San Diego Mortgage rates improved a few basis points yesterday due to a large sell off in the stock market. Our European neighbors are suffering through their own economic crisis and this is causing foreign investors to seek refuge in what is still considered the safest bet in the world:  US Treasuries.  As investors sell their stocks to buy bonds this so called “flight to safety” into the bond market helped mortgage-backed securities prices move higher and as MBS prices rise rates fall.

This morning the monthly unemployment report came out. This is the most important piece of economic data released to the market because consumer spending is what drives our economy and market participants track jobs as a way to gauge consumer demand and economic activity.   High unemployment is bad for stocks and good for mortgage rates.  The national unemployment rate came in at 9.7% which was better than expected but the crisis in Europe seems to have overshadowed this positive news leaving San Diego mortgage rates virtually unchanged.

My wholesale lenders issued rate sheets slightly better but mostly unchanged from yesterday afternoon.  The 30 year fixed rate mortgage remains in the 4.75% to 5.00% range for well qualified borrowers.  Well qualified assumes a FICO credit score of 740, a loan to value at 80% and pay all closing costs including one point loan origination.   Check back frequently for news affecting San Diego Mortgage rates!

San Diego mortgage rates improved modestly yesterday but my wholesale lenders did not issue rate sheets with any improvements due to several factors causing them to hold back.  Mortgage backed securities prices remained in a narrow range and most lenders were waiting for the end of the FOMC meeting today at 2:15pm eastern time. This was a major event that always has the potential to move interest rates in either direction and in fact it did! First let’s look at some other events this morning.

The Mortgage Bankers’ Association released their weekly applications index which covers over 50 percent of all US residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts.  This gives economists a look into consumer demand for mortgage loans. More loan applications indicates an increase in home buying interest which is  a plus for the housing industry and economy.  Additionally, when rates are low an increase in applications implies consumers are refinancing for lower housing payments which can result in increased disposable income and this disposable income trickles back into the economy.

The report indicated a 3.3% decline in purchase application activity and a 15.1% decline in refinances from last week and in my opinion is primarily due to the recent tightening of lender guidelines making it harder for borrowers to qualify for a loan.  Keep in mind, San Diego mortgage rates are in the low 5% range and historically near a 50 year low. This tightening of guidelines is ahead of the Fed’s intentions to exit the MBS market in March and in fact will help the FED to exit the MBS market more smoothly.  In simple terms the weakness in the labor market and the refinance surge over the past year along with tighter guidelines has resulted in a smaller pool of qualified borrowers so loan production will be slow enough to allow the FED to exit without causing any major market disruptions.

Also today we had the New Home Sales survey showing sales in November fell by a much larger than expected 11% to an annualized pace of 355,000 sales.   Economists expected December’s report to post an increase in new home sales to an annualized pace of 370,000 sales.

The report indicated New Home Sales in December were much worse than expected. Sales fell 7.6% to an annualized pace of only 342,000.  Helping to offset the negative report was the prior month’s report was revised higher to 370,000. The seasonally adjusted estimate of new houses for sale at the end of December was 231,000. This represents a supply of 8.1 months at the current sales rate. An estimated 374,000 new homes were sold in 2009. This is 22.9% below the 2008 figure of 485,000 and a record low for annual new homes sales yet the median sales price of new houses sold in December 2009 was $221,300, an increase of $11,000. The average sales price was $290,600, an increase of $20,600.

Now onto the FOMC Statement. Drum roll please…………….    San Diego mortgage rates moved higher after the statement!!

There actually was not much difference from the December statement. The Fed  still showed a bias towards a positive economic outlook,  they didn’t show any change towards their stance on exiting the MBS purchase program in March but some district voters were against continuing a low interest rate policy citing beliefs that  the economy no longer needs such a low level of fund rates to support it.  The market didn’t like this and MBS prices quickly fell causing lenders to hike rates. 

My wholesale lenders issued rate sheets worse than yesterday. The 30 year fixed rate mortgage remains in the 5% to 5.25% range for well qualified borrowers. Well qualified assumes a credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs. Check back frequently for news affecting San Diego mortgage rates!

As of last Friday San Diego mortgage rates were at their lowest point of the new year as most lenders were offering 4.75% for a 30 year fixed rate loan.

This week has a number of rate influential data ahead. There is a meeting of the Fed , $118 billion in Treasury auctions, several housing market indicators, and a report on Gross Domestic Product.  All of these reports or events have the potential to move interest rates.

