The Freddie Mac Weekly Primary Mortgage Market Survey showed the 30-year fixed rate unchanged from last week’s 4.57%. The 15-year rate also held perfectly steady at 3.59%, the same as last week. A year ago this week according to the survey, the 30-year rate was at 3.55% while the 15-year rate was at 2.85%. Jumbo 30 year loans are around 5 1/8% and jumbo 15 year loans are around 4 1/8%.
Although there is so much concern about interest rates, it’s important to remember that rising interest rates are a sign of the economic rebound. Which would you prefer, low interest rates with a bad economic outlook, dropping home prices, and rising unemployment, or higher interest rates with a growing economy, more jobs and higher home prices? Really good economy news leads to higher interest rates! Yes interest rates are drastically higher that their bottom on May 1, yet really at historical low levels.The economy is clearly getting better although at the Fed meeting next week we may yet see a further delay in plans to initiate a taper of the QE3 stimulus plan. It was widely felt that the taper would be announced at the Sept 17-18 meeting. They may not begin to taper down due to continued concern over Syria, the ongoing debate regarding raising the debt ceiling, and the implications of the rollout of the Affordable Care Act, all of which are causing uncertainty.
It was a strong week for stocks with the Dow seeing 3 straight 100-point gain days and having its best week since the beginning of the year. Moderate inflation numbers and a retail report that showed Americans spent more at stores last month also helped boost the market. The Dow closed out the week at 15,376.06 up 3.04% over last week’s 14,922.50 close. The Nasdaq closed at 3722.18 up 1.7% over last week’s 3,660.01 close. The S&P 500 ended the week at 1,687.99 up 1.98% over last week’s 1655.17 close. The yield rate on the 10-year Treasury note closed out at 2.90% this week down from 2.94% last week after rising as high as 2.96% earlier in the week, flirting with the 3% benchmark.
Numbers released by DataQuick found that Southern California home prices were flat from a month earlier. However sales hit a seven-year high for the month. The median sales price in the six-county Southland area was $385,000 the same as it was in June and July but up 24.6% over last year. In Los Angeles County the median price rose 28.1% to $429,000 in August. The data showed that for the Southland area, buyers purchased 23,057 houses and condos, 2.8% more than a year ago but down .8% from the previous month. Its not unusual to see prices flatten at this time of year, and we may see slower sales as we move into the fall and winter months. I predict that we will see another strong spike in home prices and sales once the market begins to heat up again in February.
A report released by CoreLogic this week showed that rising home prices have continued to lift many homeowners out of having an underwater mortgage. The report showed that nationwide 14.5% of residential properties have a mortgage in negative equity, down from 19.7% in the first quarter, 22.3% a year ago and 26% in the fourth quarter of 2009. The report said that there were 7.1 million underwater homes in the second quarter compared with a downwardly revised 9.6 million in the first three months of 2013.
RealtyTrac also released their foreclosure numbers this week, finding that foreclosure filings in the U.S. fell 34% compared to last August. They reported that 55,775 properties started the foreclosure process during the month, down 44% from a year ago, the lowest number since December 2005.
This week U.S. applications for home loans fell and refinancing hit its lowest activity level in nearly 5 years. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity (including both refinancing and home purchases) dropped 13.5% for the week ending September 6. The index is at the lowest level since November 2008. Refinancing is at its lowest rate since June 2009. This is definitely a result of higher rates.
Have a great weekend!
If you’d like more information on the San Fernando Valley or Los Angeles, or to have help looking for your next home, please feel free to reach out! I’m happy to help, no obligation.