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National mortgage rate surveys showed rates moving slightly downward, last week, but rates mostly ended the week on an upward bend, following the monthly employment report. Rates had ended the previous week slightly downward due to the crisis in the Ukraine. This week, it appears that some of the geopolitical risk was reduced. While the unemployment rate did move slightly upward, 175,000 new jobs were created. This was slightly more than expected, and previous months’ numbers were also revised slightly upward. While this certainly isn’t a surge, the economy is continuing to add jobs. Last month’s ISM Manufacturing Index moved higher, but the Services Index pulled back.
Rates may start the week pulling back slightly, but after last week’s data, the probability of rates drifting very far downward is low. Outside of geopolitical pressures, Retail Sales data is likely to be the most important data point of the week. If Retail Sales remains in negative territory, rather than turning positive, then rates could remain low, perhaps even drifting slightly downward.
Mortgage rates continued to wander in a relatively limited range, last week, as markets continued to wait for more definitive news on the direction of the economy. For the most part, economic data continued to reveal lackluster growth, as expected. GDP was revised downward to 2.4% and Consumer Confidence slid backwards, continuing a relatively flat trend for the last year.
This week brings us a flow of first-of-the-month data that may give us a little more insight into which way that rates may trend. Read more in the attached newsletter.
Mortgage rates are in a wave like pattern wobbling around last week as economic news continues to show a slight slowdown in economic activity. Both Housing Starts and Existing Home Sales revealed that the housing market is cooling off to some degree. Inventories are still tight, and prices continue to move upward. The LEI continues to show minimal growth, but growth nonetheless. The Fed’s last meeting minutes were also released last week, confirming that the Fed believes that the economy is slowly improving. Surprisingly, there was some discussion of eventually raising interest rates. However, with inflation continuing to remain in very tame territory, that move is likely sometime in the distant future.
Mortgage rates will likely continue to bounce around in a fairly tight range next week, as analysts continue to debate whether we are simply hitting another slow patch, or if the economy is losing steam that it will be unable to overcome. The week is bookended by Consumer Confidence and a GDP report. If both reports come in under expectations, then we could see rates backing downward.
A global “flight to safety,” where money flows out of other investments and into the relative safety of US Treasuries, helped draw down mortgage rates last week. A report on China’s manufacturing industry revealed some unexpected contraction, spooking US and global financial markets.
Mortgage rates are likely to be most influenced by the Federal Reserve meeting, this week. It is widely anticipated that the Fed will reduce its bond purchases by another $10 billion per month. If this comes to pass, mortgage rates could go either way. If the market believes that the economy will easily outgrow the benefit of the stimulus, then rates could trend upward. However, if sentiment in the market feels that the economy still may need more boost, then rates could trend downward. This could be especially true, if there is more negative economic news. If the Fed decides not to reduce QE3 further at this time, rates are more likely to trend downward, as that may be interpreted that the Fed has lost a little bit of faith in the economy’s ability to grow without support.
Easier or Harder to Get a Mortgage?
With new rules in place, more coming, and a host of other changes in the financial industry, there are conflicting opinions on what will happen in the coming months and years. According to recent data by Ellie Mae, the average FICO score of borrowers is dropping. It is now averaging around 727, whereas a year ago it was 748. If you or anyone you know may be looking to purchase or refinance a home, or have questions regarding financing, please call me today!
Mortgage rates slipped downward some, last week, with economic news and data continuing to show a very slowly growing economy. Both Retail Sales and Industrial Production posted tiny gains, but not enough to bring mortgage rates up, especially after the latest monthly employment report. As has been the case for the last few years, we may have experienced what appears to be the beginning of a reasonable economic acceleration, only to find that it was a momentary surge. While the continued slow progress, along with occasional surges, is growth, the economy has not moved to a point of not needing some economic aid, which has been coming almost exclusively in the form of Fed programs.
This holiday-shortened week is a light week, in terms of meaningful economic data. Barring some significant news event, or unexpected turbulence in the financial markets, we may not see much movement for mortgage rates this week. With the Federal Reserve meeting next week, the more likely it appears that it will hold off on additional tapering, the more rates may trend downward.
Housing Market Condition:
Current: SOFT
Short-Term Projection: IMPROVING
Observations: Fort Lauderdale’s economy is moving in the right direction as 21,900 workers were added to the payrolls over the last 12 months.
Year-over-year job growth recovered after slowing the last few quarters, as all of the various industries added workers. The unemployment rate is down to 5.8%, falling over 1 percentage point during the year. A mortgage servicing firm decided to reduce staff, but this should be offset by Citrix Systems local headquarters adding nearly 200 positions. Fort Lauderdale’s housing market continued to make progress as home prices appreciated 9.5% for the year.
Residential construction improved, led by gains in multi-family development.
Observations: West Palm Beach’s economy grew at a steady rate. Year-to-date
job gains during the first 9 months of the year equaled those from 2012. Despite
job losses in construction, manufacturing and finance, annual employment grew
1.8%, on par with the national average. The jobless rate dipped to 7.1%, versus
8.7% a year earlier. West Palm Beach has a small, but growing, technology
base. However, by teaming with a local university, it appears to be expanding.
Helped by an expanding population, the housing market is improving. Existing
home sales were up and property values increased 11% for the year. Positive
signs include the ongoing gains in single-family permits the last few years.
Produced by: MGIC Credit Policy Department – January 2014
Plenty of eco reports and of course Cyber Monday. How do you think the week will end up?
INteresting Chart. Judicial states (like Florida) are finalizing less foreclosures and non-judicial states are finalizing more of their inventory. All in all this is good news as the numbers now approaching towards normalized levels, approximately 20,000 a month.
http://www.mortgagenewsdaily.com/10312013_corelogic_foreclosures.asp#329969
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