Today’s Mortgage News

Lot’s of great information sent to us from our lending partner at NYCB:

Last week was a busy news week. That news created big moves in the market. However, the net change for the week was almost nil. The big news was not that Simon Cowell is having a baby with his best friend’s wife. While that headline is surprising – for many reasons I will not dare to delve into – there were bigger news stories sending the market on a wild ride. Some of the top headlines last week included; The FOMC announcement, the Nonfarm Payrolls, the Weekly Jobless Claims, the Consumer Confidence Index, and the Case-Shiller Home Price Index.

One of the first reports last Monday was that Home Sales were down in June. The National Association of Realtors pointed the finger at rising interest rates, a lack of inventory, and rising home prices for causing the slow down. According to the Case-Shiller 20-city Composite Index, home prices increased 2.4 percent in May. While rising interest rates surely played a part in the drop, the Wall Street Journal reported that the percentage of first-time home buyers buying homes this year is also down. According to the NAR report, over the past 30 years, first-time home buyers accounted for more than 40 percent of the total sales. In June, that percentage was down to 29 percent. This seems to be a perfect storm of sorts for the housing market; which may cause sales to fall short of the NAR prediction of 5.05 million existing home sales and 968,000 housing starts this year.

The House Financial Services Committee approved a proposed plan to wind down Fannie Mae and Freddie Mac over a five year period. While this bill, the Protecting American Taxpayers and Homeowners Act, may pass the House, the Senate is proposing a different path. The Senate is considering a similar wind down of the GSEs, but, the Senate would also like to create the Federal Mortgage Insurance Corp.

While the housing news was fairly straight forward last week, the jobs reports were mixed. ADP reported that 200,000 private-sector jobs were added in July, more than the anticipated number of 185,000. The Jobless Claims report was down to 326,000 from 345,000. The Unemployment Rate dropped from 7.5 percent to 7.4 percent. This was all consistent, until the Nonfarm Payrolls report was released. The number of jobs added came in below expectations at 162,000 versus the expectation of 180,000 jobs being added. This sent mortgage rates down, reversing the move from the day before after the FOMC announcement was released.

The FOMC announcement was once again very vague. The Federal Reserve downgraded its economic outlook slightly and didn’t give much information about its plans for its Quantitative Easing Plan. The Committee said that the economy was expanding at a “modest” pace. In June, it had said that the economy was expanding at a “moderate” pace. It went on to say that the housing sector was strengthening, but, mortgage rates have risen.

In other news, the Consumer Confidence Index fell from last month and failed to meet expectations. It fell to 80.3 from 82.1 and the expectation was 81.1. The Employment Cost Index was unchanged at .5 percent. GDP rose to 1.7 percent, up from 1.1 percent. The formula to calculate the GDP was changed this month. The Commerce Department adjusted data from 1929 to the present and is now accounting for more knowledge or an “idea” based economy. For example, research and development is now counted as an investment (as opposed to an expense), more of the ownership transfer costs (title insurance, attorney fees, and engineering services for example) are added in, and interest from the unfunded part of pensions are also being accounted for. The result? Very little net change.

This week will feature the following reports:

  • Monday – ISM Non-manufacturing and Senior Loan Officer Survey
  • Tuesday – Trade Deficit and Job Openings
  • Wednesday – Consumer Credit
  • Thursday – Jobless Claims
  • Friday – Wholesale Inventories

There will also be several Federal Reserve policy makers speaking this week.

This entry was posted in News and tagged , , , . Bookmark the permalink.