Mortgage Rates Trend Lower After 30-Day Upswing

Graph of 10-year Notes

(Best Syndication News) Mortgage rates trended lower this week as the benchmarks used by banks shifted in the negative direction (see the mortgage rate charts below). The shift is counter to a 100-day upward movement by the major lenders.

The average 30-year fixed rate mortgage fell 11 basis points (bps) last week, however over the last 100-days the rate is still 59 basis points (bps) higher (see the mortgage rate charts below).

Fannie Mae, the Federal National Mortgage Association (OTCBB:FNMA), lowered their RNY rate three bps on Friday. The secondary lender’s 100-day trend is still much higher (see the benchmark chart below).

What Will Replace Fannie Mae and Freddie Mac?

Graph of 10-year Notes

(Best Syndication News) The President proposed doing away with the two-big government sponsored enterprises (GSE), replacing them with private capital and an increased role for government.

Part of the government role will be to provide “incentives” for financial institutions to provide “high quality loans and products.” The role of the Federal Housing Administration (FHA) will also continue. FHA will guarantee continue to guarantee qualified bank loans. The administration also expects to strengthen the lending market with legislative proposals.

Current Mortgage Rates – VA and FHA Loan Rates Increase

Graph of 10-year Notes

(Best Syndication News) Conventional mortgage rates slumped today after Freddie Mac made drastic changes in their required net yield (RNY) rates (see the mortgage rate charts below). The London InterBank Offered Rate (LIBOR) dropped while the 10-year note yield jumped four basis points (bps).

Although the average mortgage rate fell this week, the monthly and 100-day trend has been much higher. Higher home prices and a faster pace in home sales is producing a seller’s market in the United States. This could change if interest rates continue to rise – however the Federal Reserve has not signaled any changed in their targets.

Service Sector in July Grows more than expected

Graph of 10-year Notes

(Best Syndication News) The Institute For Supply Management (ISM) said their non-manufacturing sector index increased 3.8 percentage points in July 2013.

Despite the good news the Dow Jones Industrial Average (DJIA) and the broader S&P 500 shrank in value in early trading. The Dow is down 37 points (-0.24%) and the S&P is down 1.84 points (-0.11%). The tech-heavy NASDAQ is up 0.65 (+0.02).

"The NMI™ registered 56 percent in July, 3.8 percentage points higher than the 52.2 percent registered in June. This indicates continued growth at a faster rate in the non-manufacturing sector”, said Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management (ISM) Non-Manufacturing Business Survey Committee.

July Auto Sales Soar to Pre-Recession Levels

Graph of 10-year Notes

(Best Syndication News) July auto sales jumped to pre-recession levels, according to the big-three automakers. Ford Motor Company (NYSE:F) said that small car sales are up 32 percent year-over-year (y-o-y) while utility vehicles also posted strong gains.

General Motors Company (NYSE:GM) sold 234,071 cars last month, an increase of 23 percent (16 percent y-o-y). Kurt McNeil, vice president, U.S. sales operations, called their sales “well balanced” in the slow recovery. The company’s new products also helped.

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