Austin Mortgage Blog

Posts Tagged ‘retail sales’

Enjoy the historic low Austin mortgage rates

“Regulators, mount up”! Not exactly what Warren G. had in mind when he recorded the song but fitting just the same.  Next time we see a regulator entering our building, his or her card will read, “ Joe Regulator, we regulate any stealing of his property and we darn good too, but you can’t be a geek off the street, gotta be handy with the steel if you know what I mean, earn your keep”!  Just had to have a little fun with the passing of FinReg.  As my first boss always told me, “ Change is always for the better but sometimes it takes time to see it.”

Stocks are getting pounded, down 200 on the Dow, the 10 year note is up 12/32’s, and mortgage backs are plus 4 to 6/32’s depending on the coupon. Why you ask.  First up, CPI, inflation at the consumer level fell .1% while the “core index” (ex-food and energy”, rose .1%.  Tame by any means with a whiff of deflation in the cards (slim chance in our opinion).  Michigan Sentiment Survey was the one that raised an eyebrow, falling nearly 10 points to 66.5.  Economists noted that consumers have gone into a cocoon, chaining their wallets to themselves only to be opened for necessitates.  Expect Retail Sales to soften in the future.

BP finally put a cork in their crude oil jug, a welcome site indeed. Technically, the late rally (yesterday) provided the perfect set up for a continuation pattern (further rally).  Stocks are really the major influence here.  We see this a just a move to the top of the range (2.90% 10 year note).  Any where here, current mortgage pricing or a little better is a good place for borrowers to lock in their Austin mortgage interest rates.  Any reversal in stocks will simple reverse our direction and take the market to the lower part of the range.  Enjoy the historic low Austin mortgage rates.

Slow U.S. Growth, Low Austin Mortgage Rates

Weaker than expected economic data and continued low inflation helped Austin mortgage rates move a little lower from last week. In recent weeks, investors have modified their consensus outlook to reflect weaker economic growth during the second half of the year. The manufacturing and retail sales data released during the week reinforced this view. Lending further support, the Fed revised its forecast for 2010 economic growth lower as well. Meanwhile, this week’s CPI and PPI data continued to show that inflation is not a concern in the short term. Uncertainty about the pace of the economic recovery has made investors willing to purchase safer assets such as government guaranteed mortgage-backed securities (MBS) at these relatively low yields.

Congress passed the comprehensive Financial Regulations bill and President Obama will sign it into law soon. The bill provides a framework for oversight of the financial services industry, and certain aspects of the bill will affect mortgage lending and the home buying process. The bill calls for various regulatory agencies, some of which will be newly created, to determine the details. Implementation of most of the new mortgage-related rules is expected to take 18 to 24 months to complete.

A tug of war for Austin mortgage interest rates seems in the cards

Isn’t it funny what a trillion dollars can do for you.  Well, that’s what the European Union threw at countries such as Greece, Spain, Ireland, and Portugal in a move that mimicked what our Federal Reserve and Treasury departments did a little over a year ago.  Stocks took off in stealth fashion across the globe.  When stateside trading opened in NY, the Dow jumped 400 points at the bell.  Currently, the Dow is up 406 while the Naz is plus 102 points.  Too early to call the close which will be important.  We’ll want to see if traders are buying the bailout given passage is still needed by all 16 countries and the austerity measures (wage cuts, layoffs, retirement age rising, etc. etc.) have yet to be implemented in Greece.  They (citizens) could just be taking a rest before the street fighting once again begins.  Overall, the move has hope and removes a negative for growth round the globe.

Bonds, notes, and mortgage backs have felt the pinch but mortgage backs have held up quite nicely.  10 year note is off 33/32’s (yield 3.55%), 30 year bond is off 74/32’s (yield 4.42%), and yet MBS are down 8/32’s.  The week ahead is light on data with Retail Sales, Industrial Production, and Michigan Sentiment survey being the heavy hitters on Friday.  We will however have supply to contend with this week as the Treasury auctions 38 billion of 3 year notes tomorrow, 24 billion of 10 year notes on Wednesday, and 16 billion of the 30 year bond on Thursday.  Stock pricing and movement will hold the key to how well the paper is received.

