George's Take

Mortgage Delinquency Rates Decline:
You would think by the barrage of negative news reports that just about every other home was going into foreclosure.  Certainly this is not the case. In fact, the housing market has stabilized in the past six months.  The latest report from the Mortgage Bankers Association shows that the percentage of homeowners that were behind at least one monthly payment fell from 9.1% in the third quarter to 8.2% in the fourth quarter.  Also, the 2010 delinquency rate fell from over 10% in the beginning of the year to 8.2% at the end of the year.

The 2% drop in mortgage delinquencies follows the recent drop in the Unemployment Rate and the steady increase in Existing Home Sales and Consumer Confidence.  These are significant signs that the housing market is closing in on a true market equilibrium.

What Happened to Rates Last Week:
 

Mortgage backed securities (MBS) gained +39 basis points last week which caused 30 year fixed rates to move lower after reaching their highest levels of 2011 in the prior week. The economic data such as PPI and CPI showed inflationary pressures that consumers pay  - which is usually bad for mortgage rates. But the geo-political concerns over continued tensions in the Middle East, specifically the news stories of the Iranian War Ships requesting access to the Suez Canal, caused traders to move their funds into the safety of bonds which temporarily helped mortgage rates.

What to Watch Out For This Week:
The following are the major economic reports that will hit the market this week.  They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages.  I will be watching these reports closely for you and let you know if there are any big surprises:

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.  

  

Proposed Housing Overhaul Will Increase Rates:
The Obama administration released their ideas on how to overhaul Fannie Mae, Freddie Mac and the Federal Housing Administration.  Currently, all three issue mortgage backed securities that are backed or guaranteed by you the tax payer.  This gives these securities very low risk and has great appeal to foreign investors that seek low risk.  This is why your mortgage rates are still historically very low.

However, the proposed changes will enable the government to ease away from being such a big player in the mortgage business, moving from 95% of the total market down to as low as only 40% of the total market.  By doing so, rates will naturally adjust upward to equalize with the new risk levels.  These proposed changes will take a long time to pass and to be put into effect, so take advantage of today’s low rates and loan programs now while housing prices are still very affordable.

What Happened to Rates Last Week:
 

Mortgage backed securities (MBS) lost -42 basis points last week which caused 30 year fixed rates to move higher and closed at their highest levels of 2011.  As we have discussed several times, mortgage rates are pushed lower when the economy is performing poorly and their is little to no risk of inflation.  So, as the economy continues its upward march out of the recession, mortgage rates are pushed upward on the stronger growth and inflationary concerns. We had a couple of strong economic reports last week. The weekly Initial Jobless Claims were much lower than expected and Wholesale Inventories saw stronger gains.  Both were positives for the economy and therefore negative for mortgage rates.

What to Watch Out For This Week:
The following are the major economic reports that will hit the market this week.  They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages.  I will be watching these reports closely for you and let you know if there are any big surprises:

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.  

  

Three major jobs reports were released last week and all showed unexpected strength - all of which is good for the housing market.

Friday’s Unemployment Report stunned economists by dropping from 9.4% to 9.0%.  The Unemployment Rate has now dropped from 9.8% to 9.0% in just two months.  But many question the drop due to how the data is collected via phone surveys, so lets focus on two other reports that hit last week which are much more scientific.

The ADP Private Payroll report showed much stronger than expected growth.  They reported that private corporations hired 187,000 people last month.  Economists had expected a gain of only 151,000.  The Challenger Job Cuts report measures downsizing.  This report showed that the number of layoffs companies have announced plunged 34% in December to its lowest level in 13 years.

As the employment picture continues to brighten, it will add fuel to the very strong levels of Existing Home Sales that we have seen over the past two months.

What Happened to Rates Last Week:
 

Mortgage backed securities (MBS) lost -135 basis points last week which caused 30 year fixed rates to move higher.  Mortgage rates increase each and every day last week and closed at their highest levels of 2011.  As we have discussed several times, mortgage rates are pushed lower when the economy is performing poorly and their is little to no risk of inflation.  So, as the economy continues its upward march out of the recession mortgage rates are pushed upward on the stronger growth and inflationary concerns.

