Walden Mortgage Weekly Newsletter: January 23, 2013
Housing Starts Best in Over Four Years:
The rebound in U.S. home building accelerated in December, capping the best year for the industry since 2008 and adding to signs that residential real estate is contributing to economic growth. According to Commerce Department data, New Home Starts climbed 12.1 percent last month to a 954,000 annual rate, which exceeded all forecasts of economists. Spurred by record-low mortgage rates, home construction will probably keep making headway in 2013 as it recovers from the worst slump since the Great Depression. Housing starts remain short of the 2.07 million in 2005 at the peak of the boom, which was three-decade high. They averaged 1.74 million a year from 2000 through 2004. All four regions of the country showed a gain in starts last month, led by a 24.7 percent surge in the Midwest. Construction of single-family houses climbed 8.1 percent in December from the prior month, to the highest level since June 2008. Work on multifamily homes jumped 20.3 percent.
What Happened to Rates Last Week?
Mortgage backed securities (MBS) lost just -1 basis points from last Friday to the prior Friday which caused 30 year fixed mortgage rates to move sideways. We had our highest mortgage rates on Thursday and our lowest rates on Tuesday. We had a "see-saw" week. Mortgage rates improved early in the on the very tame PPI and CPI data which was very bond friendly. But MBS sold off (causing mortgage rates to rise) on the lower than expected Initial Weekly Jobless Claims and the block-buster New Home Starts. MBS rebounded (causing mortgage rates to drop) Friday on the much weaker than expected Consumer Sentiment report. Even with Friday's rebound, MBS have dropped a total of -74 basis points from the close of trading on 12/31/12. This means that mortgage rates have steadily risen so far in 2013.
What to Watch Out For This Week:
The following are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages.
|Date||Time (ET)||Economic Release||Actual||Market Expects||Prior|
|22-Jan||10:00 AM||Existing Home Sales||-||5.10M||5.04M|
|23-Jan||7:00 AM||MBA Mortgage Index||-||NA||15.20%|
|23-Jan||7:00 AM||MBA Mortgage Purchase Index||-||NA||NA|
|23-Jan||9:00 AM||FHFA Housing Price Index||-||NA||0.50%|
|24-Jan||8:30 AM||Initial Claims||-||355K||335K|
|24-Jan||8:30 AM||Continuing Claims||-||3200K||3214K|
|24-Jan||10:00 AM||Leading Indicators||-||0.50%||-0.20%|
|24-Jan||10:30 AM||Natural Gas Inventories||-||NA||-148 bcf|
|24-Jan||11:00 AM||Crude Inventories||-||NA||-0.951M|
|25-Jan||10:00 AM||New Home Sales||-||387K||377K|
We will be watching these reports closely for you and let you know if there are any big surprises: It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to us, we monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.