Mortgage Market News

Home loan rates dropped to lowest levels in a year this week after a weak Gross Domestic Product report was released on Wednesday. Freddie mac reported that the 30-year fixed conventional home loan rate hit lows. A year ago, the rate was 4.46 with 0.8 points/fees added on top of the rate.
Americans filing for first time unemployment benefits continue to hover just above the 300,000 level coming in at 312,000, just above the 310,000 that was expected. The four-week moving average of claims, which irons out any seasonal abnormalities, rose by 2,000 to 314,250. Jobless claims are near post recession lows as the sector continues dig out of the hole that the recession caused.
The government reported this morning that consumers spent on cars and trucks in May, but not much else, despite decent income gains. Personal Spending rose by 0.2% in May, below the 0.4% expected. When factoring in inflation pressures, spending fell for the second straight month. Americans did see a fifth straight months of an uptick in incomes, which rose by 0.4% in May. In addition, the savings rate rose by 4.8% from 4.5%, the highest level in eight months.
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Mortgage Market News

Housing news dominates the headlines this week as the sector tries to stabilize after the harsh winter weather early in the year weighed on the market. Black Knight Financial Services reported today that home prices rose 0.9% from March to April and were up 6.4% year-over-year. Within the report it showed that 19 of the 20 largest states saw month-over-month increases.
The National Association of REALTORS© (NAR) reported that May Existing Home Sales were up 4.9% from April to an annual rate of 4.89 million units. The 4.9% was the highest monthly rate since the 5.5% recorded in August 2011. The report showed that the median home price was $213,400, which is 5.1% above May 2013, while inventories account for a 5.6 month supply. The NAR said that "buyers are benefiting from slower price growth due to much needed, rising inventory levels since the beginning of the year."
The cost of air conditioning homes across the U.S. is around $11 billion a year with air conditioning accounting for about 5% of all electricity produced in the U.S. There are a few tips to help cut costs. If you have central air conditioning, a shaded area for the unit is the best spot to ensure the highest efficiency. During the cooling period, change the filter once a month so that the unit doesn't have to work extra hard to cool the house. Closing the blinds and curtains during the peak sun hours will also boost efficiency. In addition, installing ceiling fans will also reduce costs and try to keep the lights off during the long days of sunlight in the summer
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Mortgage Market News

The Federal Reserve released its monetary policy statement yesterday stating that it will continue to taper, or scale back, on the amount of Bonds it purchases each month. The program is geared towards stimulating growth in both the U.S. economy and the jobs market. The Fed tapered by $10 billion, which would be split between Mortgage Backed and Treasury Securities, which will now total $35 billion, $15 billion in Mortgage Bonds and $25 billion in Treasuries. The Fed also announced that it is now forecasting that U.S. growth will now be around 2.1% for 2014, down from the 2.8% that was originally forecasted earlier in the year.
In economic news, Americans filing for first time unemployment benefits fell by 6,000 in the latest week to 312,000 as the labor markets continue to move to greener pastures. Recently, there have been more available jobs and layoffs have been running at very low levels. The four-week moving average of claims, which irons out seasonal abnormalities, declined by 3,750 to 311,6750, near seven year lows. Initial jobless claims are a gauge of whether layoffs are rising or falling.
The closely watched S&P 500 Stock Index hit yet another record closing high yesterday after the Federal Reserve said interest rates will remain low for a considerable time. The index closed at 1,956.86, up a whopping 193% from the low seen on March 9, 2009, which was 666, at the height of the Great Recession. With the massive stimulus program enacted by the Federal Reserve, the U.S. has grown, while corporate earnings have increased, both reasons for the meteoric rise in Stock prices.
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Mortgage Market News

The 2014 spring buying season didn't turn out to be a blockbuster season, despite historically low home loan rates. The Mortgage Bankers Association reported that its Market Composite Index, a measure of total loan application volume, fell by 9.2% in the latest week. The decline comes after a 10.3% gain in the previous week. In addition, the refinance index declined by 13%, while the purchase index fell by 5%.
The housing sector boom of 2013 is easing halfway through 2014 and predictions are falling well short from what was forecasted at the beginning of the year. Rising home prices, tight credit and the long severe winter are some of the reasons behind this year's slide. I addition, would be buyers are finding a lot less inventory than in recent years.
The mortgage industry got a shot of good news this week as far as the employment picture is concerned. After cutting 4,000 jobs in march, April saw just 300 full-time employees from the ranks. Total employment in no-bank mortgage banking and brokerage fell to 279,000 in April from 279,300 in March. A year ago, total employment was 304,200 full time employees, but as the refinance boom began to ease, employers quickly cut payrolls.
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Mortgage Market News

