Your weekly dose of San Jose Mortgage Rates and Market commentary.
The week that was:
- Freddie Mac reported in its Primary Mortgage Market Survey® that 30-year fixed-rate mortgage averaged 4.99 percent with an average 0.7 point for the week ending January 21, 2010, down from last week when it averaged 5.06 percent. The 5-year adjustable-rate mortgage (ARM) averaged 4.27 percent this week, with an average 0.6 point, down from last week when it averaged 4.32 percent. Note that these averages are for conforming loan amounts $417,000 and lower.
- Wall Street Journal reported that California’s inventory of unsold, previously owned homes shrank to a five-year low in December, in another sign that the state may be coming out of its worst housing slump in decades. The supply of unsold single-family homes dropped to 3.8 months from 5.6 months a year ago and 16.6 months in January 2008. The inventory levels are now at their lowest level since 2005, resulting in frenzied sales with multiple offers in some cities. In Santa Clara County, inventory has dropped to 50 days from 243 a year ago.
- One of the most surprising developments last week was the way the Senate is back-peddling the confirmation of Ben Bernanke for his second term. Greenspan, Paul Volker, Warren Buffett, most former Fed officials; and last but not least, investors want Bernanke confirmed but now its populist movement for weak minded politicians that are increasingly worried they too may be tossed on the unemployed rolls in Nov that has weakened Bernanke support.
Read more..
Weekly dose of economy and mortgage market news that affects mortgage rates for San Jose Home buyers and Home owners.
The Week that was:
- Economic data last week confirmed once again that inflation fears are way overblown; Dec CPI up just 0.1%. Factory use and industrial production improved again as the economy is bottoming, at least based on recent reports. Somewhat disturbing, and adding to last week’s bounce in rates; Dec retail sales were lower, down 0.3% in a month.
- Consumers, the housing industry and the unemployment rate, now at a whopping 17% when discouraged workers are taken into account; not the building blocks for a sustained recovery.
- Freddie Mac weekly Primary Mortgage Market Survey® reported 30-year fixed-rate mortgage (FRM) averaged 5.06 percent with an average 0.7 point for the week ending January 14, 2010, down from last week when it averaged 5.09 percent. Last year at this time, the 30-year FRM averaged 4.96 percent.
- The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.32 percent this week, with an average 0.6 point, down from last week when it averaged 4.44 percent. A year ago, the 5-year ARM averaged 5.25 percent.
The Week that will be:
- Not much in the way of economic measurements this week; Dec housing starts and building permits and the Dec producer price index, prices on wholesale products, are the headliners this week.
- As long as the outlook for economic recovery remains as solid as it is currently lower rates are highly unlikely. We suggest taking advantage of any further decline in rates.
Your weekly dose of economy and mortgage market news that affects mortgage rates for San Jose Home Home owners and buyers.
The Week that was:
Another bad week for the bond and mortgage markets. The 10 yr treasury note and mortgage rates have now increased 60 basis points in the past three weeks.
- Freddie Mac reported in its Primary Mortgage Market Survey® (PMMS®) that 30-year fixed-rate mortgage (FRM) averaged 5.14 percent with an average 0.7 point for the week ending December 31, 2009, up from last week when it averaged 5.05 percent. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.44 percent this week, with an average 0.6 point, up from last week when it averaged 4.40 percent. A year ago, the 5-year ARM averaged 5.57 percent.
- Nationally, the housing market is slowly improving. House prices rose for the fifth consecutive month in October to the highest level since the beginning of 2009, according to the S&P/Case-Shiller® 20-city composite index . Eleven of the cities experienced positive growth.
Read more..
In last 3 weeks, 30 year fixed mortgage rates have gone up 34 basis points for San Francisco (SF) Bay Area homes.
In the latest results of its Primary Mortgage Market Survey® Freddie Mac reported 30-year fixed-rate mortgage averaged 5.05 percent with an average 0.7 point for the week ending December 24, 2009. The 15-year Fixed Rate this week averaged 4.45 percent with an average 0.6 point. The 5-year adjustable-rate mortgage (ARM) averaged 4.40 percent this week.
These rates are for conforming loan amount $417,000 and lower. Higher loan amounts come with higher interest rates.
The rates through 2009 have been artificially kept lower by Fed by buying Mortgage Backed Securities (MBS). Fed is planning to stop buying MBS in March 2010 and if they actually decide to do so, mortgage rates could go up 25 bps to 50 bps almost overnight. No surprise that the average rates are projected to go beyond 6% by the end of the year.
