(Best Syndication News) Mortgage interest rates ascended today despite a sharp downturn in equity prices (see the mortgage rate charts below). JPMorgan Chase, SunTrust, KeyBank, Wells Fargo, and U.S. Bank raised their rates unexpectedly.
When President Barack Obama reiterated his position Wednesday on tax-cuts for the middle-class but not the wealthy, it reminded investors of the vast gulf between the two political parties. Entrenched lawmakers are preparing for a meeting later this week to hash-out their differences, but the uncertainty drove the Dow Jones Industrial Average (DJIA) index down more than 185 points.
The sell-off continued throughout the President’s news conference. The disarray in Washington could lead to another recession if a compromise is not reached by the January 1st deadline; taxes will increase and there will be a series of budget cuts.
The U.S. Commerce Department said that retail sales decreased 0.3 percent in October. This was in-line with economist expectations of between -0.2 percent and -0.4 percent. The reading was below September’s 1.1 percent increase.
Hurricane Sandy is partially to blame for the lackluster sales. Lower gas prices, higher home prices, and an improving employment situation could help improve investor and consumer confidence. Next week the University of Michigan will release their November Consumer Sentiment Index.
The share price of retailer Abercrombie & Fitch Co. (NYSE:ANF) broke forty dollars Wednesday, the first time since May. Earnings per share were more than fifty percent higher than expected last quarter. This drove the stock up 34 percent; in the after hours the share price was up another eight cents to $42.00. Better inventory control helped eliminate their mark-down sales. On Thursday Wal-Mart Stores, Inc. (NYSE:WMT) and Target Corporation (NYSE:TGT) will release their earnings reports.
The fiscal cliff could prompt the Federal Reserve to continue their operation Twist through early 2013. The central bank has been buying about $85 billion in longer term bonds and mortgage backed securities each month.
The Fed released their last Federal Open Market Committee (FOMC) meeting minutes Wednesday. The Federal Reserve said that the housing market appears to be in recovery.
Every major equity sector was lower. The capital goods sector fell more than two percent, with the drop in construction services outpacing the broader S&P 500. PulteGroup, Inc. (NYSE:PHM) was among the major decliners in the construction services sub-sector. The share price dropped nearly six percent during the trading session, but advanced five cents to $15.28 in the after-hours.
The DJIA fell 1.45 percent, while the broader S&P 500 and tech-heavy NASDAQ dropped 1.39 percent and 1.29 percent respectively.
Although stocks nose-dived, the U.S. Treasury Department said that government bond and note yields were unchanged. The 10-year note yield, a common benchmark for the 30-year fixed rate mortgage, remained at 1.59 percent (see the benchmark chart below).
The secondary lenders ignored the exodus from equities. The Federal Home Loan Mortgage Corp (OTC:FMCC) raised their 30-year 60-day required net yield (RNY) rate five basis points (bps) to 2.837 percent. The Federal National Mortgage Association (OTC:FNMA) raised their rate four bps to 2.836 percent.
The London InterBank Offered Rate (LIBOR) was lower. The 6-month LIBOR fell to 0.523 percent and the 1-year LIBOR fell to 0.8605 percent.
The average 30-year fixed rate mortgage (FRM) advanced three bps to 3.440 percent (see the mortgage rate chart below). The difference between the 10-year note yield and the 30-year mortgage expanded three bps to 1.850 percent.
The average FHA loan rate advanced one basis point to 3.949 percent and the average VA loan rate climbed five points to 3.704 percent.
Wells Fargo & Company (NYSE:WFC) raised their conventional rate 13 bps to 3.67 percent.
U.S. Bancorp (NYSE:USB) increased their 30-year rate eight bps to 3.56 percent.
The average 15-year fixed rate mortgage advanced two bps to 2.948 percent.
WFC held their 15-year rate unchanged, however USB raised their rate five bps to 2.88 percent. USB also raised their 20-year rate six points to 2.49 percent.
The average 5-year adjustable rate mortgage (ARM) advanced to 3.077 percent.
By: John Waters
|Wednesday||1 Day||5 Day||30 Day||100-Day||100-Day|
|11/14/12||Benchmark||Point Ch.||Point Ch.||Point Ch.||Point Ch.||Low|
|3.55||Bond Buyer's 20-yr bond index||0||-12||-12||-40||3.55|
|2.71||FHLMC 30 yr 30 days RNY||5||7||14||-21||1.59|
|2.75||FHLMC 30 yr 60 days RNY||5||7||13||-22||1.68|
|2.837||FNMA 30 yr 30 days RNY||5||-3||15||-27||2.635|
|2.863||FNMA 30 yr 60 days RNY||4||-4||14||-29||2.68|
|0.2075||1 Month LIBOR Rate||0||0||-1||-4||0.2075|
|0.31||3 Month LIBOR Rate||0||0||-4||-15||0.31|
|0.523||6 Month LIBOR Rate||0||0||-10||-21||0.523|
|0.8605||1 Year LIBOR Rate||0||0||-10||-21||0.8605|
|2.31||20-year Bond Yield Rate *||0||-4||-17||-3||2.11|
|1.59||10-year Note Yield Rate *||0||-3||-11||-7||1.43|
|0.18||1-Year Note Yield Rate *||0||-2||0||-3||0.16|
|0.1||3-month Note Yield Rate *||-1||0||0||0||0.08|
|1.038||11th District Cost of Funds||0||0||-3||-10||1.038|
|2.210||Difference 3-mo & 20 yr **||1||-4||-17||-3||2.01|
|1.850||Difference 10yr Note 30yr Loan||3||5||18||-19||1.641858|
|* Treasury Yields - DAILY|
|** Pos change - economy to improve soon (probit model)|
Mortgage Rate Chart:
|Best Syndication News Mortgage Survey|
|Wednesday||1 Day||5 Day||30 Day||100-Day||100-Day|
|11/14/12||National Average APR*||Point Ch.||Point Ch.||Point Ch.||Point Ch.||Low|
|3.440%||Average 30 yr fixed||3||2||7||-26||3.31%|
|3.949%||Average 30 yr FHA||1||2||6||-29||3.81%|
|3.704%||Average 30-yr VA||5||1||1||-21||3.60%|
|2.948%||Average 15 year FRM||2||1||0||-27||2.92%|
|3.077%||Average 5/1 ARM||0||0||-5||-11||3.06%|
|3.839%||30 Yr Fixed Jumbo||-1||0||-12||-44||3.78%|
|3.022%||15 Yr Fixed Jumbo||-1||0||-6||-35||3.02%|
|11/14/12||Wells Fargo||1 Day||5 Day||30 Day||100-Day||100-Day|
|4.27%||30-Year Fixed FHA||0||0||0||-55||4.14%|
|2.98%||5-Year ARM FHA||8||8||3||-11||2.90%|
|4.36%||30-Year Fixed FHA||14||14||14||-42||4.22%|
|11/14/12||U.S. Bank||1 Day||5 Day||30 Day||100-Day||100-Low|
|* Average includes more banks than listed|
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