Monday Market Update

In recent weeks, mortgage rates have been pushed and pulled mostly by Fed policy expectations and European Union headlines. With little news on these fronts, though, the US economic data emerged as the main driver of mortgage rates this week. Unfortunately for mortgage rates, the data was generally stronger than expected, and rates ended the week higher.

This week's economic data exceeded expectations nearly across the board. Important broad indicators of economic growth, including Retail Sales and Industrial Production, showed solid increases from last month. The Philly Fed manufacturing index rose to the highest level since April. Perhaps the biggest surprise came from the housing data (see below). While stronger economic growth is great news for the economy, it tends to increase future inflationary expectations, which is bad news for mortgage rates.

The national housing data released this week continued to reflect solid improvement. September Housing Starts jumped 15% from August to the highest level since July 2008. Building Permits showed similar strength. September Existing Home Sales were 11% higher than one year ago, making 15 straight months of increases on an annual basis. Inventories of unsold existing homes declined to the lowest level since March 2006. The October NAHB Home Builder Sentiment index rose slightly, its sixth consecutive monthly increase, to the highest level since June 2006.

The big story next week will be Wednesday's Fed meeting, although investors are not expecting any major changes from the Fed following the announcement of QE3 at the last meeting. The most significant economic data will be Friday's release of third quarter Gross Domestic Product (GDP), the broadest measure of economic growth. Before that, New Home Sales will come out on Wednesday. Durable Orders and Pending Home Sales will be released on Thursday. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday.

Call us today and we will get you in contact with one of the best lenders out there to help you get the best rate possible and find the perfect home!  : )

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Copyright @ 2012 MBSQuoteline

The Market Update

 

While there was a full slate of economic data and Treasury auctions this week, investors were focused on a speech by Fed Chief Bernanke on Friday. The resulting increase in expectations for future Fed action was positive for mortgage rates, which ended the week a little lower.

Bernanke did not commit to implementing any additional easing measures in his highly anticipated speech from Jackson Hole, but his comments caused investors to raise their expectations for a third round of Fed asset purchases (called quantitative easing or QE3). Bernanke emphasized that a high jobless rate imposes large costs on the economy and left the door open for further easing. QE3 would likely involve Fed purchases of mortgage-backed securities (MBS), so mortgage rates improved after his speech. The possibility of additional monetary stimulus also caused stocks to rally on Friday.

The housing sector data released this week continued to show improvement. July Pending Home Sales increased 2% from June to the highest level since April 2010, which was shortly before the deadline for the homebuyer tax credit. Pending Home Sales are a leading indicator of future housing market activity. The June S&P/ Case-Shiller 20-city home price index increased 2.3% from May.

The biggest economic event next week may be the European Central Bank (ECB) meeting on Thursday. Investors will be watching whether there will be an announcement of additional aid measures for European countries with debt troubles. The biggest US economic report next week will be the important Employment data on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month, particularly this month coming out a little before the next Fed meeting on September 12. Before the employment data, ISM Manufacturing and Construction Spending will be released on Tuesday. Productivity is scheduled for Wednesday. ISM Services will come out on Thursday. Mortgage markets will be closed on Monday in observance of Labor Day.

Monday Market Update

Central Bank the Monday Market Update

While last week was packed with highly anticipated central bank announcements and significant economic data, there was no major economic news this week. As a result, both mortgage rates and the stock market ended the week with little change.

The pace of global economic growth is one primary influence for mortgage rates right now. Slower growth in the US, Europe, China, and most other regions has reduced inflationary pressures and supported low mortgage rates. Last week's stronger than expected Employment report and improving housing sector data, however, has raised hopes that the US will lead the rest of the world back to at least average levels of economic growth. A full slate of economic reports next week will help investors determine if the trend will continue.

While there were few notable headlines this week, news in Europe will continue to impact US mortgage rates in coming months. Weaker European countries are seeking quick relief for their debt troubles, which are close to unsustainable levels. The stronger countries such as Germany, though, are reluctant to pay the price for aid without guarantees about longer term reforms and greater central authority. It's still not certain that the European Union (EU) will remain intact. Both scheduled events and unexpected news almost certainly will have a significant effect on US financial markets for quite a while.

The most significant economic data next week will be the monthly inflation reports. The Producer Price Index (PPI) focuses on the increase in prices of "intermediate" goods used by companies to produce finished products and will come out on Tuesday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Wednesday. CPI looks at the price change for those finished goods which are sold to consumers. In addition, Retail Sales will be released on Tuesday. Retail Sales account for about 70% of economic activity. Industrial Production will come out on Wednesday. Housing Starts will be released on Thursday. Consumer Sentiment, Leading Indicators, Philly Fed, and Empire State will round out a busy schedule.

Stay tuned for more Market News and for Housing Stats released on Thursday.

Visis our websit at www.TorresRealtyGroup.com to request specific data on patricular areas that may be of interest to you.

Copyright @ 2012 MBSQuoteline

Eternal question: Should I buy or rent?

NEW YORK (CNNMoney) -- It's the eternal question in real estate: Should I buy or rent?
The answer has never been clearer: Buy!

In 98 of the top 100 housing markets, buying a home is more affordable than renting, according to the online real estate company Trulia. Only Honolulu and San Francisco buck the trend.
There are several reasons. Home prices are falling. Mortgage interest rates are at historically low levels. And rents are on the rise.

