Mortgage Market News

The lofty home price gains seen in 2013 are quickly fading to more sustainable levels in 2014. The September Case Shiller 20-city Home Price Index rose by 4.6% from September 2013, the slowest gain in two years. The 4.6% is down from the August annual rate of 5.6%, but above 4.6% expected. September saw a 0.3% gain, which was the first positive reading since April. A spokesman for Case Shiller said "the overall trend in home price increases continues to slow down."
Consumer Confidence unexpectedly slipped in November after a strong reading the month before declining to 88.7 from 94.1 in October. The 88.7 was below the 96.0 expected. Lynn Franco, Director of Economic Indicators at the Conference Board said, "Consumer confidence retreated in November, primarily due to reduced optimism in the short-term outlook." Within the report it showed that consumer assessment of the job market was slightly less favorable than the October reading.
Economic growth across the nation continued to be solid in the third quarter of 2014 led by stronger consumer and business spending. The second estimate for third quarter 2014 Gross Domestic Product (GDP) rose by 3.9%, up from the initial reading of 3.5%, which was above the 3.2% expected. The weak gains seen earlier this year, due to the harsh winter weather, have quickly faded. For the past six months GDP rose by 4.2%, the strongest stretch since the middle of 2003. Combining all three quarters this year, GDP is running at a 2.1% pace, not a real good number, but has been improving. GDP measures goods and services produced across the economy.
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Mortgage Market News

News from the housing sector showed that confidence among home builders is on the rise, after some weak readings earlier in the year. Rising consumer confidence has been a key reason for the turnaround. The National Association of Home Builders (NAHB) reported on Tuesday that its Housing Market Index rose to 58 in November from October and above the 55 that was expected. An NAHB spokesman said "low interest rates, affordable home prices and solid job creation are contributing to a steady housing recovery."
Inflation at the wholesale level unexpectedly increased in October, despite the decline in gas prices at the pumps. Lower gas prices were offset by rising prices for meat, electric power, pharmaceuticals and passenger cars. The Producer Price Index (PPI) rose by 0.2% last month, above the -0.2% expected and up from the -0.1% in September. When stripping out volatile food and energy, the so-called Core PPI rose by 0.4%, above the 0.1% expected. The index measures the cost of goods and services before they reach the consumer.
Early season snowstorms are blanketing half of the U.S. with even Amarillo, Texas receiving nearly three inches of snow a few days ago. Upstate New York, which is a big snow state, is currently receiving three or four feet of snow, which is not typical this early in the season. The National Operational Hydrologic Remote Sensing Center reported that there was snow cover on 50.1% of the lower 48 U.S. states as of today, which is the earliest that the halfway mark has been passed since it began measuring this method in 2008. It also beats a similar method that dates back to 2003 that included parts of Canada.
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Mortgage Market News

News from abroad read that Japan has fallen into a recession after the country's Gross Domestic Product (GDP) declined for two consecutive quarters. A recession is defined as a significant decline in economic activity, which includes industrial production, employment, real income and wholesale retail trade. A recession is measured by two consecutive negative quarters of GDP data. Japan's GDP fell by 1.6% in the third quarter after falling 7.3% in the second quarter.
The New York State Manufacturing Index bounced back in November after a somewhat weak reading in October. The index rose by 10.2 this month, up from the 6.2 registered in October, but lower than the 12.0 expected. The general business index signaled that business condition activity continued to expand in November, though at a slower pace from the May to September period. Within the report it showed that the employment component edged lower.
A recent study reveals that first-time homebuyers are faced with many challenges with the mortgage process, according the J.D. Power 2014 Primary Mortgage Origination Satisfaction study. The big issues facing first time homebuyers is growing student loan debt and affordability. Recent data shows that among the respondents purchasing a home, 58% are first timers. In addition, lack of experience and uncertainty regarding the process is also a barrier when it comes to first time buyers.
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Mortgage Market News

