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Mortgage rates dip slightly in February, says FHFA

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WASHINGTON (3/28/14)--Mortgage interest rates took a small step back in February, according to the Federal Housing Finance Agency (FHFA) index of new mortgage contracts.

The rate fell 0.07% from January levels.

The FHFA data is driven by the national average contract mortgage rate, which tracks the initial interest rate on mortgages issued within the last five working days of a given month.

Because rates are typically locked in 30 to 45 days before a loan is closed, however, the data actually better reflects mortgage-rate conditions in January.

The average interest rate for traditional 30-year, fixed-rate mortgages of $417,000 or less came in at 4.45% in February, a step down by 22 basis points. The average amount lent for all types of home loans was $275,000 in February, down about $8,700 from the month prior.

For previously occupied home purchases, the rate was 4.3% in February. The rate for the composite of all mortgage loans dropped to 4.22%, a 14-basis-point decline from the rate in January.

Though, after the Board of Governors of the Federal Reserve System meeting last week where newly seated Board Chair Janet Yellen indicated a possible increase in interest rates as soon as early 2015 (Washington Post March 26), fixed-mortgage rates jumped, according to data released by Freddie Mac.

Standard 30-year, fixed-rate mortgages climbed to 4.4% from 4.32% last week, and 15-year, fixed-rate mortgages moved up to 3.42% from 3.32%.

Borrowers beware of upcoming home-equity resets

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WASHINGTON (3/27/14)--Before the housing market crumbled in 2008, home prices soared, and credit came fast and cheap.

With consumer confidence high, many tapped into their home's equity to reap the benefits of paying interest-only on those second mortgages for 10 years.

That decade has come and gone, however, and the interest-only payments tied to those home-equity loans have fled along with it.

Reports have been rolling in that home-equity loans, en masse, will begin to reset this year, a mechanism that will cut off the interest-only payment terms and force borrowers to start paying down the principal loan they received 10 years ago, plus interest, from here on out.

Analysts say this could push monthly payments several hundreds of dollars higher for those consumers still carrying decade-old home-equity lines of credit.   

"We've really been trying to get the word out that this is coming," said Bob Piepergerdes, director of retail credit risk for the Office of the Comptroller for the Currency ( MarketWatch March 26). "Our message is this: (Consumers) shouldn't wait to start addressing it."

The comptroller for the currency office forecasts that $171 billion in home-equity loans held by the biggest banks will reset over the next four years, compared to just $28 billion in the previous four.

Credit unions experienced the highest growth rates in home-equity loans in 2005 and 2006, at roughly 25%, according to the Credit Union National Association's Economics and Statistics Department. If carrying traditional terms, those loans will reset in the coming two years as well.

With payments climbing anywhere from $300 to $600 higher than current levels, borrowers may have a difficult time making up the difference, leaving them vulnerable to default and foreclosure.

In the Los Angeles Times in November, Amy Crews Cutts, chief economist for Equifax, called the situation a looming "wave of disaster," as large numbers of borrowers won't be able to make the higher payments.

Meanwhile, waiting to approach lenders until the end of the interest-only period on these home-equity lines would not be prudent, advisers say. Instead, consumers should ask whether they can roll their second mortgages in with their first--which often feature lower interest rates--refinance, or opt for a forbearance plan that can modify these loans ( The New York Times Feb. 6).

"Borrowers should raise their hand very early and expect to be helped," Allen J. Jones, managing direction of Washington-based RiskSpan, told The New York Times.

Home prices fall in January for third straight month: Moody's

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WASHINGTON (3/26/14)--Cold weather, a limited housing supply and rising mortgage rates contributed to a third straight month of falling home prices in January, according to a report released Tuesday by Moody's (, The Associated Press March 25).

The Standard and Poor's/Case-Shiller 20-city home price index dropped 0.1% in January, the same decrease seen over the prior two months.

But while home prices have flattened of late, economists say the market may have needed the break, as the last two years saw housing prices surge, which has priced many people out of the housing market.

This break, economists said, could set the stage for more predictable price conditions in the coming months.

"The housing market is showing signs of moving forward with more normal price increases," David Blitzer, chairman of the S&P Dow Jones index committee, told The Associated Press.  

