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Current Mortgage Rates for Wednesday, May 16, 2012
By Michael Kraus on May 16, 2012

We are seeing mortgage rates rise this morning as positive U.S. economic data at least temporarily outweighs the approaching U.S. “fiscal cliff” as well as continued bad news from Europe, and Greece in particular.

There were two positive pieces of U.S. economic data this morning. Housing Starts rose significantly in April, jumping from 699,000 to 717,000 (seasonally adjusted). The March figured was adjusted upward from a pace of 654,000. This is significantly above expectations. The second piece of data was the Industrial Production report from the Federal Reserve. They saw production increase 1.1 percent in April. Again, this is above expectations of 0.7 percent. These numbers will cause you to hear from the bulls this morning, but I remain very unconvinced of the strength of this jobless recovery. Still, stocks are rallying right now, while Treasuries and mortgage backed securities are selling off on perceived strength.

In Europe we are seeing borrowing rates for peripheral Eurozone states rise this morning (Greece, Spain, and Italy in particular). The Greeks failed to create a new government yesterday, which means there will be another round of elections in that country, most likely in June. To make matters even worse, Greek citizens pulled about $900 million out of banks yesterday in fears that Greece could withdraw from the Eurozone in the near future. I have no idea what will happen if this turns into a full-blown bank run/panic, but it almost certainly won’t be good for anybody.

So on balance, I anticipate that the data from the U.S. will push rates somewhat higher today, although I do not think there will be a huge spike. Tomorrow we have Jobless Claims and the Philadelphia Fed Survey. We shall see how that goes.

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Category: Mortgage Rates
US Industrial Production Spikes But Mortgage Rates Hold
By David Coster on May 16, 2012

US Industrial Production spiked by twice the expected amount in April. Analysts had forecasted an increase of .5%. The April reading was the biggest month over month increase in over a year. Analysts do believe this month’s result is a catch-up for last month’s disappointing results. What is the impact of this positive economic news for mortgage rates?

Mortgage rates would typically respond negatively to a result such as this but appear to be holding tight at current levels. Despite other positive economic news in the US today as well, on-going uncertainty in Greece is cancelling out the effect of the good news.

Category: Compare Mortgage Rates, Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance
Diversion of Mortgage Settlement Money Continues
By Michael Kraus on May 16, 2012

I discussed this topic a little bit yesterday, but in light of a New York Times article by Shaila Dewan this morning, I think it is worth further delving into the diverting of mortgage settlement funds to make up state budgetary shortfalls. From the Times:

“Hundreds of millions of dollars meant to provide a little relief to the nation’s struggling homeowners is being diverted to plug state budget gaps.

In a budget proposed this week, California joined more than a dozen states that want to help close gaping shortfalls using money paid by the nation’s biggest banks and earmarked for foreclosure prevention, investigations of financial fraud and blunting the ill effects of the housing crisis. California was awarded more than $400 million from the banks, and Gov. Jerry Brown has proposed using the bulk of that sum to pay the state’s debts.

The money was part of a national settlement valued at $25 billion and negotiated with five big banks over abuses in their mortgage and foreclosure processes.”

I have made no secret of the fact that I believe that the mortgage settlement is completely and utterly inadequate. It basically amounts to a slap on the wrist for what is likely one of the largest frauds ever perpetrated. It is hard to believe that this deal could get worse, but it is, because a lot of the $2.5 billion in cash that was to be distributed to the states for the purpose of aiding homeowners is being used for other purposes (for instance, prison-building in Arizona). The total settlement is for $25 billion, but the vast majority of that is supposed to come in the form of write-downs and modifications. As the Times article notes, “even that relatively small amount has proved too great a temptation for lawmakers.”

Dave Dayen, who does excellent work over at Firedoglake.com, is keeping a running total of diverted funds. So far it is up to $234 million, and that number appears to be rising. This settlement was unconscionable, the diversion of settlement funds adds insult to injury.

Category: Mortgage Rates
Mortgage Rates Feel Pressure of Good Data
By David Coster on May 16, 2012

Mortgage rates are pressured today after better than expected data on the US economy was released. Not only was the data better than expected—it was significantly better. But while good news tends to be a negative for mortgage rates—today’s news may only push rates slightly higher given the on-going uncertainty in Europe.

At 8:30 AM this morning housing starts and permits data for April were released. Analysts had been expecting 680 thousand housing units to be started in April but the actual total was 717 thousand units—a healthy difference. While housing starts did surpass their estimates new permits for housing units declined by 7%. Analysts were impressed with the starts data but explained that we are still “normalizing” after the warmer than expected winter.

