Consumer Sentiment Moves Off Of Highs:

Americans turned less optimistic about the economy in early February on worries about falling income even as their outlook on the jobs market rose to a record high, a survey released on Friday showed.

The Thomson Reuters/University of Michigan Index of Consumer Sentiment fell back in February with a preliminary score of 72.5 that is 2.5 pts lower than January’s score of 75.

Current conditions, and more precisely a negative tone towards current finances, was the heaviest drag. Even though optimism towards the job market kept up, the CSI was unable to hang on to sentiment expressed last month. Market expectations averaged to 74.5.

The optimism in their job outlook is encouraging though and is certainly reflective of the steady string of better than expected Initial Weekly Jobless Claims and the recent decline in the national Unemployment Rate.  As these trends in lower Unemployment continue, look for the Consumer Sentiment to regain some ground.

What Happened to Rates Last Week?

Mortgage backed securities (MBS) lost -26 basis points from last Friday to the prior Friday which moved mortgage rates higher on a week-over-week basis.  That also marked a -68 basis point drop in MBS pricing from our all time high on 02/02/12.

Mortgage backed securities (and therefore mortgage rates) moved sideways during the week with only minor movements in reaction to the 10 year and 30 year U.S. Treasury auctions.  But MBS did sell off on Friday on news that Greece would come through with another austerity package that would qualify them for additional bailout funds.

The Greek story has been an important one for mortgage rates.  Mortgage rates are artificially too low due to increased demand for U.S. bonds as a pure “safety play” against a European financial collapse.  A default by Greece would start a “domino effect” of other countries defaults too.  So, any positive news that a default is postponed will cause our rates to increase.

Today? 

Fed Releases Orders Related to Banks in Mortgage Settlement

The Federal Reserve Board released today the orders related to the previously announced monetary sanctions against five banking organizations for unsafe and unsound processes and practices in residential mortgage loan servicing and processing. The Board reached an agreement in principle with these organizations for monetary sanctions totaling $766.5 million on February 9, 2012.

ABA: Statement on Proposed Bank Tax

“The banking industry strongly opposes the $61 billion bank tax included in President Obama’s budget proposal. Despite claims to the contrary, the facts on TARP are very clear: Taxpayers have profited $13 billion from their investments in banks through the program and Treasury predicts they will see a lifetime positive return of more than $20 billion. Given that non-bank programs are responsible for all of TARP’s losses, this would simply be an arbitrary tax with no regard to where losses actually occurred.

Related articles

• Foreclosure Filings Hit 4 Year Low: (michael-mcdevitt.com)
• Consumer Sentiment Increases Again: (michael-mcdevitt.com)
• Pending Home Sales Hit 19 Month High: (michael-mcdevitt.com)

Foreclosure Filings Hit 4 Year Low:

The number of U.S. homes that received a foreclosure filing fell to a four-year low in 2011 as a slowdown in processing hit the market, RealtyTrac said in a report on Thursday.

Foreclosure filings, which include default notices, scheduled auctions and bank repossessions, slid by 34 percent in 2011, the lowest level since 2007, just as the housing market was starting to crumble. RealtyTrac said there were filings on 1,887,777 homes last year.

Bank seizures of homes fell to 804,423 from 1,050,500 in 2010, also marking the lowest level in four years.

“A big part that is inflating the size of the decrease is a continuing extended foreclosure process,” said Daren Blomquist, director of marketing communications at RealtyTrac.

Nevada ranked as the state with highest foreclosure rate for the fifth year in a row, with one in 16 Nevada homes receiving at least one foreclosure filing in 2011. Even so, Nevada saw a 31 percent decrease in foreclosure activity for the year.

The length of time for foreclosure processing continued to increase in the final quarter of the year. Homes took on average 348 days to move through the process, up from 336 days in the third quarter and 305 days in the fourth quarter of 2010.

Foreclosures took the longest in New York state, where homes foreclosed in the fourth quarter took an average 1,019 days to complete the process. RealtyTrac also released foreclosure activity for December, which fell to a 49-month low of 205,024 homes, down nearly 9 percent from November. But bank repossessions rose 10 percent to 61,774.

