Mortgage Market News

Americans flocked to the malls this past weekend and online to purchase gifts as the holiday shopping season unofficially kicked off with Black Friday. The National Retail Federation (NRF) reported that more than 151 million people said they shopped in stores and/or online during the long weekend. The NRF went on to say that more than 121 million people will purchase items online today, which is known as Cyber Monday, a 5% decrease from last year's 126 million.
The manufacturing sector continues to be a drag on the U.S. economy as evidenced by the recent weak numbers from the New York State region and today's report from the Chicago area. The Chicago Purchasing Managers Index, a measure of business activity, fell to 48.7, below the 55 expected and down from the 56.2 recorded in October. Readings below 50 indicate contraction, above 50, expansion.
The National Association of REALTORS® reports that Pending Home Sales in October increased 0.2%, below the 0.7% expected following two months of declines. The index is up nearly 4% from a year ago and has produced annual gains for 14 straight months. Pending Home Sales measures signed real estate contracts for existing single-family homes, condos and co-ops. Lawrence Yun, NAR chief economist, says pending sales have plateaued this fall as buyers struggle to overcome a scant number of available homes for sale and prices that are rising too fast in some markets.
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Mortgage Market News

Home prices experienced solid gains across the U.S. as the sector continues to improve. The Case Shiller 20-city Index saw home price gains rise 5.5% on an annual basis from September 2014 to September 2015, up from the 5.1% recorded in August on a year-over-year basis. However, the lofty gains could be shutting many buyers out of the market. The national index rose 0.8% from August to September. "Home prices and housing continue to show strength with home prices rising at more than double the rate of inflation,” said David Blitzer, managing director at S&P Dow Jones Indices, which produces the numbers for the Case Shiller report.
The Bureau of Economic Analysis reported on Tuesday that the second reading for economic growth in the third quarter was revised higher from the initial reading, led by a buildup in inventories. Gross Domestic Product rose to 2.1% from the 1.5% originally reported, but well below the 3.9% recorded in the second quarter. Within the numbers it showed that consumer spending edged lower, though it still remains at a brisk pace of 3%. Gross domestic product is the monetary value of all the finished goods and services produced within a country's borders in a specific time period.
Consumer Confidence declined to the lowest levels since September 2014 as Americans were less favorable on the job market. The Conference Board reported that its Consumer Confidence Index fell to 90.4 in November, below the 99.6 expected and down from the 99.1 registered in October. Within the report it said that those anticipating more jobs in the months ahead declined, while those anticipating fewer jobs increased.
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Mortgage Market News

The National Association of REALTORS® (NAR) reported on Monday that Existing Home Sales in October declined 3.5% from September to an annual rate of 5.36 million units, lower than the 5.50 million expected. Year-over-year, sales were up 3.9%. The NAR said that the WestERN region was hit the hardest with a near 9% decline. The median home price for all housing types was $219,600, which is 5.8% above the $207,500 recorded in October 2014. Inventories declined to 4.5%.A spokesperson from the NAR said
Fannie Mae released its November Economic and Housing Outlook revealing that it sees economic growth rising the fourth quarter of 2015 bringing the yearly total to 2.2% with a slight pickup to 2.4% in 2015. Fannie Mae said that solid consumer spending, an increase in construction activity, home sales and home prices appear poised to offset global headwinds. On the housing end, Fannie Mae expects mortgage rates to rise only gradually through next year, and an improving income trend should support affordability.
Fun facts about Thanksgiving. On December 26, 1941, President Franklin D. Roosevelt signed a joint resolution of Congress changing the national day of Thanksgiving from the last Thursday of the month to the fourth Thursday. The first Macy's Thanksgiving parade took place in New York City in 1924. It featured animals from the Central Park Zoo instead of floats; floats didn't join the route until 1927. The average person consumes 3,000 calories during Thanksgiving dinner. With other meals and snacking included, it can add up to around 4,000 and 6,000 calories.
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Mortgage Market News

The San Francisco Federal Reserve Bank reported this week that it doesn't see another housing bubble forming. In its findings, the bank said that home prices have rebounded and are nearly back to the pre-recession peak. The bank said, "However, conditions in the latest boom appear far less precarious than those in the previous episode. The current run-up exhibits a less-pronounced increase in the house price-to-rent ratio and an outright decline in the household mortgage debt-to-income ratio—a pattern that is not suggestive of a credit-fueled bubble."
Research firm CoreLogic reported this week that cash sales accounted for 31.7% of total home sales in August, down from 34.9% in the same month last year. August rose 0.8% from July. Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25%. According to CoreLogic’s report, the cash sales share typically increases month over month in August due to seasonality in the housing market. CoreLogic does see cash sales to return to pre-recession levels in 2017.
Black Friday deals will be coming early this year and could start as early as this weekend. A spokesperson for BlackFriday.com says deals are spread out over a longer time period this year. Amazon, Best Buy and Costco have already begun to roll out deals, but the "doorbuster" prices will be reserved for Thanksgiving night and Friday. Black Friday is the day after Thanksgiving in the United States. Retailers generally see an upward spike in sales and consider this to be the start of the holiday shopping season. It's common for retailers to offer special promotions and to open early to draw in customers.
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Mortgage Market News

