Austin Mortgage Market Update – For the week of March 14, 2011

For the week of March 14, 2011 – Vol. 9, Issue 11

>> Austin Mortgage Market Update  

QUOTE OF THE WEEK…“An economist’s guess is liable to be as good as anybody else’s.”–Will Rogers

INFO THAT HITS US WHERE WE LIVE…Last week there was no guessing involved in the Mortgage Bankers Association (MBA) report that applications for purchase mortgages hit their highest level of the year. The MBA credited this to the improving job market and mortgage rates remaining at super low levels. This demand for purchase mortgages was up 12.5% from the week before and at its highest level since last May. Freddie Mac’s weekly survey of conforming mortgages showed Texas mortgage rates pretty much unchanged, at historically low levels for the third week in a row.

 

Another UCLA Anderson Forecast came out, reporting that the economy is growing and employment should soon pick up steam. But this somewhat pessimistic group of West Coast economists feel housing will continue to lag behind other sectors. Nonetheless, they see a “modest” recovery in housing starts, up 12% this year, then hitting 1 million in 2012 and approaching 1.5 million in 2013, thanks to pent-up demand.

BUSINESS TIP OF THE WEEK…Get out of your comfort zone. Don’t keep doing things a certain way just because that’s how you’ve always done them. Be open to new ideas and technology. Things can’t change for the better if you’re not open to change.

>> Review of Last Week

STOCKS SLIP…All three stock market indexes registered their second weekly decline in the past three weeks. The Middle East continued to concern investors as the disturbances expanded to Saudi Arabia where no one on Wall Street wanted to see them go, fearing even higher oil prices. But Friday we were all shocked by the devastation of Japan’s worst earthquake in over 100 years. Oil prices seemed far less of a worry and they actually wound up down for the week.

 

Economic news was light but net positive. New weekly unemployment claims were up a bit, after dropping the week before, but the four-week moving average is now 392,000, quite a bit below last summer’s readings. Continuing unemployment claims dropped to 3.77 million, its lowest level since October 2008! These trends are in the right direction for the country overall and for housing in particular. Friday saw Retail Sales UP 1.0% in February, increasing now eight months in a row, their longest streak of gains in over ten years! Consumers are definitely helping out.

For the week, the Dow ended down 1.0%, at 12,044; the S&P 500 was down 1.3%, to 1,304; and the Nasdaq was down 2.5%, ending at 2,716.

 

Amidst slipping stocks, bond prices held up, with buying driven by the turmoil in the Middle East and strong auctions. The FNMA 4.0% bond we watch ended up .01 for the week, closing at $98.15. As noted above, Freddie Mac’s weekly survey of conforming mortgages showed national average mortgage rates still at historically low levels. But buyers should not expect these rates to last forever, as the economic data continues to improve.

DID YOU KNOW?…The Federal Open Market Committee, or FOMC, is the policymaking body of the Fed. Its meeting this week is one of eight held each year to discuss the economy and monetary policy options to promote stable prices and growth.

>> This Week’s Forecast

HOMEBUILDERS, INFLATION, THE FED…This week highlights three favorite topics. Wednesday we see how homebuilders are feeling, as reflected by February Housing Starts, expected to be down a little, and Building Permits, showing builders’ sentiment further out, which should be up a bit.

 

Tuesday we’ll have the FOMC Rate Decision from the Fed. Economists don’t expect the Funds Rate to move off its rock-bottom level, but they’ll dissect the Policy Statement coming out of the confab for signs of when the rate may go up. Rising inflation can hike the rate, but Wednesday’s wholesale inflation (PPI) and Thursday’s consumer inflation (CPI) readings are expected to hold steady.

>> 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 March 14 – March 18

 

Date Time (ET) Release For Consensus Prior Impact
Tu 

Mar 15

08:30 NY Empire State Manufacturing Index Mar 17.0 15.43 Moderate
Tu 

Mar 15

14:15 FOMC Rate Decision 3/15 0%–0.25% 0%–0.25% HIGH

Mar 16

08:30 Housing Starts Feb 570K 596K Moderate

Mar 16

08:30 Building Permits Feb 573K 562K Moderate

Mar 16

08:30 Producer Price Index (PPI) Feb 0.6% 0.8% Moderate

Mar 16

08:30 Core PPI Feb 0.2% 0.5% Moderate

Mar 16

10:30 Crude Inventories 3/12 NA 2.52M Moderate
Th 

Mar 17

08:30 Initial Unemployment Claims 3/12 387K 397K Moderate
Th 

Mar 17

08:30 Continuing Unemployment Claims 3/5 3.750M 3.771M Moderate
Th 

Mar 17

08:30 Consumer Price Index (CPI) Feb 0.4% 0.4% HIGH

Mar 11

08:30 Core CPI Feb 0.1% 0.2% HIGH
Th 

Mar 17

09:15 Industrial Production Feb 0.6% –0.1% Moderate
Th 

Mar 17

09:15 Capacity Utilization Feb 76.5% 76.1% Moderate
Th 

Mar 17

10:00 Leading Economic Indicators (LEI) Index Feb 0.9% 0.1% Moderate
Th 

Mar 17

10:00 Philadelphia Fed Manufacturing Index Mar 28.0 35.9 HIGH

 

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months…Fed Chairman Ben Bernanke has been adamant about his commitment to keep rates where they are until he sees greater job growth and more traction in the economic recovery. The experts are talking about a rate hike later in the year, but the chances of that now are next to nil. Literally. 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
Mar  15 0%–0.25%
Apr 27 0%–0.25%
Jun 22 0%–0.25%

 

Probability of change from current policy:

 

After FOMC meeting on: Consensus
Mar  15 <1%
Apr 27 <1%
Jun 22 <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)

Comments are closed.