Austin Mortgage Blog

Archive for November, 2009

Home Sales Surge

A combination of factors helped Austin mortgage rates improve yet again during the short Thanksgiving week. Strong demand for the Treasury auctions, low inflation, and a fragile economy were all positive for mortgage markets. As a result, mortgage rates dropped to the lowest levels since January.

The consensus economic outlook is for a gradual recovery with low inflation, and the economic data released during the week was consistent with this view. Economic growth during the third quarter of the year was revised lower, but both the Fed and private economists raised their forecasts for future growth. This week’s economic reports indicated that some sectors of the economy are improving, such as the housing market (see below), while others reflected weakness. Wednesday’s data on Core PCE prices continued to show little inflationary pressure, which allows the Fed to keep rates low to assist the economic recovery.

This week’s home sales data far exceeded expectations across the board. October Existing Home Sales jumped 10% from September. Inventories of unsold existing homes dropped to a 7.0-month supply, the lowest level since February 2007. October New Home Sales rose 6%, and inventories of new homes declined to the lowest level in decades. Extremely low mortgage rates, high affordability levels, and the first-time homebuyer tax credit boosted sales in October.

Week Ahead

Next week, the important Employment report will come out on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Before the employment data, the Chicago PMI index will be released on Monday. The ISM Manufacturing index and Pending Home Sales will come out on Tuesday. ISM Services will be released on Thursday. Productivity, Construction Spending, and Factory Orders will round out the busy schedule. The Treasury will announce the size of upcoming auctions on Thursday as well.

