The current trend direction for Mortgage Rates is Sideways to lower as Bond prices are at $105.31 after a volatile week. Therefore, we recommend floating, not locking into rates at this time.
Stocks were near unchanged, but were much lower before the housing data was released. The closely watched S&P 500 traded under its 50-day Moving Average yesterday, but did manage to close above that level. The fear index, or the VIX, had its biggest one day bounce in a month. The higher the VIX, the more fear there is in the equity markets, especially with prices near all-time highs. Yesterday, Hedge fund titan, David Tepper of Appaloosa Management, said that he is nervous with Stock markets due to economic growth prospects. He said even adjusting for weather, the economy looks to be growing more slowly than expected we agree and to further that point, we have not seen real economic expansion during this entire recovery.
Financing
Weekly Survey of Rates from the Mortgage Bankers Association
For the week of May 14, 2014
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.39 percent, the lowest rate since November 2013, from 4.43 percent, with points increasing to 0.22 from 0.21 (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) remained unchanged at 4.29 percent, with points increasing to 0.16 from 0.14 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.48 percent, the lowest rate since November 2013, from 3.52 percent, with points decreasing to 0.12 from 0.22 (including the origination fee) for 80 percent LTV loans.
Commercial Real Estate Lending
Commercial Mortgage backed Securities (CMBS)– The 10 Yr Swap rate moved lower to finish the week at 2.586%, down from last weeks 2.659%.
Housing News
U.S. housing starts totaled 1.072 million in April. Economists had expected housing starts to rise to 980,000 in April, up from the prior month’s 950,000. Read more
Home builders losing confidence in recovery
After three months of holding out steady hope, sentiment among U.S. home builders weakened slightly in May. A monthly index from the National Association of Home Builders slipped one point from a downwardly revised April figure. The index now stands at 45. Anything above 50 is considered positive sentiment. Read more
Economic News
U.S. retail sales rose 0.1 percent in April. Economists had expected headline retail sales to rise by 0.4 percent, slower than the prior month’s 1.1 percent gain.
U.S. import prices fell 0.4 percent. Import prices had been forecast up 0.4 percent in April, versus 0.6 percent in the month prior.
U.S. producer prices increased 0.6 percent in April. Economists had expected producer prices to rise by 0.2 percent, slightly less than the prior month’s 0.5 percent gain.
First-time claims for state unemployment benefits totaled 297,000 in the most recent week. Economists had expected initial claims to dip to 320,000. In a separate report, April consumer prices increased 0.3 percent, in line with estimates and compared with the prior month’s 0.2 percent gain.
Sources: CNBC, Bloomberg, Housingwire, MMG