Technically, the weakness today has taken the chart back to pre-Europe chaos levels and forced sell signals to emerge on 60 minute charts.  Daily charts however are not giving us a new bear trend.  When you have this type of divergence, the market is trying to tell us that it will take time to show it’s true colors as nothing is in harmony.  In English, this means that Austin mortgage rates and pricing can go one way or the other in short order but most likely hold steady at current levels.  Best to stay on defense as stocks certainly look better, Europe looks better, and the Federal Reserve Chairman hints of Fed Funds rate hikes sooner than later.  Personally, we like the chart (better chance of lower Austin mortgage rates/better pricing) but the fundamentals (economic data) points to a steady recovery.  A tug of war for Austin mortgage interest rates seems in the cards.

For the market to do better (Austin mortgage pricing improvement), we need to breach and close above 116 10 (below 3.83% yield)

Today’s trade has been one of bullish trending action for both bonds and stocks. Stocks are higher on good earnings expectations and some positive movement on the Greek debt crisis. Word has it that EU/IMF has a plan for 40 to 61 billion EU on a three year loan at 5.0%. Trouble is that it would address their liquidity issues but not their solvency. Treasuries and mortgage backs continue to grind higher (lower yields) due to tactical reallocations and sellers that appear to be “worn out”.

One word of caution as you look at the chart. Currently, we’re right up against the top of the range (116 10 in futures and 3.83% 10 year note yield). For the market to do better (Austin mortgage pricing improvement), we need to breach and close above 116 10 (below 3.83% yield). Otherwise, all that has happened is that we’re tested the top of the range and we’ll once again consolidate, moving back towards the center of the range. Traders like the set up and prefer to short (sell) the market at this level with tight stops. Meaning that if their wrong, they will know quickly and will get out with small losses.

The economic calendar heats up as well this week. Housing data tomorrow, inflation and Retail Sales on Wednesday, housing, inflation, and Weekly Claims Thursday, and Michigan Sentiment Survey on Friday.

Best advice is to use any rally to lock your interest rate in!

Retail Sales jumped .3% and .8% ex-autos, well above economists’ expectations.  Gains in food, beverages, and gasoline station receipts led the way.  Auto sales pulled down the headline print, falling 2.0%.  Traffic was higher for most Retail Stores as well, with notable gains in women’s apparel outlets like Ann Taylor.

Given the wicked weather in February, the numbers are impressive but suspect.  Is the consumer coming out of a two-year shell or is it just time to replace some items that have simply worn out?  Time will tell.  If you’re looking to Consumer Sentiment for the answer, look again.  The index fell in this morning’s release, down 1.1 points to 72.5.  Both current conditions and future expectations fell with the latter down only slightly.  The index is moving sideways, a mirror image of our employment situation.  As employment goes, so will our feelings about how fat your wallet is.  Reaction to all of the above has been somewhat of a whipsaw.

Post Retail Sales, treasuries and mortgage backs fell like a rock with the 10 year note down 14/32’s at one time.  Mortgage backs were off 11/32’s at the same time.  Stocks as one would expect, were up 20 something and looking to breakout of upper part of the range on S & P’s (1150).  Once Consumer Confidence was released, traders threw cold water on stocks and our fixed income paper started a comeback.  Currently, the 10 year note is up 1/32^nd but mortgage backs are still off 7/32’s (we priced down 8/32’s).  Technically, the early selling triggered a new bearish trend (higher interest rates) but 10 year notes and 30 year bonds remain neutral on this study.  Given the volatile trading conditions, a bullish divergence has come into play with the chart now working on an outside day up (bullish formation).

Given the trading dynamics of late, we expect any rally to be muted.  Over the past week or so, I’ve talked about the triangle formation on the 10 year note daily chart.  Looking at that chart below, you can see how the formation is “winding itself” tighter and tighter and will eventually “breakout” into a major trend move.  3.89% and 3.43% mark the extremes (currently trading 3.72%).  Until this happens, we expect the market to be range bound between the two extremes.  Given the stabilization in the economy and slowly improving data, the higher percentage odds will be towards higher yields.  Time frame on this is tough to call with our most likely guess being the second half of the year.

With so many variables to consider – employment, sovereign debt, political rang lings’, and on and on – managing interest rate risk and helping our borrowers with their decisions on Austin mortgage rates is very hard to handicap.  Best advice is to use any rally to lock your interest rate in!

We’ll try to wrap it up for the week later today.

From our view, employment is still our economic priority and not going anywhere fast

Weekly Unemployment Claims hit the tape up 11K to 444K. Economist were looking for a much smaller gain of plus 3K. Continuing Claims fell 141K to 5.002 million. The trouble with both of the indexes is that seasonal adjustments can skew the numbers. Taking a deeper look at the “unadjusted” continuing claims number, we find that they rose 185K. Expectations are for the seasonal factors to work their way out of the system over the next few weeks. From our view, employment is still our economic priority and not going anywhere fast.

