Mortgage Bonds suffered their largest one day loss since August 13th, dropping 88 Basis Points today. In response, Lenders re priced Mortgage Rates Higher. The better than expected Labor Department’s Non-Farm Payroll Report released this morning is responsible for the sell off in Bonds.
August and September were revised higher by 60K. However, the Unemployment Rate ticked up to 7.3% as furloughed workers were counted as “out of work”. In addition, 720,000 people exited the workforce in October causing the Labor Force Participation Rate to drop by 0.4% to 62.8%.
The 4% coupon fell by 88bp to end the session at 104.31. Stocks opened lower, but soon rallied on the Jobs Report – the Dow gained 167.80 points to end at 15,761.78 – an all-time high record close. The S&P 500 finished at 1,770.61 up 23.46 points while the Nasdaq rose by 61.90 points to finish the week at 3,919.23. Oil was last seen at $94.37/barrel unchanged. The Bond markets will be closed on Monday in observance of Veterans Day.
I recommend floating Mortgage Rates, Not Locking , headed into the shortened week and look for signs of stabilization.
Weekly Survey of Rates from the Mortgage Bankers Association
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.32 percent from 4.33 percent, with points increasing to 0.42 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 4.37 percent from 4.36 percent, with points decreasing to 0.26 from 0.27 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 3.44 percent from 3.42 percent, with points remaining unchanged at 0.30 (including the origination fee) for 80 percent LTV loans.
Housing News
American Dream Slipping –Home Ownership at 18 Year Low
The U.S. homeownership rate, which soared to a record high 69.2 percent in 2004, is back where it was two decades ago, before the housing bubble inflated, busted and ripped more than 7 million Americans from their homes. Read more
Home Prices Rise by 12% Year over year in September
CoreLogic a leading residential property information, analytics and services provider, today released its September CoreLogic Home Price Index report. Home prices nationwide, including distressed sales, increased 12 percent on a year-over-year basis in September 2013 compared to September 2012. This change represents the 19th consecutive monthly year-over-year increase in home prices nationally. On a month-over-month basis, including distressed sales, home prices increased by 0.2 percent in September 2013 compared to August 2013*.
Consumer Confidence in Homebuying Hits All-Time low
Looming government uncertainty, lack of affordability weigh on industry
Consumer confidence in housing significantly widened last month, as most taxpayers were turned off by the federal government shutdown and the ongoing debt ceiling debate, taking a toll on American’s outlook toward the housing market. The share of consumers who believe it’s a good time buy a house declined to 65% — an all-time low — while the number of those who believe mortgage rates will go up in the next year fell to 57%, according to Fannie Mae’s latest monthly survey. Read more
Economic News
The October nonfarm payroll report showed 204,000 jobs were created in the month, while the unemployment rate came in at 7.3 percent in line with estimates. Economists had expected 120,000 new jobs in October.
August Factory Orders slipped 0.1 percent following a 2.4 percent drop in July orders, while September factory orders climbed 1.7 percent, in line with estimates. Economists in a Reuters survey had expected August orders to rise 0.3 percent.
ISM Nonmanufacturing Index Rises to 55.4, Above Expectations
U.S. nonmanufacturing sector expanded last month at a slightly faster pace than expected, according to data released Tuesday by the Institute for Supply Management. The reading on employment last month improved significantly. The ISM’s nonmanufacturing purchasing managers’ index rose to 55.4 in October from 54.4 in September. Forecasters surveyed by Dow Jones Newswires had expected last month’s PMI to be little changed at 54.0. Readings above 50 indicate activity is expanding.
Consumer Sentiment falls to 72.0 in early November, below the 75.3 expected.