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What’s Ahead For Mortgage Rates This Week – March 9, 2015

March 9, 2015 by Kay Monigold

What's Ahead For Mortgage Rates This Week March 9 2015Last week’s economic news was light on housing related reports, but several employment reports were released along with the national unemployment rate, which dipped to 5.50 percent. This was a full point below the Federal Reserve’s original target rate of 6.50 percent. Construction spending was incrementally lower than expected and mortgage rates also fell.

Fewer Private-Sector Jobs, Non-Farm Payrolls Increase

The ADP employment report for February fell from January’s reading of 250,000 jobs to 212,000 private-sector jobs. January’s reading was upwardly revised from the original tally of 213,000 jobs added. News was better for Non-Farm Payrolls for February. The Labor Department reported that 295,000 jobs were added; analysts expected a reading of 238,000 new jobs based on January’s original reading of 257,000 jobs added, but January’s reading was revised to 239,000 jobs added. The Non-Farm Payrolls report includes both public and private-sector jobs.

Weekly jobless claims rose to 320,000 against expectations of 301,000 new claims and the prior week’s reading of 313,000 new jobless claims. The week-to-week jobless claims report is considered volatile; most analysts base forecasts on a four-week rolling average.

National unemployment decreased from 5.70 percent in January to 5.50 percent in February as compared to an expected reading of 5.60 percent. February’s reading was the lowest since May 2008. Construction added 29,000 in February, which could indicate a boost in home construction. The unemployment rate does not account for 17.50 million workers who work part-time but want full-time work and those who have left the job market. The labor market participation rate fell to 62.8 percent, which was its lowest since the late 1970s.

Analysts said that based on the lower unemployment rate, the Fed may move as soon as June to raise the target federal funds rate to prevent rapid inflation, but Federal Reserve policy makers have consistently cited concerns over labor markets as a reason why the fed funds rate hasn’t been raised. A combination of stagnant wages, higher mortgage rates combined with stubbornly strict mortgage credit requirements could cause housing markets to lag behind other economic sectors until would-be home buyers achieve steady employment and can qualify for home financing.

Mortgage Rates Drop

Freddie Mac provided good news as average mortgage rates dropped.  Last week’s rate for a 30-year mortgage was 3.75 percent and lower by five basis points; the average rate for a 15-year fixed rate mortgage dropped by four basis points to 3.03 percent and the average rate for a 5/1 adjustable rate mortgage was three basis points lower at 2.96 percent. Discount points were unchanged at 0.60 percent for fixed rate mortgages and 0.50 percent for 5/1 adjustable rate mortgages.

What’s Ahead

This week’s economic news includes reports on job openings and labor market conditions along with retail sales reports. Consumer sentiment will be release and Freddie Mac mortgage rates and weekly jobless claims data will be released as usual on Thursday.

Filed Under: Market Outlook Tagged With: Freddie Mac, Job Market, Market Outlook

What’s Ahead For Mortgage Rates This Week – March 2, 2015

March 2, 2015 by Kay Monigold

What's Ahead For Mortgage Rates This Week March 2 2015Last week provided several housing-related reports including New Home Sales, Pending Home Sales and Existing Home Sales reports. Case-Shiller and FHFA also released data on home prices. The details:

Sales of Pre-Owned Homes Hit Nine-Month Low

According to the National Association of Realtors® (NAR), Sales of pre-owned homes dropped to a seasonally-adjusted annual reading 4.82 million sales in January as compared to an estimated reading of 4.95 million sales and December’s reading of 5.07 million existing homes sold. This was a month-to-month decline of 4.90 percent, and represented the lowest reading for existing home sales in nine months.

Lawrence Yun, chief economist for the NAR, said that a short supply of available homes coupled with rising prices contributed to the drop in sales. While mortgage rates remain near historical lows, higher home prices and short supply are negatively impacting affordability; this puts home buyers who rely on mortgages in competition with cash buyers.

More encouraging news arrived with the Commerce Department’s new home sales report; new home sales reached 481,000 sales on a seasonally-adjusted annual basis in January. Analysts had expected new home sales of 467,000 new homes based on December’s reading of 482,000 new homes sold in December.

Pending Home Sales Highest Since August 2013

The National Association of Realtors® reported that pending home sales rose by 1.70 percent in January as compared to December’s reading of -3.70 percent. Pending sales were up 8.40 percent year-over-year. Job growth, a little more leniency in mortgage credit standards and slower inflation were seen as factors that contributed to higher pending sales. Pending sales represent under sales contracts that have not closed.

Case-Shiller, FHFA Post Home Price Data

The Case Shiller 20-City Composite reported that home prices rose by 0.10 percent month-to-month and 4.50 percent year-over-year according to its index report for December. San Francisco, California had the highest year-over-year price gain at 9.30 percent, while Chicago, Illinois had the lowest year-over-year home price appreciation rate at 1.30 percent as of December.

FHFA reported that home prices for properties connected with Fannie Mae and Freddie Mac loans rose by 5.40 percent on a year-over-year basis as compared to November’ year-over-year reading of a 5.20 percent increase in home prices.

Mortgage Rates Rise

Freddie Mac reported that average mortgage rates rose across the board last week. The rate for a 30-year fixed rate mortgage rose by four basis points to 3.80 percent; the average rate for a 15-year fixed rate mortgage increased by two basis points to 3.07 percent and the rate for a 5/1 adjustable rate mortgage was also two basis points higher at 2.99 percent. Discount points for all loan types were unchanged at 0.60 percent for fixed rate mortgages and 0.50 percent for 5/1 adjustable rate mortgages.

What’s Ahead?

This week’s scheduled economic news includes consumer spending, construction spending and the Labor Department’s non-farm payroll and national unemployment reports. Weekly jobless claims and Freddie Mac’s PMMS report on mortgage rates will be released as usual on Thursday.

Filed Under: Market Outlook Tagged With: Case Shiller, FHFA, Market Outlook

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