The only report today was Existing Home Sales. This report shows the number of sales closing in the prior month so today’s report covered  sales that closed in December 2009.  December’s sales came in at an annualized rate of 5.45 million units which was down from November’s annualized rate of 6.54 million units. This was the biggest one month drop since 1968. To add insult to injury the supply of homes rose from 6.5 months in November to 7.2 months supply in December and not surprisingly San Diego mortgage rates were a little worse today.

Tomorrow  we’ll see the S&P Case-Shiller Home Price Index that tracks the monthly change in home values across the country.  All eyes will be on this data since many believe that until home prices stabilize and start to increase, it will be very difficult for our economy to sustain growth.   Tomorrow also brings a Consumer Confidence report, a 2 year note auction totaling $44billion, and the beginning of the Fed’s two day meeting.

Wednesday brings more home sales data with the weekly Mortgage Bankers’ Associations Application index and New Home Sales followed by an auction of $42billion in 5 year treasury notes.  At 11:15am  Pacific, the Fed Statement will be released. This statement sets the Federal Fund rate and gives an economic outlook and announces any changes to existing programs such as the MBS buying program.

Thursday brings us Durable Goods Orders, Jobless Claims and $32billion of 7 year notes to be auctioned while Friday is the gross domestic product report (GDP), he initial estimate of fourth quarter growth and a report on consumer sentiment.

My wholesale lenders issued rate sheets  @ 1/8 to 1/4 worse than Friday.   The30 year fixed has risen to the 4.875% to 5.125% range for well qualified borrowers. Well qualified assumes a credit score of 740 or higher, a loan to value at 80% or less and an estimated one point fee.  Check back frequently for news affecting San Diego mortgage rates.

San Diego Mortgage rates have been holding in a sideways pattern to start off  this shortened week and didn’t react much to the NAHB/Wells Fargo Housing Market Index which showed a three point decline in the West echoing continued concerns about the poor job market and large number of foreclosed homes for sale.  This builder survey rates traffic of prospective home buyers, current sales and expectations of future sales and scores for each component are then used to calculate the index.  Any number over 50 indicates that more builders view sales conditions as good than poor. In January the West region index fell to 16, three points lower than December of 09 but up from a score of 5 in January of 09.

National Association of Home Builders Chief Economist David Crowe had this to say:

“Home buying conditions have rarely been as good as they are right now, but consumers are still waiting to see significant positive signs of improvement in employment and confidence, and this is slowing buyers’ return to the market” …  “Meanwhile, competition from foreclosed homes is also severely impacting new-home sales. That said, expected improvement in the job market this spring will help propel the housing recovery as we head into the prime home buying season.”

For the week ahead,  tomorrow  data picks up with the weekly Mortgage Bankers Associations Application Index followed by Housing Starts which will give market participants a look into the strength of the housing sector.   We also get a reading on inflation with the Producer Price index which tends to be a big mover of San Diego mortgage rates. Thursday brings us the weekly jobless claims and on Friday we have no economic reports.

My wholesale lenders issued rate sheets that were unchanged from Friday. The 30 fixed rate mortgage remains in  the 4.875% to 5.125% range for well qualified borrowers.  Check back frequently for news that affects San Diego mortgage rates!

San Diego mortgage rates moved slightly higher last week despite worse than expected employment data. There are no reports on the economic calendar today but the week ahead will have some items of interest that may move rates.  To help readers make sense of these reports and how they affect rates a good rule of thumb is that worse than expected economic data benefits fixed income securities like bonds and mortgage backed securities (MBS) while better than expected data benefits the stock market.

Throughout the week the government will auction @$75 Billion in new debt.  Continued strong demand for our nation’s debt will help to keep rates low! On Wednesday the Mortgage Banker’s Association will give us a look at their mortgage application index. This will help us gauge demand in the housing sector since the report distinguishes between refinance and home purchase applications.  The 3 reports most likely to move San Diego Mortgage rates are the retail sales and jobless claims reports on Thursday and the consumer price index on Friday.  Our economy is based on consumer spending and both retail sales and jobless claims speak directly to that factor. Higher retail sales and lower jobless claims means more Americans are working and spending!  On Friday the consumer price index will help gauge inflation which is perhaps the #1 factor the Fed uses when setting interest rates. If consumer prices are higher than expected the government will raise rates to slow things down.

My wholesale lenders issued rate sheets that were basically unchanged from Friday.  The 30 fixed rate is  in the 4.875% to 5.125% range for well qualified borrowers.  Well qualified assumes a credit score of 740, a loan to value at 80%  and one point loan origination.  You may elect to pay less in upfront fees, but you will have to accept a higher interest rate. Check back tomorrow for news affecting San Diego mortgage rates!

