Mortgage Market News

Investors around the globe will be eagerly awaiting the August Jobs Report, which is due to be released this Friday, September 4, at 9:30 a.m. ET. It is expected that employers added 217,000 new jobs during the month, down from the February high of 266,000. The Unemployment Rate is expected to fall to 5.2%, which would be the lowest level since April 2008. The jobs numbers will be one of the key deciding factors in the Federal Reserve's decision as to whether or not to raise the Fed Funds Rate, the country's benchmark interest rate,.in September,
The first of three key readings in the manufacturing sector was reported today showing that business activity in the Midwest region declined marginally in August, but still managed to show expansion. The Chicago PMI Index came in at 54.4, just shy of the 54.7 expected and down from the 54.7 recorded in July. Readings over 50 indicate expansion, below 50, contraction. The national ISM Manufacturing Index will be released on Tuesday.
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Mortgage Market News

Economic growth in the U.S. surged in the second quarter led by rising business investments and consumer spending. The Bureau of Economic Analysis reported that the second reading for second quarter Gross Domestic Product (GDP) rose by 3.7%, above the first reading of 2.3% and well above the anemic 0.6% recorded in the first quarter. GDP measures the value of all goods produced in the U.S. The consumer spending component of GDP rose by 3.1% compared to the 1.8% registered in the first quarter.
The National Association of REALTORS® (NAR) reported on Thursday that July Pending Home Sales were mostly unchanged, but did see a modest rise for the sixth time in seven months. Pending Home Sales rose by 0.5% versus the 1% expected and the index has increased year-over-year for 11 consecutive months. Lawrence Yun, NAR chief economist, says the housing market began the second half of 2015 on a positive note, with pending sales slightly rising in July.
Mortgage rates edged lower this week led by turmoil in the Chinese Stock markets. The 30-year conforming fixed-rate mortgage fell.
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Mortgage Market News

The Mortgage Bankers Association (MBA) reported on Wednesday that a recent study showed that housing demand will surge over the next ten years. The MBA feels that between 13.9 and 15.9 million households will be formed by 2023, making the next 10 years one of the strongest in housing in U.S. history. The MBA went on to say that the housing demand will be driven by Hispanics, Baby Boomers and Millennials.
Online real estate company Zillow reported on Wednesday that it sees the housing market slowing down a bit as home prices saw their first negative monthly change since the recovery four years ago. Zillow said that home prices declined 0.1% in July, falling to $179,900. On an annual basis, prices rose 3.0% from July 2014 to July 2015, down from 3.4% in the year ended in June. Of the 517 metro cities covered by Zillow, 204 saw a slowdown in prices and were back to more normal levels of appreciation.
With oil prices continuing to decline in world markets due to slowing demand and a surge in supply, prices at the gas pumps are falling. The national average price for a regular gallon of gasoline is at $2.55, down from $2.72 a month ago. Recently, gas prices have been slow to push lower with the big drop in oil and this is due to outages at several major refineries. Gas analyst Tom Kloza from the Oil Price Information Service sees prices below $2 per gallon by Thanksgiving. Mr. Kloza says that the summer driving season ends this month and with refineries able to refine oil into gas at less expensive prices for its winter blend, prices will begin declining.
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Mortgage Market News

Housing news was abundant today showing positive gains for the sector. The Case Shiller 20-city Index rose 5% in the year ended in June, which was near expectations and matched the May reading. On a month-over-month basis, the index was down 0.1%. The big gains were seen in Denver (10.2%), San Francisco (9.5%) and Dallas (8.2%). The component that covers the entire nation was up 4.5% in the past 12 month.
The Commerce Department reported on Tuesday that New Home Sales in July rose 5.4% from June to an annual rate of 507,000 units. The increase of 5.4% comes after a 7.7% decline from May to June. Sales were up nearly 29% from July 2014, while the median price of a new home rose 2% from a year ago to $285,900. On the supply side, the inventory of New Homes for sale was up almost 2% to 218,000, the highest level since March 2010, though still less than half below of what it was at the height of the housing boom.
Consumer across the nation felt confident in August over the current state of the U.S. economy, which was fueled by an improving labor market. The Conference Board reported that its Consumer Confidence Index rose to 101.5 in August, the best reading since January and well above the 93.0 expected. In addition, it was the second highest reading since the Great Recession began in late 2007. “Consumers’ assessment of current conditions was considerably more upbeat, primarily due to a more favorable appraisal of the labor market," said Lynn Franco, Director of economic indicators at the Conference Board.
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Mortgage Market News

