Category Archives: Market Outlook

What’s Ahead For Mortgage Rates This Week – December 1, 2014

Posted on by

What's Ahead For Mortgage Rates This Week December 1 2014Last week’s scheduled economic events were packed into Tuesday and Wednesday, but several housing-related reports were released including the Case-Shiller National and 10-and 20-City Home Price Indices for September, The FHFA House Price Index also for September, and New and Pending Home Sales for October.

Case-Shiller, FHFA Report Slower Growth in Home Prices

According to Case-Shiller home price indices released Tuesday, the national rate of home price growth has slowed from August’s year-over-year reading of 5.60 percent to September’s reading of 4.90 percent. This was the lowest rate of home price growth in two years and was seen by analysts as a positive development in terms of sustainable price growth.

Double-digit percentage gains in home price growth in 2013 and earlier this year drove many would-be home buyers to the sidelines as narrow inventories of homes caused bidding wars in high-demand areas. 20 cities tracked by Case-Shiller had mixed results, with home prices falling in nine cities, rising in nine cities and prices were unchanged in two cities.

FHFA, the Federal Housing Finance Agency and overseer of Fannie Mae and Freddie Mac, reported year-over-year price growth of 4.30 percent in September against August’s reading of 4.80 percent. Lower price gains for September were expected as the prime period of summer sales wound down. FHFA reports on home prices related to mortgages and properties held by Fannie Mae and Freddie Mac.

Pending and New Home Sales Show Mixed Results

The National Association of Realtors® reported that the Pending Home Sales Index dipped to 104.3 in October as compared to September’s reading of 105.1.Lawrence Yun, chief economist for the National Association of Realtors®, said that lagging wage growth and tight mortgage credit conditions were stalling demand for homes. Pending home sales usually close within two months and serve as a gauge for upcoming home sales and mortgage activity. A reading of 100 for the Pending Home Sales Index is equivalent to pending home sales performance in 2001.

Better news came from the Department of Commerce New Home Sales report for October. New home sales achieved a five month high with a reading of 458,000 new homes sold on a seasonally-adjusted annual basis. October’s reading was 0.70 percent higher than September’s reading of 455,000 new homes sold, but missed analysts’ expectations of 469,000 new homes sold. New home sales increased by 1.80 percent year-over-year with regional rates as follows:

  • Midwest: +15.8 percent

  • Northeast +7.1 percent

  • West -2.7 percent

  • South -1.9 percent

The median price of new homes rose to a record high of $305,000 in October. The supply of new homes rose to a 5.60 month supply from September’s reading of a 5.50 month supply of new homes.

Mortgage Rates Fall or Flat, Jobless Claims Rise

Freddie Mac reported that the average rate for a 30-year fixed rate mortgage fell from 3.99 percent to 3.97 percent; the average rates for 15 year mortgages and 5/1 mortgages were unchanged at 3.17 percent and 3.01 percent respectively. Average discount points were unchanged for all loan types at 0.50 percent.

New Jobless Claims rose to 313,000 last week and surpassed 300,000 for the first time in several weeks. Analysts had expected a seasonally-adjusted reading of 288,000 new jobless claims. Analysts said that a rise in claims could indicate a slower pace in hiring, but said that weekly readings are too volatile to indicate a trend. The four-week average of jobless claims was 294,000 new claims, which was near an eight-year low.

What’s Ahead

Next week’s scheduled economic events include Construction Spending, the Fed’s Beige Book Report, Non-Farm Payrolls and the National Unemployment Rate. Freddie Mac’s PMMS report on mortgage rates and Weekly Jobless claims will also be released as usual.

Case-Shiller Home Prices: Price Growth Slows in September

Posted on by

CaseShiller Home Prices Price Growth Slows in SeptemberAccording to the Case-Shiller National Home Price Index, annual home price growth slipped to a seasonally-adjusted rate of 4.80 percent in September. This was 0.30 percent lower than August’s year-over-year reading of 5.10 percent.

Cities posting the highest year-over-year gains in home prices were Miami, Florida 10.30 percent, Las Vegas, NV with a gain of 9.10 percent, San Francisco, California posted a gain of 7.90 percent, Dallas home prices gained 7.40 percent and home prices increased by 6.70 percent in Portland, Oregon.