The housing recovery in general, meanwhile, may be stumbling alongside home prices, as existing home sales in February dropped to their lowest rate since mid-2012, and home construction fell for a third-straight month.

An uptick in new construction permits--fueled in large part by those looking to build multifamily housing or apartment complexes--sparks some confidence that conditions may still improve, however ( News Now March 19).

Homeownership desires vary between young, old: NAR

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CHICAGO (3/25/14)--A younger homebuyer sees a home as an investment while older purchasers are scaling their home to meet a changing lifestyle, according to an analysis by the National Association of Realtors (NAR).
Eight of 10 recent buyers made their purchase decisions citing a "good financial investment," although the range was much higher (87%) for purchasers age 33 and younger than for buyers over 68 (74%).
For Gen Y, those under 33, homeownership is an aspiration and a long-term investment, said Lawrence Yun, NAR chief economist.
"However, the challenges of tight credit, limited inventory, eroding affordability and high debt loads have limited the capacity of young people to own," Yun said. Of the 20% of Millennial buyers who took longer to save for a down payment, 56% cited student loan debt as the biggest obstacle.
Gen Y is the largest share of home buyers at 31%, followed by Gen X at 30%. Younger Boomers, ages 49-58, and Older Boomers, ages 59-67, purchased homes at 16% and 14%, respectively.
Older buyers cited being closer to family or friends, retirement or downsizing their home as reasons behind their purchases.
The home-buying process begins online for all generations, though, where prospective purchasers search for properties.

Auto loans retain priority bill-pay status: TransUnion

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CHICAGO (3/24/14)--Consumers are making mortgage payments before squaring away credit card balances for the first time since 2008, a TransUnion study released last week found.

But car payments remain miles ahead.

As of September 2013, the number of 30-day delinquencies for auto loan payments sat at 0.89%, almost a full percentage-point lower than both mortgage and credit card payments, which sat at 1.79% and 1.86% respectively ( TransUnion March 19).

The 30-day delinquency rate in September 2012 for mortgages was 2.42%, while it was just 1.81% for credit cards.

"One of the biggest impacts of the Great Recession to the credit system was its influence on consumer-payment patterns," said Ezra Becker, co-author of the study and TransUnion vice president of research and consulting ( MarketWatch March 21). "As unemployment rose and home prices cratered, increasingly more consumers were faced with financial constraints and had to make difficult choices--and many chose to value their credit-card relationships above their mortgages."

That trend appears to be shifting.

But while auto loans have been the most popular for consumers to pay back for more than a decade--a fact some believe is largely driven by the perceived inconvenience of public transit--financial planners say consumers should start ranking their cars below their mortgages as well.

Defaulting on a car loan might mean having to take the bus or the train to work. Defaulting on a mortgage, meanwhile, might put someone out on the street.

"You should pay your home, food and utilities before transportation," Kimberly Foss, founder/president of the Roseville, Calif.-based financial-planning firm Empyrion Wealth Management, told MarketWatch , adding, "If you get kicked out of your house, you have no roof over your head, nowhere to live."

Affordability dampens existing-home sales in Jan.

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WASHINGTON (3/21/14)--The National Association of Realtors (NAR) reported sales of existing homes were dragged down 0.4% in February by rising mortgage rates and home prices.
Seasonally adjusted, sales of existing homes came in at 4.6 million in February, down from 4.62 million in January. February's numbers were 7.1% lower than a year prior. Also, the pace of sales for the month was the lowest since the 4.59 million of July 2012.
Conditions were largely unchanged from January, said Lawrence Yun, chief economist, NAR.  "We had ongoing unusual weather disruptions across much of the country last month, with the continuing frictions of constrained inventory, restrictive mortgage lending standards and housing affordability less favorable than a year ago," he said.
He noted that some transactions are simply being delayed, so there should be some improvement in the months ahead.
February's median existing-home price for single-family homes, townhomes, condos and co-ops was $189,000--9.1% above 2012. "Price gains have translated into an additional $4 trillion of housing wealth recovery over the past three years," Yun added.
Rising house prices reflect the tight inventories in spite of weaker sales, said analysts at Moody's ( March 20). Uncertainties remain, Moody's noted, as affordability is restricted even more by mortgage interest rate increases.
First-time homebuyers are particularly challenged by the level of inventory and financing options. NAR reported that the share of first-time homebuyers declined to 28% this month from 30% in February 2013.

