Financial Update 2/16/2011

Real Estate Agent with Realty One Group, homes for sale, working with first time buyers


2/16/2011  Weekly Commentary

Not quite knowing what-if anything-the turmoil in the Middle East and the debt problems in western Europe will mean to the future of our interest rates and strength of our recovery, investors seem to be overlooking all but the most obvious concerns. There is, as a result, a sense that the markets are waiting for the other shoe to drop.

 Gold, whose price is an indication of the level of uncertainty among investors, has crept up beyond $1373 again. Silver is climbing even faster, and now stands at a rather amazing $30.77 an ounce. Meanwhile, the ten-year Treasury note rate has been trending higher and now stands at 3.62%. And over the last week, mortgage rates jumped significantly-the HSH 30-year rate (which includes jumbo rates in its computation) climbed 16 basis points to 5.33%, and the Freddie Mac was up 24 basis points to 5.05%.

 In other words, the 30-year mortgage officially climbed above the high 4% level last week. Unless a problem develops again in Europe or the Middle East, we are unlikely to see the 30-year fixed-rate mortgage back solidly in the 4% range again for quite some time.

 Remember that the Fed's QE2 program was designed to buy up longer-term Treasury securities, making sure that continuing demand for them keeps their rates low. That, at least, has been the theory. But QE2 has generally failed to act as the Fed predicted it would. When first unveiled, for example, the program seemed to inspire rate rises-rather than declines. Just give it time, the Fed (and others) assured us.

 This past week, the Treasury held its scheduled auctions and raised $72 billion in newly-borrowed funds. Under its QE2 program, the Fed continues to buy about $100 billion a month in longer-term Treasury securities. In other words, the Treasury created $72 billion in debt last week and the Fed created something on the order of $25 billion in new debt. The Treasury owes the $72 billion to investors all over the nation and world. The Fed owes the $25 billion to itself (another way of saying that it owes the money to all American taxpayers). 

Meantime, Fannie Mae and Freddie Mac continue to operate solely because they are being propped up financially by the federal government, which is belatedly suggesting that the support of Fannie and Freddie can't (and shouldn't) go on much longer. Current mortgages total more in dollars than all the dollars in the nation's banks.

 One stark conclusion: There are serious changes on the horizon-to the way mortgages are written, to the government's participation in writing and backing mortgages, and to the availability of funds for home financing. Stay tuned! 

February 16, 2011 


 Gold $1373.60/ounce [up]

Crude Oil (Brent) $103.59/brl [up]

U.S. Dollar to...

    Euro .7415 [up]

    Japanese Yen 83.78 [up]

6-mo Treasury Bill Yield 0.16%

10-yr Treasury Note Yield 3.62%

[6-month down 1 bp, 10-yr down 3 bps]

11th Dist Cost of Funds 1.508%[-]

30-yr Fixed-rate Mortgage 5.33%

15-yr Fixed-rate Mortgage 4.61%

1-yr ARM 3.81%

[HSH average includes jumbo rates: 30-yr up 16 bps; 15-yr up 13 bps; 1-yr ARM up 4 bps]

Freddie Mac weekly average rate

    5.05% [up 24 bps]

Mortgage Bankers Association Mortgage Applications Index

week ending 2/4


    Down 5.5%; Up 11.3% the week prior

  Purchase Money Loans

    Down 1.4%; Up 9.5% the week prior

  Refinancing Loans

    Down 7.7%; Up 11.7% the week prior 

Jobless Claims 2/5

    383,000 - prior week 419,000 (rev) - Continuing claims down 47,000 to 3.888 million 

Monthly Retail Sales Jan

    Up 0.3% - up 0.5% (rev) in December

NAHB Housing Mkt Index Feb

    Unchanged (16) for 4th month


Please let me know if there is anything I can do for you. Have a great day!

Information provide by:


Eddie Knoell

-Senior Loan Officer-
O'Dowd & Associates Mortgage Co., Inc.


Posted by


This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Real Estate Market Trends
Arizona Maricopa County
rancho santa fe
real estate
central phoenix
for sale

Post a Comment
Spam prevention
Spam prevention
Post a Comment
Spam prevention

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?


John E. Baldovin

New and Resale Homes, FHA, VA, USDA, Community Pro
Ask me a question
Spam prevention

Additional Information