Inside Lending: Austin Mortgage Market Update For the week of October 12, 2009

For the week of October 12, 2009 – Vol. 7, Issue 41

>> Austin Mortgage Market Update

INFO THAT HITS US WHERE WE LIVE At the end of September, the supply of homes for sale was reported down 1.8% from the previous month in 27 major metropolitan areas. We all know the factors. Home prices are very affordable, mortgage rates and very favorable and first-time homebuyers are taking advantage of the $8,000 tax credit set to expire at the end of November, now just seven weeks away.

The Mortgage Bankers Association saw loan applications for home purchases rise 13.2% last week, as the MBA’s Purchase Index hit its highest level since last January. The average rate on 30-year fixed rate mortgage slid to 4.89% with an average 1.13 points (including the origination fee) for 80% loan-to-value ratio loans to borrowers with good credit. Freddie Mac’s weekly survey of conforming mortgage rates put the average 30-year fixed rate mortgage at 4.87% with an average 0.7 point for 80% loan-to-value ratio loans to borrowers with good credit.


>> Review of Last Week

BOUNCING BACK… The markets had lost ground for two weeks straight, but last week they got back on track with a vengeance. Hints at good Q3 corporate earnings helped. Some retailers also reported September sales that indicate the consumer is ready to step up to the plate and contribute to the recovery.

We also had the ISM Services index increasing to 50.9 in September, putting it in territory that signals expansion for the non-manufacturing part of our economy.Corporate earnings season got off to a nice start with Alcoa breaking its string of three straight quarterly losses with a surprise profit for Q3, and not just from cost cutting but also from higher sales. We even had good news from retailers encouraged by better-than-expected September numbers. Target, Kohl’s, J.C. Penney and TJX all raised their Q3 or second half profit outlooks.

Initial claims for unemployment came in at 521,000, their lowest level since the first week of the year and continuing claims dropped 72,000, to 6.04 million. There are now economists who expect at least one month with net payroll gains before the year is out. The week ended with the trade deficit declining to $30.7 billion for August. Experts feel this solid showing for U.S. exports supports the case for a strong global recovery, with the U.S. helping supply capital goods to the rest of the world.

For the week, the Dow ended UP 4.0%, to 9864.94; the S&P 500 was UP 4.5%, to 1071.49; while the Nasdaq also rose 4.5%, to 2139.28.

The soaring stock market and a weak auction of Treasuries sent the bond market reeling, putting pressure on prices, including some mortgage backed securities. This included the FNMA 30-year 4.5% bond we watch, which was hammered down from the previous week’s $101.66 close, dropping to $100.91. But, as reported above, mortgage rates stayed in super low territory.

>> This Week’s Forecast

MORE ON CONSUMERS, INFLATION AND MANUFACTURING… In spite of everything being squeezed into three days, it’s a pretty full week of economic reports. Retail Sales give us an update on the consumer’s willingness to contribute to the recovery and CPI readings keep an eye on inflation. The Philadelphia Fed Index, Industrial Production and Capacity numbers gauge manufacturing. The FOMC Minutes give us more on the Fed’s view of the economy from their meeting on September 23.

>> 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 12 – October 16

Date Time (ET) Release For Consensus Prior Impact
W
Oct 14
08:30 Retail Sales Sep –2.1% 2.7% HIGH
W
Oct 14
08:30 Retail Sales ex-auto Sep 0.2% 1.1% HIGH
W
Oct 14
10:00 Business Inventories Aug –0.9% –1.0% Moderate
W
Oct 14
14:00 FOMC Minutes Sep HIGH
Th
Oct 15
08:30 Initial Unemployment Claims 10/10 525K 521K Moderate
Th
Oct 15
08:30 Continuing Unemployment Claims 10/3 6.06M 6.04M Moderate
Th
Oct 15
08:30 Consumer Price Index (CPI) Sep 0.2% 0.4% HIGH
Th
Oct 15
08:30 Core CPI Sep 0.1% 0.1% HIGH
Th
Oct 15
10:00 Philadelphia Fed Index Oct 12.3 14.1 HIGH
Th
Oct 15
13:00 Crude Inventories 10/9 NA –0.98M Moderate
F
Oct 16
09:15 Industrial Production Sep 0.1% 0.