What Happened to Rates Last Week:

Mortgage backed securities (MBS) gained +14 basis points from last Friday to the prior Friday which moved mortgage rates slightly lower. We had a mixed bag of economic data with very strong readings in Consumer Sentiment but we had weaker than expected Retail Sales data. Demand for our 10 year Treasury auction was very strong but pulled back on the 30 year Treasury bond auction. With the long weekend, traders moved their money into bonds on Friday which helped to push mortgage rates lower.

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.

Related articles

• Foreclosures Numbers With Big Drop, Reaching 2007 Levels (michael-mcdevitt.com)

Consumer Sentiment Increases Again:

Consumer Sentiment Increased for the Third Straight Month

Confidence among U.S. consumers rose more than projected in November, offering additional support to the biggest part of the economy.  It was the third straight month of increases in consumer sentiment.

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment climbed to 64.2 this month, the highest since June, from 60.9 in October. The median estimate of economists surveyed by Bloomberg News called for a reading of 61.5.

U.S. consumers are entering the holiday shopping season with a more optimistic outlook than they had a month ago, largely because of a recent decline in gas prices, according to the widely watched index.

Consumer Sentiment is very key to the housing industry.  As consumers feel more confident in their expectations about the economy, they are more likely to finally make the move to purchase their next home.

What Happened to Rates Last Week:

Mortgage backed securities (MBS) lost -54 basis points from last Friday to the prior Friday which moved mortgage rates higher. As we have reported for the past several weeks, bonds have been trading in reaction to what has been going on in Europe and have largely ignored the U.S economic data. Last week certainly followed that trend.  Bonds (which include mortgage backed securities) sold off (causing rates to rise) as Greece appointed a new Prime Minister and on news reports that the Italian Prime Minister would step down.  This helped to remove some uncertainty from the market place and investors removed some funds from the safe-haven of bonds. On the domestic front, we had a luke-warm 30 year U.S. Treasury auction and Initial Jobless Claims and Consumer Sentiment were much better than expected. These also pressured MBS lower.

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:

Date	Economic Release
15-Nov	NY Empire State Manufacturing Idx
15-Nov	Producer Price Index (MoM)
15-Nov	Prod Price Index (YoY)
15-Nov	Prod Price Index ex (MoM)
15-Nov	Prod Price Index ex (YoY)
15-Nov	Retail Sales (MoM)
15-Nov	Retail Sales ex Autos (MoM)
15-Nov	Business Inventories
16-Nov	MBA Mortgage Applications
16-Nov	Consumer Price Index (MoM)
16-Nov	Consumer Price Index (YoY)
16-Nov	Cons Pr Idx Ex (MoM)
16-Nov	Co Price Index Ex (YoY)
16-Nov	Net Long-Term TIC Flows
16-Nov	Total Net TIC Flows
16-Nov	Capacity Utilization
16-Nov	Industrial Production (MoM)
16-Nov	NAHB Housing Market Index
16-Nov	EIA Crude Oil Stocks change
17-Nov	Building Permits (MoM)
17-Nov	Continuing Jobless Claims
17-Nov	Housing Starts (MoM)
17-Nov	Initial Jobless Claims
17-Nov	Ph Fed Manufacturing Survey
18-Nov	Leading Indicators (MoM)

 

 

 

 

 

 

 

 

 

 

 

 

 

Employment Picture Improving And Pressured MBS

While unemployment levels will continue to be a major concern and a drag on our economy, several reports showed some improvement last week. The headline unemployment rate remained unchanged at 9.1%, however economists are focusing on the improvement in the non-farm payroll data.

“This is the single biggest factor in housing. Regardless of interest rates – people simply don’t purchase homes when they are unemployed or are concerned about their employment picture. This is why the following data is welcome news for the housing industry.”

The headline unemployment rate remained unchanged at 9.1%, however economists are focusing on the improvement in the non-farm payroll data.