The Mortgage Bankers Association (MBA) reported today that its Builder Application Survey for October showed that mortgage applications for new home purchases rose by 8% from September. Within the release it showed that new single-family homes were running at a seasonal adjusted annual rate of 461,000 units in October, which is up 8.5% from the September number of 425,000. In October it is estimated that there were 36,000 new home sales, up from the 32,000 in September, a 12.5% gain.
The mortgage delinquency rate in the U.S. continued to decline in the third quarter as the rate has now returned to the levels last seen before the housing market downturn. Late payments on mortgages declined to 5.85% in the third quarter and has now fallen six straight quarters as the economy and the job market recovers. It is the lowest level since the fourth quarter of 2007, according to the Mortgage Bankers Association's latest National Delinquency Survey.
The ongoing story of lower gas prices at the pumps continues to dominate the headlines. The current national average price for a regular gallon of gasoline is at $2.91, down from $3.18 a month ago. The U.S. Energy Department reports that the average price of gasoline will be below $3 a gallon in 2015, with consumers saving $61 billion on gas compared to 2014. The average price motorists can expect to pay at the pumps for a regular gallon of gas in 2015 is expected at $2.94, predicts the Department of Energy.
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Mortgage Market News

The Labor Department reported this morning that Americans filing for first time unemployment benefits rose in the latest week, but continue to remain near multi-year lows. Weekly Initial Jobless Claims were up 12,000 in the latest week to 290,000, which was above the 280,000 expected. Claims have remained below the 300,000 level for nine straight weeks, a feat that has not occurred since 2000. However, there are 18.2 million Americans that they can't find a full-time job, which is not a good sign five years into an economic recovery.
In the foreclosure arena, RealtyTrac reported that foreclosure filings, including default notices, scheduled auctions and bank repossessions, rose for the second straight month in October. Filings were up 15% from September to October, but are lower by 8% from year ago levels. The 15% was the largest month-over-month increase since foreclosure activity topped out back in March 2010. Properties scheduled for foreclosure totaled nearly 60,000 in October, up 24% from the previous month and up 7% from last year this time.
The Bureau of Labor Statistics reported today that U.S. employers hired workers at a rapid pace in September, as evidenced by the Job Openings and Labor Turnover Survey (JOLTS). There were 5 million employees added to the staffs in September, which was the strongest pace since the last recession began back in 2008. In addition, the rate at which employees quit their jobs rose to a six-year high, a sign that Americans are confident that they can seek employment elsewhere.
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Mortgage Market News

The Mortgage Bankers Association (MBA) reported today that despite home loan rates hovering near 18-month lows, mortgage applications fell in the latest week. As the holiday season approaches, decisions on purchasing or refinancing mortgages could be taking a back seat. The MBA reported that its Market Composite Index, a measure of total loan application volume, fell by 0.9% in the latest week. The refinance index declined 2%, while the purchase index fell by 1% from a week earlier.
Five of the largest banks in the world have agreed to pay massive fines over allegations that they attempted to manipulate foreign exchange rates. The United Kingdom's Financial Conduct Authority has fined Citibank, HSBC, JPMorgan Chase, RBS and UBS a total of $3.38 billion. The fine is the largest ever imposed by the British regulator saying that between 2008 and 2013, the banks allowed traders to share confidential information and collude with each other to fix rates and to increase the bottom line. Foreign exchange rates impact the price of imported goods, company earnings and a host of investments held by pension funds and others.
On the lighter side, with Thanksgiving rapidly approaching, a few facts to know about the upcoming U.S. holiday. Legend has it that the TV dinner was born in 1953 when someone at Swanson misjudged the number of frozen turkeys needed by 26 tons! So Swanson cut up the turkeys and the TV dinner was born. If Ben Franklin had his way, the turkey would have been our national bird. Franklin said the eagle had bad moral character and that the turkey was a much more respectable bird. And last, only male turkeys gobble. Females, called hens, cackle.
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Mortgage Market News

