Fewer Late On Mortgage Payments = Housing Strength
Fewer U.S. homeowners are falling behind on their mortgage payments, aided by rising home values, low interest rates and stable job gains.
The trend brought down the national late-payment rate on home loans in the third quarter to a five-year low, credit reporting agency TransUnion said Tuesday.
The percentage of mortgage holders at least two months behind on their payments fell in the July-September quarter to 4.09 percent from a revised 5.33 percent a year earlier, according to the firm, whose data go back to 1992. The latest rate also declined from 4.32 percent in the second quarter.
The rate of late payments on home loans has been steadily declining over the past five quarters. At the same time, U.S. home sales and prices have been rebounding over the past two years, while foreclosures have been declining.
Moderate but stable job gains, still-low mortgage interest rates, and tight supply of homes for sale have helped fuel the housing rebound. That’s also made it easier for homeowners to refinance, catch up on payments or sell their home, avoiding foreclosure.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) lost -122 basis points from last Friday’s close which caused 30 year fixed rates to move higher for the second straight week and moved rates to their highest levels since October 14th. We saw our best rates on Monday and our worst rates on Friday.
The much anticipated October Non-Farm Payroll (NFP) hit and it hit big, trumping just about every forecast. NFP came in at 204K and the market was expecting 125K (and even lower). The lower expectations were mostly due to speculation about the negative impact the government shutdown and corresponding decrease in consumer sentiment would have on the economy. But last week’s 3rd QTR GDP reading of 2.8% and the prior week’s very strong ISM manufacturing data pointed to economic growth which usually leads to more jobs. In fact, the Private Sector added 212K jobs in October while the Government Sector lost jobs.
Plus, the prior period (September) was revised upward from a low reading of 148K to a fairly respectable reading of 163K.
These numbers are subject to revision and often see major revisions. But even if October’s reading of 204K was revised downward to 180K (which would be a huge revision downward), it would still be a big-time beat of the consensus estimates of 125K. And this has caused traders to rethink their projections on the timing of the eventual Fed taper of Treasury and MBS purchases which of course provides upward pressure on mortgage rates.
|Date||Time (ET)||Economic Release||Actual||Market Expects||Prior|
|13-Nov||7:00 AM||MBA Mortgage Index||–||NA||-7.00%|
|13-Nov||8:30 AM||Export Prices ex-ag.||–||NA||0.30%|
|13-Nov||8:30 AM||Import Prices ex-oil||–||NA||0.10%|
|13-Nov||2:00 PM||Treasury Budget||–||NA||-$120.0B|
|14-Nov||8:30 AM||Initial Claims||–||330K||336K|
|14-Nov||8:30 AM||Continuing Claims||–||2862K||2868K|
|14-Nov||8:30 AM||Trade Balance||–||-$39.1B||-$38.8B|
|14-Nov||8:30 AM||Unit Labor Costs||–||0.80%||0.00%|
|14-Nov||10:30 AM||Natural Gas Inventories||–||NA||35 bcf|
|14-Nov||11:00 AM||Crude Inventories||–||NA||1.577M|
|15-Nov||8:30 AM||Empire Manufacturing||–||4.3||1.5|
|15-Nov||9:15 AM||Industrial Production||–||0.10%||0.60%|
|15-Nov||9:15 AM||Capacity Utilization||–||78.30%||78.30%|
|15-Nov||10:00 AM||Wholesale Inventories||–||0.30%||0.50%|
I will be watching these reports closely for you and let you know if there are any big surprises:
It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.