Non-farm Payrolls jumped up to 103K in September, from the revised previous month’s result of 57K, the U.S. Department of Labor reported. The results considerably exceeded forecasts of 73K growth. The change in total non-farm Payroll employment for July was also revised upward from 85K to 127K.

Average Hourly Earnings increased to 0.2% in September, following a 0.2% drop in August. On an annual basis Average Hourly Earnings remained flat at 1.9% for the second consecutive month in September.

Average Weekly Hours increased to 34.3 in September from 34.2 in August, despite forecasts of remaining at the same level.

In a separate report, the ADP Private Payroll data which measures U.S. non-farm private business sector hirings increased by 91K in September, after rising 89K in August. This was higher than market forecasts of only a 75K increase.

What Happened to Rates Last Week:

Mortgage backed securities (MBS) lost -130 basis points from last Friday to the prior Friday which moved mortgage rates upward. This was in reaction to a slew of much better than expected U.S. economic data.

“One of the main reasons that mortgage rates are so low (we hit our historical low on 09/22/11) is due to concern over a perceived weak economic recovery. So, when the market sees data that is better than expected (and even shows economic growth), MBS sell off which causes mortgage rates to rise.”

We received much better than expected news out of both the manufacturing and servicing sectors with strong ISM data. The improvement in the non-farm and private payroll data also pressured MBS.

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:

Date	Economic Event
9-Oct	Columbus Day
11-Oct	IBD/TIPP Economic Optimism (MoM)
11-Oct	FOMC Minutes
12-Oct	MBA Mortgage Applications
13-Oct	Continuing Jobless Claims
13-Oct	Initial Jobless Claims
13-Oct	Trade Balance
13-Oct	EIA Crude Oil Stocks change
13-Oct	Monthly Budget Statement
14-Oct	Export Price Index (MoM)
14-Oct	Import Price Index (MoM)
14-Oct	Import Price Index (YoY)
14-Oct	Retail Sales (MoM)
14-Oct	Retail Sales ex Autos (MoM)
14-Oct	Reuters/MI Consumer Sentiment
14-Oct	Business Inventories

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 that are the only thing government and conventional mortgage rates are based upon.

Related articles

• Employment Picture Brightens: (michaeltmcdevitt.wordpress.com)
• Pending Home Sales Jump: (michaeltmcdevitt.wordpress.com)
• Mortgage Rates Rise Slightly Heading Into The Weekend (michael-mcdevitt.com)
• Mortgage Delinquency Rates Decline: (michaeltmcdevitt.wordpress.com)

Pending Home Sales up 13%:

NAR 'DC'

Pending Home Sales are homes that have a purchase contract in place but have not yet closed. The National Association of Realtors released their data for August and it showed a year-over-year annual improvement of 13.1%.

When comparing August to July, pending home sales slipped but less than market forecasts. Economists expected Pending Home Sales to decrease month-over-month by -1.8%. The actual number was a little better at -1.2%. Hurricane Irene, which battered the Northeast at the end of the month, was likely a factor in the decline.

 

Three of four regions throughout the United States saw declines in the number of contracts to purchase previously owned homes. The Northeast region experienced the largest loss of 5.8 percent as a result of significant disruption by Hurricane Irene, according to NAR chief economist Lawrence Yun. Meanwhile, sales in Midwest and West also fell 3.7 percent and 2.4 percent, respectively. In contrast, a 2.6 percent gain in the South helped reduce the total loss of pending home sales in the month.

What Happened to Rates Last Week:

Mortgage backed securities (MBS) were unchanged from last Friday to the prior Friday but we stilled closed down -100  basis points from our best pricing levels in history on 09/22/11.

We had a very volatile week where mortgage rates escalated Monday through Wednesday and then rebounded by Friday.