Americans filing for first-time unemployment benefits fell in the latest week and now are near levels seen in the early 1970s. The Labor Department reported on Thursday that Weekly Initial Jobless Claims fell 5,000 in the latest week to 271,000, which was in line with expectations. The four week moving average of claims, which irons out seasonal abnormalities, rose by 3,000 to 270,750, the highest in eight weeks, though still a very low number. The low level of claims signals an improving job market, while the economy remains on a steady upward growth pattern.
Manufacturing activity in the Philadelphia region improved marginally in November. The Philadelphia Fed Index rose to 1.9 in November from the -4.5 recorded in October. Within the report it showed that the new orders and shipment components remained negative, while the employment index improved overall, though there was a decline in average work hours. Manufacturing activity has been edging lower throughout the year, due in part to a decline in the energy sector.
In an about-face, UnitedHealth Group Inc. the U.S.'s biggest health insurer, is considering pulling out of Obamacare, a month after the insurer said that it would expand its presence in the program. The insurer is pulling back on marketing efforts for the plans it's selling this year under the Affordable Care Act, and may exit from that market in 2017. UnitedHealth cited the business has proven to be more costly than expected.
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Mortgage Market News

The Commerce Department reported on Wednesday that Housing Starts in October fell 11% to an annual rate of 1.060 million units versus the 1.173 million expected. October’s numbers hit a seven-month low, but starts remained above the one million mark for seven straight months. This is the longest such streak since 2007. On the brighter side, Building Permits, a sign of future construction, rose 4.1% from September. The data signals a sustainable housing market recovery.
Shares of Apple received a boost this morning after investment banking giant Goldman Sachs said Apple's stock could rise 43% in the next 12 months. Goldman Sachs cited that the iPhone Upgrade Program, Apple Music, and upcoming streaming television products could be a game changer for how the market views the tech giant. The price per share of Apple is currently around $116 and could go to $163, said Goldman Sachs.
The Department of Energy (DOE) recently reported that due to warmer temperatures expected this winter, U.S. consumers will most likely pay less to heat their homes this season compared to last year. For those using propane, expect to see a 27% decline or $767 this season. Homes that heat with oil could see a drop of 15% or $362, while natural gas users will see a savings of 5% or $31. "U.S. households in all regions of the country can expect to pay lower heating bills this winter, because temperatures are forecast to be warmer than last winter and that means less demand for heat," said the DOE's Energy Information Administrator Adam Sieminski.
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Mortgage Market News

Business activity in the New York State region declined for the fourth straight month in November, signaling that manufacturing activity remains weak. The New York State Index fell to 10.7 in November, below the -6.0 expected after falling in October. Within the report, it showed that the new orders and shipments components declined, while the employment numbers were also weak.
Just in time for the Thanksgiving drive to Grandma's house, gas prices should slip this week after the price of oil fell to near $40 a barrel in trading in New York City. The national average price for a regular gallon of gasoline hit $2.15 this week, down from $2.21 a week ago and $2.28 a month ago. "Americans are finding the cheapest gas prices for this time of year since 2008," said Mark Jenkins, spokesman of AAA - The auto club group. "Now that oil prices are falling again, pump prices should get even cheaper as we approach the holiday travel season."
The Mortgage Bankers Association (MBA) reports that its Builder Application Survey showed mortgage applications for new home purchases fell by 8% in October from September. The decline was due in part to the new TRID rules that went into effect recently. The survey tracks application volume from mortgage subsidiaries of home builders across the country. Despite the decrease, the MBA's estimate of new single-family housing sales for October was up more than 7% from a year ago.
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Mortgage Market News

Fannie Mae released its Home Purchase Sentiment Index (HPSI) for October showing a slight decrease from September, falling to 83.2 from 83.8. The survey revealed consumers volatile outlook on both household income improvement and mortgage interest rates which kept housing sentiment relatively flat. The HPSI Household Income component declined and the "Good Time to Buy" and "Good Time to Sell" components also decreased, after picking up in September. These dips suggest hesitancy by some consumers to make long-term financial commitments such as buying or selling a home.
Mortgage rates edged higher this week ahead of a possible Federal Reserve interest rate hike next month. Freddie Mac reported that the 30-year fixed conventional mortgage rate rose. Mortgage rates continue to hover just above the all-time lows.
RealtyTrac reported on Thursday that foreclosure filings, which include default notices, scheduled auctions and bank repossessions, rose 6% in October from September. The rise in filings was due primarily to a 12% increase in foreclosure starts, the largest month-over-month increase since August 2011. The RealtyTrac U.S. Foreclosure Market Report provides a count of the total number of properties with at least one foreclosure filing entered into the RealtyTrac database during the month, broken out by the type of filing.
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Mortgage Market News

