Month: January 2015

Reports on the housing market continue to improve this week, with news that housing starts rebounded 4.4% in December after a 4.5% decline in November. This has been attributed primarily to the increase in single-family permits, which has risen 4.5% compared to a year ago. In fact, groundbreaking for single-family homes is at its highest level in nearly seven years, which may signal that construction will contribute much more to U.S. economic growth in 2015. The increase in construction of single-family homes indicates that the industry is beginning to focus on the biggest part of the market, and may have been encouraged by gains in employment and consumer confidence.

Numbers for the groundbreaking of multi-family homes fell 0.8%, and multi-family permits fell 11.8%. However, since single-family houses accounted for 64% of all housing starts in the past year, all groundbreaking in 2014 increased 8.8%, the highest since 2007. An increase in home construction is due to a higher demand for new homes, and some developers are saying that the demand is the strongest since the recession, which ended in June 2009. Low mortgage rates, gradually easing credit standards and a general improvement in the job market should continue to lead to improvements in the housing market.

Unemployment claims are inching higher in this week’s reports. Jobless claims at the beginning of January have been largely attributed to the expected annual post-holiday layoffs. The claims reported for January 17 totals around 307,000, which is generally considered a healthy level. Additionally, the ratio of unemployed people for every job opening is the lowest since early 2008, and job openings are nearing 14-year highs.

January has thus far seen an improvement in American consumers’ expectations for the economy, reaching the highest level in the last four years and likely due to the low gas prices and improved job market. Of those polled by the Bloomberg Consumer Comfort Index, 36% said the economy is getting better, up from 32% last month. Economic gains were largely reported among women, full-time workers, 18-34 year-olds, and Democrats, although advances were also reported from married adults and those with at least some college education.

In the 2015 State of the Union address on Tuesday evening, President Obama stated that the U.S. is now ready to move past the recession of the last 15 years. He stressed that “middle-class economics works” and that “this country does best when everyone gets their fair shot, everyone does their fair share, and everyone plays by the same set of rules.”

Next week will bring updated reports on new home sales, jobless claims, and consumer confidence levels.

Loan Program News

The biggest news on the loan program front continues to revolve around the lower annual mortgage insurance premiums that will be offered by the Federal Housing Administration (FHA). In the recent State of the Union address, President Obama once again discussed the lowering of mortgage insurance premiums as a way to expand homeownership in the U.S.  Read more about the changes offered by the FHA here.

Fannie Mae’s new “3% down” program remains of interest as well.  This option is beneficial for first-time buyers and current homeowners looking to refinance alike, and you can learn more about it here.

 

Mortgage Rate News

This week saw mortgage rates rise ever so slightly in some of the loan programs, while others remained unchanged. The 30-year Fixed Conventional rates rose marginally from 3.500% (3.570% APR) to 3.625% (3.663% APR), which shows an increase of less than ⅛ of a point in APR. The 30-year High Balance, Manufactured, Jumbo, and FHA 203k programs similarly showed slight increases. The 15-year Fixed, 30-year FHA, VA, and USDA programs all had numbers unchanged from last week’s rates.

Check out our Mortgage Rate Update page for more information about current mortgage rates.

For a more specific and personalized rate quote, give us a call at 805.543.LOAN!

 

This home lives well! Light, bright and cheery, this well-loved, well cared for home offers plenty. Excellent floor plan with living/dining room, family room with fireplace, four bedrooms, two full baths and a large kitchen with eat in breakfast area. A roomy three car garage for projects and storage plus……your cars! Back yard has high fences for privacy, covered patio, garden shed plus a hot tub. Located in Riverbank, this desirable neighborhood is close to plenty – a great park, walking trails, shopping, schools plus quick freeway access.

This week, the Retail Sales report exhibited the biggest increase since 2011. Sales this holiday season rose 4% from one year ago. Additionally, non-store holiday sales (online and e-commerce sales) rose 6.8% this season. Despite the favorable increase overall, December saw a slowing in consumer spending. However, the National Retail Federation is pleased with the increase in total holiday sales in 2013, and believes that consumers will continue to reap the benefits of an improved job market and low gas prices.

