A review of last week’s economic news finds December housing starts below and new permits exceeding expectations. While consumer confidence rose, initial jobless claims and GDP were worse than expected and durable orders were down. The stock market had three days of sell off however we did not see the flight to quality often seen when stocks slide. Many economists cite constant fear of the actual direction the economy is headed and reference this weeks’ non-farm payroll release a market mover. Those on either side of the economy recovering debate will be closely watching the report for signs of continued weakness or a bounce from the bottom. 2010 has been predicted to see higher interest rates, the question remains when and how fast the rise will occur. Stay tuned!
Below is a snapshot of this week’s economic data releases:
Monday: Dec. Personal Income
Spending
PCE Index
Jan. Institute of Supply Management
Tuesday: No economic release scheduled
Wednesday: Jan. Institute of Supply Management Service Sector Index
Thurs: Initial Jobless claims for the weekend ended 01/30
1st estimate Q4 Productivity & Unit Labor Costs
Dec. Factory Orders
Fri: Jan. Nonfarm Payrolls
Jobless Rate
Average Hourly Earnings
Tuesday, February 2, 2010
Mortgage Minutes
Monday, January 4, 2010
Mortgage Minutes
The passing of the year and the decade came quietly from the financial news perspective; however, the month of December saw an increase in interest rates of .50%. Moreover, while the start of 2010 has started with an ever so modest improvement, the forecasts for future rates almost certainly indicate movement higher. The Fed will bring their mortgage-backed securities purchasing program to a halt at the end of March and economists are already citing a run up in rates if the program is not extended. Focusing on this week, Friday’s Non Farm Payroll release could spark a quick increase in mortgage rates – while the likelihood of a sharp decrease is unlikely. Employment numbers may be beginning to signal signs of recovery. If this trend continues, the economy will grow and a demand for capital will push interest rates higher. Compounded with the extension and expansion of the tax buyer credit, the time for real estate financing is now.
Leia Mais…Monday, December 7, 2009
Mortgage Minutes
Last week, the National Association of Realtors reported pending sales increased by 3.6% in October. Factory orders defied expectations and reported a rise and last week’s closely watched non-farm payroll reported 11,000 jobs lost in November – far better than the expected 130,000 by the most optimistic economists. The results were so unexpected; it has left investors scratching their heads. In a month were initial jobless claims exceeded 2 million, it seems the dots aren’t connecting. The news sent mortgage rates higher by nearly .25% - but they continue to hover in the upper 4% range! With little economic releases on tap for this week, traders will be focused on the treasury auctions. Following last week’s positive economic news, there is some concerns that the longer termed bonds being auctioned this week will come at higher yields to draw participants. This could cause mortgage rates to rise. As the theme continues, now is not the time to straddle the fence for buying a home or refinancing.
Leia Mais…Monday, November 30, 2009
Mortgage Minutes
Despite positive economic news released last week, mortgage rates improved an .125% (typically, good economic news negatively affects the mortgage market). The improvement can be directly related to the safe haven of mortgage-backed securities. With the request from Dubai for additional time to pay its debts, financial markets reacted globally moving out of stocks into bonds. Many economists anticipate this trend to continue this week as investors monitor the effects of the Dubai announcement. However, this is only one piece to this week’s puzzle. The broad range of economic news scheduled for release this week compounded with the continued scale back of mortgage-backed securities by the Federal Reserve will likely make for a volatile week for mortgage rates. While all of the reports could be potential market movers, investors will be anxiously awaiting Friday’s non-farm payroll report for an updated glimpse on the US economy. The anticipated estimate is 114,000 jobs lost in November and unemployment to remain at 10.2%. Most economist believe actual numbers would need to dramatically exceed the expectations for the mortgage market to reap any benefits – especially considering how incredibly low rates are currently. Stay tuned for updates on the mortgage market.
Leia Mais…Friday, November 6, 2009
Tax Credit Extension-Signed By President Obama
To much anticipation and longing for further improvement in the mortgage and housing industry, the First Time Homebuyer Tax Credit will be extended today. The program, scheduled to expire at the end of November, will now require buyers to sign a purchase agreement by April 30, 2010 and close by June 30th. The FTHB Tax Credit Extension would include:
Buyers who have owned their current homes at least 5 years would be eligible for up to $6,500
First Time Homebuyers - or anyone who has not owned a home in the last 3 years would still be eligible for the $8000 Tax Credit
The credit is available for the purchase of principal homes costing $800,000 or less - vacation homes are ineligible
The credit would now be eligible to purchasers up to $125,000 in single income or $225,000 in joint income
The credit would be extended an additional year, until June 30, 2011 for members of the military serving outside the United States for at least 90 days
Extending the credit should allow more people to purchase a home and help stop the continued downward spiral in housing prices caused by the foreclosure crisis. The extension has been a priority to the real estate industry which says that the FTHB Tax Credit has been instrumental in the turn around of the market that was a major cause of the economic downturn.
The tax credit program will cost the government about $10.8 billion and the National Association of Realtors has estimated that out of the 1.4 million homebuyers that have already used the tax credit, about 350,000 would not have purchased their home without the tax credit.
Market Minutes
Mortgage rates are modestly improving after some important announcements this week. Wednesday’s policy statement issued by the Fed left benchmark rates the same and reiterated inflation continues to be contained. The Fed also confirmed they will continue to use their resources as necessary to boost the economy, but did not increase their total commitment to purchase mortgage-backed securities – a move that would have helped improve mortgage rates. Perhaps the biggest news of the week was released this morning – 190,000 jobs were lost in October and the unemployment rate has jumped to 10.2% (the highest since 1983). On the heels of this news, mortgage markets are modestly improving.
Legislation update:
The bill to extend and expand the First Time Homebuyer Tax Credit has passed the House and Senate and is expected to be signed by President Obama as early as today or tomorrow. The bill provides for the following:
- $8,000 tax credit for first time homebuyers
- $6500 “move up” credit for homebuyers owning a home 5 of the last 8 years.
- Income limits increased to $125,000 for single filers and $225,000 for joint filers.
- Eligible sales price to $800,000.
- Program extended for buyers signing a purchase contract by April 30, 2010 and closing by June 30, 2010.
- For members of the military serving outside of the US on official duty for 90 days during January 1, 2009 and May 1, 2010, the program extends to contracts signed before May 1, 2011 and closed before July 1, 2011.
Monday, November 2, 2009
Market Minutes
As a result of last week’s economic news, mortgage rates improved slightly. News included a worse than expected consumer confidence reading and a slightly better than expected GDP. The GDP numbers are grossly skewed thanks to the Cash for Clunkers and first time homebuyer tax credit programs. This Wednesday the Federal Open Market Committee will meet and issue a policy statement and the ADP National Employment Report will be published. Thursday’s initial jobless claims and Friday’s non farm payroll may be market movers. There is also speculation that a vote could come as soon as this week to extend and broaden the homebuyer tax credit until April 30, 2010. Details below:
* $8,000 tax credit would remain in effect for first time homebuyers
* New $6500 “move up” credit for homebuyers owning a home 5 of the last 8 years.
* Eligible sales price increased to $800,000.
* Income limits increased to $125,000 for single filers and $225,000 for joint filers.
Check back regularly for updates on this legislation and more.