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.
Call us at 805.543.LOAN for a free personalized rate quote!

CCL Market Update: Jobs, Retail Sales, Mortgage Rates, and a Comparison of Coastal CA Real Estate

The jobs report shows an increase in job openings for the end of 2014, which went from 4.847 million in in November to 5.028 million in December. Similarly, the number of hires in December totaled 5.148 million, up from 5.054 million in November, and the highest number of hires since November 2007. The rise in job openings and hires portrays a slowly improving job market in the U.S.
Retail sales in January fell more than expected, down 0.8%, after declining 0.9% in December. Analysts had previously predicted a fall of only 0.5%. Retail sales are continuing to be impacted by lower gas prices, as well as consumer hesitation to put higher discretionary income into spending.
Consumer sentiment in the U.S. declined in February for the first time in 7 months. According to the University of Michigan, the final sentiment reading for January was 98.1, the highest in nearly 11 years, but that number decreased to 93.6 in February. One explanation for the curbed consumer optimism is the fact that gas prices began to rise this month from a 6-year low. The concern about job losses among energy workers may have also impacted consumer sentiment.

Coastal Real Estate

Have you ever wondered how real estate on the Central Coast compares to other coastal areas in California? We have compared the 2014 real estate data for the North Coast, the Bay Area, the Central Coast, and the South Coast.



The Bay Area contains the four most expensive coastal counties, making it the most expensive region by an average of $353,000. The Central Coast ranks #3 out of 4 for the highest median home price, putting it comfortably in the middle of the spectrum.
Within each region, home values can differ drastically from city to city. Below we have chosen three coastal cities from each region and compared their median home values.


When comparing the cities of the Central Coast to the other three regions, home values appear to be moderate—not the highest, not the lowest.
Click HERE to read the complete article!

Mortgage Rates

This week brought a bump up in rates for some of the loan programs, while others remained unchanged. Despite the slight rise, rates continue at low levels.
The programs whose rates increased rose 1/8-points; the 30-year fixed rose from 3.625% (3.663% APR) to 3.750 (3.788% APR), and the FHA 203k, high balance, manufactured conventional, and manufactured FHA programs followed a similar suit. We saw little to no movement this week from the 15-year fixed, FHA, VA and USDA loan programs, and the 30-year jumbo displayed a slight decrease compared to the previous week.
Give us a call at 805.543.LOAN to receive your personalized rate quote!

CCL Market Update: Jobs Report, Home Prices, Loan Programs, Mortgage Rates

The jobs report for January exceeded expectations, making U.S. economists thrilled about the strengthening labor market. Payrolls advanced by 257,000 in January, after significant upward revisions in both December and November. After the revisions, the three month-average of 336,000 new jobs added represented the biggest gain in 17 years. Similarly, the number of people who switched from a status of “not in the labor force” to “employed” displayed the largest jump since 1990.

In spite of the large numbers of jobs added in recent months, the unemployment rate edged higher from 5.6% to 5.7% as more and more Americans return to the labor force to look for jobs. While the unemployment rate has fallen dramatically from 10% in autumn 2009, the number of persons employed is barely 2 million higher than it was before the Great Recession began in January 2008.

Another positive from the employment report was that wage growth in the U.S. is picking up. Average hourly earnings increased 0.5% last month for the largest monthly gain since November 2008. That’s a big jump!

A little closer to home, the jobless rate for San Luis Obispo County dropped to 5% in December, down from 5.8% in December 2013 and below the 5.5% reading in November. Gains in leisure and hospitality led job growth followed by the educational and health services industry. Atascadero reported the lowest jobless rate in the county at 4.1%.

January also brought gains in the oil industry. Crude oil displayed the biggest two-week rally in nearly 17 years, jumping 18% in the past 10 trading days. Additionally, the price volatility rose to the highest in approximately 6 years. Companies such as BP and Shell reduced investments, and U.S. drillers pulled more rigs off the oil fields, contributing to the oil rebound.

Home prices are still 13.4% below the April 2006 level across the U.S. Home price increases slowed their pace in December of 2014, rising only 5% from the previous year. However, this slowdown could benefit the housing market this year. Smaller price increases and lower mortgage rates could likely prompt a rebound in home sales for 2015. Although pending home sales fell 3.7% in December, the index experienced its highest year-over-year gain since June 2013, coming in at 11.7%. Economists expect a boost in sales for 2015 due to lower mortgage rates and lower down-payment requirements on mortgages from Fannie Mae and Freddie Mac.

