Category Archives: Real Estate

Mortgage Market Update 04-14-14

Consumers across the nation stepped up spending in March after dismal spending in the beginning of the year, due to the severely harsh winter weather. Retail Sales rose by 1.1% last month, the biggest gain since September 2012, while February’s 0.7% rise was revised up from 0.3%. Retail Sales account for 1/3 of consumer spending and consumer spending accounts for about 2/3s of the U.S. economy.

Home loan lending declined in the first quarter of 2014 due to rising interest rates and home prices. Total lending came in at about $226 billion, the lowest level since 1997 and less than one-third of the 2006 average. Home loan rates are up from the best levels seen early in 2013 after the Federal Reserve began to taper its massive stimulus program. Wells Fargo recently reported that its home-loan originations fell to $36 billion in the first quarter after it exceeded $100 billion for seven straight quarters through June 2013.

Banking giant Citigroup reported first quarter earnings of $3.9 billion or $1.30 per share, easily beating the $1.14 per share estimated by Thomson Financial Research. The gains were due in part to solid performances from its consumer and international businesses. In addition, the bank also grew both loans and deposits, while holding the line on its expenses.

Mortgage Market Update – 03-28-14

Americans’ attitudes towards the economy fell to lows not seen since November as higher heating and gasoline costs put a strain on household budgets. The March Consumer Confidence Index came in at 80.0, which was inline with estimates and the February reading. Economic data in 2014 has been a bit disappointing, but the harsh winter weather could have been the reason. As spring blooms, consumers will be looking for signs of more positive economic data, which would confirm that the weather had a big impact on the early year tepid economic numbers.

Consumer spending rose by the most in three months in February on services such as health care and utilities. Personal Spending rose by 0.3% last month, which was inline with estimates. Personal Income also rose by 0.3% last month, which also matched estimates. Within the data it showed that the personal savings rate edged up to a four month high of 4.3% from 4.2% in January. In addition, inflation remained tame as evidenced by a 0.1% rate in the Core Personal Consumption Expenditure, the Federal Reserves favored gauge for inflation.

In an effort to brew up some business, fast food giant McDonald’s will be offering free small cups of coffee at no charge during breakfast hours from March 31 through April 13. The world’s largest restaurant chain is rolling out the campaign for the first time to lure in new customers and to get existing customers to come in more frequently. The company is figuring that it’s likely that those stopping in for the free coffee will purchase a breakfast sandwich or other items.

Mortgage Market Update 03-17-2014

Economic data had little impact t on the capital markets today as all eyes continue to focus in on the geopolitical news out of Europe. The republic of Crimea has voted to break off from Ukraine and join Russia. President Obama has stated that Crimea’s vote “would never be recognized” by the U.S. and warned of further military action toward other parts of Ukraine.

The New York Federal Reserve reported that its Empire Manufacturing Index rose to 5.6 in March, above the 4.5 recorded in February and nearly inline with estimates. Within the report it showed that both the new orders index and the employment component both saw positive gains. Readings over 0.0 indicates improving conditions, below indicates worsening.

Over in housing news, the National Association of Home Builders (NAHB) March Housing Market Index rose to 47 in March from the 46 recorded in February and below the 50 that was expected. The NAHB said that poor weather and difficulties in finding lots and labor weighed on the index. A number below 50 indicates that more builders view conditions as poor than good.

Mortgage Market Update 03-13-14

Americans filing for first time unemployment benefits fell to lows not seen since late November, signaling an uptick in the labor market. The Labor Department reported that Weekly Initial Jobless Claims fell by 9,000 in the latest week to 315,000, which was below the 329,000 that was expected. As the country moves out of the unbearable cold weather and massive snowstorms, the sector could be on its way to greener pastures.

In the foreclosure arena, RealtyTrac reported that foreclosure activity across the nation fell to its lowest level in more than seven years, due in part to the rise in home equity. February foreclosure starts fell by 9% from January to February and are down a whopping 27% from one year earlier. However, 14 states saw an increase in foreclosure starts last month, with New Jersey seeing an increase of 126% from a year ago.

The Commerce Department reported on Thursday that after falling for 2 months, Retail Sales rose by 0.3%, above the 0.2% expected in February, as consumers purchased a variety of goods, despite the harsh winter weather last month. When stripping out autos, sales also rose by 0.3%, above the 0.2% expected. Retail Sales make up about 1/3 of consumer spending, the main driver behind economic growth. If consumer spending can continue to expand, economic growth will continue to increase.

Mortgage Market Update 03-11-14

As the spring and summer driving seasons near, one thing is for certain – higher gas prices at the pump. The national average price for a regular gallon of gasoline is $3.48, up from $3.28 a month ago as prices have increased 28 straight days. AAA predicts that prices will rise an additional 10 to 20 cents this spring and could rise more if the tensions in the Ukraine ramps up. Russia is the third largest oil producing country behind Saudi Arabia and the U.S. and any disruptions could cause oil prices to increase.