Retail Sales also disappointed, falling .3% with the ex-autos component down .2%. Gasoline station receipts were the only positive, up 1.0%. The market was looking for a better number, given high hopes of a better holiday season. We see the negative December reading as unsettling, reflecting a consumer that has started to spend but at a snail’s pace.

Results of 30 year bond auction just hit the tape. 4.64% yield, 2.68 to 1 bid to cover, Indirect bidders took 41%, and best of all, the issue was bid 4 bps “through” the screen, telling us that demand was very good. Looks to us like a good technical setup along with bond bullish data (early today) helped to support the auction. Give it an A-.

Currently, the 10 year note is up 18/32’s (yield 3.71%), mortgage backs are plus 7/32’s on the lower interest rates but only up 3/32’s on the premium priced loans. Mortgage pricing stuck at plus 3/32’s on FNMA 4.50% securities. We’ll become more friendly to the market if we can close at this level or better (3.71% yield or lower) as the technicals will support a more neutral chart with a bullish bias. Keep in mind that the winds on Wall Street can change very quickly.

Somewhat of a “let’s see what the other guy does first” type of attitude

Meant to post yesterday.

25 billion in 10 year notes will be the focus for today as the auction deadline is less than one hour away.  No news but plenty of Fed Governors are speaking with traders looking for any clues as to what they have up their sleeve.  Lockhart, Yellen, Rosengren, Tarullo, and our very our Dallas Fed governor Fisher are all on the scrambled egg/rubber chicken circuit.  For the most part, the day has been quiet with stocks hanging around unchanged and the 10 year note up 6/32’s (yield 3.46%).  As far as the auction is concerned, street talk has it that dealers are expecting a “fair” retail showing but not one that will blow the doors off.  Somewhat of a “let’s see what the other guy does first” type of attitude.

The technical trades supports a cautious approach as the 10 year chart has traded back to the October highs and then backed off.  The daily chart has formed a “reverse head and shoulders” pattern with today’s trade touching the neck line (October high).  From a traders perspective, this is a good place to sell, given the resistance is clear and will be difficult to take out.  The flip side would be if we can trade below 3.42%, especially on a closing basis.  That would blow through that neckline and project a run to the old highs set last September (yield of 3.12%).  If this happens, gains on the 10 year would be about 1 ½ points and improve mortgage pricing.

Today’s auction will go a long way in determining our next direction.

