WASHINGTON (11/26/14)--Commercial banks posted a net income of $38.7 billion in the third quarter, a $2.6 billion increase compared with the third quarter of last year, the Federal Deposit Insurance Corp. (FDIC) reported this week. The earnings were driven by a $7.8 billion jump in net operating revenue--the sum of net interest income and total noninterest income--which is the largest increase since the fourth quarter of 2009. Nearly two-thirds of the 6,589 insured institutions reported annual growth in quarterly earnings, the FDIC said, and the percentage of banks that did not record profits in the third quarter fell to 6.4% from 8.7% annually. Total loan and lease balances climbed $50.9 billion to $8.2 trillion in the quarter; commercial and industrial loans increased by $10.1 billion; and auto loans rose by $9 billion ...
WASHINGTON (11/26/14)--The Federal Housing Finance Agency (FHFA) reported this week that national contract mortgage rates for the purchase of previously occupied homes climbed to 4.11% from 4.05% in October.
The average interest rate on all mortgage loans rose to 4.11% as well, up from 4.07% in September, and the average interest rate on conventional 30-year fixed-rate mortgages of $417,000 or less was 4.31%, down from 4.33% the prior month.
The effective interest rate, which incorporates all initial fees and charges over the life of the mortgage, came in at 4.27% for the month, an increase of five basis points from 4.22% in September.
The average loan amount was $285,000 in October--a $4,000 increase from $281,000 month-over-month.
Home prices, meanwhile, climbed 0.9% in the third quarter, according to the FHFA's home price index. The increase marks the 13th straight month that home prices have risen.
Year-over-year, home prices climbed 4.5% in the third quarter. Though, the seasonally adjusted monthly index for September was unchanged from the previous month.
"Easing interest rates and modestly improving labor market conditions helped to drive up prices in the third quarter," said Andrew Leventis, FHFA principal economist. "The price increases were relatively small in most areas, however, and are consistent with the type of market deceleration that other housing market statistics have shown in recent periods."
Meanwhile, existing-home price appreciation slowed in the third quarter, according to the S&P/Case-Shiller Home Price Index, released Tuesday, compared with the third quarter in 2013.
The 10-city index rose 4.8% year-over-year, compared with a 5.5% climb annually in August. The 20-city index showed similar signs of deceleration.
Despite the deceleration, though, each metro area recorded increases in price growth year-over-year, ranging from a 0.8% increase in Cleveland to a 10.3% price gain in Miami.
WASHINGTON (11/26/14)--Real gross domestic product (GDP) climbed by 3.9% in the third quarter--a 0.4% increase from the quarter's initial reading, according to the Bureau of Economic Analysis' second estimate.
GDP jumped by 4.6% in the second quarter (Economy.com Nov. 25).
"Despite the slowing in growth in the third quarter, the performance of the economy has shifted to above-trend gains, near 3%," said Scott Hoyt, Moody's analyst (Economy.com). "The economy has expanded more than 3% in four of the past five quarters."
Consumer spending added 1.5% to growth, net exports contributed 0.8%--well below the initial estimate of 1.3%--fixed investments added 0.9% and the federal government contributed 0.7%. Inventories slowed GDP, however, as it fell by 0.1%.
Personal consumption trends showed that inflation slowed in the third quarter, as it rose only 1.3% after a 2.3% gain in 2Q. Excluding food and energy, inflation climbed 1.4% after a 2% gain in the prior quarter.
Real disposable income rose 2.3%; the savings rate increased by 5%; and corporate profits only climbed by 2.1% after jumping 8.4% in the second quarter.
Gross domestic income, an alternative metric used to gauge the pace of the economy's growth, climbed 4.5% after a 4% increase in the second quarter.
"The nation's economic prospects are improving," Hoyt said. "However, the divergence between the U.S. economy and that of much of the rest of the world is striking. The euro zone is flirting with recession, Japan is struggling to break free from the pull of deflation, and China and much of the rest of the emerging world are at best holding their own."
CHICAGO (11/25/14)--Auto-loan delinquencies climbed 13% annually in the third quarter, according to a report by TransUnion.
The quarter closed with a 1.16% delinquency rate, which tracks the ratio of borrowers who are 60 days or more delinquent on their auto-loan payments, up from 1.02% the prior quarter.
"The auto-loan delinquency rate is rising, but it remains well below levels observed just a few years ago," said Peter Turek, TransUnion automotive vice president. "With nearly 5 million more auto-loan accounts reported in the last year and with continued sales strength in this sector, it's not unusual to see an increase in the delinquency rate."
Delinquency rates rose the most for the youngest demographic, with those under the age of 30 seeing an 18% annual increase.