The Bureau of Labor Statistics reported this morning that its JOLTS report, Job Openings and Labor Turnover Survey, revealed that job openings rose by 1.5% from December to January. The report may not have as much impact as the monthly Jobs Report, but it does give insight into the labor market on hires, quits, layoffs and job openings. The report is also closely watch by newly appointed Fed Chair, Janet Yellen.

Fast food chain McDonald’s reported a larger than expected decline in comparable global sales in February, once again hurt by slowing sales in the U.S. Reports from restaurants said worldwide sales for stores open at least 13 months fell by 0.3%, below the -0.1% expected. McDonald’s said that sluggish economic growth, internal missteps, rising record beef prices, along with higher labor costs, are the hurdles that are hurting sales.

Mortgage Market Update – 03-10-14

The closely watched S&P 500 closed at another record high on Friday of 1,878.04, which is a long way from the close of 676.53 hit five years ago at the height of the Great Recession. The S&P has gained 177% since that day, which is the best 5-year performance since the June 1996 to June 2000 rise during the dot-com bubble.

Shares of Dow component Boeing are lower this morning after its 777-20 plane with 239 passengers and crew disappeared during a Malaysia Airlines flight to Beijing on March 8. There are no signs of debris or any traces of the plane. Flight MH370 took off on Saturday morning from Kuala Lumpur International Airport en route to Beijing and vanished into thin air.

Popular pizza chain Sbarro has filed for Chapter 11 bankruptcy protection, which is the second time in bankruptcy since 2011. Sbarro closed 155 stores in February , though it still has 800 locations in more than 40 countries. The chain opened in 1956 as an Italian grocery store, and serves more than 71 million pizzas every year.

Mortgage Market Update

The Mortgage Bankers Association reported this morning that its Market Composite Index, a measure of total loan application volume, rose by 4.7% in the latest week as home loan rates fell to lows not seen since November. The refinance index increased by 10%, but the purchase index declined by 4%.

In corporate earning, revenues at Coach were weaker than expected, IBM’s revenue declined while Texas Instruments forecasted weaker than expected net income. In addition, United Technologies beat earnings expectations while revenues fell. There have been 61 companies in the S&P 500 that have reported with 56% topping estimates.

The first Federal Open Market Committee meeting of 2014 will take place next week with the closely watched monetary policy statement being released at 2:00pm ET. The investing public will be looking for any additional news on the Fed’s massive stimulus program, dubbed QE III or Quantitative Easing III. The Fed revealed last May they it may begin to taper its purchases of Treasury and Mortgage Backed Securities, which sent home loan rates for a 30-year fixed from the mid 3% level to the current level of 4.5%. The Fed did begin to taper its purchases from a total of $85 billion per month to the current pace of $75 billion.

Mortgage Market Update

With little economic data this week to influence trading in the capital markets, Stock prices are mixed to start the holiday shortened week, while Mortgage Bonds are trading near unchanged levels. All markets were closed yesterday in observance of Martin Luther King Day. The two reports that will be released will be Thursday’s Weekly Initial Claims report and Existing Home Sales data.

In global labor news, the International Labor Organization (ILO) warned today that global unemployment is a current problem and it is set to rise. The ILO said that there were 202 million people unemployed in 2013, an increase of five million over 2012. The agency predicts that there will be 200 million new jobs created in the next four years, but the number won’t be able to keep up with unemployment that will exceed 215 million by 2018.

Several large banks across the nation are exiting from granting short term loans that carry high interest rates or so-called “Payday Loans.” Federal regulators are looking into whether or not these short term loans violate consumer protection loans. Instead of calling them Payday Loans, they have issued short term loans of several hundred dollars or less and are repaid from the customers checking account on payday. The loans often carry triple digit interest rates when calculated on an annual basis.

Mortgage Market Update

Consumers across the nation flocked to malls for the Veteran’s Day promotions, boosting sales in the latest week. The ICSC-Goldman Sachs Chain Store Sales Index was up 0.1% for the week ending November 16. On a year-over-year basis, there was a 2.8% increase, the biggest gain since October 19, 2013.

In corporate earnings news, home improvement retailer Home Depot reported today that net earnings were up nearly 48% in the third quarter as compared to the same period of last year. The company earned 95 cents per share versus the 89 cents that was expected. The better than expected earnings stems from the continued improvement in the housing market.

The big news in the financial sector today is the massive $13B settlement between JPMorgan and the Feds over the sales of low quality Mortgage Backed Securities that plunged in value during the financial crisis. JPMorgan asserts that most of the sales were originated from Bear Stearns and Washington Mutual, companies that JPMorgan acquired during the crisis.