Investors continue to be concerned about the dropping oil prices creating a potentially deflationary environment.  Periods of deflation typically result in falling prices, job losses, and slow growth or depression.  Fueling these concerns was Thursday’s Consumer Price Index (CPI) showing prices declined 0.4% in December following a 0.3% decline in November.  The Federal Reserve target range for CPI is 1.5% to 2.0% annual growth.  These recent readings signal that the Fed will be in no hurry to raise interest rates.

Jobless claims rose from 297,000 in September to 316,000 in the week of January 10, making an increase of 19,000. It is typical for companies to let go of seasonal workers at the beginning of January, but the numbers indicate that there was a higher-than-usual number of firings this year. However, unemployment is still down from previous years, and economists are reporting that the labor market is fine.

The housing market in the U.S. is still on the up-and-up!  According to Trulia, housing is about 75% recovered in total, and the sales and prices of existing homes have contributed the most to the improving numbers. The involvement of the millennial generation (25- to 34-year-olds) is the slowest to recover, as it is only 46% back to normal levels.

Next week begins with a bank holiday on Monday to celebrate Martin Luther King Jr. Day.  Economic news is relatively light for the remainder of the week with only a few housing related reports expected to show continued price and sales gains.

 

Loan Program News

President Obama said Wednesday that the Federal Housing Administration (FHA) will be lowering its annual insurance premiums. As a part of the president’s efforts to “expand responsible lending to creditworthy borrowers,” the FHA will be dropping premiums from 1.35% to 0.85%. Lower insurance premiums should benefit the housing market by bringing more first-time buyers into the fold.

To learn more about options for first-time buyers, visit our FAQ section.

 

Mortgage Rate News

Mortgage rates are continuing to steadily decrease this week. The 30-year fixed dropped from 3.750% (3.766% APR) to 3.500% (3.570% APR) and the 30-year manufactured went from 3.750% (3.930% APR) to 3.625% (3.688% APR) between January 12 and 15. That’s a nice drop for only one week!

Freddie Mac has a weekly survey that tracks general rate movement across various lenders. The survey results for a 30-year fixed loan are portrayed in the graph blow:

 

Call us today at 805.543.LOAN to discover your personal mortgage options!

This past week brought us favorable reports regarding the job market. According to the Bureau of Labor Statistics, 252,000 jobs were added in December, which is significantly more than the 240,000 jobs that economists had predicted would be added.  October and November job gains were also revised higher by 50,000.  Over the last months of the year, monthly job gains averaged a robust 289,000.  In total, nearly three million jobs were added in 2014!

Additionally, the unemployment rate fell to 5.6%, the lowest rate since the recession. This is a considerable decrease from last month’s 5.8% unemployment rate, and is significantly closer to the Federal Reserve’s target range of 5.2-5.5% unemployment, a range consistent with full employment.

Despite such a decrease in the unemployment rate, wage growth hasn’t followed suit, and worker wages have actually declined. In December, hourly earnings declined by 0.2% to an average of $27.54 per hour. In November there was a 0.2% increase in average earnings, but as you can see, the trend did not continue.  Overall for 2014, average worker wages increased a mere 1.65%, just in line with inflation.

Regardless of the recent decline in wages, economists are predicting a more substantial wage growth in 2015. The low unemployment rates and the fact that 21 different states are raising their minimum wage this month may both point to the acceleration of wages in 2015.

Falling oil prices seem to be causing some concern among investors lately. People are afraid that the lower cost of gas is a sign that deflation may be coming. As a result, S&P 500 saw a drop of 0.7% last week, and 1.7% the previous week. However, according to a Bloomberg post, the markets are undecided on whether this is positive for consumers and the economy, or if it tells of upcoming financial strain.

This week will feature a report on Retail Sales figures.  We are anticipating news about the significant increase in retail sales and during the holidays, especially in comparison to last year’s Holiday retail sales numbers. So far, ShopperTrak, who compiles data from retail stores’ sale logs, has reported that holiday sales increased 4.6% compared to 2013. The low gas prices are likely one reason for this increase in consumer spending. Producer and Consumer Price reports are also due out later in the week.  Inflation seems to be running below the target numbers, which should continue to keep rates low.

 

Loan Program News

Interest rates continue to fall!  If you purchased or refinanced your property in the last 18 months it’s time for a mortgage check-up to see if you can save money or shorten your loan term.

