Mortgage Market Update

Fannie Mae released its January 2014 National Housing Survey this week revealing that consumers are positive regarding access to mortgage credit while their views towards the economy are improving. 52% of respondents thought it would be easier for them to get a home loan today, an all-time high. The share of respondents who say the economy is on the right track increased 8 percentage points from last month, to 39%.

History was made today when new Federal Reserve Chair Janet Yellen became the first woman to head the central bank in its 100-year history. Ms. Yellen is in front of Congress this week testifying on the state of the U.S. economy, along with monetary policy. Ms. Yellen did say that the labor markets have made some progress, but still have a lot of improvement ahead. Ms. Yellen went on to say that the Fed policy makers could pause on easing back on stimulus if the economy weakens.

The Labor Department reported this morning that its JOLTS report, Job Openings and Labor Turnover Survey, showing a second straight month fall in the hires rate, now at 3.2% and the lowest since June of 2012. Compared to December, the total job openings rate fell 0.1% to 2.8%. The hires rate is the number of hires during the month divided by the number of employees who worked or received pay for the pay period that includes the 12th of the month.

Mortgage Market Update

Fed Chair Janet Yellen will face her first test in her semi-annual monetary policy testimony in front of Congress this week. Ms. Yellen will be in front of the House Financial Services Committee on Tuesday and the Senate Banking Committee on Thursday. Ms. Yellen will be grilled a bit by those critical of the Fed’s actions to see what her take is on tapering QE3 and overall accommodative monetary policy.

The trading week begins with Stock prices modestly lower, while Bond prices are pushing higher. The week features just a few economic reports on Weekly Initial Jobless Claims, Retail Sales and Consumer Sentiment. Stocks have been under pressure in 2014 due to weaker than expected economic data, profit taking by investors, and the Fed easing back on its massive stimulus program, which is geared towards promoting both job and economic growth.

Fast food giant McDonald’s reported today that sales in January fell by 3.3% in the U.S., while total global sales were up 1.2%. The company cited bad weather last month for the decline in domestic sales. McDonald’s has been promoting its Dollar Menu, but has been also fending off competition by Wendy’s and Burger King.

Mortgage Market Update

The Labor Department reported this morning that employers added just 113,000 jobs in January, which was below the 175,000 expected, but up from the paltry 75,000 created in December. A freeze in hiring in the health care sector is one of the factors to the lower numbers. The Unemployment Rate fell to 6.6%, the lowest level since October 2008, but that can be due in part to people falling out of the work force than finding jobs.

Filling up at the pumps will begin to be more expensive as spring nears due to more drivers being on the road along with refineries shutting down for winter maintenance, which reduces supplies. The national average price for a regular gallon of gasoline is at $3.26. For 2014, AAA predicts that the nationwide average price will peak between $3.55 and $3.75 per gallon with the average price around $3.49.
The Census Bureau reports that the share of Americans who own their own homes was 65.2% in the fourth quarter of 2013, down from 65.4% in the previous quarter. Higher borrowing costs coupled with tight credit were the two factors behind the decline. The rate peaked at 69.2% in June of 2004.

Mortgage Market Guide Update

Home prices continued to rise in the period from December 2012 to December 2013, but at a lesser pace than previous year-over-year readings. CoreLogic reported today that home prices, including distressed sales, rose by 11% in the period mentioned, but that is down from the 11.8% gain seen from November 2012 to November 2013. In addition, prices declined month-to-month by 0.1% from November to December.

Richmond Virginia Fed President Jeffrey Lacker reported today that U.S. growth could be muted in 2014, but the Federal Reserve will continue to taper its massive stimulus program, dubbed Quantitative Easing III. Mr.Lacker cited declining spending by both consumers and businesses. The Fed official went on to say he feels the growth will be closer to 2% in 2014, about the same rate that the country has seen since the end of the Great Recession.

Stock prices are rebounding today after yesterday’s steep plunge, which was touched off by a weaker than expected reading from a national manufacturing report, the ISM Index. The S&P 500 had recently lost nearly 6% from its record closing highs hit in late December and mid-January. The declines have come from profit taking, Fed tapering, a slowdown in China and on the notion that a small correction was due after the record levels recently hit.

Mortgage Market Update

The top spot at the Federal Reserve Bank of the U.S. switches to former Vice Chair Janet Yellen from outgoing Chief Ben Bernanke today. Ms. Yellen is the first woman to be the Chairperson in its 100-year history and will guide the nation through the post recession era of the U.S. economy.

In economic news, the January ISM Manufacturing Index was released this morning and came in lower that expectations at 51.3 versus the 56.0 expected to the slowest pace in 10-months. Within the report it showed that the new orders component fell 13.2 points to 51.2, also the lowest since May. The hiring gauge fell by 3.5 points to 52.3. The decline was due in part to unusually poor weather in January.

The big economic report due for release this week is the January Jobs report, which consists of Non-farm Payrolls and the Unemployment Rate. Payrolls are expected to rise by 175,000, after the weak reading in December of only 74,000 jobs created. The Unemployment Rate is expected is expected to drop to 6.5% from 6.7%. The report will be released Friday at 8:30am ET.