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Fed Minutes : Fed Considered Additional Stimulus In August

August 31, 2011 Leave a comment

FOMC Minutes August 2011

The Fed publishes meeting minutes 8 times annually — three weeks after each scheduled Federal Open Market Committee get-together. The Fed Minutes summarizes the FOMC meeting.

The Federal Reserve released the minutes from its August 9, 2011 Federal Open Market Committee meeting Tuesday.

The Fed Minutes contained no surprises and, as a result, mortgage rates nationwide have idled.

Although it gets less press attention, the Fed Minutes is every bit as important as the more highly-publicized, post-meeting statement from the FOMC. With its detailed record of conversation, the Fed Minutes highlights the discussions and debates that shape our nation’s monetary policy.

For example, here is some of what was said at the Fed’s August 2011 meeting :

  • On growth : Economic growth had been slower than the committee expected
  • On housing : The market “remains depressed”. Underwriting standards are “tight”.
  • On rates : The Fed Funds Rate will remain low until mid-2013

In addition, the Fed talked about whether a third round of asset purchases should be announced. Ultimately, that plan was rejected by consensus.

The FOMC’s next meeting is a 2-day meeting, scheduled for September 20-21. The meeting was originally scheduled for just one day, but Fed Chairman Ben Bernanke chose to extend it to two. Wall Street believes that the extension was made so Fed members could discuss new forms of economic stimulus.

Depending on the form of said stimulus — if it should even occur — mortgage rates may rise or fall. We can’t know for certain unti the size and scope of the Fed’s plan is known.

For now, mortgage rates remain rock-bottom. There’s more room for rates to rise than to fall. If you’re shopping for a loan and the rate looks right, therefore, consider locking on it.

Pending Home Sales Slip In July; Creates Buyer Opportunity

August 30, 2011 Leave a comment

Pending Home Sales Jan 2010 - Jul 2011After 3 straight months of gains, the Pending Home Sales Index slipped 1 percent in July. The monthly report is published by the National Association of REALTORS® and measures the number of home under contract to sell nationwide.

The Pending Home Sales Index is closely watched by Wall Street and analysts because it’s a forward-looking housing market indicator. Unlike most housing market data, though, Pending Home Sales forecasts a future housing market event. In this case, the Existing Home Sales report.

In its methodology, the Pending Home Sales Index states that 80% of homes under contract close within 2 months, with most of the remaining home going to closing within Months 3 and 4.

We would expect home sales data to taper into the fall buying season, but this year, they may taper more than normal. This is because, in a separate report, the National Association of REALTORS® said that contract cancellation rates are running high.

As compared to a 4 percent contract cancellation rate in May 2011, June and July both registered 16 percent. This means that fewer homes tallied as part of July’s Pending Home Sales Index will show up as “closed sales” this fall.

Contracts can be canceled for any number of reasons including more stringent mortgage guidelines, appraisals falling short of the purchase price, and changing mortgage loan limits.

For home buyers , the Pending Home Sales Index may represent an opportunity. Not only are fewer homes going under contract nationwide, but with cancellation rates spiking, sellers may be more willing to “make a deal”.

Note, though, like all real estate, the pace at which homes go under contract is a “local” statistic; you can’t assume national data applies to all markets equally. Your home market, for example, may out-perform — or under-perform — the national average.

For a closer look at what’s happening on your street including the speed at which homes are selling, talk to a local real estate agent.

What’s Ahead For Mortgage Rates This Week : August 29, 2011

August 29, 2011 Leave a comment

Net new jobs August 2009-July 2011Last week was another volatile week for mortgage rates. Wall Street alternately sought risk and shunned it, causing mortgage-backed bonds to rise and fall rapidly.

There was a lot to move markets, too, including banking concerns across Europe, inflation figures within the U.S., and a public speech by Fed Chairman Ben Bernanke.