Of course, many renters are not in a position to buy. For one, it's hard to get a mortgage these days, despite low rates. And paying rent can push them further away from being able to afford to buy.
"Rising rents make it harder for people to save for a down payment, which is the biggest barrier to buying a home that aspiring homeowners face," Jed Kolko, Trulia's chief economist.
The nation's cheapest buyer's market is Detroit, where purchasing is only 3.7 times more expensive than renting.
Other top five metro areas where buying is much better than renting are Oklahoma City, Dayton, Ohio,Warren, Mich. and Toledo, Ohio.

The one number to watch for a housing recovery

Rankings like these, however, can obscure the factors that go into each decision.
Housing markets, even within a single metro area, typically have local submarkets. Take New York City, for example. Renting in Manhattan is more affordable than buying. But in suburban Westchester County just miles to the north, buying is the more affordable option.
The size of the home can also make a difference. In some markets, renting can be a better deal on larger homes, according to Trulia.

Readers on mortgage settlement: This stinks

In San Francisco, for example, studio and one-bedroom apartments sell for 13.1 times rent, while three bedrooms or larger sell for more than 18 times rent.
The Trulia survey does not take into account home price trends, which are another factor for individuals choosing whether to buy or rent.
"People will pay more for a home if they expect prices to rise and give them a better return on their investment," said Kolko.

0:00 / 1:27 No presidential fix for housing crisis

Those calculations are about to change, according to Ken H. Johnson, a professor of real estate at Florida International who has studied the buy-vs-rent question extensively. He believes home prices nationally have bottomed.
"The ship has turned," he said. "Markets should slowly start to recover. Housing will return to its traditional role of a safety investment."
If so, that adds an incentive to buy. And investing in many of the most expensive markets may be even safer.

Foreclosures: A rising tide ahead

Kolko pointed out that places like Honolulu, San Francisco and Boston have strong long-term growth prospects. They also have little physical space to grow, a factor that tends to keep prices strong.
On the other hand, old areas that aren't growing much -- while cheap -- may not return much in the long run.
"Buying is much cheaper than renting in slow-growing places with high vacancy rates and land to spare, like Detroit and Cleveland, where prices are unlikely to improve much in the future," he said.

Find homes for sale

By Les Christie@CNNMoney

First Published: March 21, 2012: 8:05 AM ET

Monday Market Update

Overall, the economic data came in pretty close to expectations this week, and Greece successfully reached a debt deal with private bondholders. With a lack of surprises in the economic news, mortgage rates ended the week nearly unchanged.

While it was a little stronger than expected, the important monthly Employment report had little impact on mortgage rates. Against a consensus forecast of 200K, the economy added 227K jobs in February, and revisions to prior months added an additional 61K jobs. The Unemployment Rate remained at 8.3%, as expected. Average Hourly Earnings, a proxy for wage growth, increased at a 1.9% annual rate. With gains above 200K for the first three months of the year, the recent pickup in job growth and the decline in Jobless Claims reflect solid improvement in the labor market.

Greece took a necessary step along its path to receive a much needed financial aid package. Private bondholders agreed to the proposed Greek bond swap deal, which will help reduce its debt burden. Without the deal, Greece was at risk of a potentially disastrous full default on its debt, which may have forced it to leave the European Union.

The big news next week will be Tuesday's Fed meeting. Investors will be trying to determine the likelihood of additional Fed easing. The most significant economic data next week will be the monthly inflation reports. The Producer Price Index (PPI) focuses on the increase in prices of "intermediate" goods used by companies to produce finished products and will come out on Thursday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Friday. CPI looks at the price change for those finished goods which are sold to consumers. In addition, Retail Sales will be released on Tuesday. Retail Sales account for about 70% of economic activity. Industrial Production, Consumer Sentiment, Import Prices, Philly Fed and Empire State will round out a busy schedule. In addition, there will be Treasury auctions on Monday, Tuesday, and Wednesday.

Copyright @ 2012 MBSQuoteline

Monday Market Update :: What's going on with Greece...

With little US economic news this week, investors focused most of their attention on Europe, where Greece is attempting to avoid a debt default. A lack of progress in Greece late in the week caused a minor flight to safety, and mortgage rates ended slightly lower than last week.

For most of the week, it appeared that Greek officials were on track to deliver a package of austerity measures required for Greece to receive additional aid. The negotiations took an unexpected step backward on Friday, however, as Greek political leaders agreed on an austerity package on Thursday, but European Union (EU) officials stated that Greece will not receive additional aid until the Greek Parliament passes the package. Given the resistance among the Greek people, this is not a sure thing, and it extends the uncertainty about whether Greece will be able to avoid a debt default. As a result, investors shifted to relatively safer assets, including US mortgage-backed securities (MBS), which helped mortgage rates and hurt stocks.

In a light week for US economic data, the Jobless Claims report stood out. Weekly Jobless Claims unexpectedly dropped to 358K. Following several years of readings consistently above 400K, weekly claims have been mostly under 400K over the last couple of months. In the past, readings in this range have been consistent with an improving labor market. In January, the Unemployment Rate dropped to the lowest level since February 2009, and the recent Jobless Claims reports provide additional evidence that the labor market is moving in the right direction.

The most significant economic data next week will be the monthly inflation reports. The Producer Price Index (PPI) focuses on the increase in prices of "intermediate" goods used by companies to produce finished products and will come out on Thursday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Friday. CPI looks at the price change for those finished goods which are sold to consumers. In addition, Retail Sales will be released on Tuesday. Retail Sales account for about 70% of economic activity. Industrial Production, another important indicator of economic growth, will come out on Wednesday, along with the detailed FOMC Minutes from the January 25 Fed meeting. Housing Starts will be released on Thursday. Import Prices, Philly Fed and Empire State will round out the schedule.

Copyright @ 2012 MBSQuoteline