Austin Mortgage Market Update – For the week of September 12, 2011

For the week of September 12, 2011 – Vol. 9, Issue 37

 

>> Austin Mortgage Market Update 

QUOTE OF THE WEEK…“The lure of the distant and the difficult is deceptive. The great opportunity is where you are.”–John Burroughs, American naturalist and essayist

 

INFO THAT HITS US WHERE WE LIVE…The great opportunity now is for home buyers to get a mortgage at an historically low rate. Freddie Mac reported national average mortgage rates set new record lows last week. But according to most observers, buyers shouldn’t expect further rate dips. Lenders are seeing plenty of loan volume, so they don’t have to lower pricing to get more activity.

 

Opportunity was also one of the themes in Fannie Mae’s August National Housing Survey, where 69% of Americans polled say now is a good time to buy a home. And in spite of all the talk about more price declines, people expect home prices to dip only 0.5% in the next year. This is why some observers feel we’re at a price bottom now. A strong 46% of Americans expect rents to go up in the next year, so that should motivate purchases as well.

 

BUSINESS TIP OF THE WEEK…Business school researchers found that the businesses able to survive economic downturns were ones who continually changed in response to the business climate, adapted to the headwinds and constantly tried new ideas.

>> Review of Last Week

CONTINENTAL DRIFT…In four days of stock trading, the Dow drifted down for the sixth week out of the last seven, all because of financial dramas on the European continent. Europe’s Central Bank President failed to offer any plan to stimulate growth following the downward revision to his GDP forecast for the region. Friday there was talk that Greece might default on its debt over the weekend. On our shores, news that weekly initial jobless claims are still above 400,000 didn’t help matters either.

 

Even a couple of surprisingly good U.S. economic reports couldn’t overcome all these bad vibes. The August ISM Services Index was UP, to a better-than-expected 53.3, showing expansion in the non-manufacturing sector responsible for about 85% of our jobs. Following this, it was reported that the July Trade Deficit shrank, thanks to a $6.2 billion INCREASE in exports, which are UP 15.1% in the last year, ahead of imports, up 13.6%.

 

For the week, the Dow ended down 2.2%, at 10992; the S&P 500 was down 1.7%, to 1154; and the Nasdaq was down 0.5%, at 2468.

 

Friday the bond market saw a huge flight to safety by investors motivated by those rumors of a weekend Greek default. A  government spokesman in Athens said that wouldn’t be so, but Wall Streeters opted for sleeping undisturbed until Monday. The FNMA 3.5% bond we track closed Friday at $102.03, up .81 for the week. Mortgage bond prices were up and, as mentioned above, national average mortgage rates set new record lows. 

 

DID YOU KNOW?…The CPI inflation indicator measures the change in the cost of a fixed basket of products and services like housing, food and transportation. The Core CPI favored by the Fed excludes food and energy prices because of their monthly volatility.

>> This Week’s Forecast

This week began with the observance of the 10th anniversary of the September 11 terrorist attacks. Our thoughts are with all those who lost their lives and with their families, whose lives were forever changed.

 

INFLATION, RETAIL, MANUFACTURING…Wholesale inflation is expected to be well under control in Wednesday’s Producer Price Index (PPI) and Core PPI readings for August. Thursday, the critical Consumer Price Index (CPI) and Core CPI inflation measures are also forecast well within the Fed’s target range. August Retail Sales should still show consumers doing their part, although sales growth is predicted to be less than July’s.

 

Manufacturing is expected to be down a tad in the August Industrial Production and Capacity Utilization readings. And the Empire Manufacturing Index for New York and the Philadelphia Fed Index should still show contraction in those regions, although less than in the prior month.

>> 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 Sep 12 – Sep 16

 

 Date Time (ET) Release For Consensus Prior Impact
W

Sep 14

08:30 Producer Price Index (PPI) Aug 0.0% 0.2% Moderate
W

Sep 14

08:30 Core PPI Aug 0.2% 0.4% Moderate
W

Sep 14

08:30 Retail Sales Aug 0.2% 0.5% HIGH
W

Sep 14

08:30 Retail Sales ex-auto Aug 0.3% 0.5% HIGH
W

Sep 14

10:00 Business Inventories Jul 0.5% 0.3% Moderate
W

Sep 14

10:30 Crude Inventories 9/10 NA –3.963M Moderate
Th

Sep 15

08:30 Initial Unemployment Claims 9/10 410K 414K Moderate
Th

Sep 15

08:30 Continuing Unemployment Claims 9/3 3.700M 3.717M Moderate
Th

Sep 15

08:30 Consumer Price Index (CPI) Aug 0.2% 0.5% HIGH
Th

Sep 15

08:30 Core CPI Aug 0.2% 0.2% HIGH
Th

Sep 15

08:30 Empire Manufacturing Index Sep –4.0 –7.7 Moderate
Th

Sep 15

08:30 Industrial Production Aug 0.0% 0.9% Moderate
Th

Sep 15

08:30 Capacity Utilization Aug 77.4% 77.5% Moderate
Th

Sep 15

10:00 Philadelphia Fed Manufacturing Index Sep –10.0 –30.7 HIGH
F

Sep 16

09:55 Univ. of Michigan Consumer Sentiment Sep 56.3 55.7 Moderate

 

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months…Economists see a hike in the Funds Rate as the farthest thing from the Fed’s collective mind, clear through the first half 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
Sep 20 0%–0.25%
Nov 2 0%–0.25%
Dec 13 0%–0.25%

 

Probability of change from current policy:

 

After FOMC meeting on: Consensus  
Sep 20      <1%  
Nov 2      <1%  
Dec 13      <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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