Mortgage Bonds tried to rally Friday morning but were soon overtaken by equities as the day unfolded. Optimism that a deal will be reached in D.C. regarding the shutdown and the debt ceiling issues the catalyst that fueled Stocks higher. The 4% Mortgage Bond closed near unchanged down 9bp to 104 31. Bonds failed to break through the 200-day average, which moved rates off their recent lows. We are recommending Floating, not Locking into Mortgage Rates at this time.
Stocks ended higher – the Dow rose by 111.04 points to 15,237.11, the S&P 500 was up 10.64 points to 1,703.20 while the Nasdaq gained 31.13 points to 3,791.87. Oil was last seen at $101.82 down $1.19.
Weekly Survey of Rates from the Mortgage Bankers Association
The refinance share of mortgage activity increased to 63 percent of total applications, the highest level since August 2013, from 61 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6 percent of total applications.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.49 percent, the lowest rate since June 2013, from 4.62 percent, with points decreasing to 0.34 from 0.41 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.53 percent, the lowest rate since June 2013, from 4.66 percent, with points decreasing to 0.22 from 0.29 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.55 percent, the lowest rate since June 2013, from 3.68 percent, with points increasing to 0.33 from 0.28 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 5/1 ARMs decreased to 3.26 percent, the lowest rate since June 2013, from 3.39 percent, with points decreasing to 0.28 from 0.35 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
Janet Yellen will be the first woman to lead the Federal Reserve
The president has reportedly selected his nominee to replace outgoing Federal Reserve Chairman Ben Bernanke, and his official pick is Janet Yellen, according to members of the Senate Banking Committee.
Yellen, already vice chair of the Federal Reserve Board of Governors, took over as the official ‘Fed Chair nominee’ Tuesday night, creating some certainty for a stock market that has been on shaky ground since the start of the government shutdown.
Tim Johnson, chairman of the Senate Banking Committee, released a statement applauding the president’s plan to nominate Yellen. Read more
Tighter Underwriting Standards Squeeze Mortgage Credit
Mortgage credit availability declined in September, suggesting a gradual tightening of lending standards, the Mortgage Bankers Association reported Tuesday.
Credit availability continues to weigh on the market as more lenders remove key product offerings such as loans with terms greater than 30 years and/or interest-only features, explained Mike Fratantoni, the MBA’s vice president of research and economics.
“Just as before, we believe this reflects lenders implementation of the ability to repay/qualified mortgage regulation which comes fully into effect in January,” Fratantoni stated. Read more
Housing News
Economic News
Fidelity Sells off Short-Term U.S. Debt Ahead of Ceiling
The nation’s largest manager of money market mutual funds said Wednesday that it no longer holds any U.S. government debt that comes due around the time the nation could hit its borrowing limit. Read more
Weekly Jobless Claims
Weekly claims for state unemployment benefits rose to 374,000. Economists in a consensus survey had expected initial jobless claims to rise by 3,000 to 311,000. Read more
Consumer Confidence Falls to four month Low
Consumer confidence fell for the first time in four weeks as citizens’ view of the economy deteriorated to its lowest point since May. Per Businessweek: The Bloomberg Consumer Comfort Index fell in the week ended Sept. 29 to minus 29.4 from minus 28.1. A measure of attitudes about the economy slumped as lawmakers failed to resolve their differences over the nation’s budget, culminating this week in a shutdown of the government that risks slowing the expansion.
“Political tensions that led to the current government shutdown, and the coming policy fight over the debt ceiling, are likely behind the decline in consumer comfort,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. A prolonged fight over the budget “carries significant risk to overall consumer and business sentiment.”
The National Federation of Independent Business (NFIB) reported this week that small business sentiment declined in September to 93.9 from 94.1 in August. Business owners are watching the events in Washington and there was a large drop in the percentage who expect the economy to improve.
Sources: CNBC, Bloomberg, Housingwire, MMG, Businessweek