Fed decision maintains low cost of funds for CUs

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WASHINGTON (3/20/14)--Even with the change in its forward guidance, the Federal Open Market Committee (FOMC) repeated that the interest rate will stay low for a "considerable time," possibly well into 2015, keeping credit unions' cost of funds low, according to a Credit Union National Association economist.
"The Fed, under Chair Janet Yellen's leadership, did what many were expecting--continuing to wind down longer-term asset purchases and removing the forward guidance on the 6.5% unemployment rate threshold," Mike Schenk, CUNA vice president of economics and statistics, told News Now.
With the unemployment rate nearing the 6.5% threshold, many observers were wondering if increases to the Federal funds rate were imminent, he noted. Labor market conditions, inflation expectations and financial markets will be taken into account for rate decisions, even after the Fed halts its monthly asset purchases.
If the Fed continues to reduce its asset-bond purchases by $10 billion per month, it will likely complete its quantitative easing program by its December meeting.  Beginning in April, the committee will add just $25 billion per month to its holdings of agency mortgage-backed securities instead of $30 billion per month. Longer-term Treasury securities will drop to $30 billion per month down from $35 billion per month.
On the flip side, low funding costs mean credit unions "will wrestle with relatively low short-term investment yields," Schenk advised.
"The good news is that as the weather becomes less of an issue CUNA economists expect to see a continuation of the expression of pent-up demand in the consumer sector," he said, adding, "That, in combination with low market interest rates, will help to continue to boost credit union loan growth."

More permits open door for homebuilding

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WASHINGTON (3/19/14)--While February's Census Bureau numbers may indicate a sluggish housing market, a recent surge in home-construction permits may be foreshadowing a steamy summer season for homebuilders instead ( March 18).

Housing starts, or the number of homes to begin construction, fell 0.2% in February to 907,000 after January's numbers had been revised a bit higher than previously reported. Compared with February 2013 data, starts have taken a 6.4% dive.

Harsh weather, which largely shut in builders and prevented many new projects from getting off the ground, likely fueled the decline (MarketWatch March 18).

The road ahead may be clearer. Permits for home construction, thanks to multi-family or apartment construction permits, jumped by 7.7% to 1.018 million, which sits 6.9% higher than last year's numbers.

Specifically, multi-family dwelling construction permits leapt 24.3% in February, while permits for single-family homes sank by 1.8%.

A positive trend in home completions also has been bearing out of late, as completion of privately owned housing units neared a post-recession high this month with 886,000 annualized, representing a 4.4% improvement from January and a 21.9% upswing from the prior year.

NEW: Fed takes 'balanced approach' to interest rate decisions

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WASHINGTON (3/19/14 UPDATED: 2:25 p.m. ET)--The Federal Open Market Committee will take "a balanced approach" and update its forward guidance as it looks toward keeping the interest rate at 0% to 0.25%, it announced after today's meeting.
"The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run," the Fed said in its post-meeting statement.
The FOMC will assess progress--"both realized and expected"--toward its twin objectives of maximum employment and 2% inflation. The assessment information will include "measures of labor market conditions, indicators of inflation pressures and inflation expectations and readings on financial developments," the Fed noted.
Based on these factors, the committee continues to anticipate that the current target range for Fed funds will continue after its asset-purchase program ends.
The Fed also is continuing to draw down its monthly asset-purchasing program that it announced in December.
Beginning in April, the committee will add just $25 billion per month to its holdings of agency mortgage-backed securities instead of $30 billion per month. Longer-term Treasury securities will drop to $30 billion per month down from $35 billion per month.
By comparison, in February, the Fed added $30 billion per month rather than $35 billion per month in mortgage-backed securities to its holdings. Longer-term Treasury securities were reduced to $35 billion per month from $40 billion per month.

This is the third straight meeting with a $10 billion reduction.

