Mortgage rates probe new lows

Eight out of 10 loan applications are for refis ….. By Inman News

Mortgage rates plunged to new all-time lows this week as investors in bonds that fund most home loans reacted to news that the economy grew more slowly than expected during the last three months of 2011.

Freddie Mac’s weekly Primary Mortgage Market Survey showed rates on 30-year fixed-rate mortgages averaged 3.87 percent with an average 0.8 point for the week ending Feb. 2, down from 3.98 percent last week and 4.81 percent a year ago. That’s a new all-time low in Freddie Mac survey records dating to 1971.

Rates on 15-year fixed-rate loans averaged 3.14 percent with an average 0.8 point, down from 3.24 percent last week and 4.08 percent a year ago. Rates on 15-year loans have never been lower since Freddie Mac began tracking them in 1991.

For five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans, rates averaged 2.8 percent with an average 0.7 point, down from 2.85 percent last week and 3.69 percent a year ago. That’s a new low in records dating to 2005.

Rates on one-year Treasury-indexed ARM averaged 2.76 percent with an average 0.6 point, up slightly from last week’s record low of 2.74 percent. At this time last year, the one-year ARM averaged 3.26 percent.

"Most mortgage rates eased to all-time record lows this week as fourth-quarter growth in the economy fell short of market projections," said Freddie Mac chief economist Frank Nothaft in a statement. "The gross domestic product rose 2.8 percent in the final three months of 2011, below the market consensus forecast of 3 percent, while consumer spending in December was flat. One bright spot, however, was that fixed residential investment increased for the third consecutive quarter and residential construction spending rebounded in December, rising 0.7 percent."

Looking back a week, a separate survey by the Mortgage Bankers Association showed demand for purchase loans was down a seasonally adjusted 1.7 percent during the week ending Jan. 27 compared to the week before. Demand for purchase loans was down 4.3 percent from the same time a year ago.

Requests to refinance accounted for 80 percent of all mortgage applications, down from 81.3 percent the week before.

"The Federal Reserve surprised the market last week by indicating that short-term rates were likely to stay at their current low levels until the end of 2014," said MBA chief economist Michael Fratantoni in a statement. "Longer-term Treasury rates dropped in response, and mortgage rates for the week were down slightly as a result."


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Economic Update – September 12, 2011

Retail sales fell 0.7% for the week ending September 3, according to the ICSC-Goldman Sachs index. On a year-over-year basis, retailers saw sales increase 2.7%.

The Institute for Supply Management reported that the monthly composite index of non-manufacturing activity rose to 53.3 in August from 52.7 in July. A reading above 50 signals expansion. It was the 21st straight month of expansion in the services sector.

The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage applications for the week ending September 2 fell 4.9%. Refinancing applications decreased 6.3%. Purchase volume rose 0.2%.

The trade deficit decreased to $44.8 billion in July from a revised $51.6 billion in June. Exports rose 3.6% to $178 billion. Imports decreased 0.2% to $222.8 billion.

According to the Federal Reserve, consumer credit debt rose in July by $12 billion for a total credit level of $2.45 trillion. Revolving debt, which includes credit cards, fell by $3.4 billion. Non-revolving debt, including loans for cars, rose by $15.4 billion.

Wholesalers increased their inventories 0.8% to $462.4 billion in July. This followed a revised 0.6% rise in June. Sales at the wholesale level were little changed in July at $396.01 billion. On a year-over-year basis, sales were 15.1% higher since July 2010.

Initial claims for unemployment benefits rose by 2,000 to 414,000 for the week ending September 3. Continuing claims for the week ending August 27 fell by 30,000 to 3.7 million.

Economic Update – August 29, 2011

Retail sales fell 1% for the week ending August 20, according to the ICSC-Goldman Sachs index. On a year-over-year basis, retailers saw sales increase 3%.

New home sales fell 0.7% in July to a seasonally adjusted annual rate of 298,000 units from a downwardly revised rate of 300,000 units in June.