The list of U.S. retailers to remain closed on Thanksgiving continues to grow this year as they give their workers a break and maintain their reputations. Retailers are now pushing back against the "Black Friday creep", where retailers open for business on Thanksgiving. A Sam's Club spokeswoman said that they "want their associates to have that time to spend with their families, while their customers wanted to spend the day with their loved ones." However, Radio Shack announced it will opening its doors at 8:00am on Thanksgiving as the struggling electronics store looks to increase sales.
D.R. Horton, the largest U.S. homebuilder, reported today that quarterly revenues from home sales rose by 33% in its latest earnings report to $2.40 billion, which was above the $2.38 billion expected. In addition, the number of homes sold jumped by 25% to 8,612 units - the company caters to those purchasing their first or second homes. Within the report it showed that the homebuilder had earnings per share of 45 cents, which was below the 48 cents that was estimated.
After a brief pause in October, U.S. Stock markets are trading at all-time highs with the closely watched S&P 500 Index hitting 39 new closing highs in 2014 versus 45 in 2013. The index is now up 10% for the year after rising by a staggering 31% in 2013. In addition, it is up over 200% since the low of 666 seen on March 9, 2009, which was the height of the great Recession. The meteoric rise in Stocks has been due to a recovering job and housing market along with an economic recovery, which has been due in part to the various stimulus programs enacted by the U.S. Federal Reserve. The S&P is now at 2,037.
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Mortgage Market News

Government sponsored agency Fannie Mae released its October National Housing Survey revealing that Americans' optimism regarding the housing market continued its gradual ascent amid greater confidence in household income and personal finances. Within the report it showed that those who feel it is a good time to sell rose to 44%, a new all-time survey high. In addition, the percentage of those surveyed who expect their personal financial situation to get better over the next 12 months increased to 45%.
Gas prices at the pump continued to decline in the latest survey, which is putting extra cash in the pockets of consumers as the holiday shopping gets underway. The national average price for a regular gallon of gasoline is at $2.92, down from $3.24 a month ago and below the $3 level for the first time since 2010. However, the decline in gas prices are being offset by soaring food costs. In one hand, and out of the other.
The U.S. Department of Agriculture predicts that food prices will rise 2.5 to 3% this year, which is above the current inflation rate of 1.7%. Analysts are predicting that higher food prices could wipe out $10 billion from the wallets of consumers in November and December compared with last year, which is double the $5 billion boost expected from lower gas prices.
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Mortgage Market News

Americans filing for first time unemployment benefits fell to multi-year lows in the latest week as the sector continues to recover and move into greener pastures. The Labor Department reported that Weekly Initial Jobless Claims fell by 10,000 to 278,000 and is the second lowest level since the Great Recession ended. The four-week moving average of claims, which irons out seasonal abnormalities, fell to a 14-year low of 279,000, down 2,950 from the previous week. Since June, claims have averaged 293,000 per week compared to last year's same time period of 343,000 and well below the 594,000 average per week in 2009.
Global outplacement firm Challenger, Gray & Christmas reported today that after falling to a 14-year low in September, planned layoffs by employers across the nation surged by nearly 70% from September. U.S. employers announced planned cuts of 51,183 in October, well above the 30,477 planned in September. October is the second highest amount of planned cuts since the May 2014 figure of 52,961 and marks only the fourth time in the last 22 months that planned cuts were above 50,000.
With the Thanksgiving Holiday quickly approaching, more Americans are expected to take to the skies to visit friends and relatives this season. Airlines for America reports that 24.6 million passengers will fly domestically between November 21 and December 2. That's up about 1.5% from 2013, or 31,000 more passengers per day. U.S. carriers have reaped some big profits in that past year and are making sure that there is enough room to meet the growing demand. The top three destinations for Thanksgiving are Chicago, Orlando and Cancun.
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Mortgage Market News

