CCL Market Update: Home Sales & Prices, Nonbank Lenders vs. Big Banks, Mortgage Rates

The past week of economic news was relatively light, with much of it focusing on the housing market. House prices were on the rise in February, according to the Federal Housing Finance Agency’s Home Price Index. After a 0.3% gain in January, February house prices increased by 0.7%. The year-over-year price increase was also favorable at 5.4%, compared to 5.1% in the previous month.

Existing home sales saw a 6.1% increase in the month of March to a 5.190 million annual rate. This is near the high end of analysts’ expectations, and is the best rate since September 2013. Single-family home sales increased by 5.5% to a 4.590 million rate, and condo sales had a whopping 11.1% gain to a 600,000 rate. The median price for existing homes in March was up by 5.1% to $212,100, and the year-over-year median had an increase of 7.8%, the best reading since February of last year. Market analysts predict that the improvement in prices for existing homes will help bring more homes into the market, and consequently boost future sales.

New home sales did not follow the upward trend of existing home sales in March, with a drop in sales of 11.4% to a 481,000 annual rate, although 4,000 new homes came into the market over the course of the month. The median price for new homes fell by 1.5% to $277,400 in March, and the year-over-year median price also dropped by 1.7%, which continues to point to weakness on the new homes market.

Nonbank Lenders vs. Big Banks

Spring is bringing an increasing number of homebuyers this year, however, big banks are losing market share, which continues to open the door for the independent, nonbank lenders.

According to the Mortgage Bankers Association, volume and profit of these nonbank lenders are up significantly from a year ago, especially their share of all lending numbers. A publication from Inside Mortgage Finance reported that nonbank lending rose to 37.5% of the market during 2014, up from 13% back in 2012. Editor Guy Cecala said that this can be attributed to “a combination of nonbanks being more aggressive, both in terms of rates and underwriting, and large banks pulling back slightly in the conforming markets.”

Those leading nonbank lending growth include Quicken and Penny Mac, as well as other smaller nonbanks, like SLO County-based Central Coast Lending. Read the full article HERE.

Mortgage Rates

National mortgage rates continued to display downward motion over the past week. According for Freddie Mac’s weekly mortgage rate survey from April 23, the average rate for a 30-year fixed conventional loan is 3.65%, slightly down by 2 basis points from last week’s average of 3.67%. This is the lowest 30-year conventional average rate since mid-February. Overall, rates for most loan programs remain near their 2015 lows.

Local rates have increased slightly, but still remain low. The 30-year fixed conventional went from 3.664% APR to 3.674% APR over the past week, an increase of 10 basis points. The 30-year High Balance, FHA 203k, and Jumbo programs also had higher APRs this week, with increases ranging from 7 to 116 basis points. The 15-year fixed conventional, 30-year FHA, 30-year VA, and 30-year USDA programs all remained unchanged. Visit our Mortgage Rate Update page for more on current local mortgage rates.

With rates near the lowest levels this year, now is a great time to consider a home purchase or refinance! Give us a call at 805.543.LOAN to discuss your mortgage options.

New Listing! 946 Bluebell, SLO


This single level 2 bedroom/2 bath condo is just a short distance from French Park, shopping and restaurants. Large open kitchen adjacent to dining area and large living/family room with vaulted ceilings and lots of windows and light. Inside laundry area and large gardens to enjoy in the privacy of your own yard.The 2nd garage has recently been used as an office, and is not included in the square footage of the home. New carpet and paint make this move in ready and clean as a whistle.

CCL Market Update: Retail Sales, Housing Statistics, Fed Rate Hike Predictions, Mortgage Rates

Retail sales for March showed improvement compared to previous months, likely due to improvements in weather conditions. March retail sales increased by 0.9% after dropping 0.5% in February. The Beige Book reported that 5 of the 12 Districts saw moderate expansion, with some improvement in retail and auto sales, as well as in the labor and real estate markets. The report noted that Districts generally reported stable or modestly increasing overall price levels.

Jobless claims have increased slightly over the past week. Claims in the April 11 week rose by 12,000 to a level of 294,000, up from 282,000 in the previous week. This produced little change in the 4-week average, which rose slightly to 282,750. This is still nearly 25,000 below levels from a month ago, and points to improvement for the upcoming April employment report. The unemployment rate for insured workers remains unchanged at 1.7% for the third week straight.