Also beating expectations significantly this morning was the Industrial Production report. Forecasts called for an increase in industrial activity by .5%. The 1.1% was more than twice the expectation and the highest level reported in over a year. The report indicated that utilities and manufacturing firms picked up their activity significantly in April.

This afternoon at 2:00 PM the minutes of the past Federal Reserve Open Market Committee meeting will be released. Analysts will be looking for any sign that the committee is either more or less open to future stimulus. Most “Fed Watchers” believe that the committee is split between those that are open to more stimulus and those that are strongly set against it. For now it appears the opponents of new stimulus have the upper hand.

German Chancellor Angela Merkel ‘s comments today that she wants to find a way to keep Greece in the Euro Zone has helped calm the markets in Europe and the US. A Greek default and exit from the Euro Zone would cause major disruptions to world markets. Despite the German leader’s comments many analysts believe that Greece’s exit from the monetary union is a foregone conclusion.

Tomorrow jobless claims, the Philly Fed Index (manufacturing) and Leading Indicators report will compete with news from Europe to propel mortgage rates.

Category: Compare Mortgage Rates, Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance
Current Mortgage Rates for Monday, May 15, 2012
By Michael Kraus on May 15, 2012

Yesterday saw mortgage rates improve slightly. I expect that they will remain close to current levels today.

There were a couple of economic numbers released this morning. None of them especially remarkable. Retail sales increased by 0.1% from March to April, more or less in line with expectations. This is the slowest pace of growth this year. The Consumer Price Index was unchanged in April, while core CPI (which excludes food and energy, which tend to be volatile) rose 0.2%. This is also essentially in line with expectations. So we are not seeing significant inflation, and economic growth is stagnant. Neither of these numbers will really push the markets one way or the other, especially in light of the ongoing troubles in Europe.

Uncertainty surrounds the situation in Greece, where the newly elected president was unable to form a government. This will cause a new set of elections, probably sometime in the middle of June. It looks increasingly certain that Greece will have to leave the Eurozone, although it is not clear exactly how this will happen. The ultimate impact of all of this on the global economy is unclear, but suffice it to say that the fear of some sort of disaster scenario will help keep mortgage rates low for the near future.

Total Mortgage is committed to getting you the lowest possible rate. To get information on our rates and products, call us today at 877-868-2503, or fill out the form to the right.

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Category: Mortgage Rates
Retail Sales Downward Trend to Pull Down Mortgage Rates?
By David Coster on May 15, 2012

US retail sales have continued there streak of positive growth in April of 2012. However, for the third consecutive month overall sales growth has declined. Two bright spots in the report this month were the increase in sales by online (non-store) retailers which grew by 11% and building material and garden equipment retailers which grew by 10.3%. Will the declining trend in retail sales help keep mortgage rates near all-time lows?

Retail sales are the lifeblood of the US economy. 70% of US GDP is related to retail activity. If the trend lower for retail sales continues it would have a tremendously negative affect on the overall health of the economy. This could draw investors into mortgage-backed securities and could induce the Federal Reserve to provide additional stimulus–both of which could bring mortgage rates even lower.

Category: Compare Mortgage Rates, Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Stimulus
Arizona To Divert Mortgage Settlement Funds to Make Up Budget Shortfall
By Michael Kraus on May 15, 2012

Remember the mortgage settlement that was supposed to provide relief to those wrongfully foreclosed upon? The settlement itself was borderline embarrassing, in that it amounted to a slap on the wrist for egregious behavior. What’s worse is that some states with budget shortfalls are trying to divert those funds to make up the budgetary gap. The fight over the funds could give rise to a lawsuit in Arizona. According to Mary Jo Pitzl at the Arizona Republic:

“[Arizona Attorney General Tom] Horne on Tuesday promptly rebuffed the request from the Arizona Center for Law in the Public Interest. This sets the stage for a legal battle over one of the more controversial provisions of the recently enacted state budget.

At issue is the decision of the Legislature and Gov. Jan Brewer to tap $50 million from the $97.7 million the state received as part of its settlement with five mortgage-lending firms. They said they needed the money from the national mortgage settlement to balance the state budget. Initially, the intent was to use the money for prison construction.”

The money was intended to provide counseling and assistance to troubled homeowners. Dave Dayen at Firedoglake.com is keeping a running total of diverted funds across all states. So far we are up to $234 million in diverted funds, out of a total of $2.75 billion in cash disbursements. Dayen doesn’t think that the Arizona Center for Law has much chance of winning this court battle, as nothing in the settlement prevents the mortgage settlement funds from being diverted for other use.

