Syd Leibovitch’s weekly financial market update says that for the second quarter this year, mortgages are more expensive than rent.  How exciting!  For more information, read on my friends…

 

Stocks slightly above last week’s levels – Stocks dropped early in the week as China allowed its currency to devalue. This was done to spur the Chinese economy which has stalled. This move of making its currency worth less makes it’s goods cheaper which they hope will spur exports, and lead to an increase in manufacturing. Unfortunately, this makes U.S. goods more expensive in China. That hurt stocks of U.S. Companies that sell to China, such as Apple. Chinese consumers purchase 20% of all Apple products sold. It also hurt U.S. fast food chains, construction, airline, and other companies that sell to Chinese companies and consumers. Those companies saw their stocks fall. At the same time oil continued to fall, at one point hitting $42 per barrel, a price not seen since the depths of the financial crisis 2008. On Friday stocks recovered as reports of better than expected retail sales were released, as well as second quarter earnings of some retailers that beat expectations. 

The Dow Jones Industrial Average closed the week at 17,477.40, up from last week’s close of 17,373.38.  The S&P 500 closed the week at   2,091.54, up from last Friday’s close of 2,077.57.  The NASDAQ closed the week at 5,048.23, unchanged from last week’s close of 5,043.54.

30 year fixed mortgage rates still below 4%   –  The 30 year fixed rates ended the week around 3.875% for loans up to $417,000, and around 4.00% for loans over $417,000.  The 15 year fixed rate loans are about 3.125% for loans up to $417,000, higher loan amounts have rates that are around 3.375%. The 5 Year-ARM rate is around 3.00% and 1 Year-ARM mortgages are around 2.50%.

Treasury Bond yields stable this week – The 10 year Treasury bond yield closed week at 2.20%, it was 2.18% last Friday.  The 30 year treasury bond yield closed Friday at 2.84%, unchanged from last week’s close of 2.83%.

U.S retail sales rise 0.6% in July – The Commerce Department reported that U.S. Retail sales rose 0.6% in July after being flat in June. This beat experts forecast. The report showed that sales rebounded in July as households boosted purchases of automobiles, clothing, and a range of other goods. Experts feel that this suggests solid momentum in the economy early in the third quarter. Unfortunately, this upbeat report strengthened expectations that the Federal Reserve would begin to raise interest rates as early as next month. This did move bonds and mortgage rates off their lows of the week.

Mortgage payments more affordable than rents – According to Zillow’s affordability report for the second quarter of 2015, rents are at an all time high for single family homes, but monthly payments are more affordable than they were before the housing bust. Zillow found that renters nationwide can expect to spend 30.2% of their monthly income on rent and 40% in Los Angeles, San Jose, and San Francisco. They found that homebuyers nationwide can expect to spend 15.1% of their income on a mortgage payment. In the years immediately prior to the housing crisis in 2008 Zillow says that homebuyers could expect to spend 21.3% of their monthly income on a house payment.

​Next week we will get housing price and sales data for July. I’d think it will show prices continuing to rise and robust sales based on what we are seeing.

Have a great weekend!
Syd Leibovitch


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