Austin Mortgage Market Update – For the week of November 30, 2009

For the week of November 30, 2009 – Vol. 7, Issue 48 >> Austin Mortgage Market Update INFO THAT HITS US WHERE WE LIVE The economic reports before Thanksgiving were packed with housing market data and, guess what, they were all extremely positive! Monday saw Existing Home Sales UP 10.1% to an annual rate of 6.10 million, the highest since February 2007. Sales are now UP 20% in the past two months and UP 36% from their January lows. Even better, the supply of existing homes was down to just 7 months, with inventories down to 3.57 million, the lowest level in almost three years. This puts existing homes very close to the 6-month supply level of a healthy housing market. The Case-Shiller 20-City Composite Home Price Index rose 0.3% in September. The index also showed its second consecutive quarterly increase, UP 3.1% for Q3, returning to August 2003 levels. Wednesday, New single-family Home Sales were UP 6.2% in October to an annual rate of 430,000 units. New Home Sales are now UP 30.7% over their January low. The unsold supply of new homes dropped to 6.7 months as of October, with inventories at 239,000, 58.2% down from their mid-2006 peak and at their lowest level since mid-1971. The median price was down only 0.5% from a year ago and average price down just 4.7%. Freddie Mac reported mortgage rates down for the fourth straight week, reaching historic lows well below 5%, with an average 0.7 point, for prime borrowers with 20% down payments. Freddie Mac’s chief economist said, “Interest rates for 30-year fixed-rate loans are currently 0.8 percentage points below this year’s peak set in mid-June, which shaves roughly $100 off the monthly payments on a $200,000 mortgage.” >> Review of Last Week TWO KINDS OF BLACK FRIDAY… Leading up to Thanksgiving, we had lots to be grateful for, with market gains and encouraging economic reports. Retailers’ Black Friday exceeded expectations, but unfortunate financial news from Dubai turned Wall Street’s Friday a depressing black, with the Dow losing 154 points on the day. The Dubai government announced there would be a six-month “standstill” on debt repayments for Dubai World, its holding company. This sent world markets reeling with fears of multi-billion dollar defaults. But Dubai is part of the super-wealthy United Arab Emirates (U.A.E.), which should provide deep support. In addition, Dubai’s debt is mostly held by U.K. and European banks, with little U.S. involvement. The situation bears watching, although our recovery remains clearly on track. On Tuesday, for example, Q3 GDP growth was revised down to a still substantial 2.8% annual rate. The key item in the report was the look at Q3 corporate profits, which grew at a very strong 50% annual rate, the third consecutive quarterly increase. Wednesday, initial jobless claims dropped to 466,000, sending the four-week moving average down to 496,500, below the level a year ago. Continuing claims are now down to 5.423 million. The Richmond Fed Manufacturing index showed expansion of activity for the seventh straight month. Consumer Confidence went up to 49.5 for November, beating consensus estimates. This tied in nicely with Wednesday’s reports showing personal incomes are rising, consumer spending is up and the savings rate is 4.4% vs. 1.7% just two years ago. Even non-mortgage consumer debt is down 5% from its mid-2008 peak. Nonetheless, the Dubai surprise left the Dow off 0.1% for the week, at 10309.92; the S&P 500 was up just 0.11 points, to 1091.49; while the Nasdaq slipped 0.4%, to 2138.44. Prices held higher in the bond market, as investors anticipate the fall-out from Dubai and its state supported debt issues. The FNMA 30-year 4.5% bond we watch ended up 72bp from the previous week’s close, finishing at $102.50. Mortgage rates, as noted above, fell last week to historically low levels! >> This Week’s Forecast FOCUS ON JOBS… The week opens with insight into the continually improving manufacturing sector, while Pending Home Sales figures hold our interest on Tuesday. But the real focus for the week will be on Friday’s November jobs report. Analysts will be looking for further signs of recovery in this lagging economic indicator. The consensus expects the unemployment rate to plateau, which is an improvement over rates on the rise. >> The Week’s Economic Indicator Calendar Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates. Economic Calendar for the Week of November 30 – December 4 Date Time (ET) Release For Consensus Prior Impact M Nov 30 09:45 Chicago PMI Index Nov 53.0 54.2 HIGH Tu Dec 1 10:00 ISM Index Nov 54.8 55.7 HIGH Tu Dec 1 10:00 Pending Home Sales Oct –0.5% 6.1% Moderate W Dec 2 10:30 Crude Inventories 11/27 NA 1.02M Moderate Th Dec 3 08:30 Initial Unemployment Claims 11/28 483K 466K Moderate Th Dec 3 08:30 Continuing Unemployment Claims 11/21 5.517M 5.423M Moderate Th Dec 3 08:30 Productivity–Rev. Q3 8.5% 9.5% Moderate Th Dec 3 08:30 Employment Cost Index Q4 NA 0.4% HIGH Th Dec 3 10:00 ISM Services Index Nov 51.5 50.6 Moderate F Dec 4 08:30 Average Workweek Nov 33.1 33.0 HIGH F Dec 4 08:30 Hourly Earnings Nov 0.2% 0.3% HIGH F Dec 4 08:30 Nonfarm Payrolls Nov –114K –190K HIGH F Dec 4 08:30 Unemployment Rate Nov 10.2% 10.2% HIGH >> Federal Reserve Watch Forecasting Federal Reserve policy changes in coming months. The Fed continues to affirm it will keep rates down until the recovery looks more solid, but inflation is always a concern. Overall consumer prices in the last six months are up at an annual rate of 2.7%, but economists don’t expect any rate changes in the near future. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same. Current Fed Funds Rate: 0%–0.25% After FOMC meeting on: Consensus Dec 15 0%–0.25% Jan 27 0%–0.25% Mar 16 0%–0.25% Probability of change from current policy: After FOMC meeting on: Consensus Dec 15 1% Jan 27 1% Mar 16 3% ß This blog entry is an advertisement for Max Leaman. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in the newsletter is copyrighted by PrimeLending, A PlainsCapital Company and cannot be reproduced for any use without prior written consent. It is designed for real estate and other financial professionals only. It is not intended for consumer distribution. The material does not represent the opinion of PrimeLending, A PlainsCapital Company. Š 2009 PrimeLending, A PlainsCapital Company. Trade/service marks are the property of PlainsCapital Corporation, PlainsCapital Bank, or their respective affiliates and/or subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved. PrimeLending, a PlainsCapital Company (NMLS #: 13649) is a wholly-owned subsidiary of a state-chartered bank and is an exempt lender in the following states: AL, AK, AR, CO, DE, FL, GA, HI, ID, IA, KS, KY, LA, MN, MS, MO, MT, NE, NY, NC, OH, OK, OR, PA, SC, SD, TX, UT, VA, WV, WY. Licensed by the Arizona Dept. of Financial Institutions-license #BK 0907334; California Department of Real Estate-license ID #01857468; California Department of Corporations- license #4130996; Connecticut Department of Banking-license #ML-13649; District of Columbia Department of Insurance, Securities and Banking- license #MLO13649, Illinois Dept. of Financial and Professional Regulation-license #MB.6760635; Indiana Dept. of Financial Institutions- license #11169; Maine Dept. of Professional & Financial Regulation-license #SLM8285; Maryland Dept. of Labor, Licensing & Regulation-license #11058; Massachusetts Division of Banking- license # MC5404, Michigan Dept. of Labor & Economic Growth-license #FR 0010163 and SR 0012527; Nevada Dept. of Business and Industry, Division of Mortgage lending-exempt license #732; New Hampshire Dept. of Banking- license #14553-MB; New Jersey Dept. of Banking and Insurance-license #0803658; New Mexico Regulation and Licensing Dept., Financial Institutions Division-license #01890; North Dakota Dept. of Financial Institutions-license #MB101786; Tennessee Dept. of Financial Institutions-registration #4023; Texas Regulated Loan License-license #7293; Vermont Dept. of Banking, Insurance, Securities and Health Care Administration- lender license #6127 and broker license #0964MB; Washington Dept. of Financial Institutions-license #520-CL-49075; Wisconsin Department of Financial Institutions-license #214170. 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Really, the market is marking time, ready to grab a turkey leg and a cold one