Research firm CoreLogic reported that there were 55,000 completed foreclosures nationally, down from 67,000 in September 2014, a 17.6% decrease. The report went on to say that there has been a 52.8% decline since the peak of the foreclosure problems when there were 117,438 foreclosures in September 2010. In addition, completed foreclosures jumped 49.5% from August 2015 to September 2015, which was due in part to the result of an annual public auctioning of thousands of tax-foreclosed properties in Wayne County, Michigan.
With the Federal Reserve almost set to raise interest rates (the Fed Funds Rate) next month, consumers could be impacted. If you are buying a home and using an adjustable rate mortgage (ARM) to finance the purchase, those rates will move higher, as ARMs closely follow the Fed Funds Rate. If you are shopping for a home equity loan, those rates will also increase, as will home equity lines of credit. Interest rates on most credit cards and rates on certificates of deposits, money markets, and savings accounts will increase as well.
On the lighter side, with Thanksgiving right around the corner, here are a few facts: Approximately 46 million turkeys are eaten on Thanksgiving every year. The Macy's Thanksgiving parade began in 1924 with only 400 employees. More alcohol is consumed on Thanksgiving than any other holiday of the year. One last fact, while Turkey does contain tryptophan, which could make us feel drowsy, sleepiness is more likely caused by the over-consumption of alcohol and food, especially desserts.
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Mortgage Market News

Government sponsored entities and mortgage service giants Fannie Mae and Freddie Mac reported last week that their benchmark interest rate for the standard mortgage modification program fell below 4% for the first time since the program began in January 2012. The new rate is 3.875% and has been in effect for Freddie Mac since November 5, while Fannie Mae’s will begin on November 13. The program is "designed to help those borrowers who are ineligible for the Home Affordable Modification Program."
The chances of an interest rate hike from the Federal Reserve grew larger after the strong October Jobs Report was released last Friday. The U.S. economy has been gaining strength in the past year and the Federal Reserve may feel that it is time for interest rates to rise, after being near zero percent since late 2008. If rates do rise, responsible buyers will still have easy access to loans and low-rates, however, banks will demand higher interest payments from less-qualified consumers.
Thanksgiving travel will be a bit less costly this season with airline flight costs lower, along with the price of gasoline if traveling to grandma's by car. Thanksgiving flights for the top 10 destinations are down by an average of nine percent from last year. At the gas pumps, prices are down to a national average of $2.20, the lowest average in over a decade. Hotel prices, however, are expected to rise by five percent, so consumers may want to stay with relatives or friends when traveling during Thanksgiving.
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Mortgage Market News

Strength in the U.S. labor market rebounded in October to the fastest pace of the year, after weak numbers in August and September. The Labor Department reported that Non-farm Payrolls rose by 271,000 last month, which could push the Federal Reserve to raise interest rates in December. The 271,000 was well above the 181,000 expected, while August and September were revised higher by a total of 12,000.
Within the Jobs Report it showed that wage growth accelerated to the fastest year-over-year pace since 2009. The Unemployment Rate fell to 5% from 5.1%, the lowest level since April 2008, before the Great Recession began. Gains were seen in white collar businesses, health care, retailers and restaurants. The solid report signals that the world's largest economy is back on track. The so-called U6 number fell to 9.8%, the first time below 10% since May 2008. The U6 number are those people who can't find work or those with only part-time jobs.
The Mortgage Bankers Association (MBA) reported this week that mortgage credit availability continued to loosen in October, due in part to new conforming loan programs. The Mortgage Credit Availability Index rose 1.5% last month to 128.4, after an increase in September. A spoke person for the MBA said many of the new conforming loan programs were affordable housing programs, which have lower down payment requirements.
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Mortgage Market News