Conforming rates rose to their highest levels of the week Wednesday afternoon, then receded into the weekend. 3

0-year fixed rates remain above their all-time lows set 2 weeks ago. 5-year ARMs are at all-time lows.

This week, mortgage rates figure to be equally jumpy. As well as a full slate of economic data, because of Labor Day, bond markets will be light on volume. When volume is light, pricing gets volatile.

The week’s calendar of data includes:

  • Monday : Pending Home Sales Index; Personal Income and Outlays
  • Tuesday : FOMC Minutes; Fed President Kocherlakota speaks
  • Wednesday : Factory Orders
  • Thursday : Jobless Claims; ISM Manufacturing Index
  • Friday : Non-Farm Payrolls

Of all the reports, though, it’s Friday’s Non-Farm Payrolls that might move mortgage markets the most.

Jobs are crucial to the ongoing economic recovery and, from Wall Street to Capitol Hill, it’s top of mind.

If the jobs report shows more jobs created than expected, or a positive forward trend, expect bond markets to fall, pushing mortgage rates up. On the other hand, if the jobs report is soft, mortgage rates may improve.

We can’t know what rates will do on any given day, so the best strategy for a shopper is to shop with purpose. Know what you want, and be ready to lock when you see it. 

If you wait too long, the rate will be gone.

Mortgage Rates Bounce Off All-Time Lows; The Start Of A Trend?

August 26, 2011 Leave a comment

Freddie Mac Weekly Rates

Low mortgage rates are terrific — if you can get them.

One week after posting its lowest mortgage rate in 50 years, Freddie Mac reports that the 30-year fixed rate mortgage rose by an average of 7 basis points nationwide this week to 4.22%. To get the rate, you’ll pay an average of 0.7 “points”.

This week’s rise in the 30-year fixed rate mortgage pulled rates off their all-time lows so either you locked last week’s rock-bottom rates, or you missed it.

Mortgage rates are rising.

As a refinancing homeowner or home buyer , rising mortgage rates are something to watch. This is because, as mortgage rates rise, so do the long-term interest costs of giving a mortgage, increasing your homeownership costs.

For example, if you failed to lock a rate last week when rates were bottomed, and then decided to lock-in only after rates had climbed 0.25 percent, at the new, higher rate, over the life of your loan, you would have responsibility for an extra $5,300 in interest costs for every $100,000 you borrowed.

Rising mortgage rates can be expensive.

For home buyers, rising mortgage rates pose a second problem — they erode your purchasing power. A home that fits your budget at today’s rates may not fit your budget at next week’s rates. And because mortgage rates change quickly, you can sometimes feel ilke you’re racing the clock.

The hard part about mortgage rates, though, is that we can never know what they’ll do next. On some days they rise, on some days they fall, and on some days they stay the same. Instead of trying to “time the bottom”, therefore, a good strategy can be to lock the first, low rate that fits your budget. Then, if rates are lower in the future, you can look to refinance at that time.

Mortgage rates remain at historical lows. It’s a good time to lock a rate.

Ranking The Best Places To Live In The U.S. (2011 Edition)

August 25, 2011 Leave a comment

Top Places To Live 2011CNNMoney recently released its Best Places To Live 2011 list.

The annual survey is based on data from Onboard Informatics. Using Quality of Life factors such as education, crime and “town spirit”, and focusing on towns with between 8,500 and 50,000 residents, the CNNMoney survey ranks the country’s best “small towns”.

To be eligible, towns must be have a median household income greater than 85 percent, and less than 200 percent of the state median income; must not be a categorized as a “retirement community”; and must be racially-diverse.

From a list of 3,570 eligible towns nationwide, Louisville, Colorado was ranked #1.