What to Watch Out For This Week:

The following are the major economic reports that will hit the market this week.  They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages.  I will be watching these reports closely for you and let you know if there are any big surprises:

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.  

  

Date

ET

Release

For

7-Feb

15:00

Consumer Credit

Dec

9-Feb

7:00

MBA Mortgage Purchase Index

4-Feb

9-Feb

10:30

Crude Inventories

5-Feb

10-Feb

8:30

Initial Claims

5-Feb

10-Feb

8:30

Continuing Claims

29-Jan

10-Feb

10:00

Wholesale Inventories

Dec

10-Feb

14:00

Treasury Budget

Jan

11-Feb

8:30

Trade Balance

Dec

11-Feb

9:55

Mich Sentiment

Feb

Existing Home Sales Jump Again:
Despite bad weather, U.S. home sales jumped more than expected in December.  Sales of previously occupied homes soared 12.3 percent last month which far surpassed national forecasts of an increase of only 4.5%.  This marks the second straight month of significant gains in sales.  In November, Existing Home Sales surged 6.1%.  The national median home price in December was $169,300 which was only 0.2% lower than levels a year ago.  This is important to note because 36% of homes sold in December where under the “distressed” category.  And even though this is a larger than normal percentage of sales, the national median home price barely moved.  In fact, it actually increased in some ares such as the Midwest (+3.3%).

In other news, Housing Starts decreased from 553K to 529K.  While the media has had a field day of reporting this as bad news…it is actually good news!  The number one reason that the housing industry fell was over supply.  And with supply levels still above where they need to be, any addition to those levels (for example by building even more homes) is not a good idea.

What Happened to Rates Last Week:
 

Mortgage backed securities (MBS) lost -54BPS from Tuesday’s open (Monday was closed due to the holiday) to Friday’s close which caused 30 year fixed rates to move higher.  MBS generally trade in the opposite direction of positive economic news.  And last week we had a lot of positive economic news with strong results from Existing Home Sales, Initial Jobless Claims, Leading Economic Indicators and more.
What to Watch Out For This Week:

The following are the major economic reports that will hit the market this week.  They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages.  I will be watching these reports closely for you and let you know if there are any big surprises:

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.  

  

Fed Says Economy Improved in Last Six Months:

The economy has improved in the last six months, signaled by greater consumer spending, durable goods purchases and some signs of increased investment according to Federal Reserve Governor Daniel Tarullo which echoed the optimism of his boss, Chairman Ben Bernanke.

Tarullo stated “….has reinforced the sense that we are going to have slightly-above-trend growth going forward and that it is a firmer imbedded growth than may have been apparent six months ago.” As we have discussed several time, as the economy grows - so does demand for housing.  So, this is great news that our recent trend of improving Existing Home Sales will receive a boost from economic growth just in time for a busy Spring buying season.

What Happened to Rates Last Week:
 

Mortgage backed securities (MBS) lost -31BPS from Monday’s open to Friday’s close which caused 30 year fixed rates to move higher.  Don’t be confused by media reports about interest rates.  They repored last week that rates decrease when in fact they increased.  Why are the so wrong?  Because the media simply reports the results of a Freddie Mac interest rate survey that is always at least a week old before it is published.  Contact me for real information on rates.

What to Watch Out For This Week:
The following are the major economic reports that will hit the market this week.  They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages.  I will be watching these reports closely for you and let you know if there are any big surprises:

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.  

  

18-Jan

Employment Picture Brightens:

Demand for housing is fueled by consumer confidence levels.  And nothing impacts those levels more than how consumers feel about the job market.  We had three major releases last week that gave us a better understanding of the employment picture.

First up were the Challenger Job Cuts report.  This measures the number of layoffs announced by corporations.  They reported that layoffs decreased by 34% in December.  Next up was the ADP Private Payroll report.  They measure non-farm and non-government hiring.  This report showed a gain of 297,000 jobs in December which was one of the strongest increases on record.  Lastly, the Labor Department reported that the national Unemployment Rate declined from 9.8% to 9.4% which is the lowest reading in 1 1/2 years.