Lots of economic data today with revised Q3 GDP, Consumer Confidence, Case-Shiller Home Price Index, FHFA Housing Index, FOMC minutes of the last meeting, and 42 billion in 5 year paper up for auction.  Revised GDP came in near expectations, down .7% at 2.8% (revised from a previous 3.5%).   Downward revisions to personal consumption and nonresidential fixed investment did the most damage.  Case-Shiller Home price index measures home prices in 20 of the largest cities.  The index rose .3% month on month yet is down 9.4% year on year.  The Pacific and Mountain cities were the best performers and overall, stability was evident in most others.  FHFA Home prices, a measure derived from only FNMA/FHLMC loans, was unchanged month to month and up .2% for the 3^rd Quarter.  The East North Central did the best, up 1.1% while the West South Central sat in the back of the bus but still up .1%.  Consumer Confidence hit the tape better than expected, up .8 to 49.5.  The rebound can be attributed to a 1.5 point increase in current expectations.  The gain was offset by worsening business conditions and a slight dip in future consumer expectations.  Details of the 42 billion dollar 5 year note auction will be out at high noon cst while FOMC minutes will hit the screen at 1:00 pm cst.  All of the above has done little to move the market.  For the most part it’s been a quiet yet slightly bullish day for bonds, notes and mortgage backs (up 3/32’s).  Stocks were off 70 something early but have cut their losses in half, currently down 41 on the big board.  Trading has really been a two way affair with the pro’s controlling most of the action.  Think of the price action this way.  When football teams have a big lead in the 4^th quarter they are content to take a knee and wind the clock down to zero, trying to avoid injuries and mistakes.  Same thing with traders.  With most fixed income and equities traders having a good year, this late in the game (little over a month to year end) no one wants to screw their gains up as that is what bonuses are based on.  That keeps a bid in treasuries, especially short maturities like 3 month T-Bills, as they are a safe haven play to stash money.  From the technical picture, the chart is content to hang out near the highs (low yield mark) but cannot take it out.  The downside (selling) has been limited as well with the regression line since October supporting the market as well as the 8 and 21 day moving averages.  We call this a goldilocks market, not to hot, not to cold, but just right.  Really, the market is marking time, ready to grab a turkey leg and a cold one.

For the most part, the market has been like watching paint dry

Way behind the curve today as we’ll already entered the second half of the day’s trade.  For the most part, the market has been like watching paint dry.  Total movement in mortgage backed securities has only be 3/32’s (currently up 1/32^nd) while stocks opened strong and have held most of their gains (Dow plus 130).

Even the 44bln of 2 year notes that hit the auction block were a non-event as there were no surprises.  For the record, the auction came in on the screws at .802% yield with 44.5% going to indirect bidders.  The issue had an above average bid to cover of 3.16 to 1.  By most traders accounts it was “ham on rye.”

Austin mortgage rates to stay low well into 2010

Weekly Jobless Claims broke out of the gate first this morning, unchanged at 505K while the Continuing Claims Index fell for the 9^th consecutive week to 5.61 million.  Seasonal factors are at work here as the holiday season tends to skew the numbers.  One thing is for certain, 505K in weekly claims does not set the world on fire.  Until we start to see a pickup in average hours worked, slack in the labor market will remain.

