GOOD, BAD OR UGLY? I truly believe all off the above, if we're looking at last week and home loan rates in Raleigh, Cary and the entire Triangle. Good news came in the form of the very friendly inflation and employment news, which helped rates on conforming home loans improve by about .125% over the course of the week. "Conforming" home loans are those under $417,000, and subject to very standard credit, income and asset qualifying, nothing exotic or designer, outside the box or fancy - and there's a reason those are being singled out here as having improved.
A little bad news came by way of the Bureau of Economic Analysis, revising previous personal savings rate estimates higher, but showing that Americans still save less than 1% of their income. If you're not sure that you are preparing effectively for your future plans, like retirement or sending your kids to college, please get in touch with me, and let's review your situation to see if I have an idea or referral that might help.
The ugly last week - well, it was REALLY ugly. The media screamed all week about issues in the mortgage industry, particularly impacting what are called "non-conforming" home loans; those that are dollar amounts higher than $417,000, or with credit, income or assets not falling under traditional guidelines. Many of those rates got excessively ugly, in many cases, overnight. Why? It's an interesting story, and not one that even the media seems to understand very well. I will share my opinion in a future post.
Whew!!!!...after a busy week of expected and unexpected news last week, the economic report calendar becomes very tame this coming week, only populated with a handful of low-level reports. In fact, the week's only MAJOR event takes place on Tuesday with the release of the Fed's latest interest rate decision and monetary Policy Statement. The Fed is expected once more to keep their Fed Funds interest rate "on hold" at 5.25%.
I am most interested in the tone and wording of the Fed's Policy Statement. Are they feeling more comfortable about inflation, given the inflation friendly news of last week? If this sentiment leaks into the verbiage of the Policy Statement, Bonds may get a ride higher upon the release, and home loan rates would improve. However, if Fed Chair Ben Bernanke and his fellow inflation fighters at the Fed still sound concerned about inflation, Bonds and home loan rates could worsen.