David M. Blitzer, chairman of the S&P Dow Jones Index Committee, said that Florida and the Southeastern region showed sustained strength. Citing gains in builder confidence and housing starts and pre-crisis levels for foreclosures and mortgage defaults, Mr. Blitzer said that the outlook for housing in 2015 should be “stable to slightly better.”

Analysts said that higher inventories of available homes had slowed home price growth. Cooling home prices allow more buyers into the market, which creates a better balance between buyers and sellers. Rapidly increasing home prices in late 2013 through early 2014 forced buyers onto the sidelines as investors and cash buyers drove home prices higher and raised demand for available homes.

Cities Post Incremental Month-to-Month Gains

Case-Shiller’s 10-and 20-City Home Price Indices were 15 and 17 percent below their mid-2006 peaks with 18 of 20 cities tracked showing slower growth in September than in August. Top month-to-month gains were incremental, with Miami, Florida and Charlotte, North Carolina gaining 0.60 percent, Las Vegas, Nevada gained 0.40 percent and Dallas, Texas gained 0.30 percent. Denver, Colorado, Tampa, Florida and Portland, Oregon posted month-to-month gains of 0.20 percent.

Cities posting no month-to-month gain included Los Angeles, California and New York City.

The steepest decline in month-to-month home prices was seen in Washington, D.C. at -0.40 percent., followed by Atlanta, Georgia at -0.30 percent San Francisco, California, Atlanta, Georgia, Chicago, Illinois, Detroit, Michigan and Seattle Washington posted month-to-month declines in home prices of -0.20 percent. San Diego, California and Boston, Massachusetts posted declines in month-to-month home prices of -0.10 percent.

FHFA House Price Index Unchanged in September

The Federal Housing Finance Administration posted no gain on its month-to-month reading for September, although analysts had expected a gain of 0.40 percent from August to September. Year-over-year, FHFA reported a 4.50 percent gain in home prices between the third quarter of 2013 and the same period in 2014.

On a positive note, Seasonally-adjusted home prices for purchase-only transactions rose in 40 of 50 states during the third quarter of 2014. The top five states posting the highest annual home price gains were Nevada, Hawaii, California, North Dakota and Florida.

What’s Ahead For Mortgage Rates This Week – November 24, 2014

Posted on by

Whats Ahead For Mortgage Rates This Week November 24 2014Last week’s scheduled economic news included the NAHB/Wells Fargo Housing Market Index, Housing Starts and Existing Home Sales. FOMC meeting minutes were released along with weekly Freddie Mac mortgage rates and weekly jobless claims.

In addition, the National Association of Realtors® suggested that FHA should lower its mutual mortgage insurance premiums (MMI) as its fund for paying claims has normalized since recession.

Homebuilder Confidence Nears Nine-Year High

The National Association of Home Builders/ Wells Fargo Housing Market Index achieved a reading of 58 for November. This was two points higher than the expected reading of 56 and four points above September’s reading. This was the fifth consecutive month of readings above 50.

Readings above 50 indicate that more builders are confident about housing market conditions than not. Components of the index improved with builder confidence in present sales of new homes up 5 points to a reading of 62, confidence in sales over the next six months rose by two points to 66, and the reading for prospective buyer traffic rose four points to 45.

Housing Starts Slow, Existing Home Sales Suggest Stronger Housing Market

Housing starts were lower by 2.80 percent in October at a seasonally-adjusted rate of 1.01 million against an expected reading of 1.03 million and September’s reading of 1.04 million homes started. October’s reading was affected by a 15.50 percent drop in multi-family construction, but single-family home construction increased by 4.20 percent. Analysts noted that the multi-family sector is notoriously volatile.

The National Association of Realtors® reported that the seasonally-adjusted annual rate of existing home sales for October exceeded the expected reading of 5.15 million with 5.26 million existing homes sold. October’s reading also surpassed September’s reading of 5.17 million previously-owned homes sold. October’s reading represented a 1.50 percent increase over September sales of existing homes, and was the highest reading since September 2013.

The median price of previously-owned homes rose to $208,500 in October, which represented a 5.50 percent increase year-over-year. The inventory of homes for sale is higher with a 5.1 month supply of homes available, which was a year-over-year increase of 5.20 percent. Higher inventories of homes available and low mortgage rates were seen as factors contributing to more home sales.