If you are still on the fence to refinance your Bay Area Home Mortgage, the window for low rates could be short. If you are looking for a Bay Area Mortgage Broker who could shop more than 100 lenders to get you the best mortgage interest rate, call me at 408.905.6261.
The week that was:
The statement from the last FOMC meeting wasnt much of a change. The fed stuck to keeping the rates low for “extended period”. But how “extended” is “extended” - now that’s anybody’s guess!
- Freddie Mac’s weekly Primary Mortgage Market Survey® reported 30-year fixed-rate mortgage (FRM) averaged 4.94 percent with an average 0.7 point for the week ending December 17, 2009, up from last week when it averaged 4.81 percent. Last year at this time, the 30-year FRM averaged 5.19 percent.
- The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.37 percent this week, with an average 0.6 point, up from last week when it averaged 4.26 percent. A year ago, the 5-year ARM averaged 5.60 percent.
- The median price paid for a Bay Area home rose above the year-ago level for the second consecutive month, a reflection of widening price stability, fewer foreclosures selling and more activity in pricier areas. Sales were higher than a year earlier for the 15th consecutive month. The median price paid for all new and resale houses and condos that closed escrow in the nine-county Bay Area last month was $387,000. That was up 10.6 percent from $350,000 in November 2008, according to MDA DataQuick of San Diego.
Read more..
The Week that was:
The bond and mortgage markets were choppy, swinging on weak Treasury auctions (the 10 yr and 30 yr). Not much in the way of economic measurements but what there was were better than what had been expected.
- Retails in Nov were better than markets were looking for, the U. of Michigan consumer sentiment index indicated consumers are increasing their optimism about the economic outlook, and while somewhat ignored in the past couple of years as a positive, the Oct international trade deficit declined for the first time in years.
- Weekly MBA mortgage application data for last week. The overall application index increased 8.5%; the purchase applications were up 4.0% while re-finances increased 11.1%. The increase in purchase applications reflected a 10.0% increase in Government Purchase applications and a 0.2% decrease in Conventional Purchase applications. The average contract interest rate for 30-year fixed-rate mortgages increased to 4.88% from 4.79%, with points increasing to 1.17 from 1.00 (including the origination fee) for 80% loan-to-value (LTV) ratio loans. This ends a six week run of declining 30-year fixed rates.
Read more..
The week that was:
Not much in the way of economic measurements last week; it was a four day week for the bond and mortgage markets with Veteran’s Day falling on Wednesday.
- Weekly MBA mortgage applications index was +3.2% from last week; it was all re-finances, its index up 11.3% while purchase applications dropped a huge 11.7% to its lowest level since Dec 2000. The refinance share of mortgage activity increased to 71.5% of total applications from 66.1% the previous week. The average interest rate for 30-year fixed-rate mortgages decreased to 4.90% from 4.97%, with points increasing to 1.03 from 1.01 (including the origination fee) for 80% LTV.
- Weekly jobless claims continued to decline last week, down another 12K for the previous week but still at 512K new unemployment claims filed.
- The Reuters/University of Michigan preliminary sentiment index decreased to a three-month low of 66 from 70.6 in October.
- A report from the Commerce Department showed the trade deficit widened in September by the most in a decade as rising demand for imported oil and automobiles swamped a fifth consecutive gain in exports.
Read more..
The Week that was:
After the dust settled interest rates ended the week about unchanged from the previous week; the stock market gained on continued better data from manufacturing and services sectors (DJIA +311). Two events marked the week:
- The FOMC policy statement on Wednesday and Friday’s employment report. The Fed in the statement at the conclusion of the FOMC meeting reiterated there is no concern on the Fed’s part that inflation has any chance in the immediate future, and that the Fed will allow interest rates (the Fed funds rate) to remain low for “an extended” period of time. The statement was no different than what the Fed has been saying in past three FOMC meetings.
- Friday’s employment report for Oct revealed more jobs lost than was expected, -190K; it however, was offset with revisions to Sept and Aug non-farm jobs that added back a total of 91K from the original releases. The unemployment rate jumped substantially more than economists were expecting, to 10.2% frm 9.8% in Sept; a sizeable increase.
Read more..
