Market Watch 12-15-2009

Mortgages continued to slide this morning on the announcement that producer price index figures rose all most double that what was expected rising by 1.8%. However, the large portion of this increase can be attributed to a sharp rise in oil prices during the review period. Oil prices in November breached the $80 per barrel mark but have retreated to around $70 per barrel as of today. Inflation cannot happen if over 10% of the US citizens are unemployed…hard to drive prices up when a large portion of America is unemployed and I would say there is probably another 7% which are under employed.

Tomorrow is the “big day” as the Bernanke’s two day FED party ends at 2:15 EST. The market will continue to look for any hint that either the FED will stop buying investment assets or that they may be looking to raise rates soon. I believe that this is a very remote possibility but still a possibility. If they were to do either of the before mentioned things, look for rates to move sharply higher….again…I doubt that this will happen but keep your eyes on the market after 2:15 pm tomorrow….Assuming I am correct and they continue on their current course, look for rates in improve slightly but nothing to get too excited over. Fixed rates today remain in the 4.875% range while 5 year ARMS are running in the 3.50% range!!!

Warriors of Wall Street

Our “Warriors of Wall Street” will have plenty to chew on this week as we will get a look at a cornucopia of economic releases and the final Fed meeting of the year. On the calendar this week we will get a look at the producer price index, the consumer price index, housing starts and leading economic indicators. While all of these release reach the level of “biggies”, the market will really focus on what the FED has to say during their two day meeting which concludes at 2pm on Wednesday. Any hint of Bernanke and friends coming off of their current position of holding rates at current levels will send mortgage rates notably higher. While this is certainly a possibility, I believe that Big Ben and friends are not ready to take the chance of upsetting what may actually be the beginnings of a recovery in the economy. But, beware of the message that they will put out at 2pm on Wednesday.

Look for rates over the next 48 hours to meander at current levels until the FED meeting concludes on Wednesday. 30 year fixed rate mortgages are hovering at the 4.875% handle while 5 year ARMS are holding in the 3.50% range.

Rates on the Rise

Ok…what does higher than expected retail sales and a poor treasury auction equal??? The answer….higher rates…Rates have moved roughly .25% in rate higher over the past 72 hours but have seemed to have found their spot, for now, holding in the 4.75% to 4.875% range for 30 year fixed rates and 3.25% to 3.375% for 5 year ARMS. The interest rate market is looking for something to move to higher levels and it got it with the news describe above. Look for rates next week to continue to try to push to higher levels in anticipation of another Uncle Sam Treasury Auction during the week. If the auctions next week are not received well, look for rates to push higher again. However, if the auctions next week are received well, look for rates to move slightly to lower levels. Don’t look for 4.5% on the 30 year fixed handle next week…I hope I am wrong. 30 day outlook for rates are to remain in the 4.75% range to 5.25%. I guess that is not too bad considering that these levels represent some of the lowest rates we have seen for over 40 years!!!

Today's Mortgage Rates and News

The mortgage markets have opened up once again lower (higher rates) and 30 year fixed rate mortgages (conforming) are running in the 4.625% to 4.750% range while 5 year ARMS (conforming) are running in the 3.25% to 3.375% range. FHA / VA is at 4.75% today.

In mortgage news, believe it or not…the director of HUD is asking Congress to raise the minimum down payment on FHA loans from 3.5% to 5% and cut seller contribution back to 3% from its current levels of 6%...I thought this guy was an Obama guy…can’t see how this would be good for housing the market but I will keep you updated. On a brighter note!!! There is a bill floating through the US House which would eliminate HVCC (the appraisal reform that we all have had to deal with over the past several years)…my inside sources on Capitol Hill are telling me that this bill has some legs and could get passed before the end of the year!!! The elimination of this bill would allow us to pick our appraisers for you deals like we did in the past!!!

Want a great web page to find out what is going on in our business??? Go to www.thinkbigworksmall.com and click on the daily report. These guys do a daily show each morning!!! The news part is generally around 3 to 4 minutes long and it is entertaining!!! This is one of my favorites!!!