Builders, Realtors® Call for Lower FHA Premiums

Kevin Kelly, chairman of the National Association of Home Builders and the National Association of Realtors® called for the FHA to lower its mortgage insurance premiums. The cost of FHA loans, which require borrowers to pay an upfront mortgage insurance premium and annual premiums that are pro-rated and added to monthly mortgage payments, were seen as an obstacle to first-time and moderate income homebuyers. This request was based on a report that indicated the FHA fund for paying mortgage insurance claims is in the black for the first time since 2011.

Mortgage Rates, Jobless Claims Fall

Freddie Mac reported that average mortgage rates fell across the board on Thursday with the average rate for a 30-year fixed rate mortgage lower by two basis points at 3.99 percent, and the average rate for a 15-year fixed rate mortgage lower by three basis points at 3.17 percent. The average rate for a 5/1 adjustable rate mortgage dropped by one basis point to 3.01 percent. Average discount points remained the same for all loan types at 0.50 percent.

The Commerce Department reported that new jobless claims fell to 291,000 from the prior week’s reading of 293,000. Analysts expected a reading of 280.000 new jobless claims, but this was the tenth consecutive week of readings for fewer than 300,000 new jobless claims. The four-week rolling average of new claims rose by 1750 to a reading of 287,500. The four week average reduces the volatility of weekly jobless claims and provides a more accurate reading of unemployment trends.

What’s Ahead

Next week’s scheduled events include the Case-Shiller 10 and 20-City Home Price Indices, FHFA’s House Price Index and New and Pending Home Sales reports. There are no reports set for Thursday or Friday due to the Thanksgiving Holiday.

FOMC Minutes: Economy Growing, Housing Lags

Posted on by

FOMC Minutes Economy Growing Housing LagsMinutes of the Federal Open Market Committee (FOMC) meeting held October 28 and 29 were released Wednesday. The report suggests that the U.S. economy continues to improve, although the annual inflation rate remains near 1.50 percent and short of the committee’s goal of 2.00 percent. Falling crude oil prices were cited as a cause of faltering inflation rates. The minutes indicated that FOMC members expect inflation to remain below the 2.00 percent benchmark for the next year or so.

The minutes did not reveal an exact date for raising the target federal funds rate, which is currently 0.00 to 0.250 percent, but analysts expect a rate change in mid-to-late 2015. One committee member said that the Fed should commit to keeping the target federal funds rate at its present level until inflation reaches the Fed’s goal of 2.00 percent.

Job Markets Improve, Mortgage Rates Fall

FOMC members said that labor markets had improved “somewhat further.” The minutes noted that the national unemployment rate had declined to 5.90 percent in September, which was lower than the FOMC goal of 6.50 percent for national unemployment. While this was good news, FOMC discussed the fact that a significant number of part-time workers suggested under-utilization of the labor force. A combination of stronger labor markets and a 0.25 percent reduction of mortgage rates during the intermeeting period between September 17 and October 28 were seen as positive for housing markets, but the committee noted that mortgage lending standards for single-family homes had not changed much. Lending requirements were more accommodative for commercial real estate.

QE Ends, FOMC Seeks to Maintain “Accommodative” Financial Conditions

FOMC members voted to end asset purchases made under the Fed’s quantitative easing program, but said that ongoing reinvestment of principal payments on bonds and MBS with the goal of maintaining “sizeable” holdings of long-term securities. The minutes indicated that this would help maintain “accommodative” financial conditions.

The committee agreed to re-assert its position that although national unemployment and inflation may achieve or surpass FOMC goals, the committee could maintain the target federal funds rate at current levels for “some time” after the benchmarks are achieved. Ultimately, the FOMC’s decision to change the target federal funds rate will include thorough and ongoing review of global and domestic economic developments.

Committee members concluded this meeting with a decision to set the next FOMC meeting for December 16 and 17.

What’s Ahead For Mortgage Rates This Week – November 10, 2014

Posted on by

Negotiation Tips: How to Ask the Seller to Pay the Closing CostsLast week’s economic reports contained mixed reports indicating that the economy continues to recover with occasional “blips” in its progress. Construction spending was lower than expected.

