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Nicole's Week in Review

By
Mortgage and Lending with United Lending

Mortgage Rates

Rates ended nearly unchanged for the week, but the biggest news last week was the Fed signaled higher mortgage rates are in the near future.

The low mortgage rates we've enjoyed were due in large part to the Fed's purchase of Mortgage-Backed Securities (MBS) on the secondary market -- a 1.2T purchase commitment spread evenly over the last year. Speculation that the Fed would continue to purchase MBS was squashed last week when the Fed gave a definitive "no", and instead said their current commitment would continue through first quarter 2010 through a "weaning" off of the program.

The Fed is "weaning" the market off its purchases of MBS to gradually transition the market back to normal conditions, rather than a quick bump in rates.  Regardless, its a given that the Fed's end to purchasing MBS will cause rates to increase, most likely above the 6% range.

Existing and New Home Sales

In other housing news, Existing Home Sales and New Homes Sales came in lower than expected, and inventory of existing and new homes dropped to its lowest levels since April 2007 and January 2007, respectively.  This decline may be attributed to builders constructing less homes, but either way is a great sign as a drop in inventory is what is needed to begin stabilizing the housing market.

Lastly, remember the $8,000 first-time home buyer tax credit expires November 30th!  If you're wanting to take advantage of this credit, you need to have a home under contract by October 15th.  Get in contact with me quickly if you're interested so we can move quickly!

Forecast for the Week

This week has a full calendar of economic news due out, with Unemployment the most crucial of figures due out Friday.  Currently, our national unemployment rate is sitting at 9.7%.  Remember, as a general rule, weaker than expected economic data is good for mortgage rates, and visa versa.

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