Today’s 9:00 cst data points were Leading Economic Indicators and the Philly Fed Index.  LEI posted a plus .3% gain, .2% below expectations.  Among the 10 composite indices, 6 posted positive gains.  Consumer expectations and Building Permits provided the drag on the overall index.  Manufacturing in the land of cheese steaks and Dirty Bird football improved a few points to 16.7.  A rise in new orders has helped the region to post gains in each of the last four months.

Treasury Secretary Geithner is on the hill today, touting regulatory accountability and the need to eliminate the perception of “too big to fail.” Our view that risk is back in vogue, noting gold at record highs and stocks up 60%.  Systemic risk/asset bubble risk is creeping back into the market as investors are forced into stocks and fixed income spread product.  The Fed is on hold for at least another year and they (Fed) will need to see GDP growth of 4% to 5% before they will tap on the brakes (raise interest rates).  We’d look for Austin mortgage rates to stay low well into 2010.  Technically, we matched the old highs (low yield) of late September.

The test of this high now become pivotal for the next directional move.  We need to close at a yield of 3.30% or lower on the 10 year note to boost the bullish, breakout pattern.  If this comes to fruition, the next target will we’ll be looking for is 3.23%.  On the flip side, a failure to goose the market higher will result in a continued range trade and a retest of yields in the 3.41%/3.42% arena.  Currently the 10 year note is up 7/32’s to yield 3.34%.  Mortgage backed securities have underperformed all week, only up 1/32^nd as spreads continue to widen.  Tough call here as the market continues to assault the low yield level but fails to take it out. However, positive structure points to levels holding near the highs as the bears have been kept at bay.  The best way to view your options is by risk/reward.

Be careful of there.

October Housing Starts fell 10.6%: some have blamed the fall on uncertainty over the 8K first time home buyers stimulus while others point to a consumer who is unemployed and over budget

CPI was suppose to be the day’s headliner but Housing Starts stole the show.  While CPI, inflation at the consumer level, was in line with expectations (up .3% with the core index up .2%), October Housing Starts fell 10.6% to 529k units (annualized).  The decline was in large part due to a 33.3% drop in multi-family homes (5 units or more), setting a new record low.  Building Permits fell as well, down 4.0% to 552K.  Every region in the country took a dip with the Northeast leading the way (down 9.6%).  The best performing region was the wild West, off 5.9%.  Some have blamed the fall on uncertainty over the 8K first time home buyers stimulus while others point to a consumer who is unemployed and over budget.

The MBA Purchase Index reflects the latter with new applications off 4.7% even though interest rates are low.  Reinforces our belief that the Fed will continue to buy mortgage backed securities, helping to keep mortgage rates low into the new year.  Market reaction to all of the above has been a bit choppy.  Mortgage backs were down as much as 10/32’s this morning, in line with fast money selling of treasuries.  We have started to recover but are still off 6/32’s.  Stocks opened slightly lower, then accelerated to the downside but have now cut their losses in half (Dow down 37 points).  The dollar index is once again on the slide, falling below 75 after yesterday’s brief, dead cat bounce ( no offence cat lovers).  The slide has everything to do with the Obama Administration trying to convince the Chinese to let the Yuan appreciate, helping American exports.  Fat chance given their (China’s) treasury and real estate holdings in the U.S.

Technically speaking, the market continues to rattle around within the confines of a bullish upward sloping trend channel.  Most oscillators, including trend intensity are giving bullish reading yet the chart fails to make new highs.  This is somewhat of a concern so we need to be careful.  That said, the onus is still on the bears to take control which just hasn’t happened.  We like the market but want to see a new high (lower yield on the 10 year) by week’s end.

6 Ways to Boost Business at the End of the Year

Finish strong!…Ways to boost business at the end of the year. There’s just a few weeks left before the close of the year, but that’s plenty of time to finish up strong. Here are a half a dozen ideas that can help you get more out of this year AND set you up for even bigger success in 2010. 1. Write up your client success stories. What were your biggest successes this year? Write them up (anonymously, or get the client’s permission) and put them on your website and send them out in emails. Also send them as press releases to the local media and both paid and free online press release services, such as www.prweb.com and www.openpr.com. 2. Get client testimonials. Ask clients to email you a sentence or two about their experience working with you. Don’t be afraid to prompt them about what to say. Use these quotes on your website, in emails, print mailers or ads and work them into your success stories (#1 above). But check out the new FTC guidelines on testimonials and endorsements here. 3. Contact your top 25 clients in the next 30 days. Now is a great time to thank clients for their business and ask what they’d like to see from you in the coming year. This is also an opportunity to ask if you can help them get something done by year end. Email them but also connect on their social networks, like Twitter, LinkedIn and Facebook. And do ask for a referral. 4. Run a webinar. Pick a hot topic and email an invitation to clients and prospects. Offering free access can capture interested leads. Record the webinar and sell downloads to those who can’t attend. 5. Send a Thanksgiving email. Share all that you’re grateful for, which of course includes your clients. Tell why you appreciate the people who hire you. 6. Follow up your year-end business. Follow up the business you get with an email asking why the client chose you and how satisfied she was with your work. When you get the answer, ask for permission to quote it. Then kick off your 2010 marketing by using these testimonials in emails, print mailers, ads and on your website. Most of these ideas can work any time of the year — look at them again in a few months. They’re all pretty easy to do, so pick one or two and take your best shot at ending 2009 BIG! … Have a great month!

