Category Archives: Economy

Mortgage Market Guide 11-17-14

News from abroad read that Japan has fallen into a recession after the country’s Gross Domestic Product (GDP) declined for two consecutive quarters. A recession is defined as a significant decline in economic activity, which includes industrial production, employment, real income and wholesale retail trade. A recession is measured by two consecutive negative quarters of GDP data. Japan’s GDP fell by 1.6% in the third quarter after falling 7.3% in the second quarter.

The New York State Manufacturing Index bounced back in November after a somewhat weak reading in October. The index rose by 10.2 this month, up from the 6.2 registered in October, but lower than the 12.0 expected. The general business index signaled that business condition activity continued to expand in November, though at a slower pace from the May to September period. Within the report it showed that the employment component edged lower.

A recent study reveals that first-time homebuyers are faced with many challenges with the mortgage process, according the J.D. Power 2014 Primary Mortgage Origination Satisfaction study. The big issues facing first time homebuyers is growing student loan debt and affordability. Recent data shows that among the respondents purchasing a home, 58% are first timers. In addition, lack of experience and uncertainty regarding the process is also a barrier when it comes to first time buyers.

Mortgage Market Guide

Americans filing for first time unemployment benefits fell to multi-year lows in the latest week as the sector continues to recover and move into greener pastures. The Labor Department reported that Weekly Initial Jobless Claims fell by 10,000 to 278,000 and is the second lowest level since the Great Recession ended. The four-week moving average of claims, which irons out seasonal abnormalities, fell to a 14-year low of 279,000, down 2,950 from the previous week. Since June, claims have averaged 293,000 per week compared to last year’s same time period of 343,000 and well below the 594,000 average per week in 2009.

Global outplacement firm Challenger, Gray & Christmas reported today that after falling to a 14-year low in September, planned layoffs by employers across the nation surged by nearly 70% from September. U.S. employers announced planned cuts of 51,183 in October, well above the 30,477 planned in September. October is the second highest amount of planned cuts since the May 2014 figure of 52,961 and marks only the fourth time in the last 22 months that planned cuts were above 50,000.

With the Thanksgiving Holiday quickly approaching, more Americans are expected to take to the skies to visit friends and relatives this season. Airlines for America reports that 24.6 million passengers will fly domestically between November 21 and December 2. That’s up about 1.5% from 2013, or 31,000 more passengers per day. U.S. carriers have reaped some big profits in that past year and are making sure that there is enough room to meet the growing demand. The top three destinations for Thanksgiving are Chicago, Orlando and Cancun.

Mortgage Market Guide 10-14-14

Bank earnings were abundant today with Citigroup, JPMorgan and Wells Fargo all reporting their quarterly numbers. Wells Fargo reported that revenues came in at $21.2 billion, above the $21.1 billion expected. JPMorgan reported a profit of $5.6 billion, a big surge from the $380 million in the same period last year, which was due to hefty legal bills. Lastly, Citigroup earned $1.15 per share, which was above the $1.12 expected.

The National Federation of Independent Business reported that its small business optimism index fell in September. Business owners are expecting an ease in profits and sales, a tightening in credit conditions, and are experiencing a harder time filling job openings with qualified candidates. The Index fell 0.8 points to 95.3, which is five points below where it was before the start of the Great Recession in late 2007.

The U.S. Stocks markets have lost some ground in the past few weeks. U.S. equities have lost almost $744 billion in values since October 8 due to slowing global growth concerns and as the Federal Reserve eases back on its latest stimulus program dubbed Quantitative Easing III (QE). The QE program was originally announced in November of 2008 to promote job and economic growth. The closely watched S&P 500 Stock Index has lost 6.3% since hitting its all-time closing high of 2,011 back on September 18, 2014.

Mortgage Market Guide 09-18-14

The housing markets received some sour news today as sales for new home construction declined in August from July. The Commerce Department reported that New Home Sales fell by 14.4% last month to an annualized rate of 956,000 units, which was below the 1.117 million rate in July and below the 1.045 million expected. The sector continues to improve, but tight credit conditions coupled with a still higher than normal unemployment rate is constraining further gains. Single family homes declined by 2.4% while multi-family dwellings plunged nearly 32%.

Americans filing for unemployment benefits plunged in the latest week to the lowest levels since July, which could signal that the low amount of job creation in August could be just a one-off aberration. The Labor Department reported that Weekly Initial Jobless Claims fell by 36,000 in the latest week to 280,000, near a 14-year low, and well below the 305,000 expected. The four week moving average, which irons out any seasonal abnormalities, fell by 4,750 to 299,500. The data suggests that the jobs market continues to improve, and will be a key factor to the members of the Federal Reserve.

The improving U.S. economy and labor markets have caused the poverty rate to decrease significantly in 2013 for the first time since 2006, reported the Census Bureau. The U.S. poverty rate fell to 14.5% last year from 15% in 2012. The Latino population saw the biggest decline in the poverty rate with a 2.1% decline while median household income posted its first increase since 2000. Within the report it showed that those Americans with year-round full-time jobs increased by nearly 2.8 million to 105.8 million in 2013.

Mortgage Market Update 09-12-14

Americans across the nation opened their wallets in August spending their hard earned money on automobiles and a range of other goods, including back-to-school items. Retail Sales rose by 0.6% last month, above the 0.3% recorded in July, which was revised from 0.0%. The report signals that the economy continues to recover after the weak readings from the beginning of the year.

