4 Million Homes Return to Positive Equity
Fast-rising home prices in 2013 gave U.S. borrowers back much-needed equity in their homes. The housing crash and subsequent plunge in prices during the end of the last decade put millions of borrowers “underwater” on their mortgages—owing more than their homes were worth.
Nearly 4 million of those borrowers came back above water in 2013, according to a new survey from Zillow. See the interactive map.
“We’ve reached an important milestone as negative equity has fallen below 20 percent nationwide, which has helped free up marginally more inventory and contribute to further stabilization of the market,” Zillow’s chief economist, Stan Humphries, said in a release.
Rising prices are clearly a double-edged sword in the recovery. Double-digit gains are giving homeowners more equity as well more confidence in the market, but declining affordability is hurting potential buyers.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) gained +75 basis points (BPS) from last Friday’s close which caused 30 year fixed mortgage rates to improve. The market saw the lowest rates on Thursday and the highest rates on Monday.
Positive economic news is always negative for long-term bond prices and therefore mortgage rates. That is unless there is a massive rush into U.S. bonds due to overseas concern and that is exactly what happened last week.
If it wasn’t for a “flight to quality” into U.S. bonds primarily due to concern over the Ukraine, MBS would have sold off and mortgage rates would have increased. New Fed Chair Janet Yellen reaffirmed her earlier testimony in front of the House Financial Services committee for the Senate Banking committee which means that the Fed is on a solid path to reduce their monthly bond purchases unless the economy takes a sharp nose-dive. Durable Goods Orders were much better than expected and so were the Chicago Purchasing Manager’s Index and Consumer Sentiment. The 4th QTR GDP was revised downward but inline with market expectations. All of these events would have normally pressure MBS pricing.
|Date||Time (ET)||Economic Release||Actual||Market Expects||Prior|
|3-Mar||8:30 AM||Personal Income||–||0.30%||0.00%|
|3-Mar||8:30 AM||Personal Spending||–||0.10%||0.40%|
|3-Mar||8:30 AM||PCE Prices – Core||–||0.10%||0.10%|
|3-Mar||10:00 AM||ISM Index||–||51.6||51.3|
|3-Mar||10:00 AM||Construction Spending||–||-0.10%||0.10%|
|3-Mar||2:00 PM||Auto Sales||–||NA||5.1M|
|3-Mar||2:00 PM||Truck Sales||–||NA||7.0M|
|5-Mar||7:00 AM||MBA Mortgage Index||–||NA||-8.50%|
|5-Mar||8:15 AM||ADP Employment Change||–||150K||175K|
|5-Mar||10:00 AM||ISM Services||–||53.5||54|
|5-Mar||10:30 AM||Crude Inventories||–||NA||0.068M|
|5-Mar||2:00 PM||Fed’s Beige Book||–||NA||NA|
|6-Mar||7:30 AM||Challenger Job Cuts||–||NA||47.30%|
|6-Mar||8:30 AM||Initial Claims||–||338K||348K|
|6-Mar||8:30 AM||Continuing Claims||–||2973K||2964K|
|6-Mar||8:30 AM||Unit Labor Costs – Rev||–||-0.70%||-1.60%|
|6-Mar||10:00 AM||Factory Orders||–||-0.50%||-1.50%|
|6-Mar||10:30 AM||Natural Gas Inventories||–||NA||-95 bcf|
|7-Mar||8:30 AM||Nonfarm Payrolls||–||163K||113K|
|7-Mar||8:30 AM||Nonfarm Private Payrolls||–||170K||142K|
|7-Mar||8:30 AM||Unemployment Rate||–||6.60%||6.60%|
|7-Mar||8:30 AM||Hourly Earnings||–||0.20%||0.20%|
|7-Mar||8:30 AM||Average Workweek||–||34.4||34.4|
|7-Mar||8:30 AM||Trade Balance||–||-$37.3B||-$38.7B|
|7-Mar||3:00 PM||Consumer Credit||–||$11.8B||$18.8B|
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.