This blog entry was sent to you because of your business relationship with Max Leaman. This email is an advertisement for Max Leaman. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in the newsletter is copywritten by PrimeLending, A PlainsCapital Company and cannot be reproduced for any use without prior written consent. It is designed for real estate and other financial professionals only. It is not intended for consumer distribution. The material does not represent the opinion of PrimeLending, A PlainsCapital Company. Š 2009 PrimeLending, a PlainsCapital Company. Trade/service marks are the property of PlainsCapital Corporation, PlainsCapital Bank, or their respective affiliates and/or subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved. PrimeLending, a PlainsCapital Company is exempt from licensing in the following states: AL, AK, AR, CO, DE, FL, GA, HI, ID, IA, KS, KY, LA, MN, MS, MO, MT, NC, NE, NV, NY, OH, OK, OR, PA, SC, SD, TX, UT, VA, WV, WY. Arizona Mortgage Banker Number License Number 0907334; California Department of Real Estate License Number 01857468; Connecticut Mortgage Lender License Number ML-13649; Illinois Mortgage banker License number MB.6760635; Maine Supervised Lender License Number SLM8285; Maryland Mortgage Lender License number 11058; Michigan First Mortgage Registrant License Number FR 0010163 and Second Mortgage Registrant License Number SR 0012527; New Jersey Licensed Lender Number 083659; New Mexico Mortgage Loan Company License Number 01890; North Dakota Money Broker License number MB101786; Tennessee Mortgage Registrant Number 4023; Texas Regulated Loan License Number 7293; Vermont Mortgage Banker license Number 6127; Vermont Mortgage Broker license Number 0964MB; Washington Consumer Loan License Number 520-CL-49075; Wisconsin Mortgage banker License number 214170. NMLS# 151263

With stocks near unchanged and a basket of economic uncertainty, best to not throw caution to the wind

PPI, inflation at the wholesale level, rose .3% headline yet dropped .6% on the core index (ex-food and energy).  Both numbers were below economist’s expectations and show little to nothing by way of inflation in the pipeline.  Industrial Production/Capacity Utilization were also on the tape, up .1 IP while Cap U came in at 70.7%.  The rise in IP was below expectations but continued a string of gains that has lasted 4 months.  Cap U made it 4 months in a row as well, showing us that there is still considerable slack in the economy yet stability is staring to creep back in to industrial output.  Big Ben put on a good show yesterday, talking the talk about the Fed’s main concerns on unemployment and inflation.  Try as he may, the market seems to doubt that he can pull it off, that is putting people back to work and controlling inflation.

His mandate for low interest rates well into the future, coupled with a staggering deficit, falling dollar, 3 trillion in health care costs on the docket, and taxes for both individuals and small business destine to rise in 2010 will create difficult challenges and unintended consequences.  With the Fed policy a given, we expect to see a floor under the bond market, supporting both treasury and mortgage back security pricing.  Buying sponsorship (upcoming auctions) and year end book closings will be the challenge (liquidity issues).

The 10 year note and mortgage backs were very overbought as well, giving us a text book sell as consolidation set in.  Mortgage backs were off as much as 12/32’s early today but have boot strapped themselves back to cut the losses in half.  We traded right back down to good support and that up sloping trend line I showed you last week.  So far, it has held.  We also like the fact that the chart has held closer to yesterday’s highs versus today’s lows, giving the chart a neutral, inside day appearance.

With stocks near unchanged and a basket of economic uncertainty, best to not throw caution to the wind.

