Austin Mortgage Market Update – For the week of October 17, 2011

For the week of October 17, 2011 – Vol. 9, Issue 42

 

>> Austin Mortgage Market Update 

QUOTE OF THE WEEK…“When you cease to dream you cease to live.”–Malcolm S. Forbes

 

INFO THAT HITS US WHERE WE LIVE…One dream that, happily, doesn’t seem to be going away is the one we Americans have of owning our own home. In fact, in spite of all the negative news we hear about housing, the percentage of Americans who own their home is still the second highest on record, according to the Census Bureau. Even better, new research reveals that up to two million people are planning to jump into the housing market in the next two years.

 

The study from a business-to-business media company confirmed that Americans place a high value on homeownership across demographic groups, across the country, even where there have been larger declines in home values. Given today’s prices and super low mortgage rates, 72% of homeowners and 59% of renters polled said that right now is a “good” or “very good” time to buy! Another study found that 80% of homeowners plan to buy another home and most view homeownership as one of the best long-term investments.

 

BUSINESS TIP OF THE WEEK…Do not cut corners in anything you do in business. Make sure your client’s experience with you is an absolute delight.

>> Review of Last Week

BEST WEEK IN AWHILE…Awhile is actually more than two years, as stocks hadn’t had a weekly performance this strong since July 2009. The broadly based S&P 500 was up a surprising 6% and stocks have now advanced in seven of the past nine sessions, gaining more than 11%. What made investors so upbeat was evidence that Europe is getting serious about paying its debts. Eurozone officials made a commitment to develop a full plan to stabilize the financial situation and shore up capital at European banks. This is good news for U.S. banks who have loaned money to their friends across the pond.

 

There was good economic news over here as well. The trade deficit remained flat for the month. Initial jobless claims ticked down for the week and the four-week moving average is well below where it was this Spring. Same-store chain store sales are up 2.8% over a year ago by one survey and up 4.8% by another. We ended the week with September Retail Sales UP 1.1% overall and UP 0.6% excluding autos. These are the strongest monthly increases since Q1 and say to some economists, if not to the media: no recession!

 

For the week, the Dow ended UP 4.9%, at 11644; the S&P 500 was UP 6.0%, to 1225; and the Nasdaq was UP 7.6%, to 2668.

 

With investors rushing back into the riskier stock market, bond prices suffered. The FNMA 3.5% bond we track closed Friday at $100.23, down .94 for the week. Plunging bond prices edged up yields and interest rates. Yet national average mortgage rates were up only a bit from last week’s record levels, and are still historically low.

 

DID YOU KNOW?…Currency in circulation is the total amount of paper currency, coins and demand deposits held by consumers and businesses. A decline in this number can make fewer loans available, because banks don’t have as many demand deposits in their reserve.

>> This Week’s Forecast

BUILDING NEW HOMES, SELLING EXISTING ONES, CHECKING UP ON INFLATION… This week gets us back to a look at the housing market. September Housing Starts are expected to be up a tad, just shy of 600,000 new homes a year. But analysts are predicting a slight dip in Existing Home Sales for September, although that figure should still hover near 5 million per year.

 

With the Fed’s easy money policies, we have to keep an eye on inflation. For businesses, prices are forecast up slightly for the month, as measured by the Producer Price Index (PPI). The Fed’s big focus is always on the Core Consumer Price Index (Core CPI). This excludes volatile food and energy prices and is projected to be up a little, but well within the Fed’s target range. 

>> 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 Oct 17 – Oct 21

 

 Date Time (ET) Release For Consensus Prior Impact
M

Oct 17

08:30 Empire State Manufacturing Index Oct –4.0 –8.82 Moderate
M

Oct 17

09:15 Industrial Production Sep 0.2% 0.2% Moderate
M

Oct 17

09:15 Capacity Utilization Sep 77.5% 77.4% Moderate
Tu

Oct 18

08:30 Producer Price Index (PPI) Sep 0.2% 0.0% Moderate
Tu

Oct 18

08:30 Core PPI Sep 0.1% 0.1% Moderate
W

Oct 19

08:30 Consumer Price Index (CPI) Sep 0.3% 0.4% HIGH
W

Oct 19

08:30 Core CPI Sep 0.2% 0.2% HIGH
W

Oct 19

08:30 Housing Starts Sep 595K 571K Moderate
W

Oct 19

08:30 Building Permits Sep 610K 620K Moderate
W

Oct 19

10:30 Crude Inventories 10/15 NA 1.344M Moderate
W

Oct 19

14:00 Fed’s Beige Book Oct NA NA Moderate
Th

Oct 20

08:30 Initial Unemployment Claims 10/15 404K 404K Moderate
Th

Oct 20

08:30 Continuing Unemployment Claims 10/8 3.690M 3.670M Moderate
Th

Oct 20

08:30 Existing Home Sales Sep 4.94M 5.03M Moderate
Th

Oct 20

10:00 Philadelphia Fed Manufacturing Index Oct –9.6 –17.5 HIGH
Th

Oct 20

10:00 Leading Economic Indicators (LEI) Sep 0.3% 0.3% Moderate

 

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months…Economists see no change in the Funds rate for the next few Fed meetings. The Fed’s stated goal is to keep the rate down through the summer of 2013. 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 2 0%–0.25%
Dec 13 0%–0.25%
Jan 25 0%–0.25%

 

Probability of change from current policy:

 

After FOMC meeting on: Consensus  
Nov 2      <1%  
Dec 13      <1%  
Jan 25      <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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