Consumer Sentiment Best Levels in 4 Years:

U.S. consumer sentiment rose to its highest level in more than four years in early May as Americans remained upbeat about the job market, a survey released on Friday showed.

The Thomson Reuters/University of Michigan’s preliminary May reading on the overall index on consumer sentiment improved to 77.8 from 76.4 in April, topping forecasts for 76.2. It was the highest level since January 2008.

Despite the recent slowdown in job growth, nearly twice as many consumers reported hearing about new job gains than said they had heard about recent job losses, the survey said.

The data suggests that either more positive numbers on the labor market will be seen soon, or that consumers have ratcheted up their expectations too high, survey director Richard Curtin said in a statement.

Housing demand is very closely tied to Consumer Sentiment reading, so this is more great news to go along with fantastic mortgage rates as the busy purchase season ramps up.

What Happened to Rates Last Week?

Mortgage backed securities (MBS) lost -11 basis points from last Friday to the prior Friday which caused mortgage rates to increase slightly from the beginning of the week.  However, they remained near the best levels of 2012.

The highest rates of the week were on Friday and the lowest rates of the week were on Tuesday.

MBS were pressured lower (higher rates) on better than expected U.S. economic news.  The Mortgage Industry Index, Initial Jobless Claims and Consumer Sentiment were all better than market expectations.

However, MBS also received a lot of support with strong demand for the 30 year U.S. Treasury Bond and heightened concern over the future of Europe.  This concern caused U.S. based bonds such as mortgage backed securities to be in high demand as a safe way to park your money.

Related articles

• Consumer Sentiment Moves Off Of Highs: (michael-mcdevitt.com)

Housing Supply Decreases, Good for Housing:

In the latest release of the National Association of Realtors‘ Existing Home Sales report, there were some very interesting facts.  Even though they reported a month-over-month decrease of 2.6% in existing home sales, they revised February’s data upward. The NAR said even with March’s decline, the pace of sales in the first three months of the year marked the strongest first quarter since 2007.

But the real gem is the inventory data.  The nation’s glut of unsold homes is easing, as inventories fell to 2.37 million. Realtors in some markets have even reported shortages of housing stock. A decrease in the amount of homes on the market is always good for housing as it stabilizes and even drives prices upward.  Nationwide, the median price for a home resale rose to $163,800 in March, up 2.5 percent from a year earlier.

An improving labor market has realtors upbeat about sales prospects for the rest of the year.

Distressed home sales accounted for only 29 percent of resales, down from 34 percent in February, which is also a very positive trend.

What Happened to Rates Last Week?

Mortgage backed securities (MBS) gained +15 basis points from last Friday to the prior Friday which caused mortgage rates to move sideways.

The highest rates of the week were on Tuesday and the lowest rates of the week were on Friday.

MBS traded in a very narrow range all week as we had a light week in terms of the economic data that was released.

Retail Sales were much better than expected but Initial Jobless Claims and Existing Home Sales were worse than expected, there were no major Treasury auctions to guide the market last week.

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)

Refinance Applications Surge 26.4% as Rates Set New Lows

Mortgage applications jumped 23.1 percent on a seasonally adjusted basis during the week ended January 13, 2012.  The increase in the Market Composite Index, a measure of loan application volume maintained by the Mortgage Bankers Association (MBA) reflected improvements in both the purchase and refinance business following the traditionally slow Christmas and New Year holiday period.  On an unadjusted basis the index increased 38.1 percent.

The Refinance Index increased 26.4 percent from the week ended January 6 to its highest point since August 8, 2011.  The seasonally adjusted Purchase Index rose 10.3 percent, returning to pre-holiday levels.  The unadjusted Purchase Index was up 28.4 percent from the previous week and was 2.2 percent higher than during the same week in 2011.

The four-week moving average for each index also increased; the Composite Index increased by 5.99 percent, the seasonally adjusted Purchase Index by 1.96 percent and the Refinance Index by 7.0 percent.