A Federal Reserve survey of senior loan officers indicated that credit standards remain strict for mortgages and other types of lending. According to the survey, a “modest net fraction” of large banks had eased credit standards for prime mortgage lending.

First-Time Homebuyers Struggle as Market Share Hits 27-Year Low

The National Association of REALTORS® (NAR) reported that first-time buyers’ share of home purchases has slipped to 33 percent, which was its lowest level in 27 years. According to Lawrence Yun, chief economist for the NAR, high home prices and mortgage insurance costs along with strict mortgage credit requirements continue to sideline first-time buyers.

In other news, the Department of Commerce reported that construction spending dropped by 0.40 percent in September as compared August’s reading of -0.50 percent and an expected reading of +0.70 percent. September’s reading represented a seasonally-adjusted annual construction spending rate of $950.90 billion.

Mortgage Rates: Average 30-Year Mortgage Rate Tops Four Percent

Average mortgage rates rose last week according to Freddie Mac. The average rate for a 30-year fixed rate mortgage rose by four basis points to 4.02 percent. The average rate for a 15-year fixed rate mortgage rose by eight basis points to 3.21 percent, while the average rate for a 5/1 adjustable-rate mortgage rose by three basis points from 2.94 percent to 2.97 percent. Average discount points remained at 0.50 percent for all three types of mortgages.

This is not altogether bad news, as higher mortgage rates are typically prompted by improving economic conditions. 2014 started with an average rate for 30-year fixed rate mortgages of 4.05 percent.

Labor Reports Suggest Stronger Jobs Markets

Last week’s economic news included several reports that indicated improvements in U.S. labor markets. The Department of Labor released its Non-Farm Payrolls report for October with a reading of 214,000 jobs added against expectations of 243,000 jobs added and September’s reading of 256,000 jobs added. While this appears contrary to stronger labor markets, analysts said that a new low in the national unemployment rate of 5.80 percent indicated that fewer new jobs were needed. October was the ninth consecutive month reporting 200,000 or more jobs added.

The ADP employment report, which tracks payrolls in the private sector, reported an increase of 5,000 jobs from September’s reading of 225,000 jobs to October’s reading of 230,000 jobs.

Weekly jobless claims fell to 278,000 against expectations of 285,000 new jobless claims filed and the prior week’s reading of 288,000 new claims filed. This reading supports a stronger jobs market and may compel would-be home buyers to enter the market as concerns about unemployment and jobs wanes.

The national unemployment rate reached a new low with October’s reading of 5.80 percent. In related news, Fed Chair Janet Yellen indicated in a speech on Friday that the target Federal funds rate will likely rise in 2015, but she gave neither a prospective date nor details about how much the benchmark federal funds rate may rise.

What’s Ahead For Mortgage Rates This Week – November 3, 2014

Posted on by

What's Ahead For Mortgage Rates This Week - November 3, 2014Last week’s economic news brought mixed developments as pending home sales moved to their second highest level of 2014.

The Federal Open Market Committee (FOMC) announced the expected end of asset purchases under its quantitative easing program. In its post-meeting statement, the committee noted improvements in overall economic conditions labor markets as indications of better than expected economic trends.

The Case-Shiller Home Price Index reports for August showed continued slowing in housing price gains. Mortgage rates were higher, but consumer confidence exceeded expectations.

Pending Home Sales Rise, Case-Shiller Reports Slower Price Gains

The National Association of REALTORS® reported that pending home sales gained 0.30 percent in September for an index reading of 105 as compared to August’s reading of 104.7. Analysts said that lower home prices and more homes available likely brought more buyers into the market.

The S&P Case Shiller 10 and 20-city home price index reports for August showed further slowing in home price growth with a year-over-year reading of 5.60 percent as compared to July’s year-over-year reading of 6.70 percent.

This was the slowest price increase since November 2012. Home price growth is slowing as demand decreases. Tight mortgage qualification requirements are likely contributing to lower demand for homes.

FOMC ends QE, Mortgage Rates Rise

The Fed ended its asset purchases under its QE program according to a statement after the FOMC meeting on Wednesday. This move was expected, and the statement repeated its plan to leave the target federal funds rate unchanged for a considerable period after the QE program’s conclusion. Analysts interpreted that to mean that no rate change would likely occur until approximately June 2015.

