6/25/10 Mortgage Market Week-in-Review
June 29, 2010
What Did Interest Rates Do Last Week?
** based on Freddie Mac weekly average survey **
30-yr Fixed - Lower
Last Week: 4.69%
Previous Week: 4.75%
1yr Ago: 5.42%
15-yr Fixed - Lower
Last Week: 4.13%
Previous Week: 4.20%
1yr Ago: 4.87%
Jumbo Fixed (Average 30-yr Fixed)
Last Week: 5.50%
Previous Week: 5.50%
Highlight of Last Week's Major Economic Reports
Mortgage rates wandered into new record territory, with 30-yr rates at their lowest levels unseen since the 1940-50s. Unfortunately, home sales haven't benefitted from this unique opportunity due to buyers being kept away by the lagging job market and tighter lending requirements.
And, especially with the mad rush created by the homebuyer tax credit, it was expected that home sales would take a dip after its expiration. As such, Existing Home Sales dropped 2.2% in May, while New Home Sales tumbled 32.7%.
Meanwhile, with updated reports reflecting that the economy grew only 2.7% in the 1st quarter, the Fed downgraded its forecast for economic growth and intimated that "financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad" and that "the pace of economic recovery is likely to be moderate for a time." Of course, this signals to us that the job and housing markets are likely going to remain sluggish for longer than we were expecting.
What to Look for This Week
June's employment report will be the main attraction for the week, and it is widely expected that the numbers will be negative (both figuratively and literally) with the government's hiring of Census workers no longer a factor.
Short-Term Rate Outlook
Stable
Stay Informed: What's in the News
"U.S. Census: Texas Booms Despite Recession While Florida Sags" from USA Today
http://content.usatoday.com/communities/ondeadline/post/2010/06/census-data-show-texas-cities-boom-despite-recession-/1
"Texas Leading Nation in Economic Recovery" from Texas A&M Real Estate Center
Texas is coming out of the Great Recession and leading the United States in the current U-shaped economic recovery, according to the Real Estate Center's latest monthly review of the Texas economy.
After 16 months of job losses, the state's annual employment growth rate turned positive in May 2010 and posted an annual employment growth rate of 0.2 percent for the period from May 2009 to May 2010. The nation's rate of job losses has decreased from 5 percent in August 2009 to 0.4 percent in May 2010.
The state's seasonally adjusted unemployment rate rose from 7.5 percent in May 2009 to 8.3 percent in May 2010, while the U.S. rate rose from 9.4 percent to 9.7 percent during that period.
Five Texas industries - education and health services, mining and logging, other services, leisure and hospitality, professional and business services - and the government sector had more jobs in May 2010 than in May 2009. Six other industries had net job losses over the same period.
Thirteen Texas metro areas posted positive employment growth rates from May 2009 to May 2010, up from seven for the period from March 2009 to March 2010. College Station-Bryan ranked first in job creation followed by San Angelo, Waco, Killeen-Temple-Fort Hood and McAllen-Edinburg-Mission.
The state's actual unemployment rate in May 2010 was 8 percent. Amarillo had the lowest unemployment rate followed by Midland, Lubbock, College Station-Bryan and San Angelo.
"Austin Metro Area Gains 2,000 Net Jobs" from Austin Business Journal
http://www.bizjournals.com/austin/stories/2010/06/21/daily26.html?ana=e_du_pap
"Mortgage Rates Fall Again, But Few Can Buy, Refinance" from Austin American Statesman
http://www.statesman.com/business/mortgage-rates-fall-again-but-few-can-buy-767783.html
"Fannie Cracking Down on Walkaways" from Inman News
Fannie Mae says it will get tough on borrowers who engage in "strategic defaults," or walk away from a home that's worth less than what's owed on the mortgage even if they can afford to keep making their payments. Economist Mark Zandi of Moody's Analytics has estimated that 9 million homeowners are "underwater" by more than 20 percent, making them more likely to consider a strategic default. Fannie Mae said Wednesday that it will not only refuse to guarantee another loan for seven years if it has evidence that a borrower chose to default on their loan, and will seek to recoup losses in court through deficiency judgments in states that allow lenders such recourse.
