Mortgage markets improved last week in a week of few economic releases. The one major data point -- Retail Sales -- showed stronger-than-expected, but markets reacted mildly. The report's strength was whispered in advance of the actual release; its reading validated Wall Street's growing faith in the U.S. economy. Most action last week revolved around the Middle East: Libya's internal turmoil continued Bahrain clashes intensified Saudi Arabia's citizens planned a Day of Rage In response to these events, Wall Street continued its flight-to-quality. Mortgage-backed bonds are now at their best levels since early-February. Mortgage rates have improved 4 straight weeks. Unfortunately for rate shoppers in Illinois , the gains have been meager. Conforming mortgage rates have only dropped sligh... 03/14/2011

Beginning April 1, 2011, Fannie Mae is increasing its loan-level pricing adjustments. Conforming mortgage applicants in Illinois should plan for higher loan costs in the months ahead. If you've never heard of loan-level pricing adjustments, you're not alone; they're an obscure mortgage pricing metric and, thus, are rarely covered by the media. That doesn't make them any less relevant, however. LLPAs are mandatory closing costs assessed by Fannie Mae and Freddie Mac, designed to offset a given loan's risk of default. LLPAs were first introduced in April 2009. This April's amendment is the 6th increase in 2 years. LLPAs can be costly. In addition to an up-front, quarter-percent fee applied to all loans, there are 5 additional "risk categories" in the LLPA equation: Credit Score : Lower FI... 03/10/2011

For certain members of the military, and for certain federal employees, there's just 2 months remaining to get use the federal home buyer tax credit. Eligible persons include members of the uniformed services, members of the Foreign Service, and intelligence community employees who served at least 90 days of qualified, extended duty service outside of the United States between January 1, 2009 and April 30, 2010. Spouses of persons meeting the above criteria are eligible as well. The federal home buyer tax credit ranges up to $8,000 for first-time home buyers, and up to $6,500 for existing homeowners. Existing homeowners must have lived in their "main home" through 5 of the last 8 years to be eligible. Claiming the federal tax credit is a two-step process. First, eligible persons must be... 03/07/2011

Mortgage markets improved last week as Wall Street's concerns about the Middle East trumped its fears of inflation. Conforming and FHA mortgage rates in Illinois fell to a 3-week low. Last week marked the second straight week in which mortgage rates fell, a streak that follows four straight weeks of climbing mortgage rates. It's been a bout of good fortune for rate shoppers and home buyers. In addition, according to Freddie Mac's weekly mortgage rate survey, the average spread between conforming 30-year fixed rate mortgages and 5-year ARMs has widened further. The two benchmark products are now separated by 1.15%. It's the largest interest rate gap in recent history; one that yields a monthly payment difference of $68 per $100,000 borrowed. This week, it's unclear in what direction mort... 02/28/2011

Home resales rose another 2.7 percent last month, according to the National Association of REALTORS® monthly Existing Home Sales report. An "existing home" is a home that's been previously occupied and is not considered new construction. The number of existing homes sold on a rolling 12-month basis is now at its highest point since May 2010, the month before the federal homebuyer tax credit ended. It's also up some 40% since July 2010, the month after the tax credit ended. But that's not the biggest story in the Existing Home Sales report. The precipitous decline in home inventory deserves more attention. At the current pace of sales, the complete, national home resale inventory will be sold in 7.6 months. This is close to 5 months faster as compared to last year's peak, and well below ... 02/24/2011

Mortgage markets improved slightly last week, rebounding from the worst 1-week loss in recent history. The gains were geopolitical, however; the result of instability in the Middle East region. Economic data was overlooked as investors made a broad-based flight-to-quality. For just the second time in 2011, conforming mortgage rates in Orland Park fell on a week-to-week basis. Rates shouldn't have dropped, though. Here's just a sampling of last week's economic data, all of which can be tied to rising mortgage rates: Oil prices are soaring on supply concerns The Producer Price Index touched a 2-year high Philadelphia Fed Manufacturing Survey predicted strong Q1 growth Furthermore, the just-released January FOMC Minutes showed an improving economic outlook from members of the Federal Reser... 02/22/2011

Annualized Single-Family Housing Starts dropped 1 percent in January to 413,000 units nationwide, it's lowest reading almost 2 years. A "Housing Start" is defined as a home on which construction has started.  Now, if you had only seen the Housing Starts story in the headlines today, you wouldn't have known that single-family starts fell at all. It's because of how the story is being reported. Most commonly, newspaper headlines are reading something similar to "Housing Starts Jump 14.6%" with the lead paragraph making mention that "housing starts are at their highest levels in 4 years". It's a true statement, but it's misleading, too. This is because, despite the Census Bureau reporting Housing Starts by property type -- single-family, multi-family, and apartments -- the media often lump... 02/17/2011

