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More Americans signed contracts to buy homes in February
More Americans signed contracts to buy homes in February, but sales were uneven across the country and not enough to signal a rebound in the housing market. Read more…
World Events Spark a Short-Term Drop in Home Loan Rates
Is this the last opportunity to purchase or refinance at bargain home prices and rates which are at record lows?
For the past several months, rates have been rising from the historically low levels they reached during the second half of last year. These rates presented a great opportunity for homeowners to refinance their home loan. It was even a better opportunity for those who were interested in purchasing their first home, an investment property or trade up. With bargains available, purchasing made so much sense for those who see real estate as a long-term investment and more importantly a better life for their family.
Rising rates were not bad news for the state of our economy. The rates were rising because the economy is recovering and that is very good news. Evidence of a recovery is all around us. Just last week, CNN indicated that rents are about to rise precipitously and one must ask whether the recovery of the home purchase market will be next….
“Already, rental vacancy rates have dipped below the 10% mark, where they had been lodged for most of the past three years. “The demand for rental housing has already started to increase,” said Peggy Alford, president of Rent.com. “Young people are starting to get rid of their roommates and move out of their parent’s basements.” By 2012, she predicts the vacancy rate will hover at a mere 5%. And with fewer units on the market, prices will explode. Rent hikes have averaged less than 1% a year over the past decade, according to Commerce Department statistics, adjusted for inflation. Now, Alford expects rents to spike 7% or so in each of the next two years…”
World events, especially the tragedy in Japan, have caused a short-term drop in home loan rates just as the economy is heating up. This means that you now can purchase or refinance a home at the lowest rates in months. According to the Freddie Mac Weekly Survey, rates have dropped over 0.25% in the past several weeks. Rates on 15-year fixed home loans are the lowest they have been since December. This lower rate equates to an approximately $500 in annual savings in interest on a $200,000 mortgage.
How long will rates stay low because of this crisis? No one can tell. But if you missed out on refinancing or purchasing last year, this could be your opportunity. Today, those who hesitate may be missing a very historic opportunity. Home affordability is the lowest it has been in our generation. Those who have a lot of money have been picking up bargains for the past year. Why? Those who are successful stay ahead of the trends. These lower rates mean that everyone can take advantage of this occasion to own the home of their dreams or reduce their payment on the home they already own. With gas prices up, wouldn’t the savings help?
Contact me quickly as we expect to be plenty busy this week with those who recognize the significance of the timing.
-Seth
Weak Existing Home Sales and AT&T Buys T-Mobile
MARKET WRAP: The announcement from the Treasury that it will begin selling $10B in Mortgage Backed Securities each month starting this month sent MBS prices lower today. The total amount the Treasury owns is $142B. The news sent MBS and Treasuries considerably lower but they did manage to pare some of those losses by the close of trading. The 4% coupon fell 34bp to end the session at 98.97, despite a weak read on Existing Home sales. A big M&A deal and a somewhat stabilization of Japan’s nuclear reactor problems helped to boost Stock prices today and as money came out of the Bond markets. AT&T announced it will purchase T-Mobile in a deal worth $39B. The Dow surged 178.01 to 12,036.53, the Nasdaq rose 48.42 to 2,692.09 while the S&P 500 gained 19.18 to 1,298. Oil prices rose as the US and western allies launched an air attack on Libya in an effort to oust Gadhafi settling at $102.33/barrel up $1.26. There are no major economic reports due for release tomorrow.
Japan continues to rock the markets
MARKET WRAP: The devastation in Japan continued to rock the markets today forcing investors to panic sell in the equity markets pushing the Dow Jones down nearly 300 points before paring more than half of those losses by the time the Stock markets closed at 4:00pm ET. The selling of equities lifted the Bond markets but Bonds reversed course and shed many of those gains as the day progressed, especially after the Fed was more upbeat on the economic recovery and noted commodity inflation in its FOMC statement. The benchmark 4% coupon finished at 98.88 after being as high as 99.31 up 22bp for the session. The Dow fell 137.74 to 11,855.42, the S&P 500 Index fell 14.52 to 1,281.87 while the Nasdaq dropped 33.64 to 2,667.33. Oil settled at $97.19/barrel down $4.01. Tomorrow’s data includes Housing Starts/Building Permits along with the Producer Price Index.
Japan and the Mid East Impact Bonds.
Mortgage Bonds moved higher today on the devastating news out of Japan and as the unrest in the Mid East continues but they closed well off the best levels of the session halted by resistance and as Stocks were able to pair 2/3s of the days losses. The 4% coupon finished at 98.66 up 22bp. There were no economic reports today. As mentioned, Stocks were able t pare some losses as investors bought on the dips. The Dow fell 51.24 to 11,993.16, the S&P lost 7.89 to 1,296.39 while the Nasdaq dropped 14.64 to 2,700.97. Oil traded below the $100 mark today but was able to reverse course and move higher as news that the rebels in Libya were being defeated settling at $101.19/barrel near unchanged after trading as low as $98.47. The Fed will have a 1-day FOMC meeting tomorrow with the statement being delivered at 2:15pm ET. The only major economic report will be the NY State Empire Manufacturing Index.
Market Wrap:monthly coupon rollover
MARKET WRAP: Mortgage Bonds had their monthly coupon rollover after the close of trading today. The effect of this rollover was minus 34bp points for the 4% coupon. Therefore, while the Bond quote for today shows minus 59bp closing at 97.66, the minus 34bp rollover adjustment must be accounted for. This means that pricing actually closed down 25bp on the day. A report out from think-tank group Medley Group Advisors, fueled concerns that the Fed may start withdrawing monetary stimulus earlier than expected and pushed Treasury prices lower and spilled over into Mortgage Backed Securities. Stock markets moved higher today as money shifted from the Bond markets and as oil moved a bit lower, Boeing received a $10B from 2 airlines in China, B of A hinted of a possible dividend hike and allies of Gadaffi said were looking at exit plans for the leader. The Dow rose 124.35 to 12,214.38, the Nasdaq jumped 20.14 to 2,765.77 while the S&P 500 Index rose 11.69 to 1,321.82. Oil settled at $105.02/barrel down 42 cents after key oil producers considered increasing output. There are no major economic reports due for release tomorrow. The Treasury will sell $21B 10-yr notes.