President Obama announce this past week a significant reduction to the monthly mortgage insurance premium for FHA-insured mortgages.  This 0.5% decrease combined with the general decline in interest rates will present a great refinance opportunity for all FHA borrowers.

Fannie Mae is offering a new low-downpayment mortgage option for 2015. This new 3% down (97% loan-to-value) option is helpful for homebuyers who would potentially qualify for a loan but are unable to pay a 5% or higher downpayment. This program may also be helpful for homeowners whose homes have lost value, but still do not qualify for the Home Affordable Refinance Program (HARP).

Consider visiting our FAQ section to learn about our Homestyle Mortgage program which allows you to purchase or refinance while also financing desired home improvements.

 

Mortgage Rate News

Rates have fallen to levels not seen since May 2013. This week’s rates are keeping pretty consistent with last week’s rates. The 30-year fixed continues to be around 3.75% (3.77% APR) to 3.88% (3.89% APR), while the 30-year FHA ranges from 3.25% (5.34% APR) to 3.50% (5.56% APR).

These rates were determined with the following loan parameters: the 30-year fixed had a $522,000 purchase price and a $417,000 loan amount; the 30-year FHA had a $432,124 purchase price and a $417,000 loan amount.

If you are interested in visualizing the rate movement, take a look at Freddie Mac’s weekly survey on mortgage rate movement here.

With these low rates, now is a great time to give us a call and learn about how you can benefit from refinancing. Call us at 805.543.LOAN.

Happy New Year! Let’s catch up on holiday season economic data releases…

Manufacturing activity dipped slightly month-over-month to end 2014, although it was the 19th consecutive month that the sector logged an expansion. Orders dipped as companies anticipated the effects of lower energy prices, according to a Bloomberg News overview on the subject. Click here for more.

New jobless claims ticked up by 17,000 to 298,000 for the week ending December 27. The final 2014 four-week average of 290,750 is a healthy number, especially because 2014 opened with an average of 346,000.

And speaking of positive numbers from 2014, last year, payrolls added the most jobs since 1999… through 11 months. We will see just how many jobs 2014 added this Friday (January 9th) when the December employment report is released.

The S&P 500 opened 2015 with four-straight “losing” days, thus breaking a streak of 264 trading days without a four-day losing streak – the longest such streak in 87 years. We wrote that sentence as a mouthful on purpose: news networks can make a statistic out of anything to grab attention.

(In other words, don’t be alarmed by the news. This decline doesn’t mean we are in for bad times. Actually, analysts predict gains for stock indexes in 2015).

In general, stock indexes had a strong 2014. The S&P 500, for example, rose 11% in 2014, and reached several all-time record highs in December.

Loan Program News

Nothing major to report on the loan program front. As we discuss in the mortgage rate section below, interest rates dipped nicely to end 2014. Check out our website’s FAQ section to learn more about the rate lock, the floating rate lock, and “why mortgage rates move.”

If the issue keeping you for homeownership is downpayment, check out our “low down payment” guide and our “first-time home buyers” guide for qualification tricks (your down payment can be as low as 0%). Don’t disqualify yourself from the couch!

 

Mortgage Rate News

The 30-year fixed enters 2015 in the 3.75% to 4.00% range. All in all, 2014 was a great year for mortgage rates.

We speak about “mortgage rates” generally, but the actual rate that each borrower will obtain varies based on credit profile, down payment, desired out-of-pocket closing cost (buyers can pay more for a lower rate), loan program, lender used, and more.

Two quick methods used to track broad rate movement is the 10-year U.S. Treasury bond yield, and Freddy Mac’s 30-year fixed mortgage rate tracker.

When the 10-year yield drops, expect mortgage rates to improve. The 10-year Treasury bond yield began 2014 at 3.00%, dropped to 2.58% by July 1, and finished 2014 at 2.17%.

Freddie Mac’s weekly survey, meanwhile, tracks general on-the-ground rate movement across a portfolio of lenders. The 30-year fixed movement in 2014 can be seen below:

Nice drop!

Another way to track rates, of course, is just to sign up for the CCL Rate Tracker. We will do the work for you! Email rylan@CentralCoastLending.com the test “mortgage rate tracker” to receive an update every two weeks.

For a more specific rate quote, give us a call at 805.543.LOAN (the quote is free and honest!).