Last week was quiet for economic news. Retail sales came in better than expected, though they weren’t particularly awe-inducing. Consumers spent 0.6% more in August than in July, which suggests that the disappointing employment report (as discussed last week) may indeed be a simple aberration.
Mortgage applications dipped during the holiday-shortened Labor Day week. Led by an 11% decline in refinance applications, the MBA measure of mortgage activity is now at the lowest level since the year 2000. Applications for home purchases fell 3.0%.
The Federal Reserve’s stimulus activity (quantitative easing) helped mortgage rates find the lowest rates on record in 2012, which set off a refinance boom. As the market normalizes, we expected to see the dip in refinance, because many current owners already refinanced to a lower rate
There are more reasons to refinance beyond “lower rate, lower monthly payment”, including eliminating (or reducing) mortgage insurance, and taking cash out to consolidate debt and make home improvements.
This coming week will be a busier one. The Federal Open Market Committee (FOMC) meets, and will release its quarterly projection of economic activity for the year. We expect to see the continuation of “tapering” (reduction of QE) and modest expectations for future growth. Data releases include consumer price index, jobless claims, housing starts, and industrial production.
Mortgage Rates Inch Higher
Mortgage rates inched higher last week. These days “no big news” tends to mean “slightly higher rates.” Recent volatility abroad has helped push rates down to an 18 month low, but a quiet week tends to release some of that downward pressure.
Below, we have included a graph with data from Freddie Mac’s weekly national mortgage rate survey.
USDA Mortgage Insurance Fee Set to Rise
The monthly mortgage insurance fee for the USDA loan will increase from 0.4% to 0.5% for home loans completed on and after October 1, 2014.
For a $400,000 home purchase, the fee bump would move the monthly mortgage insurance payment from $133.33 to $166.67.
Buyers who are in the process of completing a USDA loan will need a Conditional Approval from the Rural Development office by September 30, or will be be required to accept the additional fee… READ MORE
Central Coast Lending is a California mortgage broker and direct lender based on the Central Coast of California in San Luis Obispo County. Call us today at 805.543.LOAN or email us here to set up a free pre qualification. We are The Mortgage Experts: ask us anything!