Refinancing took an 82.2 percent share of all application activity, up from 80.8 percent the previous week and the highest share since October 22, 2010.  Applications for adjustable rate mortgages (ARMs) constituted represented a 5.6 percent share of applications, up two basis points from the previous week.

“Interest rates dropped last week due to continuing anxieties regarding the fragile economic situation in Europe,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.  “With mortgage rates reaching new lows, refinance volume jumped and MBA’s refinance index reached its highest level in the last six months.  Purchase activity also increased as buyers returned to the market after the holiday season.”

With the exception of jumbo loans (with balances over $417,500) interest rates continued their downward trend. Three of the rates, in fact, hit the lowest level in the history of the MBA applications survey.  The jumbo rate – for 30-year fixed-rate (FRM) loans – increased to 4.40 percent from 4.34 percent with points decreasing to 0.37 from 0.47 point.  The effective rate also increased.

Thirty-year FRM with conforming (under $417,500) balances hit a new low, decreasing to 4.06 percent with 0.48 point from 4.11 percent with 0.41 point. The effective rate also decreased.

Rates for FHA guaranteed 30-year FRM were at 3.91 percent with 0.59 point, the lowest FHA rate in the history of MBA’s application survey, down from 3.96 percent with 0.72 point.  The effective rate also decreased from the previous week.

The third all-time low is the 3.33 percent rate with 0.39 point for the 15-year FRM.  This was a drop from 3.40 percent with 0.37 point rate the previous week.  The effective rate also decreased.

The average contract interest rate for 5/1 ARMs was unchanged at the record low 2.90 percent established the previous week.  Points decreased to 0.45 from 0.49.   The effective rate also decreased from last week.

All rates quoted are for 80 percent loan-to-value originations and points include the application fee.

 MBA’s covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.  Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100.

Pending Home Sales Hit 19 Month High:

The number of Americans who signed contracts to buy homes in November rose to the highest level in a year and a half. The best reading on pending homes sales since a federal home-buying tax credit expired appeared to encourage traders on Wall Street.
The Realtors group said Thursday that its index of sales agreements jumped 7.3 percent last month to a reading of 100.1. A reading of 100 is considered healthy. The last time the index was that high was in April 2010, one month before the tax credit expired.

Contract signings usually indicate where the housing market is headed. There’s a one- to two-month lag between a signed contract and a completed deal.

Homes are the most affordable they’ve been in decades. Long-term mortgage rates are at historic lows and prices in most metro areas have tumbled since late 2006.

What Happened to Rates Last Week:

Mortgage backed securities (MBS) gained +95 basis points from last Friday to the prior Friday which moved mortgage rates lower.

We had much better than expected U.S. economic data.  Pending Home Sales, Consumer Confidence, and the Chicago PMI were all very strong.

Normally, these type of strong readings would cause bonds to sell off and your mortgage rates to rise.  But last week was a holiday shortened week that saw very low volumes.

Traders simply “parked” their funds into the safe-haven of bonds over the holiday week which increased demand for bonds and temporarily lowered mortgage rates.

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)

 

 

 

 

 

 

 

 

 

 

 

 

 

Private Sector Sees Job Growth:

levels last week. The ADP Private Payroll report continued to show gains in hiring in the private sector. Their monthly gauge came in at 110K which was much better than market expectations of 101K.

In a separate report, the national Unemployment Rate fell from 9.1% to 9.0%.  The total non-farm payroll gains were 80K which was below market expectations. However, the prior period was revised upward significantly.

Bright spots: Professional and business services up 562K in 2011. Hotel and restaurants up 344K this year. Health Care up 313K for the year. Retail Trade up 156K this year. And mining jobs are up 152K during the year.

What’s not doing well? Construction, government, financial services, insurance and real estate. Alas, new homes rose in September after four straight monthly declines.

Obviously, housing demand is very closely tied to employment levels. While employment levels still have a long way to go, there is some improvement which is a positive for housing.

