Last week Mortgage Bonds finished at levels not seen since May 21 and home loan rates hit near historic lows. It’s hard to believe that some borrowers locked their interest rates under 5% on 30 year fixed rate mortgages. Stocks closed lower and the Dow market had its worse week since mid-June. As a result, money flowed to Bonds which helped home loan rates to stay low.
With weaker than expected Job Report for September and the unemployment rate of 9.8%, the Labor Department wasn’t showing much love for US workers. We also saw a decline in the Average Workweek and Average Hourly Earning. Both reports show the weakness in the labor market.
Personal Spending indicated that spending rose in August – the fastest monthly pace in almost 8 years. It sound like great news but we need to take into consideration the results of the “Cash for Clunkers” vehicle purchasing incentive, which is no longer in effect. Pending Home Sales were up above expectations which could be due to the $8,000 First Time Home Buyer Tax Credit set to expire on November 30. So if you're still thinking of taking advantage of this great incentive, it's certainly time to act and get off that fence.
I wonder if Timothy Geithner's home has sold yet... Check out what our Secretary Of The Treasury is trying to do with his house. It's hillarious!
Looking Forward
The markets may see some volatility due to the Treasury Department auctions coming up this week and the auctions will certainly compete with Mortgage Backed Securities. As you may or may not know, the Fed has decided to scale back their purchase of Mortgage Backed Securities so Mortgage Bonds may not get as much support now. We could see more of a wild ride on this week’s auctions than before.
Always Remember
When economic news are weak, money flows out of Stocks and into Bonds which helps the bond market and home loan rates to improve. Strong economic news usually has the opposite result.
To Your Success ~ Maria
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