We recommend Floating/Not Locking Mortgage Rates at this time, as Bond Prices attempt to recover. The 4% coupon rose by 56bp to end the session at 102.78. Comments from Fed members on delaying QE taper past September coupled with weak data from New Home Sales gave Bonds a big lift on Friday. Lending some support to Bonds on Thursday was the jump in Weekly Initial Jobless Claims rising by 13K to 336K, inline with estimates. The jobs data will be closely watched by the Fed in its decision on tapering.
St. Louis Fed President James Bullard told CNBC Friday that he didn’t think there was a need to hurry to cut back on the Fed’s bond-buying program. Read more
Stocks rose after getting beat up in the past two weeks – the Dow was up 46.77 points to 15,010.51, the S&P 500 was up 6.54 points to 1,663.50 while the Nasdaq rose by 19.08 points to end at 3,657.79. Oil was last seen at $106.34/barrel up $1.31.
Housing News
The Federal Housing Finance Agency reported that home prices rose 7.7% in the year ended in June as the housing recovery continues. From May to June, prices rose by 0.7%.
New Home Sales drop 13.4% in July from June to 394K units annualized and below the 485K expected. June’s numbers were revised lower to 455K from 497K.
Uncertainty binds U.S. Mortgage Finance System
While there’s no doubt a type of housing recovery is underway, analysts are at odds about the stability of the market, which is blocking private capital from making a comeback. On the reverse side, others feel housing is in full swing and the right policies are in play. Read more
Economic News
Initial Jobless Claims rising by 13K to 336K, inline with estimates. It is the highest level in a month, but remain near post recession lows. The 4-week average, which smoothes out seasonal abnormalities, fell by 2,250 to 330,500, near 6 year lows.
Mortgage Statistics
At the end of 2011, 8.2% of mortgages had at least 1-payment past due and another 4.4% of mortgages were in the foreclosure process. At the end of 2012, 7.5% of mortgages were late and another 3.7% of mortgages were in foreclosure. At the end of June 2013, 6.8% of mortgages were late and another 3.3% of mortgages were in foreclosure (source: Mortgage Bankers Association).
Sources: CNBC,Bloomberg, Housingwire, MMG