San Diego mortgage rates remain unchanged after the December employment report announced a loss of 85,000 jobs. This was much worse than expected and put the national unemployment rate at 10%.  This was in contrast to November of 2009 where 4000 jobs were created and that was the first month since December of 2007 that we actually gained jobs vs. losing jobs.  Ironically, bad news in the labor market translates to good news for San Diego Mortgage rates. Less jobs means less consumer spending which in turn keeps price inflation in check. This is good for rates because the first thing the Fed does when they fear inflation is jack up rates to slow things down.

So what can we take from this report? Although the economy has stabilized we are not out of the woods and it is too soon to say we are in recovery. My heart goes out to the families affected by December’s loss of 85000 jobs but had we seen a better than expected report it may have put pressure on the Fed to raise rates over inflation worries. When the Fed raises rates it leads to higher consumer costs,  lower consumer spending and a further slow down in our economic recovery.

Most of my wholesale lender issued rate sheets unchanged from yesterday. The par 30 year fixed rate is in the 5.0% – 5.125% range for highly qualified borrowers. Highly qualified assumes a credit score of 740, loan to value of 80% and pay one point loan origination.   Have a great weekend and check back Monday for updates on San Diego Mortgage rates.

San Diego mortgage are in a sideways pattern this week ahead of tomorrow’s release of non farm payroll numbers. Inflation remains the top concern of economists and mortgage backed securities traders.  The jobless claims report came out today showing first time unemployment claims rising by a modest .25% which was better than expected and those who continued to receive benefits fell by 165,000. There are still 5.5 million people out of work and collecting benefits so be thankful if your are one of the fortunate ones with a stable job!

Most of my wholesale lender issued rate sheets that were slightly worse from yesterday. The par 30 year fixed rate is in the 5.0% – 5.125% range for highly qualified borrowers. Highly qualified assumes a credit score of 740, loan to value of 80% and pay one point loan origination.   Check back tomorrow to see how the payroll numbers affect San Diego Mortgage rates.

To better understand where San Diego mortgage rates are headed we have to look at various factors in the economy. Pending home sales is one of those key factors and the data released today by the National Association of Realtors which covers pending sales in November 2009 reported a national average decline of 16% when compared to October 2009. The silver lining for those of us in San Diego is that regionally the West was only down 2.7% from October to November of 2009 and pending sales were 21.4% higher than November of 2008.

Seasonally this time of year is slow but we can expect an increase in activity in early spring as people rush to take advantage of the expanded home buyer tax credit. This tax credit has been key in keeping San Diego mortgage rates low.  In order to take advantage of the home buyer tax credit you have to be under contract by 04/30/2010 and close by 06/30/2010, be either a first time home buyer or a repeat buyer who owned their previous residence for at least 5 years. First timers get a credit of up to $8000 and repeat buyers get a credit of up to $6500.  One thing to note is that repeat buyers do not have to sell their current residence so long as they plan to occupy the newly acquired property as their primary residence.

Many of my wholesale lenders have issued rate sheet price improvements today. The 30 year fixed is back down to the 4.875% -  5.125% range for well qualified borrowers.  Well qualified assumes a credit score of 740 or higher, loan to value at 80% or less and 1% loan origination fee.  Check back frequently for news affecting San Diego Mortgage rates.

Today marks the first Monday of the new year and San Diego mortgage rates started off the day trending lower following two key reports on manufacturing and construction spending.  First, the Institute for Supply Management manufacturing index came out better than expected.  This report is important as it gauges strength in the manufacturing sector.  Improvement in this sector translates to lower unemployment figures as manufacturers create more jobs to keep up with increased output.  An improvement in unemployment will be key to sustaining the economic and housing recovery started in 2009!

Next out was construction spending data which showed the lowest level since 2004 and the seventh straight month of decline. In order for this trend to reverse businesses and consumers are going to have to feel more confident about their financial positions and job security. Another factor that remains to be seen is what will happen as banks repay their TARP funds and start to release the next wave of foreclosure inventory into the supply side of the market.

So far the Fed has indicated it will keep it’s key rate at or near zero which bodes well for San Diego mortgage rates. After this news the yields on mortgage backed securities and Treasuries alike edged higher allowing lenders to offer lower rates. This morning my wholesale lenders confirmed this by issuing improved rate sheets with a  30 year fixed in the 5.00 to 5.25% range for highly qualified borrowers with a credit score of 740, loan to value at 80% and 1% origination/discount.

Check back frequently for updates on news that affects San Diego mortgage rates.