Archives for March 2015

Mortgage Interest Rate News 3-18-15

There was a good sized bond rally in the Mortgage Backed Securities market today post Fed announcement.  Clearly the market was surprised by the content of the Fed release as mortgage bond investors pushed MBS prices higher.  Mortgage terms will only slightly improve over the next few days as lenders will want to see this rally hold/improve before passing along significant changes.  California refinance rates remain just above there early February lows however we’re still seeing some very aggressive interest rates considering the pressures lenders face.  The Fed dropped the “patient” wording that has been around for sometime and most mortgage bond investors anticipated this.  What surprised investors (in a good way) was how the Fed change it’s expected pace of raising rates and their somewhat less than positive view of recent economic activity.

Low mortgage rates; job creation and the slack housing market

Per Marketwatch:

Super-low mortgage rates and the fastest job creation in 15 years still aren’t triggering a big rebound in demand for new homes that’s long been expected.

A gauge of confidence among home builders fell in March for third month in a row and touched the lowest level since last summer. The National Association of Home Builders/Wells Fargo housing-market index dropped 2 points to 53 in March.

That’s the stingiest reading since July, though anything above 50 mean that builders are generally optimistic.

In February, the trade group blamed high snowfall for the decline in confidence. This month the organization blamed labor shortages, tough lending standards and a tight supply of vacant lots of land on which to build.

Still, the builders trade group insists that a pickup in construction and home sales is ready for a spring renewal, just like it was in 2014.

“We are expecting solid gains in the housing market this year,” said NAHB chief economist David Crowe, “buoyed by sustained job growth, low mortgage interest rates and pent-up demand.”

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Down payment averages for new home purchases

Per MPA:

Home buyers who purchased a single-family home or condo in 2014 put 14% down, translating into an average $32,141, according to the latest data from RealtyTrac. The real estate information firm’s report analyzed nearly 1.5 million purchase loans were included in the analysis in 386 counties nationwide.
“This analysis shows that first time homebuyers have a better shot at buying a home in low-priced markets, not just because of the lower price point but because on average buyers are putting down just 12% in those markets compared to 24% in high-priced markets,” said Daren Blomquist, vice president at RealtyTrac. “Meanwhile, the markets where millennials are moving the most have above-average down payment percentages, which will make it tough for millennial renters to convert into first-time homebuyers in those markets.

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Home Sales 2015 Prediction from Freddie Mac

Per MND:

Freddie Mac’s economists restated their February forecast in their Economic and Housing Outlook just released for March, that 2015 could be the best year for home sales and new home construction since 2007. That year there were 5.8 million sales – this year the economist forecast 5.6 million sales along with 1.18 million housing starts.
Len Kiefer, Deputy Chief Economist said, “This month kicks off the spring homebuying season. Between now and the end of June, we’ll see about 40 percent of all home sales for the year. So these next few months will essentially tell us whether or not 2015 will be a good or bad year for housing markets. Overall, we’re feeling good about housing and we expect this year to be the best year for home sales and new home construction since 2007.” There are, the report says, several reasons to be optimistic.

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Mortgage Interest Rate News 3-16-15

Several economic reports this morning were mortgage rate and bond yield friendly. NY Fed, NAHB and Industrial output all came in weaker than expected. Mortgage terms for conventional loans are set to start off the week a bit improved from last week. Bond investors are slowly moving back in Mortgage Backed Securities (MBS) while California refinance rates begin to improve. Loan volume for both refinance and purchases has stalled in recent weeks as mortgage interest rates have moved up.