Mortgage rates responded to the demise of QE with an across the board increase. Average rates reported by Freddie Mac on Thursday were 3.98 percent for a 30-year fixed rate mortgage, 3.13 percent for a 15-year mortgage and 2.94 percent for a 5/1 adjustable rate mortgage. Discount points were unchanged at 0.50 percent for all three loan types.

New Jobless Claims Up, But No Big Deal

Housing market trends are connected with what’s happening in labor markets. Last week’s report for new jobless claims took an unexpected jump with 287,000 new jobless claims filed against predictions of 281,000 new claims and 284,000 new jobless claims filed the prior week. The four-week average for new jobless claims dropped to 281,000 and new claims remained below the 300,000 benchmark for the seventh consecutive week.

October’s Consumer Confidence Index rose to a reading of 94.50 as compared to the expected reading of 87.3 and September’s reading of 89.0. The Consumer Sentiment Index for October was also showed an increase of 0.50 percent with a reading of 86.9 against a predicted reading of 86.4 and September’s reading of 86.4.

What’s Ahead

Next week’s scheduled economic news includes construction spending for September, Non-farm payrolls, national unemployment, and the ADP employment report. Regularly scheduled reports on mortgage rates and new jobless claims will be released on Thursday.

Case-Shiller 20 City Home Price Index And FOMC QE Update

Posted on by

Case Shiller 20 City Home Price Index And FOMC QE UpdateAccording to the S&P Case-Shiller 20 City Home Price Index, Home prices rose by 0.20 percent in August. Three of the 20 cities tracked saw home prices drop, while Detroit, Michigan posted the highest price growth. The seasonally adjusted growth rate for cities tracked declined by 0.10 percent as compared to a decline of 0.10 percent in July.

Detroit led monthly home price growth with a gain of 0.80 percent. Dallas, Denver, Colorado and Las Vegas, Nevada posted gains of 9.50 percent as compared to July. Cities posting declines in home price growth included San Francisco at -0.40 percent, Charlotte, North Carolina and San Diego, California at -0.10 percent.

Home prices increased by a seasonally-adjusted year-over-year rate of 5.60 percent in August, which was the lowest reading since November 2012. Year-over-year home prices grew by 6.70 percent in July. August home prices were 16 percent lower than their 2006 peak.

The Case-Shiller National Home Price Index posted a year-over-growth rate of 5.10 percent. This index covers all nine U.S. census regions.

Analysts note that slower growth in home prices will likely attract more buyers, but is a sign of overall decline in demand for homes. August home prices were 16 percent lower than their 2006 peak. As the jobs market continues to improve and if mortgage rates remain low, more buyers are expected to enter the housing market.

FOMC Statement: QE Ends, Labor Market Forecast Brighter

In its customary post-meeting statement, The Federal Open Market Committee (FOMC) of the Federal Reserve announced that it voted to reduce asset purchases under its current quantitative easing (QE) program to zero. The committee’s decision concluded 37 consecutive monthly purchases of Treasury bonds and mortgage-backed securities.

FOMC cited “substantial improvement” in the outlook for the labor market since the inception of QE purchases, and also noted “sufficient underlying strength in the broader economy” as the basis for the committee’s decision. The demise of QE was no surprise as FOMC has consistently tapered asset purchases each month along with its advisory that it planned to end asset purchases under the current QE program this year.

The FOMC characterized the pace of economic improvement as “moderate,” but also said that “labor market conditions improved somewhat further with solid job gains and a lower unemployment rate.” Along with the stronger outlook for jobs, the Fed noted that “underutilization of labor resources is gradually diminishing.”

The committee held to its position that it would not increase the target federal funds rate for a “considerable time” after the quantitative easing program ended. Analysts following the Fed estimate that no changes to the federal funds rate will be made until June 2015 or later.

What’s Ahead For Mortgage Rates This Week – October 27, 2014

Posted on by

What's Ahead For Mortgage Rates This Week March 31,2014Last week’s economic news included a few developments connected with housing and mortgage industries. While no economic reports were released on Monday, the rest of the week provided good news for existing home sales, home prices and mortgage rates.