What Happened to Rates Last Week:

Mortgage backed securities (MBS) gained +12 basis points from last Friday to the prior Friday which moved mortgage rates lower. This reversed the recent trend of week after week of higher rates.
We had some decent economic data such as better than expected unemployment levels which would normally drive mortgage rates upward.  But fears and concerns over Greece and the European Union caused investors to pour money into bonds which temporarily pushed mortgage rates downward.
Previously, Germany and France had worked out a package deal with the rest of the EU members to bailout Greece.  But last week, the Prime Minister of Greece stated that he wanted the Greek citizens to have a vote on if they should accept the bailout.  If that did happen, there is no way that the citizens would vote for approval and essentially sink the deal.  
Now, we understand that the Prime Minister of Greece has stated that he will step down and that the new government will approve the deal without a public vote. It is amazing how one little country can impact rates so much.

Related articles

• Employment Picture Brightens: (michaeltmcdevitt.wordpress.com)

Existing Home Sales Climb, Inventories Fall:

FED REPO MBS

Sales of previously occupied homes (the largest segment of all home sales) increased by 11.3% on a year-over-year basis according to the National Association of Realtors. Sales did decrease 3% from the previous month which was close to market expectations.

Inventories declined 2% to 3.48 million units, representing 8.5 months of supply at current sales rates.

“It’s in a holding pattern. When it does break out, it will break out upward, but it hasn‘t broken out yet,“ said Lawrence Yun, chief economist of the NAR. A separate report from the Labor Department showed that rent of primary residences is up 2.1% on a year-on-year basis. In time, rising rents should help boost sales of homes, Yun said.

Distressed home sales fell from 31% to 30%. All Cash Sales held steady at 30% suggesting continued interest by investors, and first-time home buyers accounted for 32% of the sales.

This report certainly didn’t show the housing market taking off, but it did have some bright spots which is welcome news as we continue our slow climb out of the bottom.

What Happened to Rates Last Week:

Mortgage backed securities (MBS) gained +22 basis points from last Friday to the prior Friday which moved mortgage rates slightly downward.

The MBS markets had a very choppy week where we saw intra-day pricing swings of 20 to 40 basis points each trading day. The market largely ignored virtually all of the economic data that was released. This was due to all the markets focusing intensely on Europe as Germany, France, the European Central Bank, the IMF and others met all week long in an attempt to come up with a solution to their debt woes.

The markets reacted very quickly to any leaked reports out of those meetings which added to the volatility.

Be Blessed, Hustle Hard, Dream Big! MM

Related articles

• Existing Home Sales Continue Upward Climb: (michaeltmcdevitt.wordpress.com)

Retail Sales Strongest Rate Since February:

Headline Retail Sales for September increased at a rate of 1.1% which more than doubled market forecasts of 0.5%. The Core Retail Sales (this excludes autos) also increased more than expected.  It came in at 0.6% which was three times better than the market forecasts of 0.2%.

This is very important for the housing market because housing demand is very closely tied to consumer confidence. This brings up a very interesting point. Various consumer sentiment and consumer confidence reports have shown a recent dip in their readings. So, consumers are telling the survey takers that they feel less positive about the economy and that they are less willing to spend money. But those reports are based upon surveys.

Retail Sales are based upon real and actual sales. And clearly, consumers are spending more which means their economic outlook is positive and that is always a positive for the housing market.

What Happened to Rates Last Week:

Mortgage backed securities (MBS) lost -75 basis points from last Friday to the prior Friday which moved mortgage rates upward and landed mortgage rates at their highest levels in three weeks.

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 Retail Sales.  MBS also pulled back (higher rates) as the European Union appeared to have some less-negative news. This is important because their is certainly a “flight to safety” premium in all bonds due the concerns over the Eurozone and that has been a major factor in pushing mortgage rates lower. So, the less-negative news hurt mortgage rates.