Underlying conditions--mixed jobs reports, consumer spending and inflation--have been skewed by severe winter weather that has challenged economic forecasts.
The meeting is the first for Janet Yellen as chair of the policymaking group.

Yellen to set tone for interest-rate language

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WASHINGTON (3/18/14)--Today, Janet Yellen leads the first Federal Open Market Committee meeting as chair, and economists are keeping an ear out not only for what she says, but how she says it.
The Fed has been linking the interest rate to the unemployment rate, but according to the Jan. 28-29 meeting minutes, the federal policy-making committee is looking to change its forward guidance ( News Now Feb. 20).
Now is the time for the Fed to revamp its forward guidance tool, analysts say. With the current near- zero interest rates and a continued drawdown of its monthly asset-bond purchases program, "they've got a little room to unanchor these things," said Lewis Alexander, chief economist, Nomura Holdings Inc. ( MarketWatch March 17).
Forward guidance primarily has been a repeated commitment to keep short-term interest rates--0% to 0.25%--as long as or "well past" the unemployment rate of 6.5%.
Yellen has indicated she would be comfortable with the move away from the unemployment rate, analysts said. The unemployment rate did not fully capture the health of the labor market, she told the Senate Banking Committee last month, especially considering the drag that severe winter weather has had across all economic indicators.
New "holistic" guidance is likely to be "be less specific and more ambiguous and point to a variety of indicators," Jeffrey Cleveland, chief economist, Payden and  Rygel, told MarketWatch .
Analysts forecast the fed funds rate will be 0.6% by the end of 2015.

March consumer sentiment in like a lamb

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WASHINGTON (3/17/14)--Despite expectations that the economy will warm with the weather in the coming months, consumer sentiment continues to hibernate, based on the Thomson Reuters/University of Michigan consumer sentiment index.

Consumer confidence fell 1.7 points in March to 79.9%--a four-month low. Economists had forecast a small jump up for the month to 82 (Bloomberg March 14).

Analysts pin the lack in confidence largely on "unseasonably harsh winter weather, which kept both workers and consumers stuck at home" ( March 14).

Many still expect the economy to turn around once the winter weather recedes.

"Consumer sentiment should find its way higher in 2014 as job and income growth reaccelerates," wrote Kyle Hillman, Moody's associate economist. "Beyond the labor market, Congress passed a federal budget and suspended the debt ceiling...two potential obstacles for brinkmanship in Washington to damage sentiment. Moreover, rising house prices will help consumers feel wealthier, another reason we believe confidence will climb this year."

The economic conditions index, meanwhile, gained 0.7 points, up to 96.1%, while the economic outlook index stumbled, dropping to 69.4% from 72.7%.

Bloomberg also reported:
  • The Labor Department's producer price index fell 0.1% in February after a 0.2% increase the previous month.
  • The Michigan sentiment survey's index of expectations for conditions six months out fell more than three percentage points to 69.4%, the lowest level since November.
  • The current conditions gauge, measuring how Americans feel about their personal finances, climbed to 96.1% in March from 95.4%.

Foreclosures down: 'Zombie' homes a lurking threat

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IRVINE, Calif. (3/14/14)--An improvement in foreclosure numbers unseen in seven years was reported this week by RealtyTrac in its U.S. Foreclosure Market Report for February.

Filings for foreclosures--default notices, scheduled auctions or bank repossessions--last month dropped by 10%, or down to 112,498. The recent decline also reflects a 27% decrease from levels in February of last year (RealtyTrac March 13).  

But despite the positive numbers, a new trend in foreclosures appears to be creeping up as of late.

"Zombie" foreclosures--or uncared-for, owner-vacated properties--have started to grip the housing market, as 21% of all foreclosures, or about 152,000, fall into this category.

On average, zombie foreclosures dwell in the foreclosure process for 1,031 days, or almost three years.  

"The biggest threat from foreclosures going forward is properties that have been lingering in the foreclosure process for years, many of them vacant with neither the distressed homeowner or the foreclosing lender taking responsibility for maintenance and upkeep of the home," said Daren Blomquist, RealtyTrac vice president.

"These properties drag down home values in the surrounding neighborhood and contribute to a climate of uncertainty and low inventory in local housing markets," Blomquist added.