For the week of November 16, 2009 – Vol. 7, Issue 46 >> Austin Mortgage Market Update INFO THAT HITS US WHERE WE LIVE  Thursday the Wall Street Journal reported Q3 home sales at an annual rate of 5.3 million units. That was an 11.4% gain over Q2′s 4.76 million units. Experts put much of the rising sales to the tax credit of up to $8,000 for first-time homebuyers. A week ago Friday, the President signed a bill extending that tax credit well into next year and expanding it to first-time buyers with higher incomes as well as to existing homeowners, with a $6,500 limit. National Association of Realtors chief economist Lawrence Yun feels “rising sales from the expanded tax credit should stabilize home prices by next spring.” That same tax credit bill also created a new tax break for businesses. The bill lets large firms claim cash refunds on taxes they paid going back five years, to offset current losses. The carry-back period had previously been just two years. Experts estimate this could improve the cash positions of big home builders by hundreds of millions of dollars to further help the recovery. Luxury home builder Toll Brothers is doing just fine already. Tuesday they announced their fiscal Q4 had a 42% jump in contracts over last year. And the value of those contracts was 62% higher than a year ago. Finally, the NAR’s report on home prices said most U.S. cities saw gains in the median price of single-family homes for Q3–the second quarter in a row of price gains. Prices were still down from Q3 a year ago, but the pace of the decline has been slowing. Many experts feel the shrinking supply of unsold homes suggests the housing market is edging closer to price stabilization. Even foreclosure fillings fell in October for the third straight month. >> Review of Last Week HOLDING AT 10,000… We’ve now had two weeks in a row in which investors were confident enough in the recovering economy to keep the Dow Jones Industrial average north of that magic 10,000 number. The S&P 500, a broader indicator of business health, was also up nicely for the week, as well as the tech-heavy Nasdaq, which posted the biggest jump of all. The week got off to a great start on the news that finance ministers and central bankers from 20 major world economies–the “G-20″–will keep their financial support coming until the global recovery is certain. Investors also liked the news that Hewlett-Packard made a deal to buy 3Com to expand its networking business and increase its position in China. Wal-Mart reported a better-than-expected 3.2% boost in Q3 profits and an improved outlook for the year, although it gave a cautious forecast for Q4. The Trade Balance showed exports UP five months in a row since bottoming in April. This is a 24.1% annual growth rate, with imports up at a 32.6% rate. The discrepancy makes for a deficit, but it’s billions smaller than last year. The reality is, the spike in imports and continued export gains signal to many that the economy is getting better. Meanwhile, initial jobless claims fell again last week to 502,000 and the four-week moving average was the lowest in almost a year. For the week, the Dow finished UP 2.5%, to 10270.47; the S&P 500 was also UP 2.3%, to 1093.48; while the Nasdaq went UP 2.6%, to 2167.88. It was another week of stocks moving up AND bond prices doing well too. This was helped by the Fed stepping in with their buying progra. The FNMA 30-year 4.5% bond we watch ended up from the previous week’s close, finishing at $101.75. Not surprisingly, mortgage rates fell again last week, with Freddie Mac reporting long-term rates at the lowest levels in five weeks! >> This Week’s Forecast PLENTY TO PONDER… The week begins with the October Retail Sales report giving us another look at the consumer mindset. The Producer Price Index looka at the inflation situation for business but Wednesday’s Consumer Price Index is the inflation reading the Fed looks at to see if they need to raise rates. On Wednesday we also get Housing Starts and Building Permits. Friday’s Philadelphia Fed Index is another important measure of manufacturing. >> The Week’s Economic Indicator Calendar Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates. Economic Calendar for the Week of November 16 – November 20 Date Time (ET) Release For Consensus Prior Impact M Nov 16 08:30 Retail Sales Oct 0.9% –1.5% HIGH M Nov 16 08:30 Retail Sales ex-auto Oct 0.4% 0.5% HIGH M Nov 16 08:30 NY Empire State Manufacturing Index Nov 30.00 34.57 Moderate M Nov 16 10:00 Business Inventories Sep –0.7% –1.5% Moderate Tu Nov 17 08:30 Producer Price Index (PPI) Oct 0.5% –0.6% Moderate Tu Nov 17 08:30 Core PPI Oct 0.1% –0.1% Moderate Tu Nov 17 09:15 Industrial Production Oct 0.4% 0.7% Moderate Tu Nov 17 09:15 Capacity Utilization Oct 70.8% 70.5% Moderate W Nov 18 08:30 Housing Starts Oct 600K 590K Moderate W Nov 18 08:30 Building Permits Oct 580K 573K Moderate W Nov 18 08:30 Consumer Price Index (CPI) Oct 0.2% 0.2% HIGH W Nov 18 08:30 Core CPI Oct 0.1% 0.2% HIGH W Nov 18 10:30 Crude Inventories 11/13 NA 1.76M Moderate Th Nov 19 08:30 Initial Unemployment Claims 11/14 504K 502K Moderate Th Nov 19 08:30 Continuing Unemployment Claims 11/13 5.600M 5.631M Moderate Th Nov 19 11:00 Leading Economic Indicators (LEI) Oct 0.4% 1.0% Moderate Th Nov 19 08:30 Philadelphia Fed Index Nov 12.0 11.5 HIGH >> Federal Reserve Watch Forecasting Federal Reserve policy changes in coming months.The Fed continues to maintain they will keep rates low until the economic recovery is on solid ground. Experts expect the present rate situation to continue a few more months. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same. Current Fed Funds Rate: 0%–0.25% After FOMC meeting on: Consensus Dec 15 0%–0.25% Jan 27 0%–0.25% Mar 16 0%–0.25% Probability of change from current policy: After FOMC meeting on: Consensus Dec 15 1% Jan 27 3% Mar 16 9% This blog entry is an advertisement for Max Leaman. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in the newsletter is copyrighted by PrimeLending, A PlainsCapital Company and cannot be reproduced for any use without prior written consent. It is designed for real estate and other financial professionals only. It is not intended for consumer distribution. The material does not represent the opinion of PrimeLending, A PlainsCapital Company. Š 2009 PrimeLending, a PlainsCapital Company. Trade/service marks are the property of PlainsCapital Corporation, PlainsCapital Bank, or their respective affiliates and/or subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved. PrimeLending, a PlainsCapital Company is exempt from licensing in the following states: AL, AK, AR, CO, DE, FL, GA, HI, ID, IA, KS, KY, LA, MN, MS, MO, MT, NC, NE, NV, NY, OH, OK, OR, PA, SC, SD, TX, UT, VA, WV, WY. Arizona Mortgage Banker Number License Number 0907334; California Department of Real Estate License Number 01857468; Connecticut Mortgage Lender License Number ML-13649; Illinois Mortgage banker License number MB.6760635; Maine Supervised Lender License Number SLM8285; Maryland Mortgage Lender License number 11058; Michigan First Mortgage Registrant License Number FR 0010163 and Second Mortgage Registrant License Number SR 0012527; New Jersey Licensed Lender Number 083659; New Mexico Mortgage Loan Company License Number 01890; North Dakota Money Broker License number MB101786; Tennessee Mortgage Registrant Number 4023; Texas Regulated Loan License Number 7293; Vermont Mortgage Banker license Number 6127; Vermont Mortgage Broker license Number 0964MB; Washington Consumer Loan License Number 520-CL-49075; Wisconsin Mortgage banker License number 214170. NMLS# 151263

