Archive for November, 2009

MBA: Weekly Refinance Index +11.3%. Purchase Apps at Nine Year Low - In this week's release, which reports on loan application activity for the week ending November 6, 2009, demand for new mortgage loans increased 3.2% from one week earlier. The Refinance index rose 11.3% while the Purchase index fell 11.7%, its lowest level since December of 2000.

A rising trend of mortgage applications indicates home buying interest is increasing, a positive for the housing industry and economy as a whole.

Fannie and Freddie: Lending Rates Hold Below 5 Percent - Mortgage rates continued to ease during the week ended November 12 according to information released this morning by Freddie Mac.

The average rate for a 30-year fixed-rate mortgage was 4.91 percent with 0.7 point according to the results of the weekly Primary Mortgage Market Survey. Last week the average was 4.98 percent also with 0.7 point. The 30-year FRM has had an average rate below 5 percent for five out of the last seven weeks.

The 15-year FRM averaged 4.36 percent with 0.6 point, down from 4.40 percent with 0.6 point during the previous week.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) dropped 6 basis points to 4.29 percent. Fees and points were unchanged at 0.6 point.

One-year Treasury-indexed ARMs were down slightly to an average of 4.46 percent from last week's average of 4.47 percent. Fees and points increased from 0.5 point to 0.6 point.

Dollar Off Lows,Stocks Weaker Before Fed Speakers - Investors look hesitant to keep the rally going. The S&P 500 has climbed 5.5% on six straight days of gains and the Dow hit a 13-month yesterday at 10,226. Meanwhile, stocks in Asia and Europe are all modestly higher.

Though Tuesday offered no major economic data, there’s plenty going on markets to keep headlines active and investors busy. Just yesterday the US dollar fell to a 15-month low and gold topped the $1,100 mark to hit a new record high.

Even so, analysts from TD Securities suggest the dollar may be overvalued by as much as 20%. “Our model outputs support our call for further, medium term weakness in the USD,” analysts wrote in the TD U.S. Dollar Monitor report. “We expect EUR/USD to reach USD1.55 by mid 2010.”

In unrelated news, HFE’s Ian Shepherdson argues that the $8,000 tax credit for homebuyers, which was extended into March last week, is regressive.

“For the record, the homeowner tax credit is bad economic policy ? subsidies are inefficient and distort markets ? and it is bad social policy too, because the tax credit is partly funded by non-homeowners . . . The money would have been far better spent on renewing the nation’s infrastructure, which surely needs it.”

Senior Loan Officer Survey: Credit Conditions Still Tightening - The Federal Reserve's Senior Loan Officer Survey for October shows that banks are still tightening their lending standards, although not with the frequency of a few months. CRE and C&I loans are a particular focus of the current report. For the third consecutive quarter, banks reported a strengthening demand for residential real estate loans while 30 percent reported weakened demand for revolving home equity lines.

Stocks rallied Monday, with Dow surges to 13-month high - Stocks rallied right out of the gate Monday after the Group of 20 said over the weekend that it would keep economic stimulus in place.

The Dow Jones industrial average soared 204 points, or 2%, to close at 10,226.94 -- its highest level since Oct. 3, 2008.

The S&P 500 gained 24 points, or 2.2%, to settle at 1,093.07 and the Nasdaq composite rose 42 points, or 2%, to close at 2,154.06.

The Week Ahead: Treasury Auctions, Fed Speakers, Day Off, Slow Data Calendar -

The week ahead is extremely light on new data, with virtually nothing from the US hitting markets until the jobless claims report on Thursday morning. Coupled with the labor data are two reports on the nation’s debt, the budget gap and the trade deficit ? both are which are expected to be rising.

House Passes Home Buyer Tax Credit Extension. Obama to Sign Friday - The House of Representatives has voted to pass legislation extending the home buyer tax credit until April 30, 2009.

Last night the Senate voted 98-0 to pass the legislation. Next the bill will head to President Obama to be signed into law on Friday.

While the bill extends the $8,000 tax credit for first time home buyers, it also makes available a tax credit to homeowners who have lived in their current residence for at least five years. The credit for these buyers will be capped at $6,500.

Income levels will be extended from the current limits of $75,000 for a single purchaser and $150,000 for couples to $125,000 and $225,000 respectively. Above those limits there are diminishing credits available.

Fannie and Freddie: Mortgage Rates Dip Below 5 Percent Again - Both long and short term interest rates declined during the week ended November 5 according to data released by Freddie Mac and Fannie Mae. All rates are now below an average of 5 percent.

