Austin Mortgage Market Update – For the week of July 18, 2011

For the week of July 18, 2011 – Vol. 9, Issue 29

>> Austin Mortgage Market Update 

QUOTE OF THE WEEK…“There is no right way to do the wrong thing.”–Anonymous

 

INFO THAT HITS US WHERE WE LIVE…Increasingly, the wrong thing for consumers to do is to stay out of the housing market. In many locales, owning a home is now less expensive than renting. Rents are rising and vacancies falling, according to a report that tracked leasing data across the country. For the second quarter, rents rose in all but two of 82 markets, while vacancies dropped in 72 of them, sending the vacancy rate to 6%, its lowest level since 2008. Another report showed rental listing prices up 6.7% nationally in June versus a year ago.

 

Meanwhile, national average mortgage rates got pushed down some more, thanks to the prior week’s disappointing jobs report. And the Mortgage Bankers Association reported demand for purchase loans was at about the same level as a year ago, although down a tad from the week before.

 

BUSINESS TIP OF THE WEEK…Creativity, productivity and efficiency come in waves. When your productivity surges, roll with it. Switch projects to stay motivated. But when creativity ebbs, simply take care of the boring stuff that needs to get done.

>> Review of Last Week

DEBT WORRIES WOBBLE STOCKS…The word of the week was “debt” as investors worried about both Italy’s sovereign debt problems and the inability of the politicians in Washington to get to agreement on raising the U.S. debt ceiling. With these uncertainties, stocks wobbled off their high perch and all three indexes sank for the week, the broad-based S&P 500 down 2%.

 

The FOMC Minutes from the Fed’s last meeting revealed a divided committee. Some officials feel the central bank “might have to consider providing additional monetary stimulus” if the recovery remains slow. Others think inflation threats could cause them “to begin removing policy accommodation sooner.” Tracking inflation, the June Core Consumer Price Index (CPI) was up a little more than expected, but consumers weren’t that put off, as June Retail Sales were up a tick for the month and up 8.1% from a year ago.

 

For the week, the Dow ended down 1.4%, to 12480; the S&P 500 was down 2.1%, to 1316; and the Nasdaq was down 2.4%, to 2790.

 

European debt worries and disappointing economic news sent investors to the safe haven of the bond market. Successful Treasury auctions showed these folks weren’t worried about U.S. debt. The FNMA 4.0% bond we follow ended the week UP .09, at $100.28. National average rates on fixed-rate mortgages, according to Freddie Mac’s weekly survey, are at or near lows for the year. 

 

DID YOU KNOW?…The Federal Open Market Committee (FOMC) has 19 members, including seven Federal Reserve board members in Washington and 12 regional Fed bank presidents. Two Fed board seats are currently vacant.

>> This Week’s Forecast

HOME BUILDING, HOME SELLING EDGING UP…Tuesday’s June Housing Starts are forecast up slightly from last month, although still not near pre-downturn levels. Building Permits, foreshadowing starts a few months out, are expected to be flat. Wednesday, June Existing Home Sales should also be up, but not quite back to the 5 million annual rate.

 

Weekly Initial Unemployment Claims are predicted to remain above 400,000. The Philadelphia Fed Index should show manufacturing in that region improved over last month. Finally, the June Leading Economic Indicators Index is expected to be up for the month, though at a lower rate than before.

>> 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 July 18 – July 22

 

 Date Time (ET) Release For Consensus Prior Impact
Tu

Jul 19

08:30 Housing Starts Jun 570K 560K Moderate
Tu

Jul 19

08:30 Building Permits Jun 609K 609K Moderate
W

Jul 20

10:00 Existing Home Sales Jun 4.93M 4.81M Moderate
W

Jul 20

10:30 Crude Inventories 7/16 NA -3.124M Moderate
Th

Jul 21

08:30 Initial Unemployment Claims 7/16 411K 405K Moderate
Th

Jul 21

08:30 Continuing Unemployment Claims 7/9 3.700M 3.727M Moderate
Th

Jul 21

11:00 Philadelphia Fed Index Jul 0.0 -7.70 HIGH
Th

Jul 21

08:30 Leading Economic Indicators (LEI) Index Jun 0.3% 0.8% Moderate

 

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months…Fed Chairman Bernanke still feels the recovery needs all the help it can get, so economists expect he’ll keep the Funds Rate at its super low level a bit longer. 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
Aug 9 0%–0.25%
Sep 20 0%–0.25%
Nov 2 0%–0.25%

 

Probability of change from current policy:

 

After FOMC meeting on: Consensus  
Aug 9      <1%  
Sep 20      <1%  
Nov 2      <1%  
   
   

 

 

About Max Leaman Austin Mortgage

GREAT RATES, LOW FEES, CLOSE ON TIME™ ---- 2012 Ranked #1 Austin Residential Mortgage Lender (Austin Business Journal) 2010, 2011 & 2012 Five Star Professional (Texas Monthly) 2009, 2010, 2011, 2012, 2013 PrimeLending Chairman's Circle Award 2009, 2010, 2011, 2012 Scotsman Guide Top Originator (Top 200 Mortgage Professionals in U.S.A.) Better Business Bureau "A+ Rating" National Lender Rankings (Scotsman Guide): Top Purchase Volume (No. 10) Most Loans Closed (No. 32) Top Dollar Volume (No. 88)

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