Blomquist also has written that before lending institutions repossess these properties, houses are left to deteriorate, attracting vandalism and other crime to the area.

While several solutions to the zombie foreclosure problem exist that could lead to the retention of these homes, studies show the most viable way to cure housing markets replete with "the undead" is demolition.

Cleveland, for example, a rust-belt city like many others grappling with a spate of zombie foreclosures, has demolished more than 1,000 homes so far ( March 13).

However, if a new homeowner is interested in buying the vacated home and rehabbing and revitalizing it, Blomquist said, the new owner can improve the value of the property, which can spill over to other parts of the surrounding neighborhood.

Mortgage applications stubbornly stagnant, says MBA

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WASHINGTON (3/13/14)--Mortgage application numbers continue to wallow, a recent Mortgage Banker's Association survey found, as the Market Composite Index (MCI) for applications receded by 2.1% for the week ending March 7.

MCI measures mortgage loan application volume.

Refinancing applications dropped by 3.1%--regressing to their weakest levels since November 2008--and purchasing sank by 0.5%, a number that hovers just above a post-recession low ( March 12).  

Despite an increase in mortgage interest rates for the week, for the most part rates over the last few months have remained stagnant as well.

Four-week moving averages look even bleaker.

The four-week moving average for refinance activity has dropped by 7% and sits 64% behind last year's level, while purchase applicants have dropped by almost 10% and are 17% lower than last year at this time.

Moody's doesn't paint a rosy picture for the near future either. If the economy doesn't produce stronger income growth, application demand likely will continue to suffer.

An influx in jobs in 2014 could boost the number of new households, but analysts predict the majority of new households that would form as a result would be renters, often millennials who wouldn't be able to come up with 20% down payments and quality credit.

MBA's weekly report also found:
  • Refinance applications accounted for 57% of all applications and carried 50% of the prospective loan volume.
  • The contract rate for 30-year fixed-rate conforming mortgages jumped 5 basis points to 4.52%, 7 points higher than four weeks ago and 71 basis points higher than a year ago.
  • The five-year adjustable-rate mortgage climbed 9 basis points, ending at 3.18% for the week. That interest rate sits 56 points higher than it did a year ago.

Uncertainty tamps down small-biz optimism

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WASHINGTON (3/12/14)--The Small Business Optimism Index fell by 2.7 points in February to a reading of 91.4, a number before seen in periods of severe economic downturn such as recessions or sub-par growth (NFIB March 11).

Even hiring plans, which in January's report showed promise for the New Year, took a 5-point dive.

"Uncertainty is a major cause of the index's dip," said Bill Dunkelberg, chief economist, National Federation of Independent Business, the agency that maintains the index. "Lacking any progress in Washington and facing continued unknowns with the healthcare law, the Environmental Protection Agency, the minimum wage (debate), tax reform and more, it is no surprise that the Small Business Optimism Index fell."

New job numbers in the report came in higher than originally estimated, however, unemployment still climbed a tenth of a point.

Findings also included a drop in expected real sales, likely signaling rough waters head, the index found.

"We shouldn't expect blue skies soon," Dunkelberg said.

Other indicators:
  • Labor Markets: NFIB owners increased employment by .11 workers on average.
  • Job creation: Twenty-two percent of owners reported job openings they couldn't fill, while 13% reported taking on temporary employees.
  • Sales: Sixteen percent of business owners listed "weak sales" as their top business problem.
  • Earnings and wages: Earnings remained at a discouraging net negative 27%.
  • Credit markets: Only 5% of businesses reported that all their credit needs had not been met.
  • Inflation: Fifteen percent of NFIB owners said they reduced average selling prices over the past three months, a 2-point increase, while 19% reported price increases, also a 2-point increase.

FICO says new scoring model more predictive, accurate

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SAN JOSE, Calif. (3/11/14)--A new FICO scoring model that will arm lenders with a more accurate reading of credit risk will be released this summer. It will be the first retooling of the widely consulted credit rating system in six years (American Banker March 7).