CoreLogic reports that distressed sales, which include real estate owned properties and short sales, made up 9.3% of total home sales in August. That figure is down 2.3% from August 2014 and down 0.4% from July 2015. In addition, the 9.3% share is well below the peak of 32.4% set back at the height of the Great Recession in January 2009. Before the peak, distressed sales were about 2% on average.
Staffing firm Challenger, Gray & Christmas reports that U.S. companies showed overall layoffs fell 14% in October from September, though oil industry cuts jumped to a six-month high. Layoffs totaled 50,504 of which 14,000 of those layoffs were related to the oil industry. In the retail sector, layoff announcements are up 67% from 38,948 in 2014 to 64,983, as of last month. “Despite the surge in job cuts across several sectors, it is hardly time to panic. While falling oil prices are impacting the bottom lines of companies in the energy and industrial goods sectors, they are helping many other employers, such as those in transportation and plastics manufacturing,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
Mortgage rates rose in the latest survey ahead of a possible interest hike in December. Freddie Mac reported on Thursday that the average 30-year fixed-rate conventional mortgage ($417,000 or less) rose. Mortgage rates continue to hover just above the all-time lows. To put it into perspective, since 1971, the highest rates were seen in October 1981 (18.45%) with a low (3.35%) seen at the end of 2012.
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Automated Data Processing (ADP) reported on Wednesday that private payrolls rose 182,000 in October versus the 180,000 expected, down from the 190,000 created in September. Economic growth somewhat cooled across the nation and new job creations have been decreasing since August. The lower numbers are due in part to slowing in the energy and manufacturing sector. The report comes ahead of Friday's government Jobs Report, which includes Non-farm Payrolls and the Unemployment Rate.
The service sector of the economy received positive news today after the Institute of Supply Management (ISM) reported that its ISM Service Index rose to 59.1 in October, near the highest levels in a decade that it reached in July. The 59.1 was better than the 56.6 expected. Within the report it showed that the new orders and the employment component's both saw positive gains. A reading above 50 indicates the non-manufacturing sector economy is generally expanding; below 50 indicates the non-manufacturing sector is generally contracting.
Fed Chair Janet Yellen was on Capitol Hill this morning testifying in front of the House Financial Services Committee on the health of U.S. banks. When asked about future interest rate policy, Ms. Yellen did say that a December interest rate hike is a "live possibility". However, Ms. Yeelen said no decision has been made yet and any hike would be dependent on incoming economic data. Ms. Yellen went on to say that the U.S. economy is performing well and some downside risks have diminished surrounding the global economy.
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Mortgage Market News

Home price gains remained solid in September, due in part to tightening inventories of homes available on the market. CoreLogic reported that home prices, including distressed sales, rose 6.4% in September 2015 compared to September 2014. From August 2015 to September 2015, there was a 0.6% increase. CoreLogic is forecasting a 4.7% increase from September 2015 through September 2016. “The continued growth in home prices is welcome news for many homeowners but more markets are becoming overvalued. In the near term, this trend is likely to continue and pose evaluated risks to the housing economy,” said Anand Nallathambi, president and CEO of CoreLogic.
Government sponsored entity and mortgage finance company Freddie Mac swung to a loss of $475 million in the third quarter of 2015, compared with a profit of $2.08 billion in the same period last year. Freddie Mac said that the loss can be attributed towards fair value losses on derivatives used to hedge the company's interest rate risk. The loss was the first in four years. The company will not be making a dividend payment to the Treasury in December. Freddie Mac and Fannie Mae don't make loans, they buy up mortgages from lenders, wrap them into securities and provide guarantees to make investors whole if the loans default.
After going through rough times during the Great Recession, the auto industry is now on track for record sales in 2015, reported General Motors (GM) today. GM reported that October sales will come in around 18.2 million vehicles on an annualized basis, their highest level since 2001. At the height of the Great Recession, sales fell to 10.4 million per month. "October was a huge month for the industry, smashing expectations and continuing its hot streak," said Bill Fay, Toyota's U.S. general manager.
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Black Knight Financial Services reported on Monday that purchase originations in the second quarter of 2015 were 15% higher than the same quarter in 2014. The data shows that the uptick was driven by high-credit borrowers, or those with a credit score of 700 or above. Early figures show an increase of 11% in the third quarter from a year ago. In addition, 20% of purchase loans originated in the third quarter have gone to borrowers with credit scores below 700.
The October Jobs Report will be released this week on Friday morning where it is expected that U.S. employers added 181,000 new positions last month. The Unemployment Rate is expected to tick higher to 5.2% from 5.1%. The report will be closely watched by traders and investors around the globe to gauge if the world's largest economy can rebound from the low number of jobs created in August and September. From January through July, job growth averaged over 200,000 new jobs per month. October's report will be a key factor in the Federal Reserve's decision to raise its benchmark Federal Funds Interest Rate at its December meeting.
Gas prices at the pump continue to push lower across the nation as the summer driving season ended in September and demand for oil declines. The national average price for a regular gallon of gasoline is at $2.19, down from $2.29 a month ago and down from $2.98 a year ago. Oversupply of oil is also a key factor due to increased oil production here in the states and abroad. Gas prices hit an all time high of $4.11 back in July of 2008.
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