Daily Archives: July 16, 2010

Mortgage Market News for the week ending July 16, 2010

July 16, 2010
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Slow Growth, Low Rates

Weaker than expected economic data and continued low inflation helped mortgage rates move a little lower from last week. In recent weeks, investors have modified their consensus outlook to reflect weaker economic growth during the second half of the year. The manufacturing and retail sales data released during the week reinforced this view. Lending further support, the Fed revised its forecast for 2010 economic growth lower as well. Meanwhile, this week’s CPI and PPI data continued to show that inflation is not a concern in the short term. Uncertainty about the pace of the economic recovery has made investors willing to purchase safer assets such as government guaranteed mortgage-backed securities (MBS) at these relatively low yields.

Congress passed the comprehensive Financial Regulations bill and President Obama will sign it into law soon. The bill provides a framework for oversight of the financial services industry, and certain aspects of the bill will affect mortgage lending and the home buying process. The bill calls for various regulatory agencies, some of which will be newly created, to determine the details. Implementation of most of the new mortgage-related rules is expected to take 18 to 24 months to complete.

 

 
 

Also Notable:

  • June Core CPI inflation increased at a very low 0.9% annual rate
  • Weekly Jobless Claims dropped to the lowest level since August 2008
  • The debt of Portugal was downgraded by a major credit rating agency
  • Bernanke stated that increasing credit to small businesses is “crucial” to the economic recovery
     
 

 

 
Average 30 yr fixed rate:
Last week: -0.02%  
This week: -0.05%  
Stocks (weekly):
Dow: 10,200 +100
NASDAQ: 2,200 +25

 

   Week Ahead

A light Economic Calendar next week will focus mainly on Housing data. Housing Starts will be released on Tuesday. Existing Home Sales and Leading Indicators will come out on Thursday. Also on Thursday, the Treasury will announce the size of upcoming auctions.

 

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The Fed’s June Minutes Keep Mortgage Rates In Rally-Mode

July 16, 2010
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FOMC June 2010 MinutesAccording to Freddie Mac, mortgage rates made new all-time lows this week and the good news is that rates look poised to fall even more.

Since the Federal Reserve’s release of its June 2010 meeting minutes Wednesday, mortgage rates are dipping even more and one of the main reasons why is because of some choice Fed words.

If you’ve never seen a Fed Minutes release, it reads academic. The document is page after page of stats, facts and figures about the U.S. economy, accompanied by an in-depth recap of the intra-Fed member debates that shape the nation’s monetary policy.

At 7,333 words, the June Fed Minutes is the unabridged version of the more well-known, post-meeting press release.  The corresponding press release was just 360 words.

As it turns out, Wall Street didn’t like what it read in the minutes.  Specifically:

  1. The Fed expects below normal growth through 2012
  2. The Fed’s outlook for employment has dipped
  3. Credit conditions are easing only slowly

Furthermore, the Fed said its action may be needed if the economy were “to worsen appreciably”.

Overall, the economic optimism the Fed displayed earlier this year appears to be waning. The economy is moving forward — just not as quickly as expected.  That should bode well for mortgage rates and home shopping in Lacey.

Mortgage rates were down Wednesday afternoon and Thursday and remain historically low. All it would take to reverse rates, however, is a run of positive news on jobs, growth, and consumer spending.  Therefore, if you know you need to lock a mortgage rate in the near-term, it may be a good time to make the call. 

Lock your mortgage rate and move on.