Orders for durable goods — items expected to last three or more years — rose 4% in July after a revised 1.9% increase in June. Excluding volatile transportation-related goods, orders posted a monthly increase of 0.7%.

The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage applications for the week ending August 19 fell 2.4%. Refinancing applications decreased 1.7%. Purchase volume fell 5.7%.

The Commerce Department announced that gross domestic product — the total output of goods and services produced in the U.S. — increased at a revised annual rate of 1% in the second quarter of 2011, compared to the initial estimate of 1.3%. This follows a 0.4% pace of growth in the first quarter of 2011.

The Reuters/University of Michigan consumer sentiment index for August’s final reading rose to 55.7 from a preliminary reading of 54.9, which was the lowest level since May 1980.

Initial claims for unemployment benefits rose by 5,000 to 417,000 for the week ending August 20. Continuing claims for the week ending August 13 fell by 80,000 to 3.64 million, the lowest level since September 2008.

Economic Update – June 14, 2011

Retail sales rose 0.4% for the week ending June 4, according to the ICSC-Goldman Sachs index. On a year-over-year basis, retailers saw sales increase 2.5%.

The trade deficit decreased 6.7% to $43.7 billion in April from a revised $46.8 billion in March. Exports rose 1.3% to $175.6 billion. Imports decreased 0.4% to $219.2 billion.

Wholesalers increased their inventories 0.8% to $447.2 billion in April. This followed a 1.1% rise in March. Sales at the wholesale level rose 0.3% in April to $393.5 billion. On a year-over-year basis, sales were 14.4% higher since April 2010.

The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage applications for the week ending June 3 fell 0.4%. Refinancing applications increased 1.3%. Purchase volume fell 4.4%.

Import prices rose 0.2% in May, following a revised 2.1% increase in April. On a year-over-year basis, import prices are up 12.5%. Export prices rose 0.2% in May. On a year-over-year basis, export prices are up 9%.

According to the Federal Reserve, consumer credit debt rose in April by $6.25 billion for a total credit level of $2.43 trillion. Figures for March were revised from an initial gain of $6 billion to a gain of $4.82 billion. Revolving debt, which includes credit cards, fell by $0.9 billion. Non-revolving debt, including loans for cars, rose by $7.2 billion.

Initial claims for unemployment benefits rose by 1,000 to 427,000 for the week ending June 4. Continuing claims for the week ending May 28 fell by 71,000 to 3.68 million.

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Economic Update – May 9, 2011

The Institute for Supply Management reported that the monthly composite index of manufacturing activity fell to 60.4 in April after reaching 61.2 in March. A reading above 50 signals expansion. It was the 21st straight month of expansion.

Total construction spending rose 1.4% to $768.9 billion in March, following a 1.4% decrease in February. Economists had anticipated an increase of 0.5% in March.

Retail sales fell 0.8% for the week ending April 30, according to the ICSC-Goldman Sachs index. On a year-over-year basis, retailers saw sales increase 2.8%.

Factory orders rose 3% in March to a seasonally adjusted $462.9 billion, following an upwardly revised 0.7% increase in February. Excluding the volatile transportation sector, orders rose 2.6%.

The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage applications for the week ending April 29 rose 4%. Refinancing applications increased 6%. Purchase volume rose 0.3%.

The Institute for Supply Management reported that the monthly composite index of non-manufacturing activity fell to 52.8 in April from 57.3 in March. A reading above 50 signals expansion. It was the 16th straight month of expansion in the services sector.

The Labor Department reported that in the first quarter productivity rose at an annual rate of 1.6% and labor costs increased at an annual rate of 1%.

Initial claims for unemployment benefits rose by 43,000 to 474,000 for the week ending April 30. Continuing claims for the week ending April 23 rose by 74,000 to 3.73 million. The monthly unemployment rate rose to 9% in April from 8.8% in March.


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