This should be a fairly quiet week with very few economic reports of significance due out. We have Retail Sales and a pair of consumer confidence reports due out later in the week.


Loan Program News

Applications for government-backed loans increased significantly after the FHA announced that annual insurance premiums were being cut by 0.5%. According to the Mortgage Bankers Association, the total volume of mortgage applications increased 1.3% last week compared to the previous week. It is clear that many more people are considering mortgages to purchase or refinance a home due to the drop in insurance premiums, along with down-payments as low as 3.5% on FHA loans and 3% through Fannie Mae.

You should consider refinancing if you have an interest rate above 4%, if you have a loan with mortgage insurance, or if you are interested in getting into a shorter term.


Mortgage Rates

Rates continue to be at the lowest levels in more than 20 months! The average interest rate for a 30-year Conventional Conforming loan declined -4 bps to 3.79%, compared to 4.47% one year ago, according to Freddie Mac. Take advantage of these rates while they’re still low! Call us at 805.534.LOAN for your free customized rate quote!

Central Coast Lending’s current rates for San Luis Obispo County include a 30-year Conventional loan at 3.625% (3.663% APR) and a 30-year FHA loan at 3.25% (4.823% APR). For a more in-depth look at the rates we offer, visit our Mortgage Rates page!

CCL Market Update: Unemployment, Consumer Spending, Housing Market, Mortgage Rates

Last week saw a significant drop in the number of Americans filing jobless claims, falling to the lowest level in almost 15 years. American claims for unemployment benefits dropped by 43,000 to 265,000 for the week of January 24. This is the biggest weekly decline since November 2012, and lowest level since April 2000.

The improvement in the labor market led to a notable rise in consumer confidence for January, its highest level since August 2007. Americans were much more optimistic about the economic outlook this month thanks to money saved purchasing gas, as well as the possibility of better employment prospects due to an improving job market. This is demonstrated by the 4.3% increase in consumer spending in the fourth quarter of 2014, which is the most since 2006. A survey at the University of Michigan showed that more consumers were likely to buy a car than in the last 10 years, and consumers were also more inclined to buy larger household items such as washing machines and vacuum cleaners.

On Wednesday, the Federal Reserve left policy rates unchanged as expected with the fed funds target at a range of zero to 0.25 percent. In their policy statement, they said wage growth continues to disappoint and inflation remains below the 2% target and “is anticipated to decline further in the near term”, suggesting “that it can be patient in beginning to normalize the stance on monetary policy.” The Fed is essentially watching economic developments to see what happens.

Heading into February, we will see a variety of reports important for assessing consumer spending and the direction of the economy. Included are reports on personal consumer income, motor vehicle sales, and construction spending, as well as the always anticipated employment report.


Housing Market News

According to sales reports for the first 3 weeks of January, home prices are 7.6% higher this month compared to the same time last year. While higher home prices are good for those looking to sell, the rising prices combined with the lesser supply of low-end listings have put numerous homes out of reach for some entry-level buyers. This has led a drop in the number of U.S. homebuyers making their first home purchase, bringing the 2014 first-time homeownership rate the lowest in almost 3 decades.

According to DataQuick, in California, the median home price increased by 6.3% to $388,000 in December 2014 compared to one year ago. The number of units sold was up 4.3% year-over-year to more than 36,000. San Luis Obispo County showed more modest gains during the same time period. Home prices rose just 1.1% to $470,000 and total sales actually decreased 1.9%.

While things are looking up heading toward the spring market for 2015, consider this: in order to qualify for home loans, borrowers today need higher credit scores and less overall debt than in the past, as well as complete documentation of finances.


Mortgage Rates

Rates have leveled out this week compared to the slight increase from last week. Mortgage rates for conventional loan programs such as the 30-year Fixed, 15-year Fixed, Manufactured Conventional, and Jumbo, as well as the 30-year FHA, VA, and USDA all remained relatively unchanged from the previous week. The only increases occurred in the 30-year High Balance, which rose to 3.875% (3.903% APR), and the FHA 203k, which went up to 3.375% (4.957% APR).

As a whole, rates in 2015 remain low, as indicated by Freddie Mac’s weekly survey results:


With rates this low, now is the perfect time to consider a home purchase or refinance! Give us a call at 805.543.LOAN to learn about your specialized options.