Austin Mortgage Rates Improve

Since the Fed meeting on Wednesday of last week, Austin mortgage rates have improved a little each day. There was no major economic data released during the week, and even a weak 30-yr Treasury auction on Thursday failed to stall the rally in mortgage markets. As a result, Austin mortgage rates ended the week moderately lower.

At their last meeting, the Fed indicated that monetary policy would remain on hold for quite a while. While the Fed acknowledged that it will eventually have to raise the fed funds rate, the message was clear that rate hikes are still a long way off. A series of Fed speakers this week elaborated upon their current thinking. A solid majority of Fed officials feel that the economy is still too fragile and the labor market is too weak to begin to raise mortgage rates. Confirmation that rate hikes are a long way off encouraged investors to purchase stocks and mortgage-backed securities (MBS), and both equity markets and mortgage markets have performed very well since the Fed’s announcement.

On Friday of last week, President Obama signed into law an expanded Homebuyer Tax Credit bill, which extended the deadlines and added a new $6,500 credit. Several provisions in the bill became effective immediately. Homebuyers who owned their primary residence for five out of the last eight years can claim the $6,500 tax credit for purchases made after November 6th. In addition, the extended income limits in the bill are now applicable for both first-time homebuyers and repeat homebuyers. The extended income limit for couples filing jointly is now $225,000, with the credit phased out over the next $20,000 in income. These new limits cannot be applied retroactively to deals completed before November 7th.