While FICO, a San Jose, Calif.-based analytics firm, has said it will continue to look at payment history and balances when computing credit scores, the new "FICO Score 9" model also will delve into post-recession data specific to a consumer's spending and credit habits, and how those habits have evolved over the past six years.

"For lenders, FICO 9 is a good thing because it gives them a more laser-focus on where a person is in that spectrum of being able to repay debt because it's in nobody's interest to give credit to someone who's not ready to take on credit," said Anthony Sprauve, senior credit specialist at FICO.

Consumers who have held on to strong credit scores may watch their numbers creep up a bit, while those with scores that "need work" may see their scores lowered, Sprauve told American Banker.

Similar to the current calculation, the new score model will span all major credit product lines, including mortgages, auto loans, credit cards and personal loans.

Brace for drop in ag lending due to lower crop prices

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RAPID CITY, S.D. (3/11/14)--Across the country agriculture has boomed in recent years, and the benefits of that have trickled down not just to farmers, but also to the financial institutions who serve them.

The U.S. Department of Agriculture (USDA) has forecast commodity and crop prices to tumble in 2014, meaning credit unions and other financial institutions may have to brace themselves for a difficult stretch (American Banker March 7).

"You need to make sure you have some good margins in there," Phil Love, president/CEO of Midwest Business Solutions (MWBS), a commercial and agricultural lending credit union service organization, told News Now Monday. "Prices are going to fluctuate so much up and down, if you leverage a farmer up too much...if prices retreat, he could be doing the same business, but overall gross income will have dropped substantially."

The USDA projects net farm income will drop by 26% this year, or down to about $96 billion. If correct, the weak year would spoil a three-year stretch of record-high profits.

But while staple crops like corn, wheat and soybeans are expected to take the biggest hits, Love said those who can diversify their operations, such as with cattle which remains strong, may be able to hedge their business in future down stretches.

"Depends upon what you're in," Love said. "Cattle and hogs and stuff like that are extremely strong in terms of prices, if you compare (them) with a couple of years ago."

Meanwhile, even if the USDA prediction comes true, 2014 still would boast a better 12 months than the 10-year running average, likely driven by the recent farming surge.  

That upswing has boosted land and equipment loans considerably.

Total farm debt jumped 15% between 2009 and 2013, to more than $309 billion, according to the USDA. Net income at farm banks climbed 57% from 2009 to 2012, or up to $3.6 billion, according to data from the American Bankers Association.

MWBS reported total loan closings of more $40 million and outstanding balances of $20.3 million at the end of 2013.

Japan officially declares Bitcoin is not currency

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TOKYO (3/10/14)--The Japanese government Friday declared that Bitcoin was not legal tender, but that the digital peer-to-peer payments system could be subject to taxes.
"Bitcoin are neither Japanese nor foreign currencies and its trading is different from deals stated by Japan's bank act as well as financial instruments and exchange act," according to a document from Prime Minister Shinzo Abe's cabinet ( The Wall Street Journal  March 7).
Japan did say that the bitcoin sales, related transactions and gains on exchange rates would be subject to income, corporate and consumption taxes.
The country is trying to define Bitcoin and the government's role in regulating it in light of the bankruptcy of Mt. Gox, a Tokyo-based Bitcoin exchange. The Feb. 28 bankruptcy filing cited a loss of 850,000 bitcoins, worth about $450 million at the time ( News Now March 3).
In other Bitcoin news, the Canadian-based Flexcoin exchange also closed down last week after hackers made off with about 440,000 euros ($610,000). It said owners could receive some bitcoins back from computers that weren't connected to the Internet and couldn't be raided ( March 5).

Nonrevolving credit drives consumer credit growth

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WASHINGTON (3/10/14)--Student loans and pent-up demand for autos helped boost nonrevolving consumer credit by $13.7 billion in January, according to Friday's data from the Federal Reserve.
The $2.8 billion increase in nonrevolving credit more than covered the $700 million drop in revolving credit at credit unions in January.
"Consumers are taking advantage of extremely low interest rates" to finance education and big-ticket items such as autos and vacations, said analysts at Moody's ( March 7).
Credit unions' revolving credit experienced a 7.4% slowdown in January from December's seasonally adjusted numbers.
The Fed's report indicates consumers are reluctant to take on too much credit card debt with revolved credit ticking downward 0.2%, Moody's said. After two months of harsh weather, however, consumers may be ready to take on new purchases delayed by snow.