Mortgage markets worsened terribly last week. Amid more reports of an improving economy and fears of pending inflation, mortgage rates skyrocketed to their highest levels since April 2010.  According to Freddie Mac, mortgage rates made their largest 1-week jump in more than a year last week, tacking on 0.24 percent and bringing the average national 30-year fixed mortgage rate up to 5.05%. In some markets, rates are even higher. Since bottoming out in Freddie Mac's November 11 survey, conforming, 30-year fixed mortgage rates are now higher by close to a full percentage point. Home buyers in Oak Lawn and across the nation have lost more than 10% of their purchasing power during that time. Rates have also been on a historic run higher, increasing over 9 consecutive days for the first time ... 02/14/2011

Mortgage rates are surging. Over the last 7 days, conventional, 30-year fixed rate mortgage rates have jumped 24 basis points, or 0.24%, according to Freddie Mac's weekly Primary Mortgage Market Survey. It's the largest 1-week spike in mortgage rates in recent history. The 30-year fixed rate mortgage now averages 5.05% nationally. This is much, much higher than what we saw last November when mortgage rates were 4.17% and looked headed to the 3s. That's not the case today. In fact, it's the opposite.  Mortgage rates have risen quickly and fiercely this year. As of this morning, mortgage rates are higher over 9 consecutive days, marking the longest mortgage rate losing streak in the last 6 years, at least. Note, however, that when you call your loan officer or bank, you may not be quoted... 02/11/2011

Americans are getting back to work. Sort of. This morning, at 8:30 AM ET, the Bureau of Labor Statistics released its Non-Farm Payrolls report for January 2011. More commonly called "the jobs report", the government's data showed a large decrease in the number of working Americans as compared to December, but a sizable drop in the Unemployment Rate. The job growth figures were much lower than consensus estimates: Expected job growth in January : +148,000 jobs Actual job growth in January : +36,000 jobs January's Unemployment Rate surprised analysts, too, but not in a bad way, falling from 9.4 percent in December to 9.0 percent last month. This is the nation's lowest Unemployment Rate in nearly 2 years. Today's jobs report is rough news for home buyers and rate shoppers in Oak Lawn. Shor... 02/04/2011

Another day, another strong report for housing. The Pending Home Sales Index climbed 2 percent in December, according to the National Association of REALTORS®. A "pending home sale" is an existing home under contract to sell, but not yet closed. Pending Home Sales are up for the fifth time in 6 months. The December reading is now its highest since the federal home buyer tax credit's April 2010 contract deadline, and the figure is well north of the Pending Home Sales Index 3-year average. Coupling this data with December's strong Existing Homes Sales report (+12%) and its strong New Home Sales report (+17%), it's clear that the housing market has past its trough and is in Recovery Mode. Even consumer confidence is at an 8-month high. On a regional basis, December's Pending Home Sales Ind... 02/01/2011

Mortgage markets improved this week as positive economic data was overshadowed by geopolitical strife. A flight-to-quality drove buy-side activity in mortgage bond markets, which, in turn, helped conforming rates fall across the state of Illinois. Last week marks the first time this year that mortgage rates fell on a week-over-week basis, and considering why rates fell, it points to the fragile nature of the global economy. By all accounts, last week showed that the U.S. economy is in recovery. Housing data rises to its best levels in 8 months (LA Times) Consumer sentiment hit a 7-month high (NPR) Business investment increased 1.4% in December Furthermore, the Federal Open Market Committee met last week and said that the economy continues to expand (although the pace is slower-than-opti... 01/31/2011

>Sales of new homes rose sharply in December, posting a 17.5 percent gain from the month prior. According to the Department of Housing and Urban Development, New Home Sales climbed to 329,000 in December, besting November by close to 50,000 units on a seasonally-adjusted annual basis. Last month's reading is an 8-month high for New Home Sales, and the latest in a series of signals that housing is improving in Oak Lawn and around the country. Note that December's Existing Homes Sales and Building Permits reports also showed marked gains last month, climbing 12 percent and 6 percent, respectively. Furthermore, an interesting pattern is emerging in the price points of home sales. The highest levels of relative growth are occurring within the "move-up buyer" segments. Entry-level price poin... 01/28/2011

