Mortgages Rates improved this week as the price of Mortgaged Backed Securities regained approximately 1/3 of their losses in October. In the run up to the election, as investor became increasingly confident about results, the price of Mortgaged Backed Securities dropped dramatically as folks moved their money into the stock market anticipating stock gains, and lower taxes which would theoretically cause more treasury bonds to be issued to make up revenue loss (more bond issuance = more supply, lower prices and higher mortgage rates). Rates are down approximately 0.75% from this time last year.
Home Values – CoreLogic reported that home values were flat in September. Appreciation gains have leveled off recently which is consistent with annual seasonality. Year over year home prices are up 3.4% and CoreLogic predicts 2.3% gains over the next 12 months. Historically CoreLogic is conservative in their predictions.
Fed – as anticipated the Fed cut the Fed Funds Rate (the overnight lending rate banks use to lend each other money at) by 0.25% to 4.5%-4.75%. This will improve rates on HELOCs, Credit Cards, and other short-term loans. The Fed rate cut is in response to tame inflation and lack luster job reports.
Mortgage Applications – to purchase homes declined 5% last week and are up 2% year over year. Refinances fell 19% and are up 48% year over year.