** based on Freddie Mac weekly average survey **
30-yr Fixed - Lower
Last Week: 4.69%
Previous Week: 4.75%
1yr Ago: 5.42%
15-yr Fixed - Lower
Last Week: 4.13%
Previous Week: 4.20%
1yr Ago: 4.87%
Jumbo Fixed (Average 30-yr Fixed)
Last Week: 5.50%
Previous Week: 5.50%
Highlight of Last Week's Major Economic Reports
Mortgage rates wandered into new record territory, with 30-yr rates at their lowest levels unseen since the 1940-50s. Unfortunately, home sales haven't benefitted from this unique opportunity due to buyers being kept away by the lagging job market and tighter lending requirements.
And, especially with the mad rush created by the homebuyer tax credit, it was expected that home sales would take a dip after its expiration. As such, Existing Home Sales dropped 2.2% in May, while New Home Sales tumbled 32.7%.
Meanwhile, with updated reports reflecting that the economy grew only 2.7% in the 1st quarter, the Fed downgraded its forecast for economic growth and intimated that "financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad" and that "the pace of economic recovery is likely to be moderate for a time." Of course, this signals to us that the job and housing markets are likely going to remain sluggish for longer than we were expecting.
What to Look for This Week
June's employment report will be the main attraction for the week, and it is widely expected that the numbers will be negative (both figuratively and literally) with the government's hiring of Census workers no longer a factor.
Short-Term Rate Outlook
Stable
Stay Informed: What's in the News
"U.S. Census: Texas Booms Despite Recession While Florida Sags" from USA Today
http://content.usatoday.com/communities/ondeadline/post/2010/06/census-data-show-texas-cities-boom-despite-recession-/1
"Texas Leading Nation in Economic Recovery" from Texas A&M Real Estate Center
Texas is coming out of the Great Recession and leading the United States in the current U-shaped economic recovery, according to the Real Estate Center's latest monthly review of the Texas economy.
After 16 months of job losses, the state's annual employment growth rate turned positive in May 2010 and posted an annual employment growth rate of 0.2 percent for the period from May 2009 to May 2010. The nation's rate of job losses has decreased from 5 percent in August 2009 to 0.4 percent in May 2010.
The state's seasonally adjusted unemployment rate rose from 7.5 percent in May 2009 to 8.3 percent in May 2010, while the U.S. rate rose from 9.4 percent to 9.7 percent during that period.
Five Texas industries - education and health services, mining and logging, other services, leisure and hospitality, professional and business services - and the government sector had more jobs in May 2010 than in May 2009. Six other industries had net job losses over the same period.
Thirteen Texas metro areas posted positive employment growth rates from May 2009 to May 2010, up from seven for the period from March 2009 to March 2010. College Station-Bryan ranked first in job creation followed by San Angelo, Waco, Killeen-Temple-Fort Hood and McAllen-Edinburg-Mission.
The state's actual unemployment rate in May 2010 was 8 percent. Amarillo had the lowest unemployment rate followed by Midland, Lubbock, College Station-Bryan and San Angelo.
"Austin Metro Area Gains 2,000 Net Jobs" from Austin Business Journal
http://www.bizjournals.com/austin/stories/2010/06/21/daily26.html?ana=e_du_pap
"Mortgage Rates Fall Again, But Few Can Buy, Refinance" from Austin American Statesman
http://www.statesman.com/business/mortgage-rates-fall-again-but-few-can-buy-767783.html
"Fannie Cracking Down on Walkaways" from Inman News
Fannie Mae says it will get tough on borrowers who engage in "strategic defaults," or walk away from a home that's worth less than what's owed on the mortgage even if they can afford to keep making their payments. Economist Mark Zandi of Moody's Analytics has estimated that 9 million homeowners are "underwater" by more than 20 percent, making them more likely to consider a strategic default. Fannie Mae said Wednesday that it will not only refuse to guarantee another loan for seven years if it has evidence that a borrower chose to default on their loan, and will seek to recoup losses in court through deficiency judgments in states that allow lenders such recourse.