The first of two closely watched reports on the labor markets was released this morning showing that private employers added more jobs in October than expected, as the sector continues to move to greener pastures. Payroll processor ADP reported today that private employers added 230,000 jobs in October led by a big surge in hiring at mid-size businesses. That was better than the 220,000 that was expected while September was revised to 225,000 from 213,000. With October's gain, private sector jobs have hit at least 200,000 per month for a record seven straight months, which dates back to the inception of the ADP report in 2001.
The Mortgage Bankers Association reported today that credit availability declined in October, according to its Mortgage Credit Availability Index (MCAI). The MCAI decreased by 2.5% in October after having held steady in September, while August saw a decline. An MBA spokesman said "the major cause of decline in the credit index was the removal of special loan programs which only pertain to REO (Real Estate Owned) sales." A decline in the MCAI signals lending standards are tightening, while a rise in the index indicates loosening of credit.
Mortgage applications declined in the latest week as home loan rates edged higher, but applications continue to hover near 18-month lows. The Mortgage Bankers Association reported that its Market Composite Index, a measure of total loan application volume, fell by 2.6% in the latest week, which includes both refinancing and home purchase demand. The refinance index fell by 5.5%, while the purchase index rose 2.6%. The survey covers over 75% of U.S. retail residential mortgage applications.
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Mortgage Market News

The big home price gains that were seen in 2013 have leveled off to more normal levels in 2014. CoreLogic reported on Tuesday that housing prices, including distressed sales, rose by 5.6% from September 2013 to September 2014, marking 31 months of straight year-over-year increases. However, that is down from the August level of 5.8% and July's 6.4% yearly increases. In addition, prices declined by 0.1% from August to September. CoreLogic is a leading provider of consumer, financial and property information, analytics and services to business and government.
The European Union (EU) cut its growth forecast for 2014 and 2015 today. The headlines pushed Stock prices lower around the globe and is spilling over into the U.S. Equity markets. Growth forecasts for the 28-nation Eurozone are now 1.3% for 2014, down from 1.6%. A big problem is low inflation with predictions of a 0.5% rate this year before rising to 0.8% in 2015. The German economy, long seen as the standout in the region, is expected to grow by 1.3% this year, down from the original forecast of 1.8%.
The weak European forecasts continue to move oil prices lower to their lowest levels since October 2011 hitting $75.84 a barrel on Tuesday. This has put some extra cash in the pockets of U.S. consumers as Americans are paying the lowest for gas prices since December 2010. The national average price for a regular gallon of gasoline at $2.97. In some parts of the country prices can be seen near $2.50.
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Mortgage Market News

The National Association of REALTORS® (NAR) released the findings from its 2014 Profile of Home Buyers and Sellers today revealing that 33% of recent home buyers were first time home buyers. The 33% is down from 38% a year ago and below the historical norm of 40% among primary residence buyers and is also a 30-year low. The details showed that the typical first time BUYER was 31-yearS old, while the repeat buyer was 53. A spokesman from the NAR said "rising rents and repaying student loan debt makes saving for a down payment more difficult, especially for young adults who've experienced limited job prospects and flat wage growth since entering the job market."
A report from Black Knight Financial Services says that near record low home loan rates for the 30-year mortgage interest rate has expanded the number of borrowers who could benefit from refinancing their current mortgages. The number of those who could benefit has swelled by 25% to 7.4 million borrowers. Within the report it also said that the share of borrowers with negative equity declined to just below 8% as of July, down from 33% at the end of 2011 and is at the lowest point since 2007.
The Federal Reserve's Bond buying program, otherwise known as Quantitative Easing or QE, ended in October due to gains in the job markets and strength in the U.S. economy. QE began back in early 2009 and has run in one form or another since that time up until last month. The Fed's balance sheet now stands at $4 trillion, which is made up of Treasury and Mortgage Backed Securities. However, the shorter term Fed Funds Rate, currently at 0.0% to 0.25%, will remain low for a considerable time.
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