The National Association of REALTORS® reported that existing home sales in September exceeded expectations and the prior month’s reading with a seasonally adjusted annual rate of 5.17 million sales.

Three of four U.S. regions posted higher sales of previously owned homes with only the Midwest region reporting a decline in existing home sales. Analysts said that consistent job growth and improved access to mortgage loans are two keys to improving U.S. housing markets.

FHFA, the agency that oversees Fannie Mae and Freddie Mac reported that home prices for properties associated with Fannie Mae and Freddie Mac mortgages rose by 0.50 percent in August.

In a separate development, FHFA Director Mel Watt said that the agency is reviewing policies that could lessen lender concerns over requests to repurchase Fannie and Freddie loans due to early defaults or other deficiencies. This was seen as a possible solution to current strict mortgage approval requirements that are limiting access to home loans by first-time and moderate income buyers.

Mortgage Rates Fall, Weekly Jobless Claims Rise

After falling below four percent the prior week, last week’s mortgage rates continued to decrease. The average rate for a 30-year fixed rate mortgage fell by five basis points to 3.92 percent; 15-year fixed rate mortgages had an average rate of 3.08 percent, a decrease of 10 basis points. The average rate for a 5/1 adjustable rate mortgage was one basis point below the prior week’s reading at 2.91 percent.

Average discount points were unchanged at 0.50 percent. Lower mortgage rates help with making home loans more affordable, but analysts again noted the importance of improved access to mortgage loans for would-be home buyers.

Weekly jobless claims were higher at 283,000 new claims filed as compared to projections of 285,000 and the prior week’s reading of 266,000 new claims filed. While higher than in recent weeks, new jobless claims have remained below 300,000 for six weeks. The Labor department reported that new claims over the past month fell by 3000 to 281,000 new claims. This reading was the lowest since May 2000. Due to week-to-week volatility, financial analysts and economists view the month-to-month readings as a more consistent data source.

New Home Sales Hit Six-Year High in September

Sales of new homes in September ended the week on an upbeat note and exceeded expectations; they reached a six-year high in spite of downward adjustments to sales figures reported earlier. September’s reading was 467,000 new homes sold on an annual basis as compared to expectations of 455,000 new homes sold and August’s reading of 466,000 new homes sold.

What’s Ahead

Next week’s scheduled economic news includes pending home sales, the Case-Schiller home price index reports, the Federal Open Market Committee (FOMC) post-meeting statement and reports on consumer sentiment and consumer confidence. The Freddie Mac PMMS and Weekly Jobless Claims reports will be released as usual on Thursday.

Good News! Existing Home Sales Up And FHFA Home Prices Rise

Posted on by

Good News! Existing Home Sales FHFA Home Prices RiseAfter months of reports of slowing home price momentum and forecasts of a lagging housing market, we are pleased to report an increased volume of existing home sales as reported by the National Association of REALTORS®.

The Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, reported rising prices for homes connected with Fannie Mae and Freddie Mac mortgages. Here are the details.

Pedal to the Metal: Existing Home Sales Achieve Fastest Rate in a Year

September sales of previously owned homes reached a seasonally adjusted annual rate of 5.17 million sales against expectations of 5.10 million sales and August’s reading of 5.05 million sales.

The National Association of REALTORS® reported that the national reading for sales of previously owned homes rose by 2.40 percent to a seasonally-adjusted annual rate of 5.17 million sales.

Analysts had expected September’s reading for existing home sales to reach 5.10 million based on August’s reading of 5.05 million existing homes sold.

Three of four regions posted month-to-month gains in existing home sales for September; only the Midwest showed a decline. Overall, September’s sales pace for existing homes was 1.70 percent lower year-over-year.

Steady home prices and lower mortgage rates contributed to a higher pace of existing home sales, but obstacles remain. Lawrence Yun, chief economist for the National Association of REALTORS® said that September’s reading for existing home sales reflected ongoing economic uncertainty; he said that labor markets will need to strengthen in order to maintain the pace of existing home sales.

Mr. Yun also said that restoration of more “normal” lending standards would allow more first-time and moderate income buyers to qualify for mortgage loans and could potentially increase home sales by 10 percent.

