Real Estate And Market Report January, 16 2012
Maybe I have been out of touch but I have not heard anyone talking about the fact that today is Friday the 13th. Drive home safe and don’t walk under any ladders today!
Mortgage rates once again remain at record lows for the 6th straight week. Now that the holidays are over, it seems like mortgage financing is once again ticking up. Purchase applications increased 8.1% last week while refinances rose 3.3%. Rates may be on the rise, not because of the market, but because of the government and large national lenders. What many people either don’t know, or don’t understand, is that the recent payroll tax extension that Congress passed, also contains what is essentially a tax on mortgages. The government, in order to try and offset some of the cost of the payroll tax extension, they increased by 1/10th of 1% what is called a “guarantee fee” that Fannie Mae and Freddie Mac charge on mortgage they purchase. As much as this increase is being charged by Fannie and Freddie, this money is going straight to the government. It is in essence a tax on mortgages. This fee of course will be passed on to consumers raising the cost of borrowing.
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On a side note, normally I would have said that the 1/10th increase is not a big deal, however on January 9th, one of the nation’s largest banks, who shall remain nameless, announced that they are not going to settle for just collecting the additional 1/10th…they are going to collect and additional .5% to .8%. That is equivalent to a rate increase on mortgages of at least a ¼ of a percent. I don’t know about you, but I am pretty confident that other major lenders will follow their lead.
First Time Jobless Claims reversed their recent trend of week over week declines and jumped up by 24,000 all the way back up to 399,000. This should not be a surprise in that employers will often slow down layoffs during the holiday season. I don’t believe that this is a real trend of un-employment getting worse. In my opinion this increase is an adjustment for the holidays.
The U.S. auto industry is back on its feet in a big way. GM is once again the world’s largest seller of automobiles. Auto sales overall have been strong in recent months and the trend appears like it will continue. Outside of auto sales, the retail sales report was basically flat.
Market news for next week is:
· Wednesday January 18th – MBA Mortgage Report, Producer Price Index, and Industrial Production
· Thursday January 19th - First Time Jobless Claims, Housing Starts and Consumer Price Index
· Friday January 20th – Existing Home Sales
As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate information. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at 661-505-4300.