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:

Date	Economic Event	Cons.	Previous
3-Oct	ISM Manufacturing Index	50.50%	50.60%
3-Oct	Construction Spending	-0.06%	-1.30%
3-Oct	Fed’s Lackert Speaks
4-Oct	Factory Orders	-0.10%	2.40%
4-Oct	Bernake Speaks
5-Oct	Challenger Job Cuts		47%
5-Oct	ADP Private Payroll Report	48K	91K
5-Oct	ISM Servicing Index	53	53.3
6-Oct	Initial Jobless Claims	401K	391K
6-Oct	Continuing Jobless Claims	3.7M	3.729M
7-Oct	Non-Farm Payrolls	63K	0K
7-Oct	Unemployment Rate	9.10%	9.10%
7-Oct	Wholesale Inventories	0.60%	0.80%
7-Oct	Consumer Credit	7.0B	12.0B

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.

Related articles

• Pending Home Sales Jump: (michaeltmcdevitt.wordpress.com)
• Employment Picture Brightens: (michaeltmcdevitt.wordpress.com)

Weekly Rate Watch & Housing Update: Existing Home Sales Up Strongly

Existing-home sales increased in August, even with ongoing tight credit and appraisal problems, along with regional disruptions created by Hurricane Irene, according to the National Association of Realtors®. Monthly gains were seen in all regions.

Total Existing Home Sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 7.7 percent to a seasonally adjusted annual rate of 5.03 million in August from an upwardly revised 4.67 million in July, and are 18.6 percent higher than the 4.24 million unit level in August 2010.

Investors accounted for 22 percent of purchase activity in August, up from 18 percent in July and 21 percent in August 2010. First-time buyers purchased 32 percent of homes in August, unchanged from July; they were 31 percent in August 2010.

All-cash sales accounted for 29 percent of transactions in August, unchanged from July; they were 28 percent in August 2010; investors account for the bulk of cash purchases.

Total housing inventory at the end of August fell 3.0 percent to 3.58 million existing homes available for sale, which represents an 8.5-month supply at the current sales pace, down from a 9.5-month supply in July.

Mortgage backed securities (MBS) gained 178 basis points last week which helped to move mortgage rates much lower from last Friday to the prior Friday. Mortgage rates moved lower in response to the Fed‘s announcement that they would move from purchasing shorter term Treasuries to buying longer term Treasuries. They also announced that they would purchase more mortgage backed securities with the principal that they are receiving on their current mortgage backed security holdings. The best interest rates were on Thursday afternoon.  On Friday, mortgage rates started to climb back up from their lows.

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:

Date	Time	Economic Event
26-Sep	10:00	New Home Sales (MoM)
26-Sep	10:00	S&P/Case-Shiller Home Price Indices (YoY)
27-Sep	9:00	Consumer Confidence
27-Sep	10:00	Richmond Fed Manufacturing Index
27-Sep	10:00	Fed’s Lockhart speech
27-Sep	12:30	MBA Mortgage Applications
28-Sep	7:00	Durable Goods Orders
28-Sep	8:30	Durable Goods Orders ex Transportation
28-Sep	8:30	EIA Crude Oil Stocks change
28-Sep	10:30	Continuing Jobless Claims
29-Sep	8:30	Gross Domestic Product Annualized
29-Sep	8:30	GDP Price Index
29-Sep	8:30	Initial Jobless Claims
29-Sep	8:30	Real Pers. Consumption Exp. (QoQ)
29-Sep	8:30	Pending Home Sales (MoM)
29-Sep	10:00	Core Pers. Expenditure – Price Index (MoM)
30-Sep	8:30	Core Pers. Expenditure – Prices Index (YoY)
30-Sep	8:30	Pers. Consumption Exp – Price Index (YoY)
30-Sep	8:30	Pers. Consumption Expenditures (MoM)
30-Sep	8:30	Personal Income (MoM)
30-Sep	8:30	Chicago Purchasing Managers’ Index
30-Sep	9:45	Reuters/MI Consumer Sentiment Index
30-Sep	9:55	Fed’s Bullard speech

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.

Related articles:

• Pending Home Sales Jump: (michaeltmcdevitt.wordpress.com)
• Existing Home Sales Continue Upward Climb: (michaeltmcdevitt.wordpress.com)
• Mortgage Delinquency Rates Decline: (michaeltmcdevitt.wordpress.com)