1. Mortgage Rates Only Slightly Lower After Weak Employment Data

Mortgage rates were finally lower today, but the drop was modest given that it was the product of a weak jobs report–typically a bigger market mover. Additionally, when viewed against the past three straight days of weakness, today only got us back to Wednesday’s levels. The most prevalently quoted conforming 30yr fixed rate for the very best borrower scenarios (best-execution) remains at 4.375% for the most part though 4.25% and 4.5% are both fairly close. When adjusted for day to day changes in closing costs, rates fell an equivalent of 0.04% today.

Throughout January, rates were moving lower with purpose. This continued into early February to a point where we were left to consider whether this was a market-based correction that had run its course or potentially just the first phase in a bigger move lower.

2. U.S. consumer credit posts biggest jump in 10 months

U.S. consumer credit in December grew by the most in nearly a year due to a sharp increase in credit card usage, a potentially positive sign for the economy.

Total consumer credit rose by $18.8 billion to $3.1 trillion, the Federal Reserve said on Friday. That was the biggest gain since February.

Economists polled by Reuters had expected consumer credit to rise by $12 billion in December.

Revolving credit, which mostly measures credit-card use, rose by $5 billion in December after climbing $465 million in November. Revolving credit figures can be volatile.

Non-revolving credit, which includes auto loans as well as student loans made by the government, increased $13.8 billion in December.

 

3. Don’t blame tech industry for tech hubs’ high home prices

Housing in tech hubs is expensive. Just ask anyone in California. Home prices are in fact 82 percent higher in tech hubs than in other large metros, according to a report from Trulia. What is surprising, however, is that technology may not have contributed to that huge disparity, at least according to Trulia’s chief economist Jed Kolko, who sifted through Census data to make his arguments.

“Housing in tech hubs was expensive even before the modern Internet era,” noted Kolko. “In 1990, median price per square foot was 52 percent higher in tech hubs than in other large metros.”

So the tech industry didn’t push prices higher. It was drawn to places that were already expensive. This may have been because these areas had major research universities, technically skilled workers, computer manufacturing industries or nice climates. Kolko points out that the year-over-year increase in home prices in tech hubs is actually in line with, not ahead of, the national trend; that is, after one accounts for the local severity of the housing bust.
Looking 10 tech hubs—San Francisco, Oakland, San Diego and San Jose, Calif.; Seattle; Middlesex County, Mass.; Raleigh, N.C.; Bethesda, Md.; Austin, Texas; and Washington, D.C.—the average price gain in 2013 was 13.4 percent from 2012. Compare that to an 11.4 percent gain for the 90 other large metros. The gap, Kolko argued, has to do with fact that tech hubs had steeper price declines during the housing crash but have fewer homes stuck in foreclosure today. If you adjust for that, the gap disappears.