Mortgage Market Weekly Update: Monday, Sept 26th 2011

by Alex Stenback on September 26, 2011

Last Week:
The Fed statement and announcement of Operation Twist (more on this here) contained a bonus for mortgages.  The simple plan? The Fed will buy more mortgage-backed bonds in 2011 and 2o12 in an attempt to anchor mortgage rates at low levels.

Add to the mix renewed economic pessimism globally and from our own Fed, and almost immediately, mortgage rates tumbled to new all time lows as money fled risk for safety across the globe.

By the end of the week, mortgages walked back slightly but remain in a great place: Note rate on 30 fixed from 3.875 to 4.25 depending on the mix of credit, equity, property type, etc.

This Week:
Sometimes, an orbital view can help:

Domestically: Dysfunctional politics consumed with electoral positioning and fringe issues seems unfit to deal with a stalled economy, an at risk (again) banking system, a moribound housing market.  Vast problems are receiving vastly tiny policy response, if not being ignored outright (heard the term housing in any debates?)

Eurozone, whose goose is cooked in many ways, has a problem that will sound familiar.  Too much debt, no clear way to service it.  Rumor-then-refutation of various bailouts and solutions to the problem amount to an impenetrable acronym soup (EFSF, ECB, IMF, EFSM) for most.

Suffice to say the macro environment is grim and supports low rates, and short term fluctuations we will see are mostly the momentary triumphs of hope, rumor, and positive thinking.

Highlights on this week’s calendar that may influence mortgage rates:

 - New home sales: (Monday. Update: which printed slightly better than a year ago, but still very low levels.): Bad is good here.  Our economy needs more newly contsructed homes like it needs more foreclosures.
- Durable Goods Orders (Wed): Surging Aircraft orders have been the lone bright spot.  Without those, not much to get excited about here.
- Pending sales of existing homes (Thursday): Should print better than severely depressed year ago levels.
- Weekly Jobless claims (Thursday): Average still hovers around 400K.  A break below 370k this week would be unexpected and hurt rates
- Gross Domestic Product/GDP (Thursday): Are we back in a recession?  This update to Q2 GDP will tell part of the tale. Experts looking for modest upward revision to 1.2%
- Personal Income & Outlays (Friday):  Inflation indicator PCE within this report.  Inflation hurts borrowing rates, including mortgages.

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Shopping Mortgage Rates?  Don’t miss last week’s “How to: Refinance With No Closing Costs

Need a rate quote?  Have a question?  I answer my own email, so drop me a line with a few bullets about what you are looking to do and I will give you a thorough, professional opinion as to whether it makes sense for you.

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