This year Government has announced a ton of programs to prop up the Housing Market. Some of the major programs have been geared towards Foreclosure Prevention by launching 125% refinance program and incentivising Loan Servicers for modifying loans for struggling home owners. The Higher Conforming Loan Limits up to $729,750 would also be extended through 2010. Of course, all this has come with increased regulation. My focus on this blog is to talk about 3 actions that has had the most impact:
Action #1 – Buying Mortgage Backed Securities (MBS)
The Government earlier this year decided to buy $1.25 trillion of Mortgage Backed Securities by Dec 31, 2009. On top of that Fed also planned to buy up to $200 billion in debt issued by Fannie Mae and Freddie Mac. Last month, the Fed decided to slow the process and extend it to March 31, 2010. Note that they haven’t increased the volume that they plan to buy.
Current Status: The Fed is more than two-thirds done into buying these securities. Because of heavy government intervention in the mortgage market, interest rates remain near their lowest levels in decades. Housing affordability index measured by National association of Realtors is at its highest point since 1970 in most of the areas.
Outlook: How much mortgage yields rise when the central bank ends its purchases will depend in part on how the Fed communicates its plans and how private investors respond.
If the Federal Reserve Board suddenly stops purchasing agency mortgage-backed securities, rates could jump by 30 basis points to 50 bps, according to Fannie Mae chief economist Doug Duncan. I wouldn’t be surprised if Government continues buying MBS through 2010 albeit at a much slower pace.
Read more..
The week that was:
A good week for the interest rate markets. Mortgage interest rates declined about 10 basis points. Treasury once again successfully sold $123B of notes in four auctions. Consumer confidence measured by The Conference Board declined more than expected, implying consumers may not be as convinced of a recovery as the equity markets.
Personal spending in Sept declined, new home sales were expected to be up slightly in Sept but declined 3.6%. Finally the stock market ended the week on what looks like the beginning of the long over-due correction that even the most bullish have been expecting for the past month. The DJIA declined 259 points last week, the rate markets benefited.
The week that will be:
2 Big news awaited: The industry is hopeful that the High Balance Conforming Limit and FHA Jumbo limit of maximum loan amount $729,750 will officially be extended this week through 2010. Also, there is a lot of buzz about First Time Home Buyer Credit being extended till April 30. Stay tuned!
There is an increasing buzz among traders that the Fed will alter the policy statement a little to take away market perception that the Fed will keep interest rates (FF rate) low for a “considerable” period; removing “considerable” with verbiage that allows the Fed more flexibility in the future. On Friday we will get the October employment report; estimates are for job losses to be a lot less than in the past year. Everyday this week markets will contend with economic reports of substance; ISM manufacturing on Monday, Oct auto and truck sales on Tuesday, ISM services on Wednesday (and the FOMC statement), Thursday weekly jobless claims. We expect market volatility to remain high.
The week that was:
Existing-home sales bounced back strongly in September with first-time buyers driving much of the activity, marking five gains in the past six months, according to the National Association of Realtors®.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – jumped 9.4 percent to a seasonally adjusted annual rate (SAAR) of 5.57 million units in September from a level of 5.10 million in August, and are 9.2 percent higher than the 5.10 million-unit pace in September 2008. Sales activity is at the highest level in over two years, since it hit 5.73 million in July 2007.
Interest rates were unchanged all week until Friday when rates edged up a little on treasuries as well as mortgages. For most of the past two months with only a few exceptions the 10 yr treasury note and mortgages have held within a 10 basis point range. Last week the stock market churned around on much better earnings reports but by the end of the week all three key indexes were fractionally lower on the week.
Read more..
The week that was:
By the end of the week mortgage rates and treasury rates were basically unchanged. Now looking for mortgage rates to hold between 5.00% and 5.37% for the near term, that said, the technicals are now slightly bearish.
Estimates for Loan Volume for 2010 & 2011 - The MBA is out with their revised estimates for loan volume next year and the next; the estimates have been revised lower. In 2010 the new estimate is $1.556T frm $1.62T previously thought; in 2011 to $1.482T frm $1.608T.
Economy News - Weekly unemployment claims were expected to be unchanged, but fell 10K to 514K while continuing claims fell 75K on the week. Core Consumer Price Index (ex food and energy components), a measure of inflation was +0.2% against estimates of +0.1%.
Dow Jones over 10,000 - The DJIA did it, traded over 10K last week. A benchmark for the headlines but other than that not much more than a number. It is a positive psychological level that we all pay attention to, the question in the equity markets now is, will it add to buying and cause more money to be invested? Or is it the buy the rumor, sell the fact syndrome that often occurs after markets have discounted the good news.
Read more..
The minutes from the 11/4 