Austin Mortgage Market Update For the week of November 9, 2009

For the week of November 9, 2009 – Vol. 7, Issue 45 >> Austin Mortgage Market Update INFO THAT HITS US WHERE WE LIVE Big news for the housing market came Friday when the President signed a bill extending and broadening tax credits for homebuyers. Major points were first reported in an Inside Lending Bulletin last Thursday. The tax credits apply to contracts signed by April 30, 2010, that close by June 30. Income limits for eligibility have been increased to $125,000 per year for individuals and up to $225,000 per year for couples. Credits up to $8,000 continue for first-time buyers but there is now a $6,500 tax credit for buyers who’ve owned their current home at least five of the last eight years. However, homes selling for more than $800,000 are not eligible. The week began with September Pending Home Sales coming in UP for the eighth month in a row. The National Association of Realtors index was UP 6.1% for the month, and UP 21.2% over September a year ago! The index hit 110.1, with 100 equaling the average level of sales contracts in 2001, the first year measured by the index. And, yes, the Mortgage Bankers Association once again reported the average contract interest rate for 30-year fixed-rate mortgages dropped. This time it hit 4.97% with points sinking to 1.01 (including the origination fee) for 80% loan-to-value (LTV) ratio loans. >> Review of Last Week HELLO, 10,000… The Dow Jones Industrial average had busted through 10,000 before, but was finally able to stay above that magic number when the market closed for the week. The S&P 500, which many consider an even better indicator of investor sentiment, was up every day. The big jump came Thursday with solid earnings from tech giant Cisco and a 9.5% jump in Productivity. Friday saw what some considered a gloomy October Employment Report, but investors wouldn’t let it push the Dow under 10,000. Let’s be clear. The job market is lagging behind the turnaround analysts are seeing in the overall economy. 10.2% unemployment is the highest since 1983, though still below that era’s 10.8% rate. And because of the economic growth that began in the summer, some economists now feel unemployment is at its peak or very close. There were encouraging signs in Friday’s numbers. There were fewer jobs lost than first reported for August and September. And the three-month average of job losses has declined in each of the last eight months. Getting back to more obviously positive economic news, the 9.5% productivity gain was its largest boost since 2003. ISM Manufacturing was much better than expected, now solidly in above-50 expansion territory at 55.7. ISM Services has also begun to expand at 50.6, while Construction Spending bumped up 0.8% and Pending Home Sales saw the great shot up we covered above. The Fed’s policy statement after last week’s meeting recognized for the first time that household spending is “expanding” now, rather than “stabilizing” as they characterized it before. For the week, the Dow finished UP 3.2%, to 10023.42; the S&P 500 was also UP 3.2%, to 1069.30; while the Nasdaq went UP 3.3%, to 2112.44. While stocks did well, bonds held their own, supported by buyers who chose get gloomy over an employment report that stock investors certainly weren’t fretting about. The FNMA 30-year 4.5% bond we watch ended slightly ahead of the previous week’s close, finishing at $101.28. Mortgage rates moved down again slightly, firmly staying in historically low territory. >> This Week’s Forecast TAKE A BREAK… After all the hoopla of last week’s Fed meeting and Employment Report, this week is about as quiet as it gets on the economic front. The markets take a break too, closing Wednesday for Veteran’s Day. Thursday we’ll continue to look at the weekly unemployment reports, as any improvement in jobs bodes well for housing. The Trade Balance is important, since it reflects our situation in the world market our economy is so closely tied to. Finally, we have another read on the consumer’s mindset on Friday. >> 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 9 – November 13 Date Time (ET) Release For Consensus Prior Impact Th Nov 12 08:30 Initial Unemployment Claims 11/7 NA 512K Moderate Th Nov 12 08:30 Continuing Unemployment Claims 10/31 NA 5.75M Moderate Th Nov 12 11:00 Crude Inventories 11/6 NA –3.94M Moderate F Nov 13 08:30 Trade Balance Sep –$31.9B –$30.7B Moderate F Nov 13 08:30 Univ of Michigan Consumer Sentiment–Prelim. Nov 71.8 70.6 Moderate >> Federal Reserve Watch Forecasting Federal Reserve policy changes in coming months. The Fed made clear in their policy statement after last week’s meeting, that they intend to keep rates low for a long time. Inflation could change that, of course. 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 14% This blog entryl 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 Market Update – For the week of October 19, 2009 – Vol. 7, Issue 42

