Mortgage Market Weekly – Update Jan 12, 2015

This Issue…

Last Week in Review: The labor sector continues to improve, while home price gains are stabilizing at more normal levels.Forecast for the Week: Look for key reports on inflation, manufacturing and retail sales.

View: Navigate tax time with ease thanks to the overview below.

Last Week in Review

Take this job and love it. That’s exactly what more people are doing these days, as job growth in 2014 was the strongest in fifteen years and our economy continues to improve.corelogic-home-price-index-2015-01-12 The December Jobs Report showed that 252,000 jobs were created, a touch above expectations. In addition, upward revisions to October and November added another 50,000-plus jobs to what was originally reported for those months. Employers added 2.95 million new jobs in 2014, with an average of 246,000 per month, above the 194,000 per month average in 2013.

Another positive in the report is that the Unemployment Rate came in at 5.6 percent. The head scratcher was a -0.2 percent hourly earnings figure. Hourly earnings are not growing and that is keeping inflation persistently low. One positive about low inflation is that it should benefit Bonds for the foreseeable future, as high or growing inflation can cause fixed assets like Bonds to worsen. Since home loan rates are tied to Mortgage Bonds, low inflation should also help keep home loan rates low for now.

In housing news, CoreLogic reported that its Home Price Index, including distressed sales, rose by 5.5 percent annually in November. After a near 12 percent annual increase back in January 2014, prices have been decelerating, but have stabilized to a more normal 5 to 6 percent growth rate for the last four months.

The bottom line is that home loan rates remain near historic lows, and now is 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.

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Top Things to Watch for in 2014

Economy, Interest Rates, and Housing

  1. Experienced lenders will have a huge advantage. New lending rules and strict compliance requirements will be too overwhelming for some. Dodd-Frank rules are still only 50 percent implemented and smaller lenders may not be able to afford legal staff or counsel necessary to monitor compliance.
  2. Expect inflation in 2014 to wind up no higher than 1.5 percent, possibly lower. From import prices to producer prices, from the CPI to the Federal Reserve’s favorite measure of inflation, core Personal Consumption Expenditures, are all running well below the Fed’s target of 2 percent.
  3. Interest rates will be stable into early 2015, although exceptionally low mortgage rates are a thing of the past. Auto loans and other short term rates will barely be affected by tapering of Fed purchases.
  4. The unemployment rate should be at or near 6.5 percent by the end of 2014. Jobs begin 2014 where they were in early 2013, averaging 190,000 per month. Most economic headwinds are behind us, and we could see increases to 220,000 per month.
  5. New home sales up, existing homes stay flat. The flood of distressed sales pushed existing home sales up at the expense of new homes, but distressed sales as a percentage of all home sales will decline. Existing home sales should stand pat at 5 to 5.25 million while new home sales rise by about 20 to 25 percent – to about 525,000.
  6. House prices could see a 5 to 6 percent boost. Look for slowing median house price increases and more rapidly rising average house prices, courtesy of increasing income disparities between the rich and everyone else. Inventory bottomed in 2013, but a 5 percent increase should increase supply, enabling more first-time buyers and move-up buyers to find a home.
  7. The economy could finally break out of its low growth funk. An election year means politically motivated saber rattling over the budget will be kept to a minimum. The most recent budget deal will help increase GDP due to the short-run increase in government spending, and decrease economic uncertainty. Overall, expect a one-point rise in GDP to 3.1 percent in 2014.

Mortgage Market Weekly Update – Jun 21, 2013

In This Issue

Last Week in Review: The Fed met and the volatility continued. Find out how home loan rates were impacted.

Forecast for the Week: The last week of June will be busy, with news on housing, inflation, consumer confidence and more.

View: Been wondering what those #Hashtags are really about, and if they really do make a difference? Learn more below.

Last Week in Review

“I’m free…free fallin’.” Tom Petty. Mortgage Bonds continued to fall last week as the Fed met and more volatility followed. Read on to learn what happened.

existing-home-sales-may2012-2013After last week’s meeting of the Federal Open Market Committee (FOMC), the Fed released its Policy Statement, noting that the downside risks to the outlook for the economy and labor market have diminished. Especially important: There was no mention of tapering their Bond Purchase program known as Quantitative Easing.

However, in the press conference that followed, Fed Chairman Ben Bernanke said, “Assuming the economy and labor conditions evolve as the Committee expects, the Fed anticipated it would begin tapering later this year and to finish by mid-2014.” This mixed message caused a sell-off in both Stocks and Bonds, adding to the volatility the markets have seen of late.

In economic reports of note, there was more good news in the housing sector as Existing Home Sales rose by 5.18 million units annualized in May. This is an increase of 12.9 percent from May 2012 and the highest rate since 5.44 million units were sold in November 2009. Housing Starts also rose by 7 percent in May, and though they came in lower than expected, they are actually up a whopping 28 percent since May 2012. [Read more…]

OC Register Reports Orange County has Quickest Home Sales

From the Orange County Register Business Section:

May-OC_quickest-homesales

Home prices up 10.2% annually in February per CoreLogic

CoreLogic reported that home prices rose by 10.2% annually in the month ended in February. It was the largest annual gain since March of 2006 and was the 12th consecutive monthly increase in home prices nationally.

Appreciation-Feb-2012-Feb-2

Home Prices on the Rise

More positive news from the housing sector, CoreLogic reported yesterday that home prices rose 0.7% from December to January and surged nearly 10% compared to a year ago. The 10% increase was the largest yearly since April of 2006 and was the 11th monthly increase in a row.

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