5/7/10 Mortgage Market Week-in-Review
May 09, 2010
What Did Interest Rates Do Last Week?
** based on Freddie Mac weekly average survey **
30-yr Fixed - Lower
Last Week: 5.00%
Previous Week: 5.06%
1yr Ago: 4.84%
15-yr Fixed - Lower
Last Week: 4.36%
Previous Week: 4.39%
1yr Ago: 4.51%
Jumbo Fixed (Average 30-yr Fixed)
Last Week: 5.50%
Previous Week: 5.50%
Highlight of Last Week's Major Economic Reports
The highlight for the US economy came from the highly anticipated employment report, which revealed that 290,000 jobs were added in April - the most we've seen in four years. We're now on a four-month streak of improving labor market conditions.
Despite this boom in hiring, however, the unemployment rate jumped to 9.9%, which indicates that more Americans are back looking for work. It does seem like the future is starting to look brighter for the job market as manufacturing and construction industries - and even the service sector - continue to gain steam and will eventually need to start hiring to keep up with the growing demand of an expanding economy.
Ordinarily, the positive economic news we saw this week would have likely pushed mortgage rates higher, but the panic over the Greek financial crisis - and concern that it would spread throughout Europe - wreaked havoc on the stock markets and caused a mad dash to the safety of US Treasuries, which consequently pushed mortgage rates lower.
What to Look for This Week
Frankly, no news/data will match up against the focus on Europe and the EU's ability to contain the debt crisis. If investors feel confident that the European Union, IMF, and even the US Federal Reserve are able to prevent the crisis from spreading outside of Greece, we should see a rebound in the stock market, which could lead to an increase in rates.
Short-Term Rate Outlook
Stable to Slightly Higher
Stay Informed: What's in the News
"Texas Has One of Country's Best Small Business Climates" from Austin Business Journal
http://austin.bizjournals.com/austin/stories/2010/05/03/daily7.html?ed=2010-05-03&ana=e_du_pub
"Risk Wanes for Real Estate Price Declines" from Inman News
The risk of home-price declines decreased in 93 percent of the 384 markets tracked at the end of last year by analysts with PMI Mortgage Insurance Co., although half still showed an elevated or high risk of depreciation. Overall risk of price declines "decreased dramatically" during the final three months of 2009, PMI said, largely because of improvements in affordability and declining foreclosure starts. Affordability was helped by falling home prices, lower mortgage rates, and increasing personal income.
"Fed Officials Want to Begin Shrinking Central Bank's Mortgage Portfolio" from Wall Street Journal
The Federal Reserve is debating how soon and how aggressively to sell some of its $1.1 trillion of mortgage-backed securities, a move that could lower MBS prices and boost mortgage borrowing costs. Most Fed officials do not want to hold onto the MBS because that would lead some observers to believe the central bank would allow inflation to take hold in the future; they also are concerned that observers would view sales as a sign that the Fed wants to tighten credit.
"Austin Initiates Neighborhood Partner Program" from Austin American-Statesman
The city is accepting applications for an experimental program that joins city dollars with volunteer labor to enhance neighborhoods.
The Neighborhood Partner Program was formed to split costs between the city and neighborhoods by using volunteers on the projects, allowing small-scale improvements to be made to neighborhoods by the people who live in them.
No funding has been set aside for the new program, but city leaders hope to allocate some money in next year’s budget, which will be available in October. The program will build up to 20 projects over one year. The program could be expanded if it is successful.
City officials say they do not intend for the program to replace spending on parks, roads, sidewalk repair and other public works improvements. Neither does the city intend to delay or abandon projects it has already scheduled.
"Austin Among Top 10 Worst Hit by Cybercrime" from Austin Business Journal
http://austin.bizjournals.com/austin/stories/2010/03/22/daily6.html?ed=2010-03-22&ana=e_du_pub
** based on Freddie Mac weekly average survey **
30-yr Fixed - Lower
Last Week: 5.00%
Previous Week: 5.06%
1yr Ago: 4.84%
15-yr Fixed - Lower
Last Week: 4.36%
Previous Week: 4.39%
1yr Ago: 4.51%
Jumbo Fixed (Average 30-yr Fixed)
Last Week: 5.50%
Previous Week: 5.50%
Highlight of Last Week's Major Economic Reports
The highlight for the US economy came from the highly anticipated employment report, which revealed that 290,000 jobs were added in April - the most we've seen in four years. We're now on a four-month streak of improving labor market conditions.
Despite this boom in hiring, however, the unemployment rate jumped to 9.9%, which indicates that more Americans are back looking for work. It does seem like the future is starting to look brighter for the job market as manufacturing and construction industries - and even the service sector - continue to gain steam and will eventually need to start hiring to keep up with the growing demand of an expanding economy.
Ordinarily, the positive economic news we saw this week would have likely pushed mortgage rates higher, but the panic over the Greek financial crisis - and concern that it would spread throughout Europe - wreaked havoc on the stock markets and caused a mad dash to the safety of US Treasuries, which consequently pushed mortgage rates lower.
What to Look for This Week
Frankly, no news/data will match up against the focus on Europe and the EU's ability to contain the debt crisis. If investors feel confident that the European Union, IMF, and even the US Federal Reserve are able to prevent the crisis from spreading outside of Greece, we should see a rebound in the stock market, which could lead to an increase in rates.
Short-Term Rate Outlook
Stable to Slightly Higher
Stay Informed: What's in the News
"Texas Has One of Country's Best Small Business Climates" from Austin Business Journal
http://austin.bizjournals.com/austin/stories/2010/05/03/daily7.html?ed=2010-05-03&ana=e_du_pub
"Risk Wanes for Real Estate Price Declines" from Inman News
The risk of home-price declines decreased in 93 percent of the 384 markets tracked at the end of last year by analysts with PMI Mortgage Insurance Co., although half still showed an elevated or high risk of depreciation. Overall risk of price declines "decreased dramatically" during the final three months of 2009, PMI said, largely because of improvements in affordability and declining foreclosure starts. Affordability was helped by falling home prices, lower mortgage rates, and increasing personal income.
"Fed Officials Want to Begin Shrinking Central Bank's Mortgage Portfolio" from Wall Street Journal
The Federal Reserve is debating how soon and how aggressively to sell some of its $1.1 trillion of mortgage-backed securities, a move that could lower MBS prices and boost mortgage borrowing costs. Most Fed officials do not want to hold onto the MBS because that would lead some observers to believe the central bank would allow inflation to take hold in the future; they also are concerned that observers would view sales as a sign that the Fed wants to tighten credit.
"Austin Initiates Neighborhood Partner Program" from Austin American-Statesman
The city is accepting applications for an experimental program that joins city dollars with volunteer labor to enhance neighborhoods.
The Neighborhood Partner Program was formed to split costs between the city and neighborhoods by using volunteers on the projects, allowing small-scale improvements to be made to neighborhoods by the people who live in them.
No funding has been set aside for the new program, but city leaders hope to allocate some money in next year’s budget, which will be available in October. The program will build up to 20 projects over one year. The program could be expanded if it is successful.
City officials say they do not intend for the program to replace spending on parks, roads, sidewalk repair and other public works improvements. Neither does the city intend to delay or abandon projects it has already scheduled.
"Austin Among Top 10 Worst Hit by Cybercrime" from Austin Business Journal
http://austin.bizjournals.com/austin/stories/2010/03/22/daily6.html?ed=2010-03-22&ana=e_du_pub