Rates are Falling - YIPPEE!!! - For months experts speculated that when the government exited the mortgage backed securities re-purchase program in March, mortgage rates would rise from ½ to 1%. Well the experts were clueless. (To be honest with you, I thought rates were going to rise as well, shows what I know right?)
It appears that global uncertainty, especially in Europe, is keeping demand for U.S. Treasuries high. Until there is a clear picture on exactly how the European debt crisis will play out, it seems that the U.S. Treasuries is the place that investors want to keep their money. The stock market this week has been taking it on the chin badly in that many investors are fleeing the stock market for the safe haven of government treasuries.
Mortgage rates have dropped for four straight weeks and the average for a 30 year fixed rate loan is now 4.95%. The big question is now that the tax credit has ended, are the lower mortgage rates enough to keep demand for housing strong.
New actions on foreclosures seem to be hitting a plateau. Finally there may be some light at the end of the tunnel in which the number of foreclosure actions seems to no longer be increasing. However, the number of bank repossessions has hit a new high and the odds of that continuing for the coming months remains likely.
The amount of inventory of bank owned properties continues to grow rapidly. For better or worse, the banks are very slow to release these properties for sale in the market as to not create an oversupply of housing inventory which would result in driving down house values rapidly. It is expected that the banks will continue this slow drip of properties for sale to keep housing prices somewhat stable.
Despite problems in Europe, many other areas of the U.S. economy are showing steady signs of improvement. Retail Sales continue to increase month over month as well as the demand for high ticket luxury items is rebounding as well. (I guess somebody is spending money)
Industrial Production is increasing rapidly. Although most of the increase is for the purchase of manufacturing equipment, the increase in spending points to the fact that many manufacturers are gearing up for an expected increase in consumer spending later this year.
Jobless claims continue to show small signs of improvement. Once again this week there was a slight drop in new unemployment claims. Although it is good news to see claims falling, concern remains that the number of existing unemployed is increasing. This rising trend shows that companies are still very slow to hire new staff.
Economic reports on tap for next week are:
• Tuesday May 18th - Housing Starts
• Tuesday May 18th - Producer Price Index
• Wednesday May 19th - Consumer Price Index
• Thursday May 20th - Jobless Claims
Your Mortgage Professional for life,
JJ Mack
Granite Funding Group
916-517-1800 x300
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment