The following from John Carrico at Bank of the Ozarks.
I hope 2014 is going well, from many of the reports I am reading the market was off about 35% last year compared to the previous year and this year we are seeing an improvement even though rates are slowing moving up with some down days
Mortgage Rates Fall Modestly, Staying in New Lower Range.
Posted to: Mortgage Rate Watch
Thursday, January 16, 2014 3:58 PM
Mortgage rates moved lower today preserving the pocket of recovery that formed on the heels of last week’s Employment Situation report. Every day so far this week has offered the lowest rates in the past 30 days, and this wouldn’t have been the case if we’d gone any higher today.
Such a move would have risked reintroducing 4.625% as the most prevalently quoted conforming 30yr fixed rate for ideal scenarios (best-execution). As it stands, today’s strength keeps 4.5% in force. When adjusted for day to day changes in closing costs, rates fell an equivalent of 0.03% today.
Compared to the rest of this week, Thursday is tied for the 2nd best rate sheets. It also follows 2 days of progressively higher rates and therefor stands out as a good opportunity to lock for those with little-to-no risk tolerance.
Are We There Yet? Freddie Mac Says Recovery Has Ways to Go
Posted to: MND NewsWire
Thursday, January 16, 2014 2:33 PM
The housing market turned the corner in 2012 Freddie Mac’s economists said today, and the recovery was fully underway in 2013. But despite the positive trends in home price indexes, housing starts, and home sales, when can we say that housing hasfully recovered? Chief Economist Frank E. Nothaft and Deputy Chief Economist Leonard Kiefer attempt to answer that question in the January edition of Freddie Mac’s U.S. Economic and Housing Outlook.
The two say that for the economy and housing market to be functioning normally we need to see four positive indicators; a healthy jobs market with low and stable unemployment, mortgage delinquencies back near historical averages, home prices that are consistent with an affordable mortgage payment-to-income ratio, and home sales in line with historical norms.
Since the recession the labor market recovery has been modest with a December unemployment rate of 6.7 percent, high by historical standards but moving down. Most economists agree that the rate should be between 5 and 6 percent for an economy at its long-run potential. Nothaft and Kiefer say it may be another two years before that is achieved.
Mortgage delinquency rates have been falling rapidly recently but remain well above historical norms of less than 2 percent, standing at 5.88 percent in the third quarter of 2013. The two say that with continued improvement in the labor market and increasing house prices the delinquency rate should continue to fall but will not be back to normal for some time.
The economists say that we saw in the last decade that home prices that rise too rapidly are not sustainable; they should instead rise more or less in line with income. As mortgage payments are a factor of both home price and interest rates, increases in either will affect the price of a house a typical family can afford. Between 1999 and 2006 the payments on a hypothetical 30 year fixed rate mortgage increased by 50 percent more than incomes did, in large part because of house price appreciation. Right now thepayment-to-income ratios are only 60 percent of the level that existed in 1999 suggesting that fixed rate loans will generally remain manageable for a typical family’s budget even with some additional increases in prices and rates.
Home sales have increased over the past two years but are still way below sales a decade ago. Historically home sales have averaged a rate of about 6 percent of the housing stock each year but rose to 9 percent during the housing boom then dropped to 4 percent with the housing crisis. The economists expect a pace of 5.7 percent for 2013 but homes for sale are constrained in some areas as potential sellers remain without sufficient equity to sell. This is holding back the recovery of the overall sales market. Many of the home sales in the last few years have been cash so even as sales climb the lending recovery has been muted.
So, Nothaft and Kiefer say, we aren’t there yet; the housing market hasn’t fully recovered, some markets are recovering faster than others, and the recovery is likely to slow as interest rates move higher. But it is moving in the right direction, they say, and they will continue to monitor the four key indicators in the coming year.
John D. Carrico
Bank of the Ozarks
PO Box 8811 | Little Rock, AR 72231