The National Association of REALTORS® (NAR) reported that Existing Home Sales in July were up 2% from June to an annual rate of 5.59 million units, the highest pace since February 2007. The 5.59 million was above the 5.42 million expected. Since July 2014, sales are up 10%. A spokesperson from the NAR said that tight inventories are driving prices up and that a more robust housing market could provide further support for the U.S. economy.
The Federal Reserve released the minutes from its July 29 meeting on Wednesday with a majority of the members saying the time is coming for interest rates to rise. "Most judged that the conditions for policy firming had not yet been achieved, but noted that conditions were approaching that point." Many analysts have been pointing towards a rate hike in September, but after the minutes were released, rates could rise later in the year and not next month.
Oil prices continue to edge lower this week, due to an over supply of oil around the globe. The price of West Texas Intermediate oil has fallen to $41/barrel, a six and a half year low. The drop in oil has lowered the price of gas at the pumps for most of the country. In parts of New Jersey, the price for a regular gallon of gasoline is at $2.07. The current national average price for a regular gallon of gas is at $2.66. Many gas analysts see the price of gas moving lower to a national average of $2 sometime in late fall.
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Mortagge Market News

The National Association of REALTORS® (NAR) reported that Existing Home Sales in July were up 2% from June to an annual rate of 5.59 million units, the highest pace since February 2007. The 5.59 million was above the 5.42 million expected. Since July 2014, sales are up 10%. A spokesperson from the NAR said that tight inventories are driving prices up and that a more robust housing market could provide further support for the U.S. economy.
The Federal Reserve released the minutes from its July 29 meeting on Wednesday with a majority of the members saying the time is coming for interest rates to rise. "Most judged that the conditions for policy firming had not yet been achieved, but noted that conditions were approaching that point." Many analysts have been pointing towards a rate hike in September, but after the minutes were released, rates could rise later in the year and not next month.
Oil prices continue to edge lower this week, due to an over supply of oil around the globe. The price of West Texas Intermediate oil has fallen to $41/barrel, a six and a half year low. The drop in oil has lowered the price of gas at the pumps for most of the country. In parts of New Jersey, the price for a regular gallon of gasoline is at $2.07. The current national average price for a regular gallon of gas is at $2.66. Many gas analysts see the price of gas moving lower to a national average of $2 sometime in late fall.
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Mortgage Market News

Inflation at the consumer level remained tame in July as rising housing costs were offset by by little changes in most other consumer goods. The Bureau of Labor Statistics reported on Wednesday that the inflation reading Consumer Price Index rose 0.1% in July, below the 0.2% expected and down from the 0.3% registered in June. It was the smallest increase in six months. Shelter costs rose 0.4%, the biggest gain in more than eight years, while year-over-year housing costs are up 3.1%, the largest annual increase since 2008.
Mortgage application volume rose in the latest week as interest rates to purchase and refinance remained near historic lows. The Mortgage Bankers Association (MBA) reported that its Market Composite Index, a measure of total loan application volume, rose 3.6% in the latest week. Within the numbers it showed that the refinance index was up 7%, while the purchase index gained 0.1%. The MBA also reported that the average contract rate for a 30-year fixed rate mortgage with conforming loan balances ($417,000 or less) decreased to 4.11% with points increasing to 0.37.
Breakfast may be getting more expensive in the coming months as egg prices soar at supermarkets. Due to the worst avian flu outbreak in 30 years there is limited supply which has caused egg prices to spike this year, and prices will continue to rise. The current price for a dozen of eggs are at a range between $1.99 to $4.49 and could hit $6 per dozen by the fall. So don't be surprised by the higher price of a bacon, egg and cheese at your local breakfast spot in the coming months either.
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Mortgage Market News

Job openings across the nation edged lower in June, though current levels still suggest that demand for workers remains robust. The Labor Department's Job Openings and Labor Turnover Survey (JOLTS) revealed that job openings totaled 5.25 million in June, down from the 5.36 million in May. The job openings rate for June 2015 remained at 3.6% for the third month in a row. Job openings have jumped 11% in the past year, a sign that companies feel that demand for goods and services will pick up.
The International Energy Agency reported its monthly data on oil showing that global demand is growing at its fastest pace in five years, as economic growth continues and consumers respond to lower oil prices. However, global oversupply through 2016 as a glut of oil is flowing through pipes around the world's largest producers. Oil prices have fallen below $50 per barrel, due to the oversupply and a strong dollar. As oil moves lower, prices at the pump are expected to move back to near $2 per gallon on average by December.
The recent move by China to devalue their currency has left global Stock markets in a panic feeling that the world's second largest economy is beginning to slow. The fallout here in the U.S. has pushed the closely watched S&P 500 Stock Index into negative territory for the year, after having plunged for two straight days. The U.S. Stock markets have been on a blistering pace higher since hitting multi-year lows back in March of 2009, which was the height of the Great Recession. The index hit 666 on March 9, 2009, and recently hit an all-time closing high of 2,130 back in May.
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Mortgage Market News

