In our markets of Wenatchee, Leavenworth and Chelan, we are benefitting from the drop in mortgage rates while not participating in the housing market declines that are hitting some parts of the country. But, as we have local media that just re-prints what the national Press is saying, we have some people sitting on the fence not sure if they should buy right now. The local mountains,lakes, skiing and sunshine with a close proximity to Seattle keeps a steady flow of second home and retirement buyers coming to Wenatchee, Leavenworth and Chelan. The majority of my business is land and construction loans for these people.
I try to get out some financial market news to agents and builders in our market on a regular basis to help them see where the mortgage markets are headed. Because, we do have plenty of potential buyers out there, and a good interest rate is often all it takes for them to jump in.
I was expecting some more volatility in rates than we saw this week, but I don't think we are done with rate declines. The Prime Rate came down a full 1.25% in January and that did not really rally the stock market, it just kept it from a deep decline (so far). I think today's announcement of the first decline in US payrolls in over 4 years is significant. The FED can't lower their short-term rates every week, so when we get a negative report next week, I think you will see the slide continue. Plus, this is going to be aided by the Press; they have been beating the Housing market to death for the past 6 months, and it looks like they are now targeting the whole US Economy.
The attached article appeared by the Associate Press today and highlights what you will see coming. The added words used to 'interpret ' the data for the reader is full of opinion and assumption. The 'Shower of Pink slips' they are talking about is a loss of 17,000 jobs. Against a US non-farm employment of 146 million people, I can't get enough digits on my calculator to figure that percentage. They also mention the economy grinding to a halt and tumbling into recession. As we learned with housing, once the press decides that the economy is crumbling, they will be making headlines out of anything. So, my analysis is that they will succeed in convincing the public that the sky is falling, enough to drive down the stock market and as a result, mortgage rates will continue to drop. It will be a net gain to us, because we won't lose any local jobs (because the sky really isn't falling here) but we will sell a lot of homes because of the low rates. Have a great weekend
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