South Orange County Blog from Bob Phillips

What’s Ahead For Mortgage Rates This Week : August 13, 2012

Posted in mortgage rates by southorangecounty on August 13, 2012

30-year mortgage ratesMortgage markets worsened last week as the investors moved back into risk-taking mode. Better-than-expected economic data in the U.S. plus a general feeling that the ongoing Eurozone issues will be soon be resolved (or lessened) contributed to a second straight week of rising mortgage rates.

One such data point was the weekly Initial Jobless Claims report.

According to the U.S. Department of Labor, the number of U.S. workers filing for first-time unemployment benefits unexpectedly dropped 6,000 from the week prior on a seasonally-adjusted basis. Economists had expected a week-over-week increase.

In addition, government-backed mortgage securitizers Fannie Mae and Freddie Mac both announced quarterly profits last week of a combined $8.3 billion. This, too, reflects well on the economy because both companies attributed strong results to a recovering housing market.

Conforming rates in South Orange County rose for the second straight week, according to Freddie Mac’s weekly mortgage rate survey.

The 30-year fixed rate mortgage rate now averages 3.59% nationwide for mortgage applicants willing to pay 0.6 discount points plus a complete set of closing costs where 1 discount point is a loan fee equal to one percent of your loan size.  This is a 10 basis point increase from late-July, when rates averaged 3.49%.

The 15-year fixed rate mortgage also moved higher, registering 2.84% last week after recently posting at 2.80%, on average.

This week, there won’t be much data to move markets. We’ll see the release of the Producer Price Index and the Consumer Price Index — two inflationary gauges for the U.S. economy — as well as July’s Retail Sales report. Beyond that, however, there won’t be much. Therefore, be wary of day-to-day momentum in the mortgage bond market.

Between January and July, momentum took mortgage rates lower; eventually to an all-time low. Since August 1, however, that momentum has reversed.

If you’re floating a mortgage rate or are otherwise not yet locked, get with your loan officer quickly. Mortgage rates may fall between today and Friday, but there’s much more room for rates to rise instead.

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What’s Ahead For Mortgage Rates This Week : February 27, 2012

Posted in mortgage rates by southorangecounty on February 27, 2012

Existing Home SalesMortgage markets improved in a holiday-shortened week last week, drawing mortgage rates lower throughout Coto de Caza and nationwide.

Few new economic releases reached the markets, but those that did suggested recovery — especially with respect to housing and employment, two key drivers of the U.S. economy overall.

Mortgage rates tend to rise when on strong data. That’s not what happened last week, however.

First, in housing, the New Home Sales and Existing Home Sales reports each showed strength for December and January. Separate reports show that sales volume is rising nationwide even as the number of available homes for sale fall.

Home Supply is reaching bull market levels, which pressures home prices higher.

And then, in employment, the government’s Initial Jobless Claims report turned up good news, too. The report’s 4-week moving average is now down to its lowest level since 2008, a figure that suggests that U.S. households are getting back to work and staying there.

As rate shoppers in California , don’t expect rates to fall forever.

Last week’s rate improvements were partly because the Greece bailout has yet to be finalized, and partly because concerns about Iran have sparked a mortgage bond flight-to-safety. International demand for U.S.-auctioned bonds was especially high last week and mortgage bonds benefited.

As the situations in Greece and Iran stabilize, therefore, all things equal, mortgage rates should rise.

There are just two key data points set for release this week — the Pending Home Sales Index (Monday) and Personal Income and Outlays (Thursday) — plus two key European votes on the Greece bailout. The Case-Shiller Index will also be released and the FHA is expected to announce new mortgage insurance premiums.

Mortgage rates remain near all-time lows. If you’re still floating a rate, or waiting to refinance, consider moving up your timeframe. It’s a good time to lock your mortgage rate for the long-term.

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Fewer Jobless Claims Suggests Higher Home Prices Ahead

Posted in The Economy by southorangecounty on February 14, 2012

Initial jobless claims 2008-2012

Economists believe the strength of the 2012 housing market will be closely tied to jobs. If they’re right, the housing market is ripe for a boost. It spells good news for Trabuco Canyon home sellers and may mean the end of bargain-basement prices for buyers.

Since peaking in mid-2009, the number of U.S. workers filing for first-time unemployment benefits has dropped 44 percent. Over the same period of time, the U.S. economy has added more than 2 million jobs and the national Unemployment Rate is down more than 1 percentage point to 8.3%.

Employment’s link to the housing market of South Orange County is both economic and psychological.

To make the economic link is straight-forward. A person with a job earns verifiable income and such income is required in order to be mortgage-eligible. For conventional and FHA purchase loans, for example, mortgage lenders want a home buyer’s monthly income be more than double his monthly debts. 

For the formerly unemployed that have since returned to work, having a full-time income makes buying homes possible. It also supports higher home valuations nationwide because home prices are based on supply-and-demand. All things equal, when the number of buyers in a market goes up, prices do, too.

The psychological connection between housing and employment is a tad more complicated, but every bit as important. It’s not just out-of-work Americans that don’t look for homes — it’s fearful Americans, too. People with concerns about losing a job are just as unlikely to shop for homes as people actually without a job. The same is true for people unsure of their prospects for a better-paying job, or their own upward mobility.

A recovering job market can lessen those fears and draw out buyers — especially those who face a loss on the sale of an “underwater” home.

The Initial Jobless Claims rolling 4-week average is at its lowest level since 2008. Fewer Americans are losing jobs, and more are finding permanent placement.

It’s one more reason to be optimistic for this year’s housing market. 

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