So, the mortgage settlement just continues to get worse. California

Category: Mortgage Rates
Mortgage Rates Hold Records Despite NY Surprise
By David Coster on May 15, 2012

Current mortgage rates appear likely to hold current levels or tick slightly higher this morning on a big surprise in manufacturing in the New York Federal Reserve bank region. In a day filled with typically more significant economic reports (retail sales and CPI), the lowly New York Empire State Index rarely steals the thunder—but today is different due to the size of the variation from expectations. Let’s first examine what didn’t make news today.

Retail sales increased by .1% in April. Economists had predicted a .2% increase, but growth at any rate is still considered good. The Consumer Price Index (CPI) was flat in April, signaling that inflation was under control. While the Core CPI did increase at a .2% rate, this was not high enough to concern most analysts.

Now to the Empire State Index. Analysts had expected improvement in the report of manufacturing activity in the New York Federal Reserve Bank region after a dismal reading last month. However, the improvement was double what was expected. The implication is that manufacturers, daunted by higher fuel costs in January, February and March were encouraged by the drop in prices during March and increased their activity.

Despite the relatively encouraging economic data in the US today, mortgage rates will still have difficulty rising. The continuing saga in Europe will cause investors to search for safer investments than those available in Europe. While Greece did decide to make a massive debt payment that was due today, the newly elected President has failed to form a government, likely leading to new elections. The result is a higher than typical demand for US Treasury certificates, bonds and mortgage-backed securities. That puts downward pressure on mortgage rates.

Tomorrow provides another opportunity for the US economy and prospects to over-power the uncertainty and fear from Europe. The Industrial Production report is forecasted to show a healthy increase after being flat last month. Also, tomorrow the minutes from last month’s Federal Reserve Open Market Committee will be released. Expectations are that the members of the committee generally are reluctant to propose extension of additional stimulus. The combination of a strong Industrial Production report and no hint of further stimulus could push rates higher.

Category: Compare Mortgage Rates, Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates
Will China’s Slowdown Lower or Raise Mortgage Rates?
By David Coster on May 14, 2012

China’s Industrial Production Index fell in May to the lowest level in two years. While official statistics coming from the Chinese government are not considered to be 100% reliable, the fact that the current report was substantially below the previous month’s level suggests that a meaningful slowdown in industrial economic activity is taking place. The government failed to report the index back in February of this year , but even March and April figures were substantially below the levels reported throughout 2011. What might the decline in China’s Industrial Production mean for US mortgage rates?

Initially, US mortgage rates are likely to respond favorably to the slowdown in China. As investors consider it more risky to invest in China and Europe they are likely to place more of their available funds in safer investments–such as US mortgage-backed securities. Eventually, however, China’s slowdown may work against mortgage rates as less competition from China for commodities such as oil, gas and copper lower prices for US manufacturers and help to stimulate the US economy.

Category: Compare Mortgage Rates, Current Mortgage Rates, General, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance, Stimulus
Current Mortgage Rates for Monday, May 14, 2012
By Michael Kraus on May 14, 2012

Last week we saw current mortgage rates set new record lows before ticking up slightly on Friday. The record lows were not so much data-driven (there were very few economic reports last week) as they were driven by fear. This week there are a number of economic reports scheduled, but fears over the situation in Europe will likely continue to dominate the headlines and market movements.

It appears increasingly apparent that Greece will have to leave the Eurozone one way or the other. I think the only question is how messy the exit will be. Right now nobody seems to know exactly what will happen, and those fears are pushing down stocks this morning and causing mortgage backed securities to trade higher. The problem is that some sort of resolution to the Greek problem won’t end the troubles in Europe. Spain is in peril, as is Italy, and probably France. European concerns are going to weigh on the market for a long time.

As to the U.S. economy, we’ve seen mixed reports of late. There isn’t a lot scheduled for today, but later in the week we will get the Consumer Price Index, Retail Sales, Empire State Manufacturing, Housing Starts, Industrial Production, Fed Minuntes, Jobless Claims, and the Philly Fed Survey. I suspect that we will continue to see mixed data throughout the week, with no clear indicators about the overall direction of the economy.

For today rates will continue to sit around record lows.

Total Mortgage is committed to getting you the lowest possible rate. To get information on our rates and products, call us today at 877-868-2503, or fill out the form to the right.

Continue Reading…

Category: Mortgage Rates