Monday Market Commentary: Sideways Grind for Mortgage Rates

by Alex Stenback on April 20, 2009

Animated job loss heatmap from

Last Week:
Mortgage bonds faced some selling pressure but managed to mostly hold their ground in the face of a better than expected start to earnings season on Wall Street, which did pull money out of bond markets and into equities.  30 Year fixed rates drifted slightly higher, but are still sporting a 4 handle.

There was cautious, qualified optimism about the economy from several important sources – most notably Ben Bernanke – who affirmed his “fundamentally optimistic” outlook.

As mentioned last week, I am not convinced we are past crisis stage, but the velocity of the economic contraction seems to have slowed in some quarters, which is encouraging.

This Week:
Never forget, interest rate levels can be thought of as a proxy for general economic health.  This is the very real paradox involved if you are “rooting” for lower rates – you want them to go low, but not so low that you are out of a job.  And when the economy does begin to recover in earnest, rates are going to reverse course in a hurry. 

Earnings season continues as 40% of DJIA components report earnings this week.  Watch this closely – bond markets will remain tightly levered to stocks, and rallying stocks usually hurt mortgage rates.  

The economic calendar has a handful of mostly second tier reports scheduled.  Leading Economic Indicators, Home sales (Existing (Thurs) and New (Fri) and durable goods orders stand out as the most likely market movers. As always you can track the reports themselves at the link below from Barron’s
This Week’s Economic Calendar [Barrons]
Watching Rates? If you are following mortgage rates, don’t forget to subscribe to my RateWatch Twitter feed.  It’s posted in (almost) real time in the center column, or you can grab the feed directly and have updates piped to your phone, RSS reader, IM, or Twitter account.

{ 1 comment… read it below or add one }

Tom Wilkins April 21, 2009 at 1:02 pm

Is The National Association of Realtors (NAR) inflating their membership count?

According to various sources there are big difference between the real estate head count of the National Association of Realtors and other credible sources. Recently, RIS media stated total agents to be 291,000, Taro Systems stated 329,000 and NAR claims a whopping 1.1 million. A spread of over 700,000 real estate agents. There could be several motivates why NAR inflates their numbers and several Theories.

Theory 1: NAR has long been the power to thwart off the IRS claim to exempt the Real Estate Agent as an independent contractor and not subject to employer withholding taxes. NAR has been the power behind the lobbying to have a special tax provision for the real estate agent in the IRS tax code. If it was not for this specific exemption, the Real Estate Company would be required to collect withholding taxes. Would the IRS maintain this exemption if NAR agent head count were significantly lower?

Theory 2: In most sales organizations, the rule of thumb is 80% of the business is done by only 20% of the sales agents. This rule has long been accepted in the individual real estate office. That being said, if you take 20% of 1.1 million that equates to only 240,000 agents; certainly a far cry from NAR’s claim of 1.1 million agents. So is NAR counting agents that do little or no business or business to an occasional family member to receive commission discounts?

Theory 3: NAR is about power and greed. High numbers bring credibility but often disconnected from the real world. NAR long fought to control the transaction between the buyer and seller. This practice held true until the internet let the cat out of the bag (control of homes for sale information). Through the internet the consumer can get free information from,,,,,, and all 850 individual Board of Realtors. Let’s face it, NAR has long lost the battle of control of the information, but still have not recognized it yet.

Theory 4: Most Sellers that employed the use a Real estate agent have many things in common. How little we actually saw our agent and when inquiring on the status, only to be told they were working on it. I know there is a vast amount of labor that goes into selling a home but the agents all to often fail to communication their activity. So sellers assume that their agent is lazy and only in it for the commission. Large agent head count can make one think that a single bad experience was an exception and assume with the other 1,099,999 agents they don’t have the same problem of lack of communication. Again deception by large numbers! Many free tools such as an account on can bridge the gap of communication with its 24/7 360 degrees of communication to sellers.

Theory 5: A substantial revenue stream to NAR is affiliate memberships, sponsored partnerships and National Trade Show conference revenue. Inflating Head counts misleads advertisers to believe in a higher return on investment and therefore spend more dollars in advertising, booth space and all the ala carte marketing material required from a single source. Is this much different from Bernard Madoff pozie scheme? In either case both are very misleading to all.

So what theories support NAR’s motive. How about all five! If NAR maintains such a strict code of ethics, then why did they not rat out the irresponsible lending, appraisal and mortgage practices that has sent this country into turmoil.

Douglas Lee
CEO, Taro System, Inc.
Grand Rapids MI

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