Credit quality continues to improve as well. According to the American Bankruptcy Insitute, total bankruptcy filings in the U.S. decreased 12% in February over the same period last year. Consumer filings dropped to 69,380 from February 2013's number of 78,614.

Total commercial filings in February decreased to 2,813, representing a 24% decline from the 3,722 business filings recorded a year prior. Total commercial chapter 11 filings also decreased 27%, to 452 filings in February from the 619 filings recorded a year ago.

Jobless claims drop to 3-month low

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WASHINGTON (3/7/14)--Jobless claims fell by 26,000--from 349,000 to 323,000--for the week ending March 1, according to Labor Department data released Thursday.

As The Wall Street Journal reported this week, claims for unemployment benefits have sunk to a three-month low.

While the size in the drop surprised forecasters, the volatile shifts in numbers could be explained, in part, by recent holidays or the winter weather that's thumped much of the Northeast and South Atlantic regions of the country ( Feb 6).

The four-week moving average for initial claims, which may more accurately reflect jobless trends, dropped by 2,000 last week to 336,500. Analysts note that this rate sits slightly above the claim levels consistently reported in the pre-recession era.  

Continuing claims, or those claiming at least a second week of unemployment, fell to 2.9 million in the week ending Feb. 22, a second straight week of decline. The four-week moving average backpedaled by 14,750 to 2.93 million.

Moody's analysts say continuing claims had been climbing since early December, but that the recent trend could be a sign that the labor market has started to rebound as the inclement weather backs off.     

Thanks to this decline, though, the insured unemployment rate, which measures both filed claim volume and length, has fallen to 2.2%.

The Labor Department also reported that the total number of Americans claiming benefits from all unemployment insurance programs stood at about 3.5 million for the week ending Feb. 15. That's about an 86,000 decrease from the previous week.

Economists now await today's release of the Labor Department's new-hire numbers, which are expected to show a 152,000-job growth spurt for February, an improvement from previous months.

Beige Book: Outlook optimistic despite chill factor

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WASHINGTON (3/6/14)--The economy continues to grow at a "modest to moderate" with improved conditions in eight of the 12 Federal Reserve Districts, according to the Fed's Beige Book commentary released Wednesday.
From January to early February, severe winter weather slowed activity in the Northeast districts of New York and Philadelphia. Auto, retail and manufacturing sales were particularly hard hit.
Richmond, Va.; Chicago and Minneapolis did report positive sales in weather-related goods, however.
The district reports were mixed on loan demand and volume. Analysts at Moody's noted, "Falling mortgage and refinancing applications were among the few areas of weakness reported across districts" (  March 5).
Credit quality is improving as delinquency rates tick downward or remain stable.
The slower pace in residential housing markets was attributed to the unusually severe winter. Home inventories were low in most districts, and housing prices continue to appreciate.

Commercial real estate conditions continue to improve from the previous report, according to seven of 12 districts.
Weather continues to hamper economic forecasts, but the report reinforces the bias that the economic slowdown is short lived, according to Eric Green of TD Securities ( MarketWatch March 5).
The anecdotal report was released two weeks before the Federal Open Market Committee's March policy meeting.

Weekly mortgage applications notch 9.4% gain

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WASHINGTON (3/6/14)--Weekly mortgage applications rose 9.4% on a seasonally adjusted basis for the week ending Feb. 28, according to the Mortgage Bankers Association's weekly survey.
On an unadjusted basis, the market composite index, which measures mortgage loan application volume, increased 11% compared with the previous week.
The refinance index posted a 10% gain from the previous week. On a four-week moving average basis, however, refinance activity dropped by 2.5% over the past month. At 9.6%, refinance activity is 63% lower than the same period one year ago.  
Many homeowners have already refinanced, and with rates eclipsing 5%, the forecast for refinance originations "appears gloomy," said analysts from Moody's ( March 5).
Purchase applications have dropped by 11.8% over the past month and are 15.7% below their year-ago level. Demand is essentially unchanged from three years ago, said Moody's.
Rates for 30-year fixed-rate mortgages fell by 6 basis points to 4.47%--unchanged from four weeks ago and 77 basis points higher than February 2013. Thirty-year fixed-rate jumbo mortgages decreased by 10 basis points to 4.37%.
The five-year adjustable-rate mortgage rate moved 8 basis points lower, ending the week at 3.09%. The interest rate is 54 basis points higher compared with a year earlier.