While we certainly still have a lot of ground to make up in the job market, the above news is good for housing and certainly mirrors last month’s gains in both Existing Home Sales and Pending Home Sales.

What Happened to Rates Last Week:
 

Mortgage backed securities (MBS) moved sideways last week but we certainly did see some big swings in mortgage rates during the middle of the week.  The very strong ADP Private Payroll data pushed mortgage rates upward on Wednesday but rates moved backed down after Friday’s Unemployment report.

What to Watch Out For This Week:
The following are the major economic reports that will hit the market this week.  They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages.  I will be watching these reports closely for you and let you know if there are any big surprises:

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.  

  

Pending Home Sales Jump:

Contracts for pending sales of previously owned U.S. homes rose much faster than expected in November.  This follows last week’s surprise gain in existing home sales.  A pending home sale is when a contract has been signed between a buyer and a seller but the home has not yet closed.

The National Association of Realtors reported a rise of 3.5% in November, economists had expected an increase of only 2%.  Once again, we are seeing a little stronger than expected demand which has been following a very clear pattern of strength over the past four months.

What Happened to Rates Last Week:
 

Mortgage backed securities (MBS) gained +86 basis points from Monday’s open to Friday’s close causing 30 year fixed rates to decrease from the previous week.  We had several very strong economic reports such as Initial Jobless claims and Chicago PMI.  Normally, the strength in these economic reports would have pressured mortgage rates higher. But traders parked their funds into the safe and boring world of mortgage backed securities before the end of the year which helped mortgage rates temporarily.

What to Watch Out For This Week:
The following are the major economic reports that will hit the market this week.  They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages.  I will be watching these reports closely for you and let you know if there are any big surprises:

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.  

  

Existing Home Sales Continue Upward Climb:

Sales of existing homes that have been previously occupied increased once again in November.  July is generally considered the height of the purchasing season as buyers want to complete their move before school starts.  So it is great news that we have continued to beat July’s sales each and every month.

The median price paid for a home increased +0.4% in November and it was the first increase in housing prices since August.  This means that even though we are selling more units, it is not due to slashing prices.  November saw an increase in the total number of units sold and in the median price, which is a big positive for the housing market.

The supply of home inventory also decreased slightly.  Too many homes on the market at once is never good.  During July we had 12.5 months of supply available, that moved lower to only 10.5 months worth of supply in November.


What Happened to Rates Last Week:
 

Mortgage backed securities (MBS) lost -33 basis points from Monday’s open to Thursday’s close causing 30 year fixed rates to move slightly upward from the previous week.  We had several rounds of QEII Treasury purchases that helped to keep rates from moving higher.  From a technical perspective, our 10 day moving average was a very solid resistance level that prevented any improvement in mortgage rates.

What to Watch Out For This Week:
The following are the major economic reports that will hit the market this week.  They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages.  I will be watching these reports closely for you and let you know if there are any big surprises:

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.  

  

Housing Starts Rise:
U.S. Housing starts rose more than expected in November. The Commerce Department said that housing starts rose 3.9 percent to a seasonally adjusted annual rate of 555,000 units.  They also revised October’s numbers upward to a 534,000 unit pace, it was originally reported at 519,000 units.

Ground breaking for new homes last month was lifted by a 6.9 percent rise in single-family home construction which continues to shows strength.  The multi-family sector continues to struggle and fell 9.1 percent.

What Happened to Rates Last Week:
 

Mortgage backed securities (MBS) gained +12 basis points last week causing 30 year fixed rates to move sideways from the previous week.  This was the first week out of the last seven where pricing improved.  However, it was a bumpy ride.  MBS reached their worst levels on Wednesday which drove 30 year fixed rates to their highest levels since last May.  We clawed our way back as the 10 year Treasury started to rally on very light volumes which skewed the rally somewhat. 

What to Watch Out For This Week:
The following are the major economic reports that will hit the market this week.  They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages.  I will be watching these reports closely for you and let you know if there are any big surprises:

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.