What Snow?

  • January 6, 2014

Did it snow by you? Maybe a little bit? We have just experienced a massive snow storm in the Detroit area. However, if you watched the local news you might have thought the world was ending. Were the commentators overreacting? Probably. I think it caused most people to call in for a snow day. Actually, I know this because the market has been particularly quiet today. What? You don’t snow shoe into work? Factory orders rose 1.8% in November, which met economists’ expectations. This suggests strong holiday sales fueled growth in the sector. Mortgage rates decreased slightly, but it didn’t move the market enough to cause originators to re-price. We need a little more to warm us up these days. ISM Non-Manufacturing Index unexpectedly dropped in December; slipping to 53 far from the expected 54.5. This could indicate the economic recovery is not as strong as previous economic data had suggested. This caused investors to question the Fed’s next taper move. Overreacting to one data point? Probably….just like the local newscasters. All eyes are on Janet Yellen today. Her confirmation hearing is scheduled for 5:30. There should be little stopping her from becoming the next chairmen of the Federal Bank.…

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Everyone has an opinion…

  • January 3, 2014

No economic news was released today, keeping the markets calm through the morning hours. However, there was a plethora of Federal Bankers that took the stage this afternoon to voice their opinion about the state of the economy. Let’s break it down. • Plosser took the stage first claiming the effects of ultra low interest rates won’t be seen for up to 6 years. He feels the Federal Bank’s balance sheet is still concerning and he feels despite tapering the economy should still continue to grow. This means he wants the Fed to cut the cord and let interest rates and inflation rise. Well, that’s one opinion. • Lacker was the next to pick up the microphone. He also sees the economy continuing to grow next year. He said the improvement this year was welcome, but too soon to say if it will continue. He sees the Fed cutting bond purchases further at upcoming meetings. Every one is a critic these days. • The headliner was Ben Bernanke who said this afternoon that while the economic is improving, the recovery remains incomplete. He claims that he and the Federal Bank are still committed to accommodative policy. This means he could…

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Holiday Hangover…

  • January 2, 2014

Happy New Year! The bond market opened this morning for the first trading session of 2014 to a limited crowd. Maybe everyone welcomed 2014 with a little too much gusto. Trade volume in the mortgage market remains light, with most traders out for the holiday. That has been good news for us; mortgage rates have remained stable today. The Labor Department released Jobless Claims today. The number of people filing for jobless benefits fell by 2k to 339k last week. This steady decline should have affected the bond market today. But, no one really noticed and mortgage rates were flat to Tuesday’s rate sheet. ISM Manufacturing Index was also released today. This measures manufacturing activity over the course of the month. Any number above 50 indicates economic expansion; below 50 can indicate a recession. December, just as expected, was down 3/10ths of a point to 57. This still suggests strong growth in the industry. Usually this means bad news for the bond market causing rates to increase. However, the market barely noticed today. Blame the holiday hangover. Construction spending rose to its highest level in nearly five years in November. It increased 1 percent to an annual rate of $934.4…

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New Years Eve Edition…

  • December 31, 2013

The daily market commentary is getting released early today, since the bond market closed at 2:00 p.m. EST in observance of the New Year holiday. The market is closed tomorrow and then we are back in action on Thursday. Today saw the release of a couple key economic reports. First, the Chicago Purchasing Manager hit the wire, but did not match expectations. The bigger event however was the Consumer Confidence Index which was released at 10 a.m. EST and came in a little bit better than expected. This led to bond pricing to get worse and in turn mortgage rates and prices took a slight hit through the day. Highlights from today: The S&P/Case-Shiller monthly Home Price Index was released for October. The report showed that <a href="https://dev-qlpr.pantheonsite.io/2013/market-update-decembers-case-shiller-report-continues-growth" target="_self">home prices increased</a> again. As home prices improve borrowers who are or were once underwater see their financial situation improve – which in turn helps the economy. Consumer Confidence actually jumped the most we have seen in six months, beating expectations. Speculation persists that as the economy improves the need for large scale asset purchases lessens, and fuels belief that the Federal Reserve will speed up their timeline for slowing mortgage backed…

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Rounding Out The Year…

  • December 30, 2013

Rates and pricing improved slightly this morning leading into a Pending Home Sales report that came in a little weaker than expected along with a Dallas Fed report that showed that manufacturing is not expanding as much as expectation. Outside of the couple of data points, it has been extremely quiet around here. Trade desks are likely trying to get to the New Year, so we are unlikely to see any big movements between now and January 2nd. Couple of bullets from today: Pending Home Sales increased .2% month over month which was less than the 1% prediction from economists. The Dallas Manufacturing Index of 3.1 (positive number indicates expansion, a negative number would indicate contraction) was a little short of the 4 prediction, however up from the 1.9 reading in November. With both of the above reports not matching expectation/speculation, this is good for the bond market. Why? Well, Bernanke and Yellen both indicated that their determination of how much to cut bond purchases and when was data dependent. Weaker numbers mean the Federal Reserve may stick around longer with their current purchasing habits, increasing overall demand for bonds, and in turn leading to better mortgage pricing for the…

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Is Everyone On Vacation?

