Mortgage bond prices stabilize and trade sideways

Mortgage bond prices stabilize and trade sideways but with debt resolution still up the air, the volatility will remain and prices will trade sideways.

MARKET WRAP: Bond markets stabilized today and pushed higher despite better than expected news from initial claims, pending home sales and not-so-good results from the $29B 7-yr note auction. Whispers of a lower than expected 1st read on Q2 GDP could have helped to lend support to Bonds. Stocks traded higher for the most of the session but fell in the last hour of trading ahead of this evenings House vote on the debt ceiling due around 5:45pm ET. The 4% coupon jumped 47bp to end the session at 100.75. The Dow fell 62.44 to 12,240.11, the S&P 500 Index lost 4.22 to 1,300.67 while the Nasdaq was near unchanged at 2,766.25. Oil was slightly lower in after hours trading at $97.19/barrel. Along with GDP, Chicago PMI, Employment Cost Index and Consumer Sentiment will be released tomorrow.

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FDIC’s Bair suggests time right for rate hikes.

Outgoing Federal Deposit Insurance Corp. Chairman Sheila Bair on Friday said it may be time to think about implementing a slow increase in interest rates to make bank lending more profitable. Bair’s comments come as some bankers have been criticizing the Federal Reserve’s zero interest rate policy, insisting that it is hurting bank profitability and is that it is impeding the lending environment. The Fed on Wednesday held interest rates at record-low levels as its controversial $600 billion bond-buying program came to an end. The central bank said it planned on keeping rates low for an “extended” period of time.

“That is an interesting debate, and I hear that from a lot of bankers that a gradual increase in interest rates could make lending more profitable and therefore provide more incentives for lending,” Bair said to reporters at the National Press Club after her last official speech as chairman of the agency. “It is an argument that the Federal Reserve board is very aware of and there is the counter argument in terms of economic impact [of raising interest rates]. Maybe it’s time to think about it a little more.”

With Mortgage Interest Rates at an all time low of 2011, the window to refinance may soon be closing.

 

 

Distressed Sales Put Pressure on Prices

The national median existing single-family home price was $158,700 in the first quarter, down 4.6 percent from $166,400 in the first quarter of 2010. The median is where half sold for more and half sold for less. Distressed homes typically sold at a discount of about 20 percent, accounted for 39 percent of first quarter sales, up from 36 percent a year earlier.

Lawrence Yun, NAR chief economist,said lower priced homes have seen the best sales performance. “The biggest sales increase has been in the lower price ranges, which are popular with investors and cash buyers,” he said. “The preponderance of sales activity at the lower end is bringing down the median price, so what we’re seeing is the result of a change in the composition of home sales.”

Although sales are slightly below a year ago, the volume of homes sold for $100,000 or less in the first quarter was 8.9 percent higher than the first quarter of 2010, creating a downward skew on the overall median price.

The share of all-cash home purchases rose to 33 percent in the first quarter from 27 percent in the first quarter of 2010.

How is Portland, Maine holding up?

Well ending March 31st 2011.. a total of 102 home and condo transactions transpired compared with 136 in 2010 and thus representing a somewhat significant volume decrease of 25% year over year! Despite the volume drop.. median prices continue to remain strong and actually showed a statistical 8% jump from $206,000 in the first quarter of 2010 compared with $222,000 this previous quarter. Buyers “from away” coupled with still many first time home buyers in the marketplace continue to help keep our market strong overall.

Retail Jobs Picking Up

Employment in April was up across the band of specific jobs; retail jobs increased 57,100 the largest increase since April of 2000; manufacturing +29K, goods producing +44K, service-providing +224K, government jobs down 24K. Those unemployed fro more than 27 weeks declined to 5.839 mil frm 6.122 mil in March. The U-6 unemployment rate at 15.9%; U-6 measures total unemployment, plus all personnel marginally attached to labor force and total employed part time plus all persons marginally employed.