News from our Economist

A quiet week in the bond market continues today. We were closed on Monday in observance of MLK Day, and yesterday there wasn’t a single market moving event on the economic calendar. Today, we had MBA Mortgage Application data, but tomorrow is the “big” day of the week with Jobless Claims, Existing Home Sales, and the FHFA House Price Index. We’ll just have to kill some time watching the east coast get pelted with another major snowstorm. Seriously, what is the deal Mother Nature? Mortgage applications increased 4.7% from a week earlier according to the MBA. The Refinance Index increased 10% week over week. We’ve had some decent momentum in the bond market over the last week, leading to lower rates and payments. The MBA data reflects that consumers are taking advantage of the lower rate environment. In case you haven’t heard (I’m sure you have since you are reading this entry): Quicken Loans and Warren Buffett are offering one BILLION dollars as a prize to the person that can correctly predict every game in the Men’s NCAA Basketball Tournament. Incredible payoff. Guess I’ll be watching a lot of college basketball between now and March. By Jeremy VanBuskirk, Quicken Loans Capital…

You know the drive home is going to be bad when it takes you 45 minutes just to get out of the parking lot! Last night the commute in Detroit was brutal…and for no apparent reason. It’s kind of like the bond market. Rates can improve and degrade over the slightest change. This week we sped up, slowed down and at times we seemed to be in gridlock. Let’s breakdown what happened. We opened the week strong; rates continued to improve after a shockingly weak employment report was released last week.  Let’s call it an unexpected accident on the proverbial freeway. Rates improved by almost a full point as investors entertained the idea the FOMC might delay reducing bond purchases in January. Wishful thinking. A strong Retail Sales Report was released on Tuesday, which lifted Q4 growth prospects. This caused a sell off and rates lost all positive momentum. Kind of like when you hit a speed trap. The Federal Bank Presidents also spoke this week, claiming tapering would continue at its current pace and could wind down around October. This means rates could continue to increase as the Fed takes the pedal off the metal to stimulate economic growth.…

We were alerted to a winter storm warning here in Detroit, Michigan this morning. Forecasts called for a light snow shower/some flurries. Are we really at the point where flurries necessitate high alert? Turning my attention to what happened today in the market; an increase in continuing unemployment claims was the catalyst. This week’s continuing claims report was reported worse than what was expected and the bond market rallied. When the bond market rallies, consumers reap the benefit and rate sheet pricing gets better. Diving into the numbers: The Consumer Price Index was released at 8:30 this morning. Yesterday we had the Producer Price Index and today we had the CPI which is another measure of inflation. It matched expectation, so no shock waves there. 1.5% rise in the last year for those counting. Ben Bernanke gave a speech today where he defended quantitative easing saying it was a help to the economy and didn’t envision a bubble forming in asset prices. He pointed to the inflation rate which I listed above, communicating the Fed’s inflation target of 2% By Jeremy VanBuskirk, Quicken Loans Capital Markets Analyst

After running from meeting to meeting this morning through afternoon, I received a little bit of time to do what I most like to do – get engaged in the markets, and figure out what happened today. The bond market continued to lose a little bit of steam this morning, as data from both the Producer Price Index and Empire Manufacturing beat expectations. Again, it is the bond market we track when we talk about rate sheet pricing and cost to the consumer. In this sense, positive data spurs speculation that the Federal Reserve will get more aggressive with their slowing of bond purchases. With this, we see investors move away from mortgage-backed securities and pricing degrade. Breaking the data down further: Producer Price Index, PPI, showed a 0.4% month-over-month increase. The headline number matched expectation and was an improvement over the prior month’s report. Some of the underlying numbers of the report were better than expectation which helped fuel the market action this morning. Empire Manufacturing beat expectation with their index coming through at 12.51 versus an approximate consensus reading of 3.75. A positive number indicates business activity expanded for New York manufacturers, and a more positive number than…

Yesterday I went to the gym and I realized something; there was almost no one there. Where did everyone go?  It was glorious. I think a lot of people have lost some momentum with their New Year’s resolutions—like going to the gym. You know what else lost some steam already? The mortgage bond market. Rates opened lower as the rally caused by the Friday employment report. However, by midday the market had settled down. Around 1 PM, two Fed speakers took the stage claiming they supported the end of Quantitative Easing despite the negative effects on interest rates and the stock market. Investors began to seek higher coupon bonds driving interest rates up. Today the Retail Sales Report came in better than expected. This gives ammunition to policy makers who favor a more aggressive bond taper time line; reinforcing their arguments the economy is improving. Tomorrow MBS Mortgage Application numbers are released this should give us an indication on the health of the housing market. Another key economic indicator, the Empire Manufacturing Index, is released at 8:30 as well. Maybe one of these will underperform and it might help the Bond Market pick up some steam. By Lindsey Fediuk, Quicken…