FHFA: Home Prices Rise, Mortgage Credit Standards May Ease

FHFA reported that home prices of properties connected with Fannie Mae and Freddie Mac mortgages rose by 0.5 percent in August as compared to a month-to-month revised increase of 0.20 percent in July. August’s reading represents a year-over-year increase of 4.80 percent as compared to July’s year-over-year increase of 4.60 percent.

In related news, FHFA Director Mel Watt hinted at some welcome news during a meeting on October 21 in Las Vegas.

Strict mortgage requirements are frequently cited as a cause of lukewarm home sales, but there is some hope that mortgage credit requirements may return to pre-housing bubble standards. Mr. Watt said that the agency is working on relaxing certain rules affecting how and when mortgage lenders are required to repurchase loans that they’ve sold to Fannie Mae and Freddie Mac.

These changes are designed to clarify FHFA regulations and to narrow the criteria for when repurchasing loans is required. Lenders have been using strict mortgage approval standards as a protection against Fannie and Freddie requests to repurchase loans categorized as “early defaults.”

What’s Ahead For Mortgage Rates This Week – October 20, 2014

Posted on by

Whats Ahead For Mortgage Rates This Week October 20 2014Last week’s economic highlights included the National Association of Home Builders (NAHB) Housing Market Index for October. The Commerce Department also released Housing Starts for September. Freddie Mac reported that the average rate for a 30-year fixed rate mortgage dropped below four percent. The Fed released its Beige Book report, and Weekly jobless claims came in lower than expected. Here are the details:

Homebuilder Confidence Slips in Spite of Lower Mortgage Rates

U.S. Homebuilder confidence in housing market conditions slipped by 5 points to October’s reading of 54 as compared to September’s reading; this was also lower than the expected reading of 59. Builders are concerned over strict mortgage credit rules, but the NAHB’s chief economist noted that pent-up demand, lower mortgage rates and improved labor markets are expected to drive builder confidence in the near term. Readings of 50 and above indicate that more builders are confident about market conditions than not.

Freddie Mac reported lower average mortgage rates across the board with the rate for a 30-year fixed rate mortgage at 3.97 percent, a drop of 15 basis points from the prior reading. 15-year fixed rate mortgages had an average rate of 3.18 percent from the prior week’s reading of 3.30 percent. The average rate for a 5/1 adjustable rate mortgage fell by 13 basis points to 2.92 percent. Average discount points remained at 0.50 for all mortgage types.

If 30-year fixed rate mortgages can stay below the four percent mark, this could mean additional incentive for fence-sitters to become active home buyers.

Surprise: New Jobless Claims Hit 14-Year Low

Concerns over job markets and employment stability have consistently been of concern to home buyers in the aftermath of the recession. Last week’s jobless claims report brought encouraging news as it came in at 264,000 new jobless claims filed against predictions of 289,000 new claims and the prior week’s reading of 287,000 new jobless claims filed. This was the lowest number of new jobless claims filed in more than 14 years. Analysts said that lower numbers of weekly jobless claims indicate fewer layoffs, which should help boost prospective home buyers’ confidence in job stability.

Fed: Economy Growing at “Modest to Moderate Pace”

The Federal Reserve released its Beige Book report on Wednesday. This report contains anecdotes from business sources within the 12 Federal Reserve districts. The report said that the economy continues to grow at a modest to moderate pace and noted that potential concerns over the stronger U.S. dollar causing increases in export costs did not concern the Fed’s business sources.

Housing Starts, Consumer Confidence Up

September’s housing starts were above both expectations and August’s reading. 1.02 million starts were reported with the majority being multi-family homes. The expected reading was 1.015 million housing starts; this was based on August’s reading of 956,000 starts. This news is consistent with the drop in builder confidence for sales of new single-family homes.

The University of Michigan/Thompson-Reuters Consumer Sentiment Index for October rose to 86.4 against an expected reading of 83.5 and September’s reading of 84.6. This was the highest consumer sentiment reading in seven years. Analysts rained on the consumer sentiment parade by noting that recent jitters over Wall Street and concerns about Ebola outbreaks could cause the Consumer Sentiment Index to lose ground.

What’s Ahead:

Next week’s scheduled economic reports include the National Association of REALTORS® Existing Home Sales report, FHFA’s Home Price Index and New Home Sales. Leading Economic Indicators will also be released.