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Source: co.nz
Video: Mortgage Rates Forecast | Interest Rate Info Updated Daily
Intermediate Treasury Forecast Down, Long Forecast Up This Week
The latest implied forward rate forecast from Kamakura Corporation shows projected 10-year U.S. Treasury yields differing -0.07% to 0.03% from last week while fixed rate mortgage yields varied by -0.01% to 0.08%. Mortgage yields, determined by the Monday through Wednesday weekly survey of the Federal Home Loan Mortgage Corporation, lag Treasury movements simply because of the 3-day yield calculation used in the Primary Mortgage Market Survey. The 10-year U.S. Treasury yield is projected to rise from 2.92% at Thursday’s close (down 0.06% from last week) to 3.374% (down 0.06% from last week) in one year. The 10-year U.S. Treasury yield in ten years is forecast to reach 4.639%, 1 basis point lower than last week. The 15-year fixed rate mortgage rate is forecast to rise from the effective yield of 3.69% on Thursday (down 0.001% from last week) to 4.222% (down 0.006% from last week) in one year and 6.29% in 10 years, up 0.038% from last week. We explain the background for these calculations in the rest of this note, along with some mortgage servicing rights metrics. The forecast allows investors in exchange traded U.S. Treasury funds (TLT) (TBT), total return bond funds (BOND), municipal bonds (NUV) and exchange traded mortgage funds (REM) to assess likely total returns over the next 120 months. Treasury-related exchange traded funds affected by the forward rates include:
Source: seekingalpha.com
US new home sales at risk of higher mortgage rates: forecast
The recent surge in U.S. bond yields has rattled traders and triggered volatility across the FX markets on the heels of the Fed`s tapering speculation. A consensus still beleives the Fed might start tapering its quantitative easing program as soon as next month.
Source: icn.com
Israel cuts rate on low inflation, trims growth forecast
Israel’s central bank cut its policy rate by 25 basis points to 1.0 percent due to inflation below the midpoint of the bank’s target range, slower-than-expected domestic growth, a possible slowdown in advanced economies and continued appreciation of the shekel currency. The Bank of Israel (BOI), which has now cut rates by 75 basis points this year – including two cuts in May to stem the rise in the shekel – cut its forecast for growth this year to 2.6 percent from a previous forecast of 2.8 percent, excluding the contribution of natural gas production from the new Tamar site. Including gas production, Israel’s Gross Domestic Product is forecast to expand by 3.6 percent this year, down from 3.8 percent in the previous forecast. Next year, Israel’s economy is expected to slow down from this year due to a smaller contribution of gas output to economic growth, a decline in the growth of public spending and lower growth in private consumption due to higher taxes, the BOI said. GDP in 2014 is forecast to grow by 2.7 percent, up from a previous forecast of 2.5 percent, excluding gas output. Including gas output, Israel’s economy is forecast to growth by 3.4 percent, up from a previous forecast of 3.2 percent.
Source: centralbanknews.info
Housing Starts Rise in July but Fall Short of Forecasts
“At this point, affordability hasn’t changed that much on a historical basis. Housing affordability remains high, but fundamentals are less favorable for new buyers than they were a couple of months ago,” Hanson said. Mortgage rates have spiked in anticipation of the Federal Reserve tapering the $85 billion in bond purchases it is making monthly to keep interest rates low and stimulate the economy. Economists expect the U.S. central bank to make an announcement on tapering at its policy meeting next month. U.S. stocks were poised to open slightly higher after the data. The dollar pared gains against the yen and fell to a session low against the euro. The residential construction figures last month could also be a reflection of supply constraints. Builders have been complaining about a shortage of labor and materials. Still, residential construction remains on a firmer footing and should again contribute to economic growth this year. A report on Thursday showed confidence among single-family homebuilders neared an eight-year high in August, with builders fairly upbeat about sales prospects over the next six months. Though residential construction only accounts for about 3.1 percent of gross domestic product, housing has a wider reach in the economy. Analysts estimate that for every single-family home built, at least three jobs lasting for a year are created. Economists expect average monthly housing starts for the whole of 2013 to top 1 million. Last month, groundbreaking for single-family homes, the largest segment of the housing market, fell 2.2 percent to a 591,000-unit pace, the lowest level since November last year. Starts for multifamily homes jumped 26 percent to a 305,000-unit rate, reversing the prior month’s decline. Permits for multifamily homes rose 12.6 percent to a 330,000-unit rate. Permits for single-family homes fell 1.9 percent to a 613,000-unit pace. A separate report from the Labor Department showed nonfarm productivity increased at an annual rate of 0.9 percent in the second quarter. Productivity dropped at a rate of 1.7 percent in the first quarter. Unit labor costs — a gauge of labor-related costs for any given unit of output — rose at a rate of 1.4 percent in the second quarter after dropping in the first quarter at a rate of 4.2 percent.
Source: dailyfinance.com
Reflections on the Economic Outlook and the Implications for Monetary Policy
There are several reasons motivating our interest in developing such a facility. First, such a facility should enable the Federal Reserve to improve its control over the level of money market rates. By offering a new, essentially risk-free investment, one would expect that anyone with access to such a facility would generally be unwilling to lend instead to someone else at a rate below that posted for the facility. This should help to establish a floor on the level of overnight rates. Right now, most short-term rates trade between 0 and 25 basis points, but occasionally T-bill and repo rates go negative, for example at quarter-end or when financial stresses increase the demand for very safe assets. The full allotment element of the reverse repo facility would increase the availability of a risk-free asset, satisfying the demand when the appetite for safe assets increases. This should help tighten the relationship between these and other money market rates. These reverse repos would be available to an expanded set of counterparties that includes many of the money market lenders who are ineligible to earn the interest on excess reserves (IOER), such as GSEs and a number of money market funds. Depending on the facility rate, these lenders who cannot earn the IOER rate might get a better rate by investing in the overnight RRPs compared to lending to banks or to broker dealers. This competitive effect could, in and of itself, put a stronger floor on money market rates.
Source: ritholtz.com
Forecast for mortgage rates
“Once the Fed’s new stimulus, dubbed QE4 (which stands for the fourth round of quantitative easing), gets started after the first of the year, it should help marginally reduce long-term interest rates and, more specifically, fixed mortgage rates,” says Greg McBride, CFA, Bankrate’s senior financial analyst. But the Fed’s action is “small potatoes compared to the ‘fiscal cliff,’” he adds. “If the economy slows due to going over the cliff early next year, then the slower economy and not QE4 will be the main catalyst for lower rates.”
Source: bankrate.com
CREA Updates Resale Housing Forecast
The national average home price is projected to rise by 3.6 per cent to $376,300 in 2013, with gains strongest and in the range between four and five per cent in Prairie provinces and around six per cent in Newfoundland and Labrador. Average price growth in British Columbia and Ontario is expected to come in just under the national increase, advance by less than one per cent in Quebec and New Brunswick, and recede by less than one per cent in Nova Scotia.
Source: creanews.ca
Canadian interest rate forecast for September 2013
There were faster gains in non-residential investment and exports. Residential investment was an ongoing growth contributor with government the largest drag. The inventory accumulation is a likely future drag. The recent data flow was generally positive. Payroll employment increased by 162,000 in July, the smallest gain in four months, but it was close to the 12-month average. Housing activity gained momentum with sales of existing homes up 6.5 per cent in July, the median existing-home price rose 13.7 per cent year over year, and housing starts advanced 5.9 per cent in July from an upward revised June figure.
Source: troymedia.com