Friday the Economic Situation Report was released and Non-Farm payrolls came in at about 1/3 of what economists had forecasted. Ouch. Well, there is only one thing to say about that; party in the bond market! That sounds harsh, but bad economic news can be a good thing for mortgage rates. When there is uncertainty, investors seek safety in the bond market. Rates decreased significantly last week and have continued to improve today. Let’s keep the good times rollin’! Investors were expecting a strong employment report and had prepared for the bond market to take a hit. However, the number under-performed so significantly investors are still trying to adjust, causing bond prices to rise. Most lenders reduced mortgage rates shortly after the noon hour. Does this low employment number mean the government will continue buy our bonds for a little longer? Maybe. This report has many people questioning the Fed's decision to taper bond purchases. We won’t know until the minutes from their next meeting are released. However, many hope Yellen & Co will decide to keep interest rates extra low for the time being. No major economic news was released today. So, let’s just enjoy the good times while…

If you are a mortgage professional, these are the days you live for. Fast-paced, changing, market-moving, exciting. The tone has been set for the better part of a year now. QM is coming. Well today was the day (some might call it doomsday, but not here within the QL walls). The Consumer Financial Protection Bureau established new guidelines all about a client’s ability to repay, which also set new standards to meet to become what is known as a Qualified Mortgage. Lenders have been preparing for the new rules for some time now, but it’s a new world with new statutes aimed at offering consumers more protection. If this new QM journey isn’t enough excitement for one day, today just happened to be the biggest day of the month in terms of economic data. The monthly jobs report was released this morning at 8:30. While the unemployment rate fell to 6.7%, both nonfarm payrolls and U.S. private payrolls completely underwhelmed. This led to a flurry among investors to buy mortgage backed securities, which meant interest rates on mortgages got better today. A lot better. The rally continued throughout the day, at which point many lenders, including us here at Quicken…

No, not another snow storm! I wouldn’t joke about that with you guys after this week. The market was calm; mortgage rates remained mostly unchanged day over day. This will most likely change tomorrow when the all important Jobs Report is released; a storm could be brewing. Today was not void of economic data. Initial Jobless Claims came in at 335k, versus the 330K economists had predicted. Normally, this could move the market; but not today. Do you see any clouds on the horizon? Or are those clouds breaking up? Continuing Jobless Claims fell to a low for the month suggesting the U.S. Labor Market is on the mend. The Consumer Comfort Index advanced to -28.4 from -28.7 the previous period. Kind of looks like our temperatures lately. All joking aside, consumers are apparently feeling optimistic in 2014. Maybe we will see a rainbow after the storm after all. The Labor Department will release the Employment Situation Report tomorrow. It’s Jobs Friday! Economists forecast employers added 197,000 workers in December versus the 230,000 last month, while unemployment remains at 7%. Investors will be watching this closely since employment is a key indicator the Federal Reserve will use to decide if…

Are you sick of snow days yet? I am. Let’s get this party started. Trading appears to be back to normal after a massive snow storm extended many people’s holiday break.  Today was a significant day in regards to economic news; however we didn’t see an improvement in interest rates today. Let’s see what happened… The Federal Reserve released the minutes from their December meeting. Who gets excited over meeting notes? Investors, that’s who. Today the focus was the Feds taper timeline. Some Federal Bankers want to be more aggressive than others in letting interest rates rise. However, policy makers stressed reductions in bond buying are not on a preset course. So, no clear plan. No surprise there. As expected, the new FHFA chairman Mel Watt delayed the implementation of the fee increase that was planned for April 1st. He cited concern that it could affect credit availability. This is good news for anyone who is planning on buying a home in the near future.  Consider it a late Christmas present. Mortgage applications rose 2.6% last week. That is good news for the housing market. Strong demand in housing might indicate a sustainable economic recovery. However, this good news didn’t…

Today’s market action has been favorable to bonds, and more importantly to you, the faithful reader of this update, mortgage interest rates. Last night we had the Senate confirmation of Janet Yellen as the next chairman of the Federal Reserve. This is seen as favorable because of her more accommodative monetary policy. Today we had a couple of Federal Reserve presidents speak about how the slowdown of mortgage-backed securities should occur gradually as the economy recovers. With the Federal Reserve still staying in the game to purchase mortgage bonds, this means higher demand, and better pricing can be pushed through to the consumer of mortgages. Topping the economic data and reports released today: The United States trade deficit decreased in November to $34.3 Billion, which was less than the forecasted $39.9 Billion. Typically, this is the good type of news that would lead to investors moving away from bonds, but today was all about the Federal Reserve. Investors seem to have a very watchful eye on Friday for this month’s release of the Jobs Report. The first Friday of every month is typically one of the biggest to watch and is one of the key factors that will move the…