  • December 27, 2013

We are still experiencing some post holiday paralysis with mortgage rates practically stagnant over the past three days. I think you could hear an echo down Wall Street.

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Back To Business…

  • December 26, 2013

The bond market resumed business this morning following an early close on Tuesday and a full close yesterday. This morning’s jobless claim data came through better than expected and prompted investors to sell bonds, however due to thinner trade desks, light trading meant mortgage prices and rates did not move much. Tomorrow looks like another light day on the economic calendar. Here are a couple bullets highlighting the last few days in the market: Though we have entered a rising rate environment, which continues to put some urgency on refinancing if you haven’t already, we haven’t seen that put a huge dent in the housing recovery. New Home Sales in November 2013 came in 16% higher than New Home Sales in November 2012. Weekly U.S. Initial Jobless Claims decreased week over week falling from a revised 380k to 338k. While there may be some volatility in these numbers due to the holiday season, the values do support the expectation that economic growth will accelerate next year. Speaking of the holiday season, holiday retail sales rose in November and December which is more fuel on the fire of an improving economy. By Jeremy VanBuskirk, Quicken Loans Capital Markets Analyst

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Holiday Traditions…

  • December 24, 2013

This time of year is full of holiday traditions. Christmas trees, menorahs, or a trip to a bowl game; it’s about spending time together as a family. The bond market has a holiday tradition too - market volatility. ‘Tis the season. Weak trading volume makes the market more volatile and that means rates tend to jump around.  It happens every year… a tradition. Mortgage rates increased today, but with the market closed tomorrow mortgage rates should remain stable. Durable goods orders were released this morning. It beat economists’ forecasts. Why does this matter? Good news for the economy usually means bad news for the mortgage bond market. Interest rates increased by about 1/8% in rate. New single family home sales stayed strong in November according to a report released today. Sales in the northeast increased 15.2 percent, while the Midwest was down 26.6 percent month over month. Looks like snow is not good for home sales. Mortgage applications continue to fall, decreasing another 6.3% this week. This measure the volume of applications for both purchases and refinances. This may suggest the housing market is showing signs of weakness, but there is typically a substantial dip in late December. We will…

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An Unexpected Surprise…

  • December 23, 2013

Holidays are usually full of surprises, call it Christmas magic. Friday the bond market experienced an unexpected Christmas surprise when Mel Watt announced he would delay the G-Fee increase that was scheduled to go into effect April 1st. Remember, these fees are directly passed along to you, the consumer, in your monthly mortgage payments. Interest rates increased steadily last week as almost every economic indicator beat economists’ forecasts. GDP grew at its fastest pace in almost two years and housing starts rose 23% month over month; the highest levels since 2008. The economy is growing and it’s not from eating too many cookies. Late Friday, Mel Watt, the new director of the FHFA, put the increase of the LLPAs on hold and will reevaluate its implementation. The market bounced back as investors digested the news. Could this really be happening? Maybe Santa does exist after all. Don’t get your hopes up that this fee increase is canceled; it’s just put on hold for now. Hopefully we will get direction from the FHFA soon. If you are looking at buying a home soon, there is still time to lock in lower pricing. Consider it an after Christmas sale! This week is…

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Back Where We Started…

  • December 20, 2013

Janet Yellen moved one step closer to becoming the next chairman of the Federal Reserve this afternoon. Why am I telling you this, and why is it important? Well, as we know from Wednesday the Federal Reserve moved forward in its decision to slow (buzzword = taper) bond purchases. Yellen is very likely to have a very similar approach to her predecessor, and during Ben Bernanke’s Q&A following Wednesday’s rate decision, mentioned that he consulted with Yellen on her plans going forward. In the markets today: U.S. Final Q3 GDP was up 4.1%, which is the biggest increase since Q4 of 2011. Continued signs that the economy is improving and a stronger case for slowing bond purchasing Eric Rosengren, the lone dissenter in Wednesday’s decision to taper on Monday and president of the Federal Reserve Bank of Boston, said he would have preferred to wait until March. However, he mentioned that the Fed was likely to complete its purchase program sometime late in 2014 While mortgage rates moved higher in the immediate aftermath of the tapering decision, rates improved today. This leaves us standing right back where we were before the announcement hit. Hope you have a great weekend, I…

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