Merry Christmas, Happy Holidays and a Happy, Healthy and Prosperous New Year.
For the week Mortgage Bonds are down 21 basis points. For Mortgage Rates that’s the equivalent of .125% higher in rate. With the cloud of uncertainty lifted after the taper announcement, players jumped in with both fists chanting, “Don’t Fear the Taper”. Despite a surge in Q3 GDP (4.1%), Bonds were able to move into positive territory and close higher, making up for some of the losses earlier in the week. The 4% Bond finished the week at 103.25 up 25bp.
Stocks also closed higher – the Dow finished at 16,221.14 up 42.06 points, the S&P settled at 1,818.32 up 8.72 points, while the Nasdaq was up
46.06 to end at 4,104.74. Oil was last seen at $99.12/barrel near unchanged.
Weekly Survey of Rates from the Mortgage Bankers Association
For the week ending December 13, 2013.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.62 percent, the highest level since September 2013, from 4.61 percent, with points increasing to 0.38 from 0.26 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.61 percent, the highest level since September 2013, from 4.59 percent, with points increasing to 0.24 from 0.15 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 3.66 percent, with points increasing to 0.35 from 0.31 (including the origination fee) for 80 percent LTV loans.
Fed Tapering Begins
FOMC enacts $10B in cuts per month
The Federal Open Market Committee announced Wednesday that it will in fact begin tapering purchases of both Treasurys and mortgage-backed securities (MBS) by $5 billion each. Defying conventional wisdom from analysts, beginning in January, the committee will add to its holdings of agency mortgage-backed securities at a pace of $35 billion per month rather than $40 billion per month – a 12.5% cut. read more
Housing News
US Existing Home Sales Fall to Lowest Level in Nearly a Year
U.S. home resales fell sharply in November to their lowest level in nearly a year, hurt by a rise in interest rates since the spring and ongoing price increases that have shut some home buyers out of the market.
The National Association of Realtors (NAR) said on Thursday that sales of previously owned homes dropped 4.3 percent last month, the third monthly fall in a row, to an annual rate of 4.90 million units. That was the lowest annual rate since December 2012, and well below the median forecast in a Reuters poll of a 5.03 million unit pace.
“It is a clear loss in momentum for home sales,” NAR economist Lawrence Yun told reporters. Read more
Economic News
Initial Jobless Claims Increase
The number of Americans filing new claims for unemployment benefits rose last week to the highest level in nearly nine months, casting a shadow on the labor market.
Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 379,000, the Labor Department said on Thursday. That was the highest level since March and marked the second straight week that claims have risen.
Claims for the prior week were revised to show 1,000 more applications received than previously reported. Economists polled by Reuters had expected first-time applications to fall to 334,000 last week. The four-week moving average for new claims, which irons out week-to-week volatility, increased 13,250 to 343,500.
Final Q3 GDP rises to 4.1% from 3.6% due in part to a ramp up in inventories.