Data for housing is pointing to strength in the spring market. The Housing Market Index is up 4 points to 56 so far in April, compared to 52 in March. The expectations component of the index came in strong at 64 for April, a reflection of strong optimism among homebuyers. Present sales are up to 61, an increase of 3 points since March, which hints at increasing strength for new home sales this month. Buyer traffic also increased this month to 41, up from the recent low of 37 in March. The buyer traffic component continues to be stunted by the lack of first-time buyers in the market.
Housing starts are beginning to rebound, but at a sluggish pace. March starts went up a monthly 2.0% after dropping a monthly 15.3% in February, and housing permits saw a decrease of 5.7% after February’s 4.0% gain.

Foreclosures increased by 20% to a total of 122,060 for the month of March, according to a report from RealtyTrac. This increase pushed overall foreclosure activity up 4% from year-ago levels, creating the first annual rise since September 2010. RealtyTrac Vice President Daren Blomquist noted, “The March increase in continued cleanup of distress still lingering from the previous housing crisis; not the beginning of a new crisis by any means… We would expect to see more noise in the numbers over the next few months as National foreclosure activity makes its way back to more stable patterns by the end of this year.”

A huge number of economists have changed their predictions for when the Federal Reserve will raise rates. 71% of economists now predict that a rate hike will not occur until September after the Fed’s late-summer meeting, up from last month’s level of 32%. Only 12% of economists continue to predict a June rate hike, down from 45% in March. This is a reaction to the Fed’s recently lowered expectations for economic growth. Back in December, the Fed estimated 3% growth for 2015, but they are now estimating 2.3% to 2.7% growth after their March 17-18 meeting.

Mortgage Rates

According to Freddie Mac’s weekly survey, average mortgage rates are largely unchanged within the past week. Rates remain near their 2015 lows: The 30-year fixed average reported April 16 came in at 3.67%, up only 1 basis-point from the previous week, and only 8 basis-points above the 2015 lowest rate. The average 30-year fixed from the same time last year was 4.27%.

Freddie Mac deputy chief economist Len Kiefer commented on the most recent survey results, saying, “Mortgage rates were little changed following a light week of economic reports and remaining low at the spring homebuying season. Of the few releases, the advance estimate of retail sales rebounded 0.9 percent in March though slightly below market expectations. Meanwhile, the National Association of Home Builders/Wells Fargo Housing Market Index jumped 4 points to 56 in April, suggesting home builders are optimistic and the housing market will continue to strengthen in 2015.”

Local mortgage rates for most loan programs saw little to no change over the past week. The high balance, manufactured conventional, and manufactured FHA all decreased by nearly 1/8 of a point, and the 30-year fixed and FHA 203k programs decreased by 33 and 21 basis points, respectively. The remaining loan programs remained unchanged and the 30-year FHA program has had no APR change since March 3!

As rates remain low, now is a great time to consider a home purchase or refinance! Give us a call at 805.543.LOAN for a free, customized rate quote.

CCL Market Update: Jobs Report, Consumer Comfort, Mortgage News & Rates

A relatively quiet week of economic news yielded minimal movement in the interest rate market and some positive movement in the equities markets. Here’s a recap of some of the news items that we were paying attention to:

The JOLTS (Job Openings and Labor Turnover Survey) report for February was released last week, and the numbers were relatively unchanged from the January report. There were 5.133 million job openings on the last business day of February, with a job openings rate of 3.5%. Although this was only a slight increase from January’s 4.965 million job openings, February boasted the highest level of job openings since January 2001. There were 4.916 million hires in February, a rate of 3.5%, which was barely changed from January. There was also little variation in the number of quits and layoffs in February. There were 2.7 million quits during the month, a rate of 1.9%, and there were 1.6 million layoffs, a rate of 1.1%.

In the week ending April 4, Jobless claims rose slightly by 14,000 to 281,000 after a decline of 21,000 in the week prior. Despite the increase in claims, the four-week average moved lower for the third straight week, down by 3,000 to 282,250 claims. This is more than 20,000 below the reading from a month ago. The continued downward motion of the four-week average hints at an improved April employment report.

Consumer confidence continues to improve as Americans begin to view the US economy in a more favorable light. The Bloomberg Consumer Comfort Index ascended to a level of 47.9 in the week ending April 5, the highest level since May 2007. Americans’ attitudes regarding the economy are the most optimistic in nine weeks.