Analytics firm CoreLogic reported on Tuesday that there were 43,000 completed foreclosures in June, down nearly 15% from the 50,000 in June 2014. In comparison, before the decline in the housing market in 2007, completed foreclosures were running at 21,000 per month on average from 2000 to 2006. On a month-over-month basis, completed foreclosures were up 4.8%. Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. A CoreLogic spokesperson said, "the foreclosure rate has dropped to its lowest level since 2007, supported by a decline in loans made in 2009, gains in employment and higher housing prices."
Small business owners' confidence rebounded in July, after the sharp decline in June. The National Federation of Independent Business's Small Business Optimism Index increased 1.3 points to 95.4. The report revealed that seven of the ten subindexes increased in July. Within the report it showed that the job-creation index gained three points, though there were no indications of a second half liftoff for the amount of jobs created. In addition, the profits trend index decreased further as owners reported lower profits during the month.
The National Association of REALTORS® (NAR) reported that median home prices rose in 93% of 176 metropolitan areas in the second quarter of 2015. The big rise comes after the 85% rise recorded in the first quarter for those 176 metro areas. Insufficient supply was a key factor in the gains. Lawrence Yun, NAR chief economist, says the housing market has shifted into a higher gear in recent months. "Steady rent increases, the slow rise in mortgage rates and stronger local job markets fueled demand throughout most of the country this spring,"
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The big talk on Wall Street continues to be whether or not the Federal Reserve will begin to raise the short term Fed Funds Rate sometime in the fall. Most economists feel that a rate hike will come in September, but Federal Reserve Vice Chairman Stanley Fischer put some doubts on that happening next month. Mr. Fisher said today that the interesting situation is that employment has been rising pretty fast, but inflation continues to run very low. Mr. Fischer does not want to see a raise in rates until we can see inflation return to more normal levels.
After falling for the last seven business days, Stock prices are rallying today on a series of bullish headlines. Warren Buffet's Berkshire Hathaway has agreed to purchase Precision Castparts, a U.S. aircraft parts maker for $37.2B. Additionally, Mr. Buffet made bullish comments on shares of IBM. Overseas, Chinese producer prices fell, conjuring up notions that its central bank may evoke additional stimulus measures. It was also reported that Greek banks may be getting capital infusions in the next few weeks.
With a glut of oil running through global pipelines and demand a bit low, prices have been falling since spring. The price of West Texas Intermediate (WTI) has fallen to $44/barrel from the $62 seen in the beginning of May. The recent decline in oil has sent the national average price for a regular gallon of gasoline at the pumps to $2.59, down from $2.75 in early May. AAA says that gas prices could drop even further if oil continues to fall and we could see another run towards $2 per gallon by the end of the year.
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Mortgage Market News

The highly anticipated July Jobs Report was released with little fanfare on Friday as the numbers came in close to expectations. The Bureau of Labor Statistics reported that July Non-farm Payrolls came in at 215,000, below the 229,000 expected, while the May and June numbers were revised higher by a total of 13,000. Job creation has been steady in 2015, though it has been running below last year's numbers up until this point in time. Within the Jobs Report it showed that the Unemployment Rate remained at 5.3%, while wage growth edged higher.
The report bolsters the case for a September interest rate hike from the Federal Reserve due to an improving economy along with an uptick in wage growth. The Federal Reserve members will meet in mid-September to discuss monetary policy and decide if the economy is healthy enough to usher in the first interest rate hike since 2008. With the Fed Funds Rate at or near zero at the current time, the path of least resistance will be higher. The timing will be in focus … will it be next month, October or December? Most analysts are looking for a September rate hike. The Fed Funds Rate is the interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution overnight.
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Mortgage Market News

The labor market suffered a minor setback today after headlines read that private employers added less jobs than was expected in July. Payroll service firm ADP reported that private employers added 185,000 jobs in July, below the 220,000 expected and down from the 229,000 created in June, which was revised lower from 237,000. And though job growth has been strong, it has been moderating since the beginning of the year, noted Mark Zandi, chief economist at Moody's Analytics Inc. The ADP report comes ahead of Friday's government Jobs Report where it is expected that 220,000 were created in both the private and public sector.
The Institute for Supply Management (ISM) reported that its ISM Service Index (non-manufacturing) jumped to 60.3 in July, up from the June reading of 56 and above the 56.3 expected. The 60.3 was the best reading in 10 years. All of the components within the index showed strong gains with new orders and employment the standouts. Most respondents continue to have a positive outlook on business conditions and the overall economy. A reading above 50 indicates the non-manufacturing sector economy is generally expanding; below 50 indicates it is generally contracting.
Home loan rates edged lower in the latest survey from the Mortgage Bankers Association (MBA) falling in the previous week with .034 points on top of the rate. The recent rise in Bond prices was the catalyst behind the push lower in rates, as mortgage rates are generally tied to the ebb and flow of Bond market fluctuations. Within the data it also showed that the MBA's Market Composite Index, a measure of total loan application volume, jumped 4.7%, while the refinance index was up 6%, purchase index gained 3.3%.
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Mortgage Market News