Results from the weekly Primary Mortgage Market survey peg the average rate for the 30-year fixed-rate mortgage (FRM) at 4.98 percent, down from an average of 5.03 percent a week earlier. Fees and points averaged 0.7 both weeks.

The 15-year FRM averaged 4.40 percent with 0.6 point compared to 4.46 percent also with 0.6 point last week.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) dropped 7 basis points from the previous week's average for an average of 4.35 percent. Fees and points were unchanged at 0.6 point.

The one-year Treasury-indexed ARM was at 4.47 percent with 0.5 point. Last week the average was 4.57 percent with 0.5 point.

Senate Approves Homebuyer Tax Credit Extension - The Senate today voted unanimously Wednesday night to extend the $8,000 tax credit for home buyers beyond its scheduled November 30, 2009 expiration date. The credit would be available until April 30, 2010.

Under the new legislation the credit will also now apply to home buyers who are buying their second or subsequent home. The credit currently applies only to first time home buyer. Income levels will be extended from the current limits of $75,000 for a single purchaser and $150,000 for couples to $125,000 and $225,000 respectively. Above those limits there are diminishing credits available.

Mortgage Applications Increase 8.2%. Refinance Demand Up 14.5% - In last week's release, which reported data for the week ending October 23, mortgage application activity fell 12.3% even as mortgage rates dropped from 5.07% to 5.04%. The Refinance Index, decreased 16.2% from the previous week while the seasonally adjusted Purchase Index moved lower as well, decreasing 5.2% from one week earlier. The refinance share of mortgage activity fell to 62.3% of total applications from 65.0% in the previous week. In today's release, which covers new loan applications for the week ending October 30, the MBA reported that demand for new mortgages increased 8.2% and the average 30 year fixed mortgage rates fell from 5.04% to 4.97%.

Stocks churn in choppy session - Stocks struggled Tuesday, ending mixed, as investors mulled improved auto sales, surging commodity prices and Warren Buffett's buyout of railroad Burlington Northern Santa Fe.

The first day of the Federal Reserve's two-day policy meeting and some bearish news in the financial sector were also in play.

The Dow Jones industrial average lost 17 points, or 0.2%. The S&P 500 gained 2 points, or 0.2% and the Nasdaq composite rose 8 points, or 0.4%.

The Dow Jones Transportation average surged 5.3% after Warren Buffett's Berkshire Hathaway said it will buy railroad operator Burlington Northern Santa Fe.

Gold surges to an all-time high - Gold prices surged to a record high Tuesday after the International Monetary Fund said it had sold 200 metric tons of the precious metal to India's central bank.

November gold rose $30.90 to settle at $1,084.90 an ounce, after climbing to a high of $1,085.20. The previous intraday record was set Oct. 13, when gold rose to $1,069.70 an ounce.

Production and Employment Lead ISM Index Higher -  The institute for supply management released the Manufacturing ISM Report on Business this morning. "Economic activity in the manufacturing sector expanded in October for the third consecutive month, and the overall economy grew for the sixth consecutive month" said the Institute. The Primary Manufacturing Index was reported at 55.7, better than economist estimates for a read of 53.0 and improved from last month's 56.6. The manufacturing ISM report is at it's highest level since April 2006. The prices paid index 65.0 vs. consensus 64.0 vs. 63.5 in September. The Employment Index came in at 53.1 vs. 46.2 in September and the New Orders Index registered a print of 58.5 vs. 60.8 in September.

Pending Home Sales Improve as Tax Credit Expiration Draws Near - The Pending Home Sales Index, a forward-looking indicator based on contracts signed in September, rose 6.1 percent to 110.1 from a reading of 103.8 in August, and is 21.2 percent higher than September 2008 when it stood at 90.9. The gain from a year ago is the largest annual increase on record, and the index is at the highest level since December 2006 when it was 112.8.

Refinancing Boom Boosts Lender Loan Profitability - Mortgage bankers reported a substantial increase in per-loans profits during the second quarter of 2009 and an increase in loans, especially refinancings, that allowed them to spread their fixed costs over more units.

The average production profits on each loan written during the second quarter of 2009 was $1,358 (71.29 basis points), a substantial gain over the average of $1,088 (54.58 basis points) per loan during the first quarter of the year.

The gain came as a big increase in production volume allowed lenders to spread their fixed costs over a larger number of loans, thus increasing net profits according to a statement released by Marina Walsh, MBA's Associate Vice President of Industry Analysis.