This week marked more good economic news! Real
Estate related news began Tuesday when NAR reported March resale number
of homes under contract Rose 7% from March 2012.
Stocks soared
today after a much stronger than expected jobs report. The economy
added 165,000 nonfarm payroll jobs. The unemployment rate fell to 7.5%, a
4 year low. The DOW and S&P are on track to end the week up almost
2% and the NASDEQ up 3.3%. Finally, this is starting to
shape up as what a recovery looks like! Stocks also were up with the
S&P500 ending the month of April at a record high. The major markets
finished April with the DOW up 13.3, NASDEQ up 10.2% and S&P up 12%
for the year. This run up has been a result of higher than expected
earnings, dropping unemployment, robust home sales, rising home prices,
dramatically fewer foreclosures, and rising consumer confidence.
As the economy improves, demand for loans increases, and interest rates
rise. Rising rates, in turn, drive down the price of bonds. The yield
hit 1.75% today as investors jumped into stocks and out of bonds.
Minutes from the Federal Reserve meeting last month indicated that
policymakers seemed headed to winding down their bond purchasing before a
weak March jobs report took them by surprise. They will continue
purchases of Treasury’s and agency mortgage backed securities until the
outlook for the labor market has improved. If the outlook for labor
market conditions improve as anticipated, the Fed will then decrease
purchases of massive bond buying in the year and stop them by year-end.
If the Fed does in fact try to pull-out and exit the $85 billion bond
buying program because the program has either been deemed a success or
has become ineffective, it is possible the Fed will face many unintended
consequences.
The latest GDP report confirmed that the Housing Sector has become an important contributor to the economic recovery.
Residential fixed investment added to overall economic growth over the
past eight consecutive quarters and contributed more than 0.3 percentage
points in growth over the first three months of this year. Moreover,
near record low mortgage rates should further drive the housing market
recovery over the near term.
So where are we now with rates??
This week rates are falling for all types of mortgages, and the average
15-year fixed loan has hit an all-time low of 2.56%, for a second
straight week, dropping from 2.61%, both better than the previous low
mark of 2.63% set in November. A year ago the 15-year rate stood at
3.07%. The 30-year fixed has now dropped for a fifth straight week to
3.35%, from 3.40% a week ago. After rising as high as 3.63% in March,
the rate is again honing in on the 3.31% all-time low seen last
November. A year ago the same rate averaged 3.84%.
The five-year ARM sank to 2.56% with an average 0.5 point.
It was down from 2.58% a week ago. The one-year ARM dropped to 2.56%
with an average 0.3 point. It was down from 2.62% a week ago.
This
week marked the *FIRST TIME* in history the 15-year fixed, five-year ARM
and one-year ARM all averaged the same percentage. This week mortgage
applications showed a slight uptick and the refinance share of mortgage
activity remained unchanged, accounting for 75% of total applications.
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