Home prices across the nation jumped in June due to pent-up demand and affordability, along with a more robust labor market. CoreLogic reported on Tuesday that home prices, including distressed sales, rose 6.5% from June 2014 through June 2015, the 40th consecutive month of year-over-year price gains. May to June saw a 1.7% increase. Prices are down 7.4% from the peak seen back in April 2006. Looking ahead, prices are expected to increase 0.5% from June to July and 4.2% from June 2015 to June 2016.
The Federal Reserve released its July 2015 Senior Loan Officer Opinion Survey on Bank Lending Practices yesterday revealing that banks reported having eased lending standards for a number of categories of residential loans over the past three months. Most banks reported no change in standards and terms on consumer loans. Banks also reported stronger demand for home-purchase loans, while they also saw greater demand for auto and credit card loans.
Freddie Mac reported a profit of $4.2 billion in the second quarter of 2015 citing big gains in its loan guarantee and investment portfolio. The $4.2 billion is up a whopping 700% from the first quarter and allows the government controlled mortgage finance company the ability to cut a check for $3.9 billion to the U.S. Treasury. Both Freddie Mac and Fannie Mae were bailed out by the government when the housing bubble burst back in 2008 and have since been required to sweep profits to the Treasury under terms of the bailout.
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Mortgage Market News

Americans across the nation eased up on spending for goods and services in June as wage growth continues to be a bit of a drag on the economy. Personal Spending, which measures money spent on everything from bagels to refrigerators, rose 0.2% in June from May, the smallest monthly gain since February. The 0.2% is well below the 0.7% recorded in May and just below the 0.3% expected.
Inflation continues to run below the Federal Reserve's target levels of near 2% as the economy continues to grow at a slow pace in 2015. Core Personal Consumption Expenditures (PCE), which measures price changes in consumer goods and services, rose by 1.3% year-over-year in the month ended in June. Inflation remains subdued and has remained well below the Federal Reserve's aforementioned target level of 2% for the 38th straight month. Low inflation has been mainly due to a sluggish U.S. economy, lower oil prices along with weak global economies.
Lower oil prices continued to drag on energy related industries in July as reported by the Institute of Supply Management (ISM). The ISM Manufacturing Index for July fell to 52.7 from the June reading of 53.5 and below the 53.7 expected. A reading above 50 indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting. Several of the components within the report declined, such as the employment index, which showed that employment levels declined from June, while new orders also decreased.
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Mortgage Market News




Will the new mortgage disclosures delay my closing?

The answer is NO for just about everybody.

When the Know Before You Owe mortgage disclosure rule becomes effective, lenders must give you new, easier-to-use disclosures about your loan three business days before closing. This gives you time to review the terms of the deal before you get to the closing table.


Many things can change in the days leading up to closing. Most changes will not require your lender to give you three more business days to review the new terms before closing. The new rule allows for ordinary changes that do not alter the basic terms of the deal.

Only THREE changes require a new 3–day review:




  1. The APR (annual percentage rate) increases by more than 1/8 of a percent for fixed-rate loans or 1/4 of a percent for adjustable loans.1 A decrease in APR will not require a new 3-day review if it is based on changes to interest rate or other fees.
  2. A prepayment penalty is added, making it expensive to refinance or sell.
  3. The basic loan product changes, such as a switch from fixed rate to adjustable interest rate or to a loan with interest-only payments.




 

1 Lenders have been required to provide a 3-day review for these changes in APR since 2009.







NO OTHER changes require a new 3–day review:



There has been much misinformation and mistaken commentary around this point. Any other changes in the days leading up to closing do not require a new 3-day review, although the lender will still have to provide an updated disclosure.

For example, the following circumstances do not require a new 3-day review:

  1. Unexpected discoveries on a walk-through such as a broken refrigerator or a missing stove, even if they require seller credits to the buyer.
  2. Most changes to payments made at closing, including the amount of the real estate commission, taxes and utilities proration, and the amount paid into escrow.
  3. Typos found at the closing table.


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