5/28/10 Mortgage Market Week-in-Review
May 31, 2010
What Did Interest Rates Do Last Week?
** based on Freddie Mac weekly average survey **
30-yr Fixed - Lower
Last Week: 4.78%
Previous Week: 4.84%
1yr Ago: 4.91%
15-yr Fixed - Lower
Last Week: 4.21%
Previous Week: 4.24%
1yr Ago: 4.53%
Jumbo Fixed (Average 30-yr Fixed)
Last Week: 5.50%
Previous Week: 5.50%
Highlight of Last Week's Major Economic Reports
First came Greece, and now Spain? The stock market continues to be pummeled by the European financial crisis, which is feared to drag the US economy into another recession. As a result, investors have flocked towards a "flight to quality" spree and placed their money in the safety of US Treasuries. Interest rates in general have benefited, and mortgage rates in particular have been dragged down to the lowest levels we've seen on record.
Now, let's hope these record rates continue to propel the housing market. So far, so good. After climbing 7% in March, Existing Home Sales jumped another 7.6% in April, producing the highest sales pace we've seen since last October. New Home Sales reported even more remarkable results with a 14.8% hike in April. The rate of 504K is the highest annualized figure since 2008. The question, of course, is what the data will look like post-homebuyer-tax-credit.
What to Look for This Week
May's employment report may be the only economic data that can trump the effects the European financial crisis has had on the stock market and interest rates. However, especially with the recent downward revision to GDP, it's hard to expect numbers that will be overly supportive of sizeable hiring. Not great news for the labor market, but good news for maintaining low mortgage rates.
Short-Term Rate Outlook
Relatively Stable
Stay Informed: What's in the News
"10 Best Cities for the Next Decade" from Kiplinger
http://content.kiplinger.com/magazine/archives/10-best-cities-2010-for-the-next-decade.html
"Austin Ranks High on 'Quality of Life'" from Austin Business Journal
http://austin.bizjournals.com/austin/stories/2010/05/24/daily8.html?surround=lfn
"America's Most Innovative Cities" from Forbes
http://www.forbes.com/2010/05/24/patents-funding-jobs-technology-innovative-cities.html
"Austin Ranks Among Top Fit Cities, Again" from Austin Business Journal
http://austin.bizjournals.com/austin/stories/2010/05/24/daily2.html?ed=2010-05-24&ana=e_du_pub
"First-Timer, Boomers Feel Housing Downturn Most" from Philadelphia Inquirer
Two segments of the population that the housing industry hoped would feed future growth -- young people buying their first homes and baby boomers downsizing -- may be most affected by what is becoming a prolonged housing slump. A Mortgage Bankers Association study notes that today's steep jobless rate "could have a lasting effect on lifetime earnings and attitudes toward risk and social policies" for 16-to-24-year-olds. Boomers, meanwhile, are putting off retirement or going back to work in order to rebuild retirement wealth that was lost in the recession.
** based on Freddie Mac weekly average survey **
30-yr Fixed - Lower
Last Week: 4.78%
Previous Week: 4.84%
1yr Ago: 4.91%
15-yr Fixed - Lower
Last Week: 4.21%
Previous Week: 4.24%
1yr Ago: 4.53%
Jumbo Fixed (Average 30-yr Fixed)
Last Week: 5.50%
Previous Week: 5.50%
Highlight of Last Week's Major Economic Reports
First came Greece, and now Spain? The stock market continues to be pummeled by the European financial crisis, which is feared to drag the US economy into another recession. As a result, investors have flocked towards a "flight to quality" spree and placed their money in the safety of US Treasuries. Interest rates in general have benefited, and mortgage rates in particular have been dragged down to the lowest levels we've seen on record.
Now, let's hope these record rates continue to propel the housing market. So far, so good. After climbing 7% in March, Existing Home Sales jumped another 7.6% in April, producing the highest sales pace we've seen since last October. New Home Sales reported even more remarkable results with a 14.8% hike in April. The rate of 504K is the highest annualized figure since 2008. The question, of course, is what the data will look like post-homebuyer-tax-credit.
What to Look for This Week
May's employment report may be the only economic data that can trump the effects the European financial crisis has had on the stock market and interest rates. However, especially with the recent downward revision to GDP, it's hard to expect numbers that will be overly supportive of sizeable hiring. Not great news for the labor market, but good news for maintaining low mortgage rates.
Short-Term Rate Outlook
Relatively Stable
Stay Informed: What's in the News
"10 Best Cities for the Next Decade" from Kiplinger
http://content.kiplinger.com/magazine/archives/10-best-cities-2010-for-the-next-decade.html
"Austin Ranks High on 'Quality of Life'" from Austin Business Journal
http://austin.bizjournals.com/austin/stories/2010/05/24/daily8.html?surround=lfn
"America's Most Innovative Cities" from Forbes
http://www.forbes.com/2010/05/24/patents-funding-jobs-technology-innovative-cities.html
"Austin Ranks Among Top Fit Cities, Again" from Austin Business Journal
http://austin.bizjournals.com/austin/stories/2010/05/24/daily2.html?ed=2010-05-24&ana=e_du_pub
"First-Timer, Boomers Feel Housing Downturn Most" from Philadelphia Inquirer
Two segments of the population that the housing industry hoped would feed future growth -- young people buying their first homes and baby boomers downsizing -- may be most affected by what is becoming a prolonged housing slump. A Mortgage Bankers Association study notes that today's steep jobless rate "could have a lasting effect on lifetime earnings and attitudes toward risk and social policies" for 16-to-24-year-olds. Boomers, meanwhile, are putting off retirement or going back to work in order to rebuild retirement wealth that was lost in the recession.