Weekly Info 01/27/2012

Mortgage interest rates improved this past week on the Fed’s FOMC Announcement. At the conclusion of its FOMC meeting on Wednesday, the Fed announced that they plan to leave the Fed Funds rate at current levels of 0% to 0.25% through the end of 2014, signaling concern regarding the economic recovery. Previously, the Fed had indicated that it planned to leave the Fed Funds rate at current levels through mid-2013. The Fed also cut its forecast for 2012 GDP to a range of +2.2% to +2.7% from its previous forecast of +2.5% to +2.9%. Economic data was mixed. December Pending Home Sales, December New Home Sales, December Leading Economic Indicators, and the advance report on Q4 GDP were weaker than expected. The November FHFA Housing Price Index, December Durable Goods Orders, and the University of Michigan Consumer Sentiment Index were stronger than expected. The Treasury auctioned $99 billion in 2 Year, 5 Year, and 7 Year Notes, which were met with reasonably strong demand.

Weekly Info 01/20/2012

Mortgage interest rates increased slightly this past week as economic data was generally either better than expected or in line with expectations. Economic reports stronger than expected included the New York Empire State Manufacturing Index, the NAHB housing market index, and weekly jobless claims. Weekly jobless claims fell by 50k on expectations that they would fall by 16k. Reports in line with expectations included December Industrial Production, December Capacity Utilization, December Building Permits, and December Existing Home Sales. Inflation data was also in line with expectations. The December Consumer Price Index was up 3.0% year over year and excluding the food and energy components, core CPI was up 2.2% year over year. Also of note, borrowing costs in Italy and Spain were better than expected which put pressure on Treasury yields.

Weekly Info 01/13/2012

The one bright spot in the world is the resilience of the US economy, not re-entering the recession so widely forecast last fall, and so far impervious to events in Europe. A surge in consumer credit (10% annual growth rate in November) may or may not indicate consumer and banking revival, or survive revision, but beats contraction. Consumer confidence numbers are in a sustained rise, sometimes correlating with a better job market. Tempering that enthusiasm, the ballyhooed holiday retail sales did not take place: fibbers on the stock-market channels oversold a mere point-one percent gain in December sales. Small-biz surveyor NFIB found a fourth-straight monthly gain, but shallow- slope, net index no better than last January. On concern for the rest of the world, 10-year T-notes have fallen to 1.85% today, but there is no mortgage follow-through, largely because of the unspeakably stupid mortgage-rate surcharge imposed to pay for part of the Social Security tax cut.

Foreclosures Post Big Drop, Reaching 2007 Levels

Foreclosure filings posted a 33 percent drop in 2011, falling to their lowest levels since 2007, RealtyTrac reports.

During 2011, one in every 69 homes received a foreclosure filing and 804,000 homes were repossessed — compared to 1.05 million homes that were repossessed during the foreclosure crisis peak in 2010, according to RealtyTrac.

Foreclosures have plagued many communities, putting downward pressure on overall home prices. In the past five years, more than 4 million homes have been lost to foreclosure.

So is the worst finally over for the housing market?

Not yet, analysts say. Banks took more time to process foreclosures last year, which explains some of the declines, housing analysts note. In fact, the average process time for a foreclosure rose to 348 days in the fourth quarter, up from 305 days one year prior.

RealtyTrac CEO Brandon Moore says that while he expects foreclosures to increase in 2012, he also expects foreclosures to stay well below the 2010 peak. Refinancing programs, such as the government’s Home Affordable Modification Program, are helping more borrowers lower their payments and avoid foreclosure, Moore says.

Still, the biggest problems with foreclosures remains centered in certain areas, particularly where investors helped drive up home prices during the housing boom. For example, Nevada remains the No. 1 foreclosure hot-spot, in which one out of every 16 households received some kind of default notice during 2011. Arizona and California also are continuing to face some of the highest foreclosure rates in the country too, according to RealtyTrac data.

Commentary 1/6/2012

It is an election year. In addition to the distorted economic "analysis" offered by the ever-cheerful stock-market channels, CNBC and Bloomberg, all year long this year political interests will add their garbled gabble. Today's reports of 200,000 new jobs in December and unemployment down from 8.7% to 8.5% were greeted with happy bugles from the usual suspects. Ignore that and watch the markets themselves. Interest rates rise on legitimate good news; today's 10-year T-note yield has fallen to 1.94%, and mortgages are near 4.00% again. The stock market rises on good news, and today it is flat to down. 200,000 jobs is good news, but year-over-year earnings have risen only 2.1%. A few back to work, but not the job that it was. And even if employment growth persists at that level, and new unemployment claims stay down as they were in December from 400,000 weekly, it's not enough to dent the job losses since 2007.