Another volatile economic week involving mortgage rates. As the chart below displays, there were a few significant ups and downs which prompted mid-day pricing adjustments to mortgage rates. Yet another reason to avoid the temptation of shopping on your own as a Consumer given the fact that you might inadvertantly be failing to compare apples to apples when speaking with different mortgage companies at different times.
In the chart below, the "candlesticks" signify movement in the market. A "red" candlesticks indicate a bad day for mortgage rates (as the cost of the rates increased). The "green" clandlesticks indicate a good day for mortgage rates (as the cost of the rates decreased). The larger the "body" of the candlestick, the more significant the movement was in that particular direction.
(special thanks to Market Analyst Lou Barnes for the insights below)
Markets are quiet, volatility gone, waiting for something to happen. Not calm, plenty tense, a lot happening but not concluding.
The overriding influence near-term: The Battle of 1370. What, Europe again? The English and French refighting some unpleasantness between Crecy and Agincourt?
Nah. Every stock trader on the planet is mesmerized by S&P500 1370. Go above it, and stocks should rocket if only because so many buy the chart. One problem: the S&P since mid-December has already run straight from 1200, and been stuck between 1345 and 1365 for three weeks. As vulnerable on downside as likely to explode upward.
Fed-managed long-term rates no longer react to anything: the 10-year T-note since the end of October has traded 90% of the time between 1.90% and 2.05%.
Europe has pulled back from another Greek brink, but not resolved a thing. Austerity in the big dominoes -- Italy, Spain, and France -- has not begun, each promising fiscal tightening about 4% of GDP this year. In US equivalent, imagine a $600 billion tax-hike spending-cut combination during the onset of new recession.
The ECB will next week expand bank rescue funding toward infinity. However, the ECB firehose will have little economic effect, just preventing weak banks from failing, strong banks disinterested in risk-taking, no matter how much cash the ECB sprays.
So, the world admiring its navel, what's up with the long-slow-roller, housing?
Finance types have amused themselves in the new year by announcing housing recovery. Merrill Lynch's newest report concludes: "The housing recovery would support an even bigger commitment to equities in our portfolios." Right. Merrill would find sunrise or Joe Stalin's birthday good reasons to buy more stock.
Home sales data had been talked this winter into optimistic anticipation, and the flat reality misreported: a ballyhooed but minor gain in January sales of exiting homes was reversed by a downward revision for December. Sales of new homes were just the reverse: off .9% in January, revised up a little in December. And this winter was one of the mildest in a long time. New applications for purchase loans have been unchanged all through the winter into February.
Home prices have flattened. The FHFA Home Price Index wobbled weakly through 2011, and recovered in December to a decline of .8% from where it started. The Newest Case-Shiller data is a hair weaker, through last November off 3.7% year-to-date, the last two months showing new declines in 19 of 20 cities. Stock hawkers see these trends as a happy turn to price stability. If I have been dragged to the bottom of a swimming pool, holding my breath, is my situation stable?
There are genuinely positive trends, and one big puzzle. The true positives include some big drops in overall mortgage delinquency: in the last year, 18.9% in Nevada, 14.3% in Michigan, 21% in California, and 24.5% in Arizona. Total mortgages delinquent or in foreclosure have dropped by almost 900,000 in the last year.
Don’t get carried away just yet. Nationally, 12.3% of loans are still delinquent. 3,856,000 loans are 90+ days late or in foreclosure, down only 8% last year (LPS).
The puzzle: a nationwide drop in listed inventory for sale, down 21.5% last year, 11.5% of that in December alone. This is National Association of Realtors data, which given both hands and a mirror could not count both sides of its fanny and get to "two." However, the decline is real and large, and normally a precursor to rising prices. This time we can't tell how much is instead due to exhausted sellers, others fearful of discounts too deep, or with too little equity to hire a broker and have a down payment for the next home. We'll hope, and see.
On the public policy front, the Federal government immobile and annoyed by Fed pleas for housing help, some states are moving. Florida has legislation pending which would make foreclosure easier. In the seventh year of fiddling and loan-mitigation pretense, there is no better sign than local governments wanting to get on with it. That's a true marker of moving into the back half of this mess.
For more information on topics like this, please feel free to visit www.GordonMortgage.com (an educational resource for Borrowers, Real Estate Agents, and Financial Professionals). Educational content provided by:
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