Consumer prices rose more than expected in May, led higher by rising costs for electricity, gasoline and food. The Consumer Price Index (CPI) rose by 0.4%, above the 0.3% gain in April to the highest rate since September 2012. The CPI measures consumer inflation and for the last 12 months, the rate has risen by 2.1%, after running at an annual rate of just 1% a year ago. The Core CPI, which strips out volatile food and energy, rose by 0.3% versus the 0.2% expected.
The hot housing market that was seen in 2013 is cooling off as the second half of 2014 approaches. The Commerce Department reported today that May Housing Starts fell by 6.5% from April to an annual rate of 1 million units. That is down from the 1.07 million in April and below the 1.028 million expected. Starts fell in single and multi-dwelling homes. Building Permits, a sign of future construction, declined by 6.4% last month to a 991,000 annual pace, below the 1.050 million expected.
The U.S. Federal Reserve kicks off its Federal Open Market Committee meeting today in Washington, D.C. where the members meet to discuss the economic climate and monetary policy. There is no chance of a rise in short term interest rate, which is currently at 0.25% for the Fed Funds Rate. The Fed Funds Rate is the rate in which depositary institutions lend funds maintained at the Federal Reserve to another depository institution overnight.
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Mortgage Market News

Student loan debt recently surpassed $1 trillion for the first as millions of young Americans struggle to find jobs to begin paying down their debts. In an effort to ease some of the burden, President Obama is about to announce a new series of programs that would reduce or cap payments at 10% of discretionary income dubbed the "Pay As You Earn". Remaining debt after 20 years for private sector workers would be forgiven and 10 years for government workers and employees of some nonprofit organizations.
Federal Reserve member and president of the St. Louis Fed James Bullard said today that the macroeconomy is much closer to normal than it has been in the past five years. Mr. Bullard said that the labor markets have not fully recovered while inflation continues to run low, though it has been moving a bit higher in recent months. The Fed member said that he sees a recovery through the rest of 2014.
The closely watched S&P 500 hit yet another record close on Friday afternoon of 1,949.44 after the government reported that employers added 217,000 new workers in May. The 1949.44 is up a whopping 192% since the low seen on March 9, 2009 of 666. Low interest rates fueled by the Federal Reserve have been one the biggest factors in the lofty levels. The S&P 500 is a basket Stocks that is considered to be one of the best benchmarks available to judge overall U.S. market performance.
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Mortgage Market News

The Labor Department reported this morning that employers across the nation held steady with hiring new workers in May. Non-farm payrolls grew by 217,000 last month, nearly inline with the 220,000 expected. After the early part of 2014 produced meager job growth due to the harsh weather, employers have ramped up hiring in recent months. Within the report it showed that the Unemployment Rate remained steady at 6.3%.
Within the report it shows that there are 138.46 million people in the U.S. workforce, right where the number stood back in January of 2008. Another troubling number is that since December 2007, the total number of jobs are virtually unchanged, while the number of people not in the workforce has increased by 12.8 million from 79.2 million to the 92 million.
Household wealth hit the highest on record in the first three months of 2014 hitting a record $81.8 trillion. The gains were led by higher home prices along with lofty Stock market levels. Checking account balances, pension plan assets and retirement savings also rose. The report went on to say that 10% of households own approximately 80% of Stocks.
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Mortgage Market News

Americans filing for first time unemployment benefits rose in the latest week, but the underlying trend signaled an improving jobs market. The Labor Department reported that Weekly Initial Jobless Claims rose by 8,000 to 312,000 and above the 310,000 expected. The four-week moving average of claims, which irons out seasonal abnormalities, fell 2,250 to 310,250, the lowest level since June 2007. 
The Federal Reserve has kept home loan rates near record lows in an effort to bolster the housing sector.
Outplacement firm Challenger, Gray & Christmas reported today employers planned to cut 52,961 jobs in May, an increase of 31% from April and was the largest one-month total since February 2013. The technology sector took the brunt of the cuts with most of the cuts coming from Hewlett Packard. Job cuts were concentrated in California, New York, Florida, Illinois and Pennsylvania.
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