Consumer Sentiment hit a 14-month high this month, in a survey done by the University of Michigan showing a rate of 84.6, up from the previous reading of 82.5. The surveys gauge of consumer expectations rose to 75.6 from the 71.3 reading last month and above a forecast of 73.0. The uptick in Consumer Sentiment was one of the reasons for the rise in Retail Sales as consumers feel more confident about the economy.

The price for oil continues to fall after a ramp in supplies pushing the price to lows not seen in over a year. The recent drop has pushed prices at the gas pump lower as the national average price for a regular gallon of gasoline is at $3.41, down nearly 4% from this time last year. Prices usually fall this time of year after the summer driving season, but with the large supply of oil on the market, AAA predicts a 15 to 20 cent drop by Halloween. The drop in gas prices puts extra cash in the consumers pocket, which could be used on the upcoming shopping seasons.

Mortgage Market Update 08-22-14

Sales of previously owned homes rose in July from April, signaling that the housing recovery that stalled at the end of 2013 may be back underway. The National Association of REALTORS┬« (NAR) reported that Existing Home Sales in July rose to their highest pace of the year, up 2.4% from June to an annual rate of 5.15 million units. Estimates were calling for 5.00 million. An NAR spokesman said that “tamer price increases are giving prospective buyers less hesitation about entering the market.”

The Labor Department reported that Americans filing for first time unemployment benefits declined in the latest week as the job market turns the corner to greener pastures. Weekly Initial Jobless Claims fell by 14,000 to 209,000 as claims hover near pre-recession lows. The four-week moving average of claims, which irons out seasonal abnormalities, rose by 4,750 to 300,750.

Bank of America has agreed to pay a whopping near $17B in fines related to its mortgage lending and is the largest ever between the government and a single company. This brings the total tab of fines to near $80 billion, which all stem from the financial crisis. The bank acquired home loan lender Countrywide and Wall Street titan Merrill Lynch & Co. when both were on the brink of insolvency during the housing crisis.

Mortgage Market Update – 08-13-14

U.S. consumers spent less in July at retail locations across the nation as the economy lost some economic momentum headed into the third quarter. The Commerce Department reported that Retail Sales in July were unchanged led lower by a decline in sales of motor vehicles and parts sales, furniture and home furnishing stores as well as electronic outlets. Economists were looking for a 0.3% increase and the 0.0% was the lowest level in six months.

The Mortgage Bankers Association (MBA) reported on Wednesday that total home loan applications fell by 2.7% in the latest week. The refinance index fell by 4%, while the purchase index declined by 1%. The MBA said that the 30-year fixed rate with conforming loan balances was at 4.35%, near 12-month lows.

Popular retailer Macy’s reported on Wednesday that second quarter sales were not enough to make up for the dismal numbers in the first quarter, when the severe winter weather kept shoppers away from stores. The 158 year-old company also cut its full-year same-store forecast while reporting that earnings per share came in at 80 cents, below the 86 cents expected. Macy’s is looking to the back-to-school sales season to make up for lost sales earlier in the year.

Mortgage Market Update 07-28-14

The upward trend of home prices continued in May, rising .9% from April and up 5.9% from a year ago, reported Black Knight Financial Services. The analytics and data company also said that 20 of the largest 40 metros all reported month-over-month gains. Black Knight went on to say that Colorado and Texas home prices hit new highs in May. Of the 20 largest states, prices are still 32.4% lower than their April 2006 peak.

The National Association of REALTORS® (NAR) reported on Monday that June Pending Home Sales fell by 1.1% from May and down 7.3% from June 2013. Despite the declines, the index is still above 100, which is considered an average level of contract activity. The NAR said that the housing market is stabilizing, but there are ongoing challenges with supply shortages, flat wages and tight credit.

Gasoline prices across the country have been trending lower in the past month and have fallen 24 consecutive days due to abundant refinery production, despite the geo-political tensions in Gaza Strip and Ukraine. The AAA national average for a regular gallon of gasoline is $3.52, five cents lower than last week and 16 cents below one month ago. Here in the U.S., refinery production reached its highest level of the year, which is helping to push prices lower.

Mortgage Market Guide 07-22-14

The housing sector received some good news on Tuesday as the National Association of REALTORS® reported that June Existing Home Sales rose by 2.6% from May to an annual rate of 5.04 million units. That was slightly above the 5.0 million expected. However, the 5.04 million is 2.3% below the 5.16 million recorded in June of 2013. The median sales price in June was $223,300, a 4.3% increase from last year, marking the 28th consecutive month of year-over-year gains. Sales are based on single-family, town homes, condominiums and co-ops.

Higher prices for gasoline in June led consumer prices higher, which was somewhat offset by moderating food costs. The Consumer Price Index, a key measure of consumer inflation, rose by 0.3% last month, which matched expectations. Since May of 2013, prices have risen 2.1%. Gasoline prices jumped 3.3%, the biggest increase in a year, while overall food prices rose by a modest 0.1%. The conflict in Iraq pushed oil prices higher in June, which led to the higher gas prices, but most believe that prices at the pump have peaked for the summer.

In earnings news, Coca-Cola reported lower than expected revenues in North America, failing to show growth for the second consecutive quarter. Coke sales as well as Pepsi have been declining as developed countries such as the U.S. become more health conscious and look for healthier alternatives. The soda maker reported earnings per share of 58 cents, which was lower than the 59 cents recorded in the same period last year.