The following is a guest blog from Jeffrey Heckman and Joanne Rotella with Shelter Mortgage Company and does not necessarily reflect the views of GeorgiaMoves.com
1. Mortgage rates pushed a little higher last week as minutes from the Federal Reserve’s July 31 meeting were released and confirmed investor expectations that the Fed will almost certainly begin to “taper” its bond purchase program in September or October.
2. Mortgage rates then reversed course and fell back when the July New Home Sales report caught investors by surprise and showed a 13% drop from June.
3. Several Fed officials have expressed concerns that rising rates will slow the pace of economic growth. The decline in New Home Sales provides clear support that these concerns are justified. The question is whether the data will be enough to cause the Fed to hold off longer before tapering its bond purchases. Economic data released this week will be scrutinized greatly as investors continue to speculate on the answer to this question.
4. July Existing Home Sales fared much better up 7% from June and 17% from one year ago surging to the highest level since Nov 2009.
5. A study by the Goldman Sachs Groups reveals that cash-sales have increased from roughly 20% of all homes sold in 2006 to roughly 50% of all homes sold over the last eighteen months.
6. The Goldman analysis also estimates that around 44 cents of every $1 of homes sold currently is being financed, compared to 67 cents before the crisis. Purchase-mortgage origination volume has fallen from around $1.5 trillion at the peak of the housing market in 2005 to around $500 billion in each of the last two years. While declines in the volume of homes being sold accounts for some of the decline, the Goldman economists estimate that around 40% of the decline is due to the drop-off in the amount of financing. Encouraging news in the report is that Goldman Sachs estimates purchase-loan volumes will rise to around $750 billion next year and $1.1 trillion by 2016.
It has been a volatile week for mortgage rates. Fed Meeting Minutes suggest that the Fed will begin to taper its bond purchases in the near future as expected, but a surprising decline in New Home Sales data made that outcome less certain. After the offsetting influences, mortgage rates ended the week slightly higher. The benchmark Conforming 30 year fixed-rate is now at approximately 4.625%.
Durable Orders will be released on Monday, Pending Home Sales on Wednesday, and revisions to second quarter GDP on Thursday. Friday will be the big day with Core PCE inflation, Personal Income, and Chicago PMI all due out. Consumer Confidence and Consumer Sentiment round out a very busy schedule. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday as well.
For more information or to get pre-qualified for a mortgage, please contact Jeffrey Heckman with Shelter Mortgage Company at 404-277-6044 or [email protected] or Joanne Rotella at 404-290-4800 or[email protected]