Yesterday, mortgage rates started the day lower before sprinting higher over a brief early-afternoon span. Markets were largely unprovoked by economic data, geopolitical developments, or technical factors. However this morning it's a different story. The Bond market opened lower (worse) and tried to muster a reversal but was pushed back by tough overhead resistance. All gains from yesterday have been erased.
Consumer Confidence hit a record low as the job losses weigh heavy on consumer's minds. The confidence fell to 38 from an expectation of 45.2. The market had little reaction to this report as GMAC made headlines. Chicago Purchasing Managers Index was also released. This report provides a gauge of the manufacturing industry's growth. This report came in close to estimates, so no reaction there either.
GMAC took center stage this morning as they received a $6 billion lifeline from the Treasury. With this help from Uncle Sam, GM promises to expand financing options to lure consumers back into dealers' showrooms. This move by the Treasury is part of a larger effort to bring aid to the failing auto industry and helps GM avoid bankruptcy or a complete shut down. The stock market rose on the news as money was pulled from Bonds.
Also in the news today (another sad report)... S&P/Case-Shiller data for October show home prices continuing to fall. Prices are down 18% in the past year and dropped 2.2% in October over the prior month. However, it is important to remember that the real estate market is LOCAL. For the past twelve months, the Dallas market was down just 3% as compared to Las Vegas, down 31.7%, Detroit, down 20.4%, Atlanta, down 10.5% to illustrate a few.
But the good news...makes buying very attractive.
With interest rates hovering at historic lows for conforming loan amounts, consumer should begin to seriously consider purchasing or refinancing. For those people in an adjustable-rate mortgage, this is a really good time to make the move into a fixed rate mortgage.
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