Friday, January 20, 2012
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.
Saturday, January 14, 2012
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.
Thursday, January 12, 2012
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.
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.
Friday, January 6, 2012
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.
Monday, December 12, 2011
News
They say that no news is good news. And while that may be true, last week two economic reports were good news. Read on to learn what happened…and how home loan rates were impacted.
Last Thursday, Initial Jobless Claims come in at 381,000. Not only was this lower than expectations, the number was a nine-month low, signaling that the labor market is slowly improving. Then on Friday, Consumer Sentiment reached a six-month high, rising above expectations to 67.7. These aren't the only economic reports here in the US that have improved in recent weeks, which gives us reason for some optimism when it comes to our economy. But how the Eurodrama plays out may determine which way the fragile US economy goes next.
And it was a big week in Europe, with the European Central Bank (ECB) holding a policy meeting on Thursday and the two-day European Union Summit on Thursday and Friday. Before the Summit even began, rating firm Standard & Poor's put 15 of the 17-nation Euro currency bloc on a downgrade review, citing "continuing disagreements among European policy makers on how to tackle" the Euro debt crisis.
So what were the results of the EU Summit? Leaders agreed to a new, tighter "fiscal integration" across the Eurozone. This means that a new treaty will be drafted, setting guidelines such as annual budget deficits being limited to three percent, and failure to meet guidelines like these would automatically spark disciplinary procedures. As expected, Germany was the winner in this negotiation as they demanded a tighter fiscal union in lieu of firing up the printing press and buying troubled sovereign debt.
So what does all of this mean for home loan rates here in the US? It's important to remember that when our economy is struggling and economic reports are less favorable, our Bond Market usually benefits as investors seek a safe haven for their money. And since home loan rates are tied to Mortgage Bonds, our home loan rates are sometimes at their best when our economy is struggling. In a way it makes sense...in times of economic struggle, good home loan rates can help kick start our economy in other areas.
Though our economic reports have been improving of late, our Bond markets - and therefore home loan rates - have continued to benefit from the uncertainty in Europe, as investors have been staying put in the relative safe haven of US Bonds. That's why now remains a great time to purchase or refinance a home, with home loan rates still near historic lows. Let me know if I can answer any questions at all for you or your clients.
Last Thursday, Initial Jobless Claims come in at 381,000. Not only was this lower than expectations, the number was a nine-month low, signaling that the labor market is slowly improving. Then on Friday, Consumer Sentiment reached a six-month high, rising above expectations to 67.7. These aren't the only economic reports here in the US that have improved in recent weeks, which gives us reason for some optimism when it comes to our economy. But how the Eurodrama plays out may determine which way the fragile US economy goes next.
And it was a big week in Europe, with the European Central Bank (ECB) holding a policy meeting on Thursday and the two-day European Union Summit on Thursday and Friday. Before the Summit even began, rating firm Standard & Poor's put 15 of the 17-nation Euro currency bloc on a downgrade review, citing "continuing disagreements among European policy makers on how to tackle" the Euro debt crisis.
So what were the results of the EU Summit? Leaders agreed to a new, tighter "fiscal integration" across the Eurozone. This means that a new treaty will be drafted, setting guidelines such as annual budget deficits being limited to three percent, and failure to meet guidelines like these would automatically spark disciplinary procedures. As expected, Germany was the winner in this negotiation as they demanded a tighter fiscal union in lieu of firing up the printing press and buying troubled sovereign debt.
So what does all of this mean for home loan rates here in the US? It's important to remember that when our economy is struggling and economic reports are less favorable, our Bond Market usually benefits as investors seek a safe haven for their money. And since home loan rates are tied to Mortgage Bonds, our home loan rates are sometimes at their best when our economy is struggling. In a way it makes sense...in times of economic struggle, good home loan rates can help kick start our economy in other areas.
Though our economic reports have been improving of late, our Bond markets - and therefore home loan rates - have continued to benefit from the uncertainty in Europe, as investors have been staying put in the relative safe haven of US Bonds. That's why now remains a great time to purchase or refinance a home, with home loan rates still near historic lows. Let me know if I can answer any questions at all for you or your clients.
Weekly Info 12/9/2011
The newest European maneuvers have trigged a stock rally, but credit markets are not buying the deal. The small upward pressure on US yields today is preparatory to a big borrowing binge by the Treasury next week, not anything fundamental. Through the fog of Europe, dominating and concealing everything, one pattern is clear: the US economy is doing better than forecast 90 days ago, and the rest of the world is in some stage of sinking. The two surveyors of US consumer confidence have each reported November-December gains. New claims for unemployment insurance last month were the lowest since February, and the small-business org, NFIB, has also found the first up-turn in small-business hiring since 2008. The Fed's Z-1 reported a couple-trillion-dollar drop in US household net worth in the 3rd quarter; however, all of it was attributable to stock market losses then, all of which have been recovered.
Friday, December 2, 2011
Weekly Info 12/2/2011
Everybody struggles now to find guideposts in the thicket of new economic information. Two old ideas may help. First, the time-sense of humanity is more calibrated to getting the bear out of the cave than musing about why bears like caves. Second, a version of frog-in-hot-water: we tend not to notice the gradual onset of lunacy, grasping the insanity only in retrospect. US data are pretty good -- relative to fears of new recession. November payrolls gained 120,000 jobs, and inclusive of all revisions added that many to prior months. If markets had any idea in September that payrolls had jumped by 210,000, double the original announcement, we would not have had that mortgage refinance party. Reality break: the Treasury borrows and spends about $120 billion each month, and for that stimulus we get 120,000 jobs. Instead, why not just pay each of these people a million bucks and let them stay home? Europe is struggling with austerity, not us. Yet.
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