Phone: 214.749.4700
Email: info@modtownrealty.com
On Monday, Republicans and Democrats agreed to send a measure to vote that would increase the loan limits in certain high-cost areas for loans insured by the Federal Housing Administration. If passed by Congress, the limits reduced back in September would be increased again to help provide more financing opportunity for areas where housing costs are higher on average.
Today’s big news in the mortgage market was the Federal Housing Finance Agency releasing details around the modification of HARP (Home Affordable Refinance Program), an initiative initially created to allow borrowers to refinance and lower payments despite falling home values. The expansion of this program will affect certain borrowers with Fannie Mae or Freddie Mac insured loans. This announcement will not affect borrowers until December, after lenders, servicers and mortgage insurance companies all digest the language and draft lending policies over the next few weeks. Not only will rates improve for certain borrowers, but other borrowers that weren’t eligible to refinance will have options going forward. It will be important to look for information here in the coming days and weeks.
Retail sales in October came in higher than expected this morning and the New York Manufacturing Index shows shipments growing. But this positive economic news was mostly offset by continued concern from the European sector. Investors continue to be concerned that EU nations will be unable to implement austerity measures and generate the capital needed to weather their debt crisis. French, Italian and Spanish bond yields continue to climb and some fear that Italy may be the next to seek talks around a bailout. Recession talks are common for the EU region, with Europe failing to exceed growth expectations in the third quarter. This has led the dollar to strengthen and US Treasury bonds continue as a source for more stable investment. Mortgage rates have maintained fairly consistent and aggressive levels, despite some relatively positive economic news over the past week. The concensus for economic growth in the coming quarters appears to be a modest 2.0 – 2.5% for the U.S. while Europe struggles to remain in positive territory (~0.5%).
As we continue through the remainder of the week, prices paid to wholesalers in October decreased by the most in four months, indicating slower inflation levels. Although this would normally point to a more negative outlook which would lower rates, some consider this more of a correction from higher prices seen as a result of the Japan Tsunami and higher energy prices earlier in the year. Look for the Consumer Price Index, Manufacturing and Housing Starts reports later in the week. Any modest improvements are somewhat expected. If signs point toward another U.S. economic stall, we can expect rates to fall slightly.
See what one of our clients had to say about their experience with our partner,
Utility Concierge – A FREE Utility Set Up Service for ALL Modtown Clients
The market has been a mix of emotions over the past week, with quite a bit of rate fluctuation. China raising rates to combat inflation and ADP reporting some strong employment indications in the U.S. both contributed toward rate increases last week. European debt concerns along with indications that U.S. service industries expanded at a slower pace in June helped drive rates lower.
Last Friday was the big day for mortgage rates. Employment data was reported at very discouraging levels, with employers only adding 18,000 jobs compared to an expectation of 105,000. The worst report seen in 9 months, the unemployment rate unexpectedly rose to 9.2%. This seemed to pop the balloon of positive economic momentum seen over the prior weeks, bringing mortgage rates down nearly 0.375% in just one day as investors fled back to the safe haven of Treasury bonds.
To start the week, interest rates are down yet again as concerns continue that the European debt crises will spread to countries like Spain and Italy. This move has brought the 10 year Treasury yield back down below the 3.00% market, fueling us toward the strong interest rate environment we saw a couple weeks ago in the height of the Greek debt crisis..
Beyond Europe, news points to look out for the rest of the week include minutes from the most recent Federal Reserve meeting, along with consumer and producer price indicators which should provide insight in terms of any inflation. Weekly unemployment claims will also be relatively important this week in terms of whether they reinforce poor monthly employment report we received last week. If we see reinforced data suggesting fizzling economic growth, then this current low interest rate environment will be reinforced.
As we head back after Independence Day and the long weekend, many were grateful for the day off with all of the news and movement in the markets from last week. Although we head into a short work week, there is plenty to look toward in terms of mortgage rate drivers.
The economy gained some steam last week leading to some impressive stock market gains. Reports late in the week showed manufacturing expanding more than expected, along with Chicago-area economic data also unexpectedly improving. Add this impact to Greece approving austerity measures needed to avoid defaulting on their debt, easing economic tension slightly in Europe. With fewer investors as skittish about the global economy, demand for U.S. Treasuries declined last week, which pushed yields and mortgage rates higher. Rates have started the week lower, however, as rumors circulate that China’s debt may be understated, and talks of rating agency downgrades for Greece persist. So we’ve already seen some momentum back toward the relative safety of U.S. Treasuries, which has helped maintain lower rates similar to the lows we saw from May.
A good piece of news for mortgage rates last week was the investor demand remaining after the Federal Reserve’s end of “QE2″ (the second Quantitative Easing program of investing in U.S. Treasuries and mortgage-backed securities in order to help foster lower borrowing costs). Although rates modestly rose last week as the program drew to a close, most view this a result of positive economic reports, with only a small gap left behind by the Fed’s exit.
