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CCL Market Update: Unemployment Claims, Housing Starts, Loan Programs, Mortgage Rates

Jobless claims fell more than expected last week, dropping by 21,000 to 283,000, and nearly reversing the spike of 25,000 from the week before. The four-week average in the number of Americans filing new claims for unemployment benefits is down for the fourth straight week, down 6,500 to 283,250, and the lowest level since early November. Analysts did comment that the shorter week due to the President’s Day holiday may have contributed to the unexpected decline in claims, but that the trend continues to point to a strengthening labor market.
American consumer confidence is continuing to improve. Consumers’ outlooks on the U.S. economy climbed from 38.1 to 38.9 over the past week, according to the weekly survey by Bloomberg. Only 26% of Americans surveyed this month believed that the economy is getting worse, and 35% said the economy is improving, the highest in more than four years. January payrolls had their best three months of job growth in 17 years, indicating that the improvement in the job market is a large contributor to the improving consumer outlook.
Housing starts are down slightly this month; the February index is 55 compared to 57 in January. Previously, January housing starts saw a decline of 2.0% after a 7.1% jump in December. This is due largely to the weak number of single family starts, which is chiefly effected by the lack of first-time buyers in the market, especially younger buyers.
Heading into next week, expect updated reports on existing and new home sales, as well as unemployment claims and retail sales numbers.

Loan Programs

A new rule change eliminating the “prepayment penalty” for FHA borrowers recently went into effect on January 21. The rule change, announced by the FHA back in August 2014, states that for new FHA loans, interest cannot be charged to the borrower beyond the payoff date.

Read the full article on the new rule here.

Mortgage Rates

Mortgage interest rates rose to the highest level so far this year. According to Freddie Mac, the national average for a 30-year fixed mortgage is 3.76%, up from 3.69% last week, and the average 15-year rate increased from 2.99% to 3.05%.
Central Coast rates for almost all loan programs have also increased this week, with the exception of the 30-Year High Balance and 30-Year FHA programs. The largest increase was seen for Manufactured FHA loans at 3.625% (5.179% APR), up 1/4-point from last week’s rate of 3.375% (4.966% APR). Overall, loan programs remain lower than this time last year. The 30-Year Conventional is 3.750% (3.812% APR) compared to 4.375% (4.421% APR) in February 2013, and the FHA 203k is 3.625% (5.207% APR) compared to 4.250% (6.242% APR) one year ago. Although rates have risen slightly over the last couple of weeks, they remain substantially lower than last year.
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Written by Central Coast Lending - Go to Central Coast Lending's Website/Profile