Mortgage rates moved lower today, following a policy announcement from the European Central Bank (ECB). Some investors were concerned the ECB might begin sprinkling in clues about rate hikes or an early end to bond buying programs, but there was no such drama in the announcement or the press conference that followed.
If you're not familiar with the ECB, it's essentially Europe's version of the Federal Reserve. Both wield tremendously large balance sheets (used to control supply and demand in rates markets, and thus, rates themselves). While central banks can only truly control the shortest term rates, investors who trade the bonds that drive longer-term rates (like mortgages) are nonetheless paying very close attention. Bottom line: with the ECB not sending any threating messages about shorter-term rates, longer-term rates were able to relax a bit....(read more)
Is there mostly good news in the negative number for March pending home sales? The National Association of Realtors says yes. The NAR's Pending Home Sales Index (PHSI) dipped by 0.8 percent to 111.4 in March from 112.3 in February but NAR says, while this was a slight decrease in momentum, "pending home sales maintained their recent high level." The index is remains 0.8 percent higher than a year ago.
The PHSI is a forward-looking indicator based on signed contracts to purchase existing homes. Those contracts are generally expected to result in closed sales within 60 days....(read more)
Last week, with considerable fanfare, the Mortgage Bankers Association released its plan for reforming the housing finance system, including a resolution of the nine-year old federal conservatorship of the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. This week ICBA, which represents independent community banks, more quietly released its blueprint for reform.
The paper, titled ICBA Principles of GSE Reform and a Way Forward notes that the placement of the GSEs in conservatorship in 2008 was described back then as a "temporary time-out" to allow both companies to stabilize. After eight years, and into a third presidential administration, Fannie and Freddie, although they have returned to profitability, worked through most their defaulted loans, and continued to provide liquidity to the housing market, have less capital today than when they were placed under government control....(read more)
Although it features a rather shameless pitch to play a major role in a reorganized National Flood Insurance Program (NFIP), CoreLogic has published, in its Insights blog, some reassurance for homeowners living in flood-prone areas. Stuart Pratt, Senior Vice President for Government and Industry Relations, addresses the status of NFIP as Congress looks at reauthorizing and perhaps substantially reforming it.
NFIP was initially created in 1968 by the National Flood Insurance Act and is administered by the Federal Emergency Management Agency (FEMA). Its aim is to provide affordable flood insurance and mitigate "negative externalities associated with flood disasters." Flood insurance is required to be carried by homeowners with mortgages backed by any federal programs and by many private lenders if the insured property is in a Special Flood Hazard Area (SPFA). Premium rates are set on individual properties depending on their location and elevation and are not negotiable....(read more)
Mortgage rates were relatively unchanged today, but only after averaging the disparate changes from various lenders. That means some lenders are in much better shape versus yesterday while others are noticeably worse.
This sort of disparate movement isn't typical of mortgage rates across lenders, but it can happen when underlying bond markets experience volatility on back-to-back afternoons. That was indeed the case over the past 48 hours. Bond markets weakened (which pushes rates higher) yesterday afternoon, but only a handful of lenders issued reprices (new, higher rates, in response to intraday market movement). Today's volatility was in our favor resulting in several lenders issuing POSITIVE reprices....(read more)
Mortgage application volume rose during the week ended April 21, solely from a significant increase in refinancing. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume, was up 2.7 percent on a seasonally adjusted basis from the week ended April 14, and rose 3.0 percent on an unadjusted basis.
The Refinance Index increased 7 percent from a week earlier while the seasonally adjusted Purchase Index fell by 1 percent. The unadjusted Purchase Index ticked up 0.1 percent compared with the previous week and was 0.4 percent higher than the same week in 2016....(read more)
Mortgage rates moved moderately higher again higher today, as global financial markets continued reacting to recent geopolitical flashpoints (like the French election, discussed yesterday). Markets are also moving in anticipation of future flashpoints (like tomorrow's tax reform announcement). In general, investors have piled back into riskier assets like stocks because the French election reduces long-term risks to the European Union. Investors previously were more willing to buy bonds--a safe haven asset frequently used to insulate investors from increased risk.
The prospects for tax reform have a similar effect in that they encourage investors to favor riskier assets at the expense of bonds. When demand for bonds decreases relative to supply, rates move higher....(read more)
At $1.4 trillion, student loan debt represents the U.S.'s second largest debt market behind mortgages and, in several recent surveys, younger respondents have said those loans are a large reason they are unable to save up a downpayment to buy a home. The debt won't easily go away, but Fannie Mae now says it would like to make those loans a slightly little less painful presence in borrowers' lives.
The company is announcing policies that will assist homeowners and potential homebuyers with student loan obligations to qualify for a mortgage. The company notes the significant increase in that kind of debt over the last decade has created challenges and put up obstacles to homeownership. In acknowledgement that "one size does not fit all." the new policy provides borrowers three options from which, depending on individual circumstances, they can choose....(read more)
New home sales jumped higher in March, posting their third consecutive gain. Sales of newly constructed single-family homes were at a seasonally adjusted annual rate of 621,000 units, an increase of 5.8 percent from February's downwardly revised annual rate of 587,000 units.
The U.S. Census Bureau and the Department of Housing and Urban Development said this puts sales up by 15.6 percent compared to the March 2016 estimate of 537,000 units.
Median home prices had dipped in January when compared to a year earlier, however in February the median of $315,100 was up by about $4,000 from the previous year....(read more)
Both of the major price indices released this morning showed continued growth in home price appreciation. The S&P CoreLogic Case-Shiller National Home Price Index set its fourth consecutive record high, rising 5.8 percent in February, up from a 5.6 percent increase in January. The seasonally adjusted monthly gain was 0.4 percent.
The Housing Price Index provided by the Federal Housing Finance Agency gained 0.8 percent compared to January, up from revised 0.2 percent in January. On an annual basis prices were up 6.4 percent. Annual changes continued to be positive in all census divisions
Details to follow...(read more)