Today, the Federal Open Market Committee voted 10-to-0 to leave the Fed Funds Rate unchanged within its target range of 0.000-0.250 percent. In its press release, the FOMC noted that since December's meeting, economic growth is ongoing, but at a pace deemed "insufficient" to make a material impact on the jobs market. In addition, the Fed said household spending "picked up" late last year, although it continues to be held back by joblessness, tight credit and lower housing wealth. This is similar to the language used in the FOMC's November and December 2010 statements. Also like its last two statements, the Fed used this month's press release to re-affirm its plan to keep the Fed Funds Rate near zero percent "for an extended period", and to keep its $600 billion bond market support packa... 01/26/2011

Home values were reported unchanged in November 2010, on average, according to the Federal Home Finance Agency's Home Price Index.  We say "on average" because the government's Home Price Index is a data composite for the country. The index doesn't measure citywide changes in places like Chicago , nor does it get granular down to the neighborhood level to measure places like Evergreen Park. Instead, the Home Price Index groups state data in 9 regions with each regions having as few as 4 states in it, and as many as 8. Not surprisingly, each of the regions posted different price change figures for the period of October-to-November 2010. A sampling includes: Values in the Pacific region rose +1.2% Values in the New England region rose +0.3% Values in the Mountain region fell -1.9% The com... 01/26/2011

The Federal Open Market Committee begins a 2-day meeting today in Washington D.C. It's the group's first meeting of 2011 -- one of 8 scheduled for the year. The Fed meets every 45 days, on average. Its last meeting was December 14, 2010. Rate shoppers and home buyers should make a note. Mortgage rates and home affordability could change dramatically beginning tomorrow afternoon. Because Wall Street watches FOMC meetings closely, so should you. The meetings provide insight on the future of U.S. monetary policy, as told by the nation's central banker. Investors make trades based on the FOMC's commentary which is one reason why mortgage rates tend to undulate through the hours leading up to the FOMC's adjournment, and the days immediately after. Wall Street is shifting old bets, and placin... 01/25/2011

Mortgage markets worsened last week in a holiday-shortened trading week. As the body of U.S. economic data continues to show slow, steady improvement, Wall Street is becoming a net-seller of mortgage-backed bonds. As a result, conforming mortgages rates in Illinois are rising. This is why conforming and FHA mortgage rates rose last week in Illinois. Existing home supplies plunged to a 2-year low in December, and unemployment claims dropped more than expected, giving hope for the U.S. economy in 2011. This week, that trend may continue. There's a lot of news set for release. The biggest story of the week is Federal Open Market Committee's 2-day meeting. Scheduled for Tuesday and Wednesday, the FOMC's meeting is the first of its 8 scheduled meetings this year. In it, the FOMC is expected ... 01/24/2011

Each month, in conjunction with the Department of Housing and Urban Development, the Census Bureau releases its New Residential Construction report. The report is comprised of several sections, one of which counts the number of homes that have "broken ground" in Illinois and nationwide. They're called "Housing Starts" and, by most measures, they faded quickly as 2010 came to a close. According to the Census Bureau's report, Housing Starts of single-family homes fell to 417,000 units on a seasonally-adjusted, annual basis. The figure marks a 9 percent drop-off from November, and is the lowest reading since May 2009. Not surprisingly, the press went bearish on housing post-release: U.S. Home Building Stuck Near 50-Year Lows (AFP) Housing Starts Slowed Sharply In December (New York Times)... 01/20/2011

Consumers keep spending, the economy keeps growing. Mortgage rates are easing lower this morning on just-released, slightly worse-than-expected Retail Sales data from December 2010. Excluding motor vehicles and auto parts, December's sales receipts were $1.5 billion higher from November. Analysts had expected a number north of $2 billion. Despite falling short of estimates, however, December's reading is the highest in Retail Sales history, surpassing the previous record set in July 2008, set during the recession. In addition, December's strong numbers helped 2010's year-over-year numbers go positive for the first time in 3 years. Although the data is a mixed bag for Wall Street, home affordability in Chicago is improving today. The link between Retail Sales and home affordability may n... 01/14/2011

According to foreclosure-tracking firm RealtyTrac, the number of foreclosure filings nationwide dropped for the second straight month in December. After falling 21 percent in November, filings were down by an additional 2 percent in December. "Foreclosure filing" is a catch-all term, comprising default notices, scheduled auctions, and bank repossessions. Like most months, a small number of states dominated December's national foreclosure figures. 6 states accounted for more than 50 percent of all bank repossessions. California : 17% of all repossessions Florida : 11% of all repossessions Arizona : 6% of all repossessions Michigan : 6% of all repossessions Texas : 6% of all repossessions Nevada : 4% of all repossessions December's foreclosure filings fell to its lowest levels since June ... 01/13/2011