>> Austin Mortgage Market Update For the week of October 19, 2009 – Vol. 7, Issue 42 INFO THAT HITS US WHERE WE LIVE For the third week in a row, rates on 30-year fixed-rate mortgages remained below 5% in Freddie Mac’s Primary Mortgage Market Survey. The average for conforming mortgages was 4.92% with an average of 0.7 point (including the origination fee) for 80% loan-to-value ratio loans to borrowers with good credit. The Mortgage Bankers Association reported applications down 1.8% for the week, although re-financings were up, as more people took advantage of historically low mortgage rates. The MBA also projected double-digit growth for home sales next year. They see 2010 existing home sales up 11.2% to 5.57 million and new home sales up a healthy 21% from 2009 levels. Another encouraging stat came from the National Association of Realtors which reported 3.6 million existing homes for sale at the end of August, nicely down from 4.3 million 12 months ago. First time buyers may still be able to get the $8,000 tax credit expiring at the end of November. That’s six weeks away, which is not a lot of time, but not impossible. Fence-sitters should get pre-qualified now. >> Review of Last Week FLIRTING WITH 10,000… Investors focused on corporate earnings saw enough encouraging signs to push the Dow past 10,000 on Wednesday. It was last at that magical mark on October 7 a year ago. The market closed above 10,000 again on Thursday, but Friday was a different story. GE and IBM reported quarterly results that were less than expected and University of Michigan Consumer Sentiment fell 3.9 points, after a 7.8 point rise in September, so the week ended below 10,000, but still with an overall gain. But don’t fret over consumers — they’re clearly showing up at the stores. Retail sales for September fell just 1.5%, way less than expected after the end of the Cash for Clunkers program. In fact, “core” retail sales (take out autos, building materials and gas) were UP 0.5% and are UP three of the last four months. Ignore the pundits — consumers ARE participating in this recovery. Other good indicators included the Empire State Manufacturing Index rising to its highest level in over five years and initial unemployment claims falling to 514,000, their lowest level since the start of the year. But the best news for investors was on the earnings front, with JPMorgan Chase, Goldman Sachs and Citigroup all beating estimates. Tech darling Google blew everyone away with earnings of almost $6 a share and an optimistic economic outlook. The week ended with Treasury Secretary Tim Geithner telling CNBC: “… you’re going to see the economy growing at a significant rate…the rest of this year. [And] Positive growth in 2010 at a level that will begin to gradually bring down the unemployment rate.” For the week, the Dow ended UP 1.3%, to 9995.91; the S&P 500 was UP 1.5%, to 1087.68; while the Nasdaq rose 0.8%, to 2156.60. The bond market saw prices under pressure in the shortened week. This included the FNMA 30-year 4.5% bond we watch, which dropped a tad from the previous week’s $100.91 close, ending at $100.72. But, as reported above, mortgage rates stayed low, keeping us in “the golden age of mortgage rates”, as one observer described it. >> This Week’s Forecast HOME SWEET HOMES… This week is full of news on the subject we love most. Tuesday we get Housing Starts and Building Permits for September, Friday delivers Existing Home Sales. For a gauge of the broader economy, the PPI looks at producer prices, while the LEI consolidates a group of indicators. We will all keep watching Initial and Continuing Unemployment numbers as we wait for Secretary Geithner’s prediction to come true. Corporate earnings will stay big in the picture as 12 companies who are part of the Dow Jones Industrial Average share Q3 results. >> 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 October 19 – October 23 Date Time (ET) Release For Consensus Prior Impact Tu Oct 20 08:30 Housing Starts Sep 610K 598K Moderate Tu Oct 20 08:30 Building Permits Sep 590K 579K Moderate Tu Oct 20 08:30 Producer Price Index (PPI) Sep 0.0% 1.7% Moderate Tu Oct 20 08:30 Core PPI Sep 0.1% 0.2% Moderate W Oct 21 10:30 Crude Inventories 10/16 NA 0.33M Moderate Th Oct 22 08:30 Initial Unemployment Claims 10/17 517K 514K Moderate Th Oct 22 08:30 Continuing Unemployment Claims 10/10 5.990M 5.992M Moderate Th Oct 22 10:00 Leading Economic Indicators (LEI) Sep 0.9% 0.6% Moderate F Oct 23 10:00 Existing Home Sales Sep 5.35M 5.10M Moderate >> Federal Reserve Watch Forecasting Federal Reserve policy changes in coming months. Last week the Consumer Price Index (CPI) inched up 0.2% for September. The Fed watches this number like a hawk for signs of inflation. Rates should stay down until the recovery builds, but after that, the Fed could move quickly. 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 Nov 4 0%–0.25% Dec 15 0%–0.25% Jan 27 0%–0.25% Probability of change from current policy: After FOMC meeting on: Consensus Nov 4 1% Dec 15 4% Jan 27 13%

This blog post 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

Dow Crosses Above 10,000

Stronger than expected economic data, solid earnings reports, and upward revisions to the Fed’s growth forecast propelled the Dow stock index above the 10,000 level for the first time since October 2008. However, these same factors were unfavorable for Austin mortgage rates, and they ended the week modestly higher.

This week’s economic data mostly surprised to the upside. With the end of the Cash for Clunkers program, Retail Sales declined, but by less than expected. Excluding autos, Retail Sales rose on a monthly basis. Industrial Production showed a nice increase, and the Empire State regional manufacturing index jumped to the highest level since May 2004. Weekly Jobless Claims fell to the lowest level since early January, indicating some improvement in the labor market.

On Wednesday, the minutes from the September 23 Fed meeting were revealed. At that meeting, the Fed announced that there would be no change in the size of the $1.25 trillion mortgage-backed securities (MBS) purchase program, but that it would be extended from the end of the year to the end of the first quarter of 2010. The purpose of the longer time frame was to gradually wind down the program and minimize disruptions to MBS markets, which heavily influence mortgage rates. The Fed minutes released this week showed that the MBS purchase program was one of the primary areas of discussion at the Fed meeting. Some Fed officials argued in favor of expanding the size of the MBS purchase program to stimulate the housing market and the overall economy, but the majority decided against it. Based on the minutes, it appears very unlikely that the Fed will change its announced position and increase the scope of its MBS purchases, unless the economic outlook deteriorates significantly.

Week Ahead

Housing data will be in the spotlight next week. Housing Starts will be released on Tuesday, and Existing Home Sales will come out on Friday. The Producer Price Index (PPI) inflation data will also be released on Tuesday. The Fed’s Beige Book is on the schedule for Wednesday. In addition, the Treasury will announce the size of upcoming Treasury auctions on Thursday.