The complete Top 10 Best Places to Live as cited by CNNMoney, and their respective average home listing prices :

  1. Louisville, Colorado ($383,569)
  2. Milton, Massachusetts ($577,008)
  3. Solon, Ohio ($291,162)
  4. Leesburg, Virginia ($486,018)
  5. Papillion, Nebraska ($218,520)
  6. Hanover, New Hampshire ($643,500)
  7. Liberty, Missouri ($177,678)
  8. Middleton, Wisconsin ($347,770)
  9. Mukilteo, Washington ($345,487)
  10. Chanhassen, Minnesota ($418,607)

Rankings like these can be helpful to home buyers nationwide, but it’s important to remember that the Best Place To Live survey is subjective. You may find none of the above towns to be to your liking.

You may also find the lowest-ranked city to be your favorite.

In other words, before making a decision to buy, connect with a real estate agent who has local market knowledge. That’s the best, most reliable way to make sure you get the housing data that matters to you.

Categories: Rankings Tags: , ,

Ranking The Best Places To Live In The U.S. (2011 Edition)

August 25, 2011 Leave a comment

Top Places To Live 2011CNNMoney recently released its Best Places To Live 2011 list.

The annual survey is based on data from Onboard Informatics. Using Quality of Life factors such as education, crime and “town spirit”, and focusing on towns with between 8,500 and 50,000 residents, the CNNMoney survey ranks the country’s best “small towns”.

To be eligible, towns must be have a median household income greater than 85 percent, and less than 200 percent of the state median income; must not be a categorized as a “retirement community”; and must be racially-diverse.

From a list of 3,570 eligible towns nationwide, Louisville, Colorado was ranked #1.

The complete Top 10 Best Places to Live as cited by CNNMoney, and their respective average home listing prices :

  1. Louisville, Colorado ($383,569)
  2. Milton, Massachusetts ($577,008)
  3. Solon, Ohio ($291,162)
  4. Leesburg, Virginia ($486,018)
  5. Papillion, Nebraska ($218,520)
  6. Hanover, New Hampshire ($643,500)
  7. Liberty, Missouri ($177,678)
  8. Middleton, Wisconsin ($347,770)
  9. Mukilteo, Washington ($345,487)
  10. Chanhassen, Minnesota ($418,607)

Rankings like these can be helpful to home buyers nationwide, but it’s important to remember that the Best Place To Live survey is subjective. You may find none of the above towns to be to your liking.

You may also find the lowest-ranked city to be your favorite.

In other words, before making a decision to buy, connect with a real estate agent who has local market knowledge. That’s the best, most reliable way to make sure you get the housing data that matters to you.

Categories: Rankings Tags: , ,

New Home Supplies Remain Flat; Builders Not Over-Extending

August 24, 2011 Leave a comment

New Home Supply 2008-2011

Sales of newly-built homes slipped in July, falling 1 percent as compared to June. Home buyers closed on a seasonally-adjusted, annualized 298,000 units, the lowest reading since February.

The supply of new homes, however, remained flat.

July’s 6.6 months of supply equaled June’s tally and remains near the multi-year low of 6.5 months set in May of this year. The figures suggest a new home market that’s finding its balance.

Builders are building to meet demand, and not much more.

The New Home Sales report may have read differently if not for the Northeast Region which doubled its sales units in July. The gains buoyed the broader data, re-affirming the importance of looking past national data and focusing on what’s local; the national market is not reflective of any given town

Broken down by region, July New Home Sales fared as follows:

  • Northeast Region : +100.0% from June 2011 
  • Midwest Region : +2.4% from June 2011 
  • South Region : -7.4% from June 2011 
  • West Region : -5.9% from June 2011 

However, as with most months, it’s important that we recognize the New Home Sales data’s margin of error.

Although New Home Sales showed a 1 percent drop in July, the reported margin of error was ±12.9%. This means that the actual reading could have been as high as +11.9 percent, or as low as -13.9 percent. Because the range includes both positive and negative values, the Census Bureau assigned its July data “zero confidence”.

New Home Sales appear to be stable, despite falling sales figures. Supplies remain flat and builder confidence does, too. The good news for buyers , then, is that lower mortgage rates are making homes more affordable.

Mortgage rates are currently at 50-year lows.

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