As attention turns away from Greece and economic trouble abroad, eyes should start to focus more on the U.S. debt ceiling as July 22nd is the targeted cutoff to come to an agreement in order to have a solution completed by August 2nd deadline. To the extent that the government drags its feet here, rating agencies might be prompted to start threatening downgrade action, which could lead to less investor demand for Treasuries, which in turn would force mortgage rates higher. Keep an eye on developments here in the days ahead.
This week, Friday’s Payroll report for June will highlight U.S. economic reports with an expectation that 100k jobs will have been added (nearly double what was reported for May).
Nick Marascia
Vice President of Mortgage Lending
Tel: 214.845.4146
As we closed last week, the stock market had posted weekly declines for the last 6 weeks straight, which means that mortgage rates continue to be very strong. Last week alone, stocks fell 2.2%, and without any real positive counteracting data, concerns continued to rise over economic weakness going forward. Credit fears continue in Europe with concern in Portugal, Spain, Greece, Ireland, etc. With the shape of the yield curve and an outlook for low short-term rates, adjustable rate mortgage products also continue to look strong, with much lower rates than fixed rate products. A couple of Fed members did speak last week that weak jobs data hasn’t changed their view on monetary policy, or the economy going forward. That being said, speculation is rising that some sort of stimulus may be needed to help the U.S. economy along the path to recovery. Any talk of stimulus, however, will be accompanied with talks of government spending and the debt ce iling, which will become a hotter topic until as we near the August deadline. If investors start selling Treasuries because of the debt ceiling uncertainty, or rating agencies downgrade U.S. debt, this should drive interest rates higher. There wasn’t much economic data released this morning, so attention seems to be on Federal Reserve speeches, presidential debates, and news abroad. Economic news data does pick up later this week, however, producer and consumer price numbers to indicate inflation levels, retail sales figures, and manufacturing numbers, just to name a few. There is a definite possibility that mortgage rates continue to jump around.
A couple of Fed members did speak last week that weak jobs data hasn’t changed their view on monetary policy, or the economy going forward. That being said, speculation is rising that some sort of stimulus may be needed to help the U.S. economy along the path to recovery. Any talk of stimulus, however, will be accompanied with talks of government spending and the debt ceiling, which will become a hotter topic until as we near the August deadline. If investors start selling Treasuries because of the debt ceiling uncertainty, or rating agencies downgrade U.S. debt, this should drive interest rates higher.
There wasn’t much economic data released this morning, so attention seems to be on Federal Reserve speeches, presidential debates, and news abroad. Economic news data does pick up later this week, however, producer and consumer price numbers to indicate inflation levels, retail sales figures, and manufacturing numbers, just to name a few. There is a definite possibility that mortgage rates continue to jump around.
Nick Marascia
Vice President of Mortgage Lending
Tel: 214.845.4146
With investors clamoring for Treasuries and Agency insured mortgage backed securities, rates dropped again over the course of last week, despite fairly neutral economic data.  The European debt crisis is the primary driver of this additional demand, as investors have sought shelter in U.S. debt, which they view to be a much safer investment.  Although demand increased significantly, supply of new mortgage applications has only been increasing modestly. This supply / demand imbalance has led rates lower.
In the U.S. this week, S&P/Case-Shiller just released their index of housing prices for 20 cities around the country, showing home prices as the lowest in 8 years. Many conclude the large inventory of pending foreclosures has been keeping prices low. Along with consumer confidence levels reported hitting a 6 month low, rates have improved slightly yet again to start the week. This rate improvement occurred in spite of the improved economic outlook in Europe as speculation rose that more aid would be pledged to Greece.
Numerous economic indicators will be released in the week ahead, as prior month reports begin to hit the headlines. Keep an eye on payroll and labor market information, with ADP and Non-Farm Payroll reports announced tomorrow and Friday respectively. Both are projecting growth, but at a slightly slower pace than April. International economic stability will probably be the other primary driver of rates this week. If investors begin to feel more comfortable with the steps being taken to avoid a worsening debt crisis in Europe, you could see money start to flow out of Treasuries and back into equities, which could rates to inch upward. Indicators on manufacturing, factory orders, unemployment, and construction spending are among some of the other reports being released later this week.
Nick Marascia
Vice President of Mortgage Lending
Tel: 214.845.4146
Moving is a huge hassle. Isn’t that enough stress? Let us connect you to the best utility package deals for your new home, including exclusive rates available only though Modtown.
Utility Concierge offers a unique service to compliment your home buying experience – setting up ALL your utilities for you while granting you access to exclusive packages and rates. From movers to cable and internet, they take care of the burden! They deliver added value and savings at no cost to you and guarantee the best prices and excellent one-of-a-kind customer service.
All you have to do is:
•   Register using the online form and mention Modtown
•   Your personal Utility Concierge calls within 24 hours.
•   The concierge finds the best local services, latest technologies, special promotions, and pricing.
•   You make the selections, and they make the connections.
•   You receive your utility itinerary with all scheduled installation dates and times.
It’s that simple. They save you time, money, and stress while introducing you to the latest technological advances and special offers available only through Utility Concierge.