This week should prove to be more exciting with readings on Retail Sales, inflation reports, Housing Starts, Beige Book and Leading Economic Indicators. We will also hear from a number of the Federal Reserve regional Presidents.

Mortgage News & Rates

Mortgage applications for home purchases are up for the third straight week. The week ending April 3 showed a 7.0% increase in purchase mortgage applications, now at the highest level since July 2013. The year-over-year index is up 12.0%. The refinancing index had been very strong over the last couple of weeks, but fell 3.0% in the latest report. Low rates continue to be a key factor in the increasing number of mortgage applications.

Nationally, mortgage rates are dropping once again, according to Freddie Mac’s weekly survey. The average rate for a 30-year conventional loan is at 3.66%, down from the April 2 rate of 3.70%, the lowest rate in nearly 10 weeks.

Local mortgage rates remained relatively unchanged over the past week. The 30-year fixed APR increased slightly by about 17 basis points, while the remaining conventional loan programs saw no change. Most of the government loan programs also remained static, with the exception of the FHA 203(k) program, which dropped by only 2 basis points. Visit our Mortgage Rate Update page for more information.

As rates remain on the low end, now is a great time to consider a home purchase or refinance! Give us a call at 805.543.LOAN for a free, customized rate quote.

CCL Market Update: Employment Report, Construction Spending, Consumer Comfort, Mortgage Rates

Reports on employment were abundant over the past week. The number of jobless claims decreased by 20,000 to 268,000 in the March 28 week. Apart from the 267,000 reading in week of January 24, this is the lowest number of jobless claims since April 2011. As was expected, the unemployment rate is holding steady at 5.5%.

The number of payroll jobs increased by 126,000 in March after an increase of 264,000 in February and 201,000 in January. March’s numbers fell short of the 247,000 increase expected by analysts as employers added the fewest number of jobs since December 2013. There is speculation that this slowing in the addition of new jobs could prevent an earlier rate increase by the Fed, especially if job creation numbers continue to come in lower than expected. On the other hand, Omair Sharif, rates sales strategist at Societe Generale in New York, remarked, “Hiring just took a breather. I wouldn’t read this as anything other than that.” He went on to predict that job growth “should get back on track in the second quarter.”

On the up side, average hourly earnings rose by 0.3% last month, surpassing the 0.2% increase that had been previously forecast; this is a 2.1% increase from a year ago.

Construction spending dipped 0.1% in February after falling 1.7% in January. Expectations were for a 0.2% increase. Despite this drop in spending, total outlays were up 2.1% in February on a year-ago basis, compared to the 1.4% increase in January. Analysts believe that adverse weather in some parts of the county could be affecting construction numbers.

American consumer comfort levels rose for the third straight week in the week ending March 29, finishing off the best quarter in nearly 8 years. Bloomberg’s Consumer Comfort Index rose to 46.2 the last full week of March from 45.5 the prior week, making it the second highest reading since July 2007. According to Bloomberg, Americans’ views of their finances and the buying climate have been boosted by greater purchasing power. Consumers may be more motivated to spend as the stronger dollar makes imported goods less expensive and gas prices creep lower. Consumer spending makes up about 70% on the U.S. economy, and is primarily supported by better employment opportunities and buying conditions.

Mortgage News & Rates

Mortgage applications are up for the second week straight, according to data from the Mortgage Bankers Association. Purchase applications rose by 6.0% in the March 27 week, while refinancing applications went up by 4.0% the same week.

National mortgage Rates increased very slightly this week, but continue to remain low. Freddie Mac’s weekly mortgage rate survey reported the average rate for a 30-year fixed rate mortgage was at 3.70% on April 2, up 1 basis point from 3.69% on March 26.

Here on the Central Coast the majority of the loan programs saw no movement since March 25, with the exception of the 30-year conventional, 30-year high balance, and 30-year FHA 203k programs, which all displayed slight increases. Despite the slightly higher rates in the latter three programs, rates continue to be significantly lower than the same week one year ago; the current rate for a 30-year fixed conventional loan is 3.625% (3.680% APR) compared to 4.500% (4.524% APR) one year ago. Similarly, the current rate for a 15-year fixed conventional loan is 3.125% (3.195% APR) compared to 3.500% (3.530% APR) the same week last year.

As rates remain on the low end, now is a great time to consider a home purchase or refinance! Give us a call at 805.543.LOAN for a free, customized rate quote.