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• Mortgage Delinquency Rates Decline: (michaeltmcdevitt.wordpress.com)

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)

HOPE Now Nears 5 million Loan Modification Mark

HOPE Now, which was the first program initiated to deal with the mounting foreclosure problem in 2007, has reached a level of 4.86 million loan modifications. HOPE is a voluntary private sector alliance of mortgage servicers, investors, private mortgage insurers and non-profit housing and debt counselors.

HOPE reports there were 56,000 permanent modifications of proprietary loans during August,  unchanged from the July rate. This brings the total of proprietary modifications since 2007 to 4.06 million. An additional 791,399 modifications were completed up to the end of July through the Home Affordable Modification Program (HAMP), a joint initiative of the Departments of the Treasury and Housing and Urban Development.

To date this year HOPE has completed 690,000 permanent loan modifications.  An estimated 478,000 of these were proprietary and 211,749 were completed under HAMP with August HAMP totals not yet tabulated.

Completed foreclosure sales increased in August from 65,000 to 68,000 (+5 percent) and foreclosure starts increased 18 percent from 185,000 in July to 218,000 in August. Sixty plus day delinquencies were up only slight from July figures at 2.81 million.

Reduced principal and interest payments accounted for approximately 83 percent of modifications in August and 38,000 loans were modified with reductions in principal and interest payments of more than 10 percent.  Eight-three percent of proprietary modifications in August were fixed-rate with initial periods of five years or more.

Faith Schwartz, Executive Director, reports, “HOPE NOW’s servicing partners continue to complete permanent loan modifications at a rate consistent with past months – in spite of tremendous negative impact of the continued housing and unemployment crisis. And, in cases where modifications are not possible, the industry is working hard to educate at-risk homeowners about the options available to them.”

Related articles

• HAMP Loan Modifications Performing Well (youngenvied.com)
• Freddie Mac Finalizes New Modification Option (michael-mcdevitt.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)

Mortgage Rates Rise Slightly Heading Into The Weekend

After two days of significant improvements, Mortgage Rates took a measured step back today.  Best-Execution rates rose about an eighth of a point, but in some cases, your rate may not have changed at all today-merely your closing cost quote (temporary caveat that we’ll probably repeat a few more times):

Please keep in mind that lenders simply cannot move mortgage rates lower at the same pace as a rapid rally in Benchmark Treasuries.  Although you might hear talking heads on TV or read articles saying that mortgage rates are tied to Treasuries, THEY ARE NOT, and you’ll be perennially frustrated if you expect them to be.  We explained that in greater detail earlier in the month:(Why aren’t rates getting lower as fast as Treasuries). 

Today’s Rates:  The current market is in a state of flux at the moment and mortgage rates moving up and down around ALL TIME LOWS.  BestExecution 30yr Fixed rates were mostly near 3.875% today, with a higher than normal degree of variation around there.  FHA/VA deals are in a bit of a predicament that’s keeping them blocked off below 3.75% (there’s no secondary market for rates any lower than that right now!).  For similar reasons, 15 year fixed conventional loans may be stuck at 3.25%.  5 year ARMS remain near 3.125%, but with variations from lender to lender.

GUIDANCE:  Yesterday’s guidance was really excellent.  As feared, we saw plenty of “pipeline control” price changes among lenders, and that was exacerbated today by weakness in the bond market.  Strategically (longer term, bigger picture), locking when the Best-Execution rate is 3.875% makes a ton of sense.  Even on a shorter term outlook, the broader shift that’s taken place behind the scenes in the secondary mortgage market suggests a range of rates between 3.75 and 4.125.  So right now it’s leaning slightly to the more aggressive side.  If there was any better time in history to lock a loan than today, it was yesterday.  We don’t know what sort of opportunities will be available next week, and although we think rates will be relatively low for a while, we’re not sure it’s worth the risk to float for marginal gains when we’re only an eighth or two away from some of the most aggressive offers yesterday (and consequently, of all-time).