Economy Watch: Mortgage Rates Hit New Highs
Mortgage rates are continuing their upward creep, but the housing market still seems to soldier on in its recovery.
By Dees Stribling, Contributing Editor
Mortgage rates are continuing their upward creep, but the housing market still seems to soldier on in its recovery. Freddie Mac reported on Thursday that 30-year fixed mortgages averaged 4.58 percent (with 0.8 points) for the week ending Aug. 22, the highest average in about two years. During the same week last year, the average for a 30-year mortgage was 3.66 percent.
“Fixed mortgage rates continued to follow bond yields higher leading up to the August 21 release of the Federal Reserve monetary policy committee’s minutes for July,” Freddie Mac chief economist Frank Nothaft noted in a press statement. “Meeting participants acknowledged mortgage rate increases might restrain housing market activity, but several members expressed confidence the housing recovery would be resilient in the face of higher rates.”
So far, it has been. Separately, the Federal Home Finance Agency reported that its House Price Index for the second quarter of 2013 was up 2.1 percent from the first quarter, and up 7.2 percent compared with 2Q12. The agency’s index is based on home prices for properties whose mortgages are owned or guaranteed by Fannie Mae or Freddie Mac.
Leading economic indicators edge up
The Conference Board reported on Thursday that its Leading Economic Index (LEI) for the U.S. increased 0.6 percent in July to 96.0, following no change in June, and a 0.3 percent increase in May. The happy year 2004 = 100, according to the organization’s reckoning.
“Following moderate growth in the last few months, the U.S. LEI picked up in July, with widespread gains among its components,” Conference Board economist Ataman Ozyildirim, explained in a statement. “The pace of the LEI’s growth over the last six months has nearly doubled, pointing to a gradually strengthening expansion through the end of the year. In July, average workweek in manufacturing was the weakest component.”
According to the Conference Board, some of the other components of the index include average weekly initial claims for unemployment insurance; manufacturers’ new orders; ISM Index of New Orders; building permits; stock prices; and the interest rate spread, 10-year Treasury bonds less federal funds.
Nasdaq gets weird
On Thursday Wall Street experienced its biggest technical fubar since the 2011 Flash Crash, when trading stopped stone cold on the Nasdaq for about three hours, idling trillions of dollars in investment capital. After it was over, Nasdaq issued a vague statement.
“Earlier this afternoon, NASDAQ OMX became aware that price quotes were not being disseminated by the Securities Industry Processor (SIP), which consolidates and disseminates all prices for the industry,” the company said, adding that the glitch was fixed in 30 minutes. But Nasdaq had to coordinate with the other major exchanges and regulators to get things on even keel again, which took more time.
The reason for the stoppage? Not stated, and perhaps not known. In any case, Wall Street ended up on Thursday, with the Dow Jones Industrial Average up 66.19 points, or 0.44 percent, and the S&P 500 gaining 0.86 percent. The ill-starred Naasdaq was in the black, too, by 0.99 percent.