Demand bumps up housing prices: CoreLogic

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IRVINE, Calif. (3/5/14)--Housing prices increased an unexpected 0.9% in January, according to the U.S. CoreLogic Home Price Index released Tuesday, reflecting 23 months of year-over-year increases in home prices nationally.
January's number is 12% higher than January 2012, and CoreLogic forecasts that February prices will follow suit with a 12.5% year-over-year growth rate.
"Polar vortices and a string of snowstorms did not manage to weaken house price appreciation in January," said CoreLogic Chief Economist Mark Fleming. "The last time January month-over-month and year-over-year price appreciation was this strong was at the height of the housing bubble in 2006."
Strong sales in states unaffected by winter weather contributed to the unseasonably positive pricing. According to Moody's, home prices likely will continue to increase because of investor purchases and limited completion of homes under construction ( March 4).

Services at heart of personal income spend

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WASHINGTON (3/4/14)--Americans' personal spending ramped up in January primarily because of services being purchased not physical goods, according to Monday's report from the Commerce Department.
Services rose 0.9%--the largest jump since October 2001. The Affordable Care Act pushed spending in the health-care arena, including enrollment in insurance exchanges.
Winter weather continues to affect the economy with consumers spending more on utilities, tightening budgets and reducing product consumption, according to analysts at Moody's ( March 3).
February numbers will likely be just as erratic given the severe weather. Shoppers and travelers stayed home, and construction was hindered. "The outlook is more uncertain than usual," Paul Dales, senior U.S. economist at Capital Economics, told The Wall Street Journal (March 3).
Excluding special factors such as health-care allowances, cost-of-living adjustments and the expiration of the long-term unemployment benefits, personal income increased $23.7 billion (0.2%) in January, compared with a decrease of $15.1 billion (0.1%) in December.
Disposable personal income, which is personal income less personal current taxes, rose $45.2 billion, or 0.4% in January, compared with the $9.7 billion decrease (-0.1%) in December, the Commerce Department reported.

Bitcoin exchange Mt. Gox files for bankruptcy

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TOKYO (3/3/14)--The most prominent Bitcoin exchange in the world filed for bankruptcy protection at a Tokyo District Court Friday.
Tokyo-based Mt. Gox said that its liabilities currently exceed assets by about 2.7 billion yen or $26 million, and that it has 127,000 creditors. The company's debt spiked after it fell prey to cyberthievery that cost it 750,000 in customers' coins and 100,000 of its own---worth about $450 million in U.S. dollars, based on Feb. 28 exchange rates ( The New York Times, Bloomberg Feb. 28).
The company filed for protection under Japan's Civil Rehabilitation law, which is akin to Chapter 11 in the U.S. Under the law, the company will be assigned an administrator who will develop a restructuring blueprint and handle payment of claim distributions to creditors.
In the year ending 2013, Mt. Gox had revenue of 135 million yen, or $1.33 million, according to Bloomberg .
Once host to about four-fifths of the world's Bitcoin trading, according to The New York Times , the exchange has, over the past few weeks, been rocked by the theft. On Feb. 7, the company froze withdrawals amid reports of the heist. Mt. Gox confirmed it Feb. 24 and said Wednesday that it was "working very hard" toward a solution. Mt. Gox CEO Mark Karpeles said Friday that weak cybersecurity enabled the breach, according to Bloomberg .
Bitcoin was released to the public in 2008 by a pseudonymous programmer or group of programmers known as Satoshi Nakamoto. It has no central bank and relies on an open ledger to verify transactions. Bitcoin also enables users to preserve anonymity.
The decentralized and identity-concealing characteristics of Bitcoin have led law enforcement officials to call on the federal government to more closely regulate digital currencies.