Mortgage Market News

The Mortgage Bankers Association reported today that its Market Composite Index, a measure of total loan application volume, decreased by 1.2% in the latest week. The decline in application volume comes despite near record low home loan rates. The refinance and the purchase index both fell 1%. The share of refinancing makes up 52% of total application volume. The weak origination activity comes despite being in the midst of the spring buying season.
The luxury home building sector of housing received some good news today. Toll Brothers, the nation's largest luxury home builder, reported today that 2nd quarter profits more than doubled due to higher prices and as the company delivered more properties. The average price for a Toll Brothers home rose to $706,000, up from $577,000 a year earlier.
More and more employees are getting hit with higher healthcare premiums and co-payments. It has been reported that 56% of employers have increased their employees' share of premiums or co-payments for office visits in 2014, while nearly 60% of employers will do the same this year. The move now is to introduce higher deductible plans, which could ease the cost for employees.
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Mortgage Market News

Despite the spring buying season being in full bloom and mortgage rates at lows not seen in almost a year, mortgage application volume barely budged last week. The Mortgage Bankers Association reported that its Market Composite Index, a measure of total loan application volume, rose by 0.9% in the latest week, while the refinance index increased 4%. The purchase index fell by 3%.
Zillow reported today that the national negative equity rate fell to 18.8% in the first quarter of 2014, meaning more is owed on the home than it is currently worth. In Q4 of 2013, negative equity stood at 19.4%. Zillow said that negative equity tends to limit inventory, which pushes home values higher, which in turn makes those homes that are available, that much less affordable.
Government controlled mortgage finance giant Fannie Mae said today that it has cut its outlook for home sales in 2014, as well as 2015. The move comes after markets for new and existing homes experienced weakness in the first quarter. Fannie is now forecasting that existing home sales will hit 4.98 million this year, down from the 5.04 million originally projected. Single family homes are forecasted to see sales of 476,000 this year, down from 494,000.
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Mortgage Market News

Construction of new homes surged in April from March, as the warmer weather ushered in builders to break ground on new homes at the fastest pace in 2014. The Commerce Department reported that Housing Starts jumped 13.2% in April to an annual rate of 1.07 million units, above the 975,000 that was expected. The gains were largely due to a big surge in multi-family dwellings, up 43%, while single-family starts were up less than 1%.
The labor market continues to improve across the country as the weather related issues have thawed out. The Bureau of Labor Statistics reported today that unemployment rates declined in 43 states with 30 states reporting rates below the national average of 6.3%. The lowest rate of unemployment comes from the state of North Dakota, due to a big boom in oil and natural gas explorations production. Rhode Island is the highest at 8.3%.
Consumer Sentiment across the nation declined this month as prospects of income growth dimmed. The Consumer Sentiment Index fell to 81.8 from the 84.1 reading recorded in April and below expectations of 84.5. There was some good news within the report-consumers judged the current state of the economy at the most favorable in ten years.
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Mortagge Market News

Surging food prices pushed wholesale prices higher in April signaling that pricing pressures may be building after a long period of low inflation. The Labor Department reported today that the Producer Price Index (PPI), which measures the average change over time in the selling prices received by domestic producers of goods and services, rose by 0.6% last month and was the largest monthly gain since September 2012. The Core PPI, which strips out volatile food and energy, rose by 0.5%. also above the 0.2% expected.
Home loan rates hit 2014 lows last week, which stirred up activity in the home loan rate market. The Mortgage Bankers Association reported that its Market Composite Index, a measure of total loan application volume, rose by 3.6% in the latest week. The refinance index increased by 7%, while purchases were down less than 1%.
In a sign of times to come, one in ten Americans no longer carry cash on a daily basis, according to a new report from Bankrate.com. The survey also revealed that 78% of Americans carried less than $50 in paper bills, 49% carry less than $20 and 9% didn't carry cash at all. The survey also found to some degree gender related; 86% of women carry less than $50, compared to 70% of men.
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Mortgage Market News

