12/16/2013 - Last Week's Mortgage Recap and This Week's Forecast
Last Week in Review
"A step in the
right direction." Barbra Streisand obviously wasn't singing about the housing
market in her 1980's song. But those lyrics were fitting with last week's
housing news. Read on for details.
 There was good news on the foreclosure front as research firm CoreLogic reported that completed foreclosures in October declined by 30 percent from those completed in October 2012. In addition, the foreclosure inventory declined by 28 percent this year while the rate of serious delinquency is at its lowest level since November 2008. RealtyTrac also reported that foreclosure inventory fell by 15 percent from October to November. This is good news for the housing industry, but with almost 900,000 properties across the nation still in foreclosure--a level four times the norm--the housing recovery still has more to go. In other news, Weekly Initial Jobless Claims surged in the latest week by 68,000 to 368,000, which is the highest level since early October. The previous week, Weekly Initial Jobless Claims dropped to 300,000, but that was most likely influenced by the Thanksgiving holiday, as filers could have waited until after the holiday to process their claims. Also of note, Retail Sales for November came in above expectations. What does this mean for home loan rates? The labor and housing markets are key areas the Fed has been watching as it determines when to taper its Bond purchases. Remember that the Fed has been purchasing $85 billion in Bonds and Treasuries each month to stimulate the economy and housing market. One of the key topics the Fed will be deciding at its December 17-18 meeting is whether to taper its purchases before or after the new year. Fear regarding this decision has led to volatility in the markets in recent weeks, and this topic is sure to impact the markets and home loan rates in the coming weeks and months. The bottom line is that home loan rates remain attractive compared to historical levels and now remains a great time to consider a home purchase or refinance. Let me know if I can answer any questions at all for you or your clients. |
Forecast for the Week
In addition, the two-day Federal Open Market Committee (FOMC)
meeting begins on Tuesday and ends on Wednesday with the Fed's monetary
policy statement being delivered at 2:00 p.m. ET. All eyes will be watching
to see if the Fed decides to begin tapering its Bond purchases.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on. When you see these Bond prices moving higher, it means home loan rates are improving -- and when they are moving lower, home loan rates are getting worse. To go one step further -- a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning. As you can see in the chart below, volatility has been rampant, as some positive economic reports have caused concern that the Fed will taper its Bond purchases sooner rather than later. I will be watching the news closely this week to see what happens after the Fed meeting.
Chart: Fannie Mae 4.0% Mortgage Bond (Friday Dec 13, 2013)
|
Economic Calendar for
the Week of December 16 - December 20
|
If you need any
assistance on financing your residential property, be it investment or your
personal home, please give us a call at 314-744-7806, or visit my website by
clicking on the link below:
Comments
Post a Comment