TGIF - I wish I had solid confirmation that the Tax Credit will be extended but we're being kept in suspense - nonetheless folks need to be looking at buying anyway as there is no better time than the Present! Here is a great website that you might consider signing up for - it's geared mainly toward loan officers but it has great updates that anyone in our industry can relate to and be happy to made aware of: http://www.thinkbigworksmall.com Have a great weekend - please call me when I can be of assistance to you or your clients!
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 Points are up-front fees paid to obtain a better interest rate on a loan. One point equals one percent of the loan amount. A lower interest rate may result in a lower monthly payment, but it is important to consider how long you intend to be in the loan, and to compare current rates to historical market trends. If you take out a $300,000 mortgage and decide to pay one point, this translates into an up-front closing cost of $3,000. Paying a point up front saves $100 a month but it will take 30 months to recuperate the cost of that point. If you decide to refinance or sell the home before the 30-month mark, your money is lost. In this case, you would benefit financially by remaining in the home longer than the 30 months. Rates run in cycles. When rates are at historical lows, it is sensible to pay points if you plan to live in the home for an extended period of time. It is unlikely that rates will go down; hence, there will be no need to refinance. When rates are up, there is a strong likelihood that they will come down. This is no time to pay points. The chances of refinancing in the future are extremely high, and you will likely not be in the loan long enough to recuperate the cost of the points. |
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| Mortgage Interest Rates for Fixed Rate Mortgages* | |||||||||||||||||||||||||||||||||||||||||||||||||
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| *Rates are subject to change due to market fluctuations and borrower's eligibility. | |||||||||||||||||||||||||||||||||||||||||||||||||
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From "Think Big, Work Small"
Continue to float but stay tuned for rate alerts. Rate markets are overbought and unless the stock market really implodes today there is no more to the rally with Treasury auctions looming next week and near term technical overbought oscillators drawing attention.
At 8:30 Sept non-farm jobs were reported down 263K against market estimates of -180K to -200K, the unemployment rate at 9.8% was in line and +0.1% form August. Average hourly earnings in Sept were up just 0.1%, also seen as a negative to the economic optimism. August non-farm jobs were revised a little better, from -216K to -201K.
The reversal in the equity markets is finally taking hold after a month of waiting; even the most bullish investors are now having to face the reality that the equity markets may have over-shot. That said, listening to various guests on CNBC after the employment report suggests the bulls are not going to give up easily. Lot of chatter coming from the NYSE floor that traders are excited about the turn lower in the stock market, as have noted previously traders say they want a decline in the stock market so they can buy at lower levels. As far as we are concerned, talk is a very cheap commodity; we do not take those thoughts seriously. Changes in sentiment can occur rapidly based on unfolding data. At the end of the day, the basic question in the markets now is whether or not we will have a double dip recession? The bond market is leaning that way while the equity markets are tilted toward no double dip; will likely to increase market volatility over the next few weeks.
Bernanke yesterday said the expansion may not be strong enough to "substantially" bring down unemployment, indicating the central bank will be slow to drain the trillions of dollars it's pumped into the economy. With the Fed expected to not initiate any tightening moves for most of 2010 and inflation off the radar at the moment, the fixed income markets are benefiting in a major short covering move triggering huge stop loss selling. Carrying on with the rally so far this morning on the weaker than expected employment data
Additional bad news for the economic outlook this morning from the Labor Dept; its preliminary estimate for the annual benchmark revisions to payrolls that will be issued in February. They showed the economy may have lost an additional 824,000 jobs in the 12 months ended March 2009. The data currently show a 4.8 million drop in employment during that time.
At 10:00 August factory orders concluded the data this week; expected to be +0.5%, orders were down 0.8%; August durable goods orders revised to -2.6% from -2.4%.
Looking ahead; next week Treasury will auction a total of $71B in 3s, 10s and 30s on Tuesday, Wednesday and Thursday ($39B of 3 yr notes, $20B of 10 yr notes and $12B of 30 yr bonds); Monday Treasury will also auction $7B of 10 yr inflation-indexed notes. Demand for US debt has been very strong from foreign and domestic investors in the past three months. This time the auctions will face the lowest yields in six months if rates hold current levels.
By 10:00 the rally early ended; Not likely to see much movement through the rest of the day. The stock market is slowing finding a little traction from the worst levels at 9:00 this morning.
Continue to float but stay tuned for rate alerts. Rate markets are overbought and unless the stock market really implodes today there is no more to the rally with Treasury auctions looming next week and near term technical overbought oscillators drawing attention.
30-YEAR FIXED-RATE MORTGAGE LOWEST IN FOUR MONTHS, NEARING ALL-TIME LOW SET IN SURVEY IN APRIL
5-Year Fixed Mortgage Rates Are The Lowest Since Freddie Mac Records Began In 1991; 5-Year ARM Rates Also Hits Record Low
McLean, VA - Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 4.94 percent for the week ending October 1, 2009, down from last week when it averaged 5.04 percent. Last year at this time, the 30-year FRM averaged 6.10 percent. The last time the 30-year FRM was below 5 percent was the week ending May 28, 2009, when it averaged 4.91 percent.
The 15-year FRM this week averaged 4.36 percent, down from last week when it averaged 4.46 percent. A year ago at this time, the 15-year FRM averaged 5.78 percent. This is the lowest the 15-year FRM has been since Freddie Mac started tracking it in 1991.
The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.42 percent this week, down from last week when it averaged 4.51 percent. A year ago, the 5-year ARM averaged 6.00 percent.
The one-year Treasury-indexed ARM averaged 4.49 percent this week, down from last week when it averaged 4.52 percent. At this time last year, the 1-year ARM averaged 5.12 percent.
"Low mortgage rates are helping to stabilize home sales," said Frank Nothaft, Freddie Mac vice president and chief economist. "New home sales in August rose to the highest annualized pace since September 2008 and the inventory of unsold houses fell to the lowest level since February 1983.
Although existing home sales fell somewhat in August, it was still the second strongest showing in 23 months. Furthermore, house prices increased for the second month in a row in July, after adjusting for seasonality, based on the 20-city composite S&P/Case-Shiller Home Price index®. Moreover, the increases were more broad-based in July with house prices rising in 17 of these metropolitan areas, compared to 16 in June.
From Dick Lepre, San Francisco
Thursday October 1, 2009
Initial Jobless Claims were 551,000 above previous and consensus. Personal Income was +0.2%. Personal Spending was +1.3%. Construction Spending was +0.8%. Pending Home Sales was +6.4%. All of this may well be the makings of another jobless recovery. Yes, jobs trail in a recovery but the fact is that technology and the world economy are eliminating jobs. The Treasury techs are bullish which is good news for rates.
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