Home prices in the U.S. rose by 11.3% in 2013, but the lofty gains most likely will not be achieved going forward, reports Case Shiller. Case Shiller said today that it predicts a rise of just under 6% for 2014 and from the final quarter of 2013 until 2018, prices will rise just 3.1%. Home prices remain 21% below the peak reached in the first quarter of 2006.
Consumers didn't flock to retailers in April as evidenced by the weak Retail Sales report, coming in at just 0.1%, below the 0.3% expected. Consumer spending accounts for a large portion of U.S. economic activity and retail sales account for about one-third of the purchases. The numbers could be skewed as pent up demand in late February and March pushed sales up, while the Easter holiday took place three weeks later this year, which made it hard for the government to seasonally adjust the numbers.
The National Federation of Independent Business Small Business Optimism Index rose by 1.8 points in April to a post recession peak of 95.2. The index has surpassed the 95 level for the first time since 2007, but is still 5 points below the average reading from 1973 to 2008. Employers see problems in the near future related to taxes, government regulation and red tape and poor sales.
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Mortgage Markert News

The spring home buying season is in full bloom and with home loan rates near historically attractive levels, mortgage application activity picked up last week. The Mortgage Bankers Association reported that its Market Composite Index, a measure of total loan application volume, rose by 5.3% in the latest week. The refinance index increased by 2%, while the purchase index jumped 9%.
Federal Reserve Chair Janet Yellen is on Capitol Hill today testifying on the state of the U.S. economy today in front of the Joint Economic Committee. Ms. Yellen said that due to the fact that inflation remains stable, the labor markets arestill not at full force and disappointing housing activity, monetary accommodation from the Federal Reserve in the form of ultra-low rates, will continue.
The harsh winter put a crimp on worker productivity around the nation early in the first quarter of 2014. U.S. non-farm productivity fell at its fastest pace in a year declining by 1.7% after a 2.3% gain in the final quarter of 2013. Productivity measures hourly output per worker and during the January to march period, worker hours were reduced or they couldn't even get to job sites. Due to a drop in productivity, unit labor costs surged by 4.2% in the quarter, well above the 2.5% expected. Unit labor costs measure the price of labor per single unit of output.
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Mortgage Market News

Home prices continue to rise across the U.S., but the year-over-year gains are somewhat declining after the big gains seen in 2013. Corelogic reported on Tuesday that home prices, including distressed sales, rose by 11.13% year-over-year in March after a 11.81% increase in February. That is the 25th straight year-on-year gain. From February to March, prices rose by 1.4%. However, affordability, tight credit and supply concerns are becoming an increasing drag on purchase market activity, said CoreLogic.
Legendary fund manager Jeffery Gundlach, whose $32B Total Return Fund (DBLTX), which specializes in mortgage bonds and has beaten 97% of similarly managed funds, has recommended to bet against exchange traded funds that tracks homebuilders because declining affordability will reduce housing demand. Homeownership has been declining; the share of Americans who own their homes fell to 64.8% in the first quarter of 2014, an almost 19-year low.
In a recent survey, nearly half of lenders say mortgage demand is weak as credit standards tighten. The April Federal Reserve senior loan officer survey said that credit standards on mortgage loans that banks categorize as nontraditional residential mortgages and subprime residential mortgage tightened. The decline in demand has also been seen in lender earnings as more banks reporting that things are tougher currently in mortgage finance compared to a year ago.
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Mortgage Market News

Americans filing for unemployment benefits jumped in the latest week as claims usually rise around Easter, due to the holiday falling on different dates each year. Weekly Initial Jobless Claims rose by 14,000 in the latest week to 344,000, above the 315K expected. The four-week moving average, which irons out seasonal abnormalities, rose by 3,000 to 320,000. The report comes ahead of tomorrow's April Jobs Report, where it is expected that employers added 210,000 new workers in April.
American companies across the nation planned more job cuts in April than in March as the job markets continues to work through the malaise that was caused by the Great Recession. Outplacement firm Challenger, Gray & Christmas reported that planned layoffs in April were 40,298, a 17% increase from the March number of 34,399. A big portion of the cuts were seen in the retail and financial services. One bright note, planned cuts of 161,639 so far in 2014 are the lowest since 1997.
Consumer spending rose in March to the fastest pace in nearly five years, signaling that the U.S. economy has gained some strength with the arrival of spring. Consumer spending makes up more than two thirds of U.S. economic output. Personal Spending rose by 0.9%, above the 0.6% expected. Within the report it showed that the personal savings rate fell to 3.8% after hitting 4.2% in February.
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