
Foreclosure Filings Drop to six Year Low
The U.S. recorded 442,117 foreclosure filings in the first quarter of 2013, a steep 23% drop from a year ago and the lowest level reached since 2007, real estate data firm RealtyTrac said in a new report.
Foreclosure filings also fell 1% from February to March, with 152,000 filings reported last month.
Economic News
Jobless Claims-Better than Expected
The number of Americans filing new claims for unemployment benefits fell more than expected last week, which could ease fears of a marked deterioration in labor market conditions after a surprise stumble in job growth in March. Also in economic news, U.S. import prices fell in March as weak petroleum costs offset a spike in food prices, according to a government report that pointed to benign inflation pressures.
Initial claims for state unemployment benefits dropped 42,000 to a seasonally adjusted 346,000, the Labor Department said on Thursday, unwinding the jump in the prior week related to difficulties adjusting the data for seasonal variations. That was the largest weekly drop since mid-November. Read more
Sources: Bloomberg, CNBC, MMG, Mortgageorb, Fox Business. Wall St. Journal, BTN