Hawaii and Oklahoma were the only two states to experience declining rates of delinquencies. Nebraska, South Carolina and New Mexico witnessed the largest increases.
Auto-loan debt also climbed for the 14th consecutive quarter to an average of $17,352, TransUnion reported.
Per borrower, auto-loan debt climbed 3.9% in the third quarter year-over-year, and 1.4% on a quarterly basis.
The number of auto-loan accounts rose to 64.2 million from 59.4 million in the third quarter annually as well.
Further, the subprime delinquency rate climbed to 5.31% from 4.5% annually in Q3.
"We've been at an elevated state of subprime originations for several quarters, and the good news is that there has not been a material impact on the overall auto-loan delinquency rate," Turek said. "The uptick in delinquency reflects a healthy and thriving auto-finance industry where credit is more broadly available to all consumers."
- NEW YORK (11/24/14)--
Wall Street traders, investment bankers and wealth managers may miss out on the average 4% pay hike they were expected to receive in 2014, thanks to the multibillion dollar penalties their employers--big banks such as Bank of America and Citigroup--have had to dole out for infractions that helped cause the financial crisis in 2008
The Wall Street Journal
Nov. 20). "This is the year those legal costs come home to roost," Michael Karp, CEO of Options Group, the firm that compiled a report that listed the potential pay raises, told
The Wall Street Journal
were expected to receive the healthiest pay increase during bonus season, as
their pay was estimated to climb 9% from their year-ago levels
. Trader compensation was not expected to change drastically compared with 2013 pay, and wealth-management employees were estimated to receive a 7% raise in 2014, according to Options Group ...
WASHINGTON (11/24/14)--Fannie Mae has dimmed its forecast for home-loan rates in 2015, according to
(Nov. 21), however the lower monthly payments may fail to stir up residential sales.
The government's secondary-mortgage market giant dropped its estimate for the 30-year fixed-rate mortgage to about 4.3%, which is a drop of two-tenths of a percentage point from its most recent estimate for next year.
Still, Fannie Mae officials aren't encouraged by the prospects for the 2015 housing market.
"The housing market continues to grind its way upward, but we don't expect a breakout performance in 2015 as the fundamentals remain somewhat muted," Doug Duncan, chief economist for Fannie Mae, told
"We believe that mortgage activity in 2015 will be very similar to 2014."
Rates also continue to remain flat through the end of the year.
Freddie Mac's most recent reading for the 30-year fixed-rate mortgage came in below 4%, the sixth straight week of readings hovering near 4%. The mortgage rate has averaged 7% over the last three decades.
Home sales have not picked up despite the persistent low rates on the market, and analysts believe that if rates continue to remain flat through 2015, there's no reason to believe the housing market will drastically improve.
New single-family homes are selling at a pace 34% below levels seen on average over the past three decades,
reported, while existing-home sales have reached a pace about 12% faster than the average of the past 30 years.
Many analysts believe it's the credit standards that are pressing down on sales, not necessarily the price tags on the homes.
"The current situation is much more driven by the availability of mortgage credit than the cost," said David Crowe, chief economist for the National Association of Home Builders.
WASHINGTON (11/21/14)--After stumbling late in the summer, existing-home sales have rebounded with a 1.5% jump in October to 5.26 million annualized units sold on a seasonally adjusted basis, according to the National Association of Realtors (Economy.com Nov. 20).
Existing-home sales also sit 2.5% higher than levels seen at this time last year, with three out of four U.S. regions posting monthly gains.
The South posted the highest climb month-over-month (5.3%), trailed by the Midwest (5.1%) and the Northeast (4.4%). The West was the only region not to record an increase in sales.
National single-family home inventory fell 3% to 1.96 million units in October, potentially signaling a modest tightening in that segment of the market, according to Moody's analysts.
Inventory remained 5.4% above levels seen in October 2013, however.
Condo and co-op sales have not picked up as much speed as single-family homes, but they are beginning to climb, Moody's said, recording a 3.3% jump from September.
The median sales prices for single-family homes fell to $208,700 in October, sitting 5.6% higher year-over-year, while the average single-family home price has jumped 4.1% annually.
"In terms of sales volume, the housing market has almost pulled out of its slump in the first quarter of 2014, and the steady upward trend in prices is also a good sign of excess demand," said Andres Carbacho-Burgos, Moody's analyst (Economy.com). "The median existing single-family home price is well on its way to regaining the 2005 peak by the end of next year."
While single-family home construction has taken the slow road in its recovery from the recession, single-family starts are expected to hasten next year, especially if the labor market continues to tighten and the labor force and household formation continued to climb, Carbacho-Burgos said.