3/26/10 Mortgage Market Week-in-Review
March 31, 2010
What Did Interest Rates Do Last Week?
** based on Freddie Mac weekly average survey **
30-yr Fixed - Slightly Higher
Last Week: 4.99%
Previous Week: 4.96%
1yr Ago: 4.85%
15-yr Fixed - Slightly Higher
Last Week: 4.34%
Previous Week: 4.33%
1yr Ago: 4.58%
Jumbo Fixed (Average 30-yr Fixed)
Last Week: 5.50%
Previous Week: 5.50%
Highlight of Last Week's Major Economic Reports
Despite consensus estimates of an increase, the Commerce Department said that New Home Sales actually fell 2.2% in February. Meanwhile, Existing Home Sales also posted a drop of 0.6% from the previous month but is still 7.9% ahead of last year's pace. Additionally, a revised peek at the 4th quarter 2009 GDP showed that the economy grew at a slightly less vigorous pace than previously estimated (5.6% vs 5.9%).
Generally, these reports would be supportive of mortgage rates moving lower; however, mortgage rates actually crept up last week as a result of very weak demand for US Treasuries. When demand is weak, the yield (rate) must increase in order to raise the demand. And, since mortgage rates tend to follow the trend of US Treasuries, we saw rates post their highest levels so far this year.
What to Look for This Week
All eyes will be on the labor market with the release of March nonfarm payroll figures. It is widely expected that the economy will post a strong showing with a gain of about 180K jobs and an unemployment rate of about 9.7%. If we are surprised by a stronger-than-expected increase in jobs, expect even more upward pressure on mortgage rates.
Additionally, the Fed is scheduled to end its purchases of mortgage-backed securities on the 31st, which means mortgage rates will once again be driven predominantly by the principles of supply and demand. Most expect mortgage rates will start a steady increase - one that may likely put us about 0.5% above current levels.
Short-Term Rate Outlook
Higher
Stay Informed: What's in the News
"Austinites Biggest Spenders in U.S." from Austin Business Journal
http://austin.bizjournals.com/austin/stories/2010/03/22/daily29.html
"Austinites' Average Wage Increased in '09" from Austin Business Journal
http://austin.bizjournals.com/austin/stories/2010/03/22/daily23.html?ed=2010-03-23&ana=e_du_pub
"Austin Unemployment Falls to 7.2%" from Austin Business Journal
http://austin.bizjournals.com/austin/stories/2010/03/22/daily45.html
"Austin Most Expensive Rent in TX" from Austin Business Journal
http://austin.bizjournals.com/austin/stories/2010/03/22/daily54.html?ed=2010-03-25&ana=e_du_pub
"Real Estate Outlook: Freddie Mac Predicts Positive Recovery" from Realty Times
Freddie Mac chief economist Frank Nothaft predicts steady economic growth in the upcoming quarters, even as some Wall Streets analysts have warned of a "double-dip" mini-recession. According to Nothaft, economic growth in the range of 3.3 percent to 3.5 percent would keep inflation under control and interest rates low; and he expects 30-year mortgage rates to average about 5.6 percent by the end of the year, although home prices are likely to remain flat.
"Investors with cash are buying houses" from USA Today
More home buyers are snapping up properties with cash, a trend driven in large part by investors returning to the market after four years of falling prices around the country. The share of home sales involving all-cash transactions was 26% in January, up from 18% a year earlier, according to the National Association of Realtors. The figures come from a survey of members about their most recent transactions. Many home buyers also are paying cash, but investors are largely using cash so they can avoid paying interest charges on loans and get a larger return on their investment.
** based on Freddie Mac weekly average survey **
30-yr Fixed - Slightly Higher
Last Week: 4.99%
Previous Week: 4.96%
1yr Ago: 4.85%
15-yr Fixed - Slightly Higher
Last Week: 4.34%
Previous Week: 4.33%
1yr Ago: 4.58%
Jumbo Fixed (Average 30-yr Fixed)
Last Week: 5.50%
Previous Week: 5.50%
Highlight of Last Week's Major Economic Reports
Despite consensus estimates of an increase, the Commerce Department said that New Home Sales actually fell 2.2% in February. Meanwhile, Existing Home Sales also posted a drop of 0.6% from the previous month but is still 7.9% ahead of last year's pace. Additionally, a revised peek at the 4th quarter 2009 GDP showed that the economy grew at a slightly less vigorous pace than previously estimated (5.6% vs 5.9%).
Generally, these reports would be supportive of mortgage rates moving lower; however, mortgage rates actually crept up last week as a result of very weak demand for US Treasuries. When demand is weak, the yield (rate) must increase in order to raise the demand. And, since mortgage rates tend to follow the trend of US Treasuries, we saw rates post their highest levels so far this year.
What to Look for This Week
All eyes will be on the labor market with the release of March nonfarm payroll figures. It is widely expected that the economy will post a strong showing with a gain of about 180K jobs and an unemployment rate of about 9.7%. If we are surprised by a stronger-than-expected increase in jobs, expect even more upward pressure on mortgage rates.
Additionally, the Fed is scheduled to end its purchases of mortgage-backed securities on the 31st, which means mortgage rates will once again be driven predominantly by the principles of supply and demand. Most expect mortgage rates will start a steady increase - one that may likely put us about 0.5% above current levels.
Short-Term Rate Outlook
Higher
Stay Informed: What's in the News
"Austinites Biggest Spenders in U.S." from Austin Business Journal
http://austin.bizjournals.com/austin/stories/2010/03/22/daily29.html
"Austinites' Average Wage Increased in '09" from Austin Business Journal
http://austin.bizjournals.com/austin/stories/2010/03/22/daily23.html?ed=2010-03-23&ana=e_du_pub
"Austin Unemployment Falls to 7.2%" from Austin Business Journal
http://austin.bizjournals.com/austin/stories/2010/03/22/daily45.html
"Austin Most Expensive Rent in TX" from Austin Business Journal
http://austin.bizjournals.com/austin/stories/2010/03/22/daily54.html?ed=2010-03-25&ana=e_du_pub
"Real Estate Outlook: Freddie Mac Predicts Positive Recovery" from Realty Times
Freddie Mac chief economist Frank Nothaft predicts steady economic growth in the upcoming quarters, even as some Wall Streets analysts have warned of a "double-dip" mini-recession. According to Nothaft, economic growth in the range of 3.3 percent to 3.5 percent would keep inflation under control and interest rates low; and he expects 30-year mortgage rates to average about 5.6 percent by the end of the year, although home prices are likely to remain flat.
"Investors with cash are buying houses" from USA Today
More home buyers are snapping up properties with cash, a trend driven in large part by investors returning to the market after four years of falling prices around the country. The share of home sales involving all-cash transactions was 26% in January, up from 18% a year earlier, according to the National Association of Realtors. The figures come from a survey of members about their most recent transactions. Many home buyers also are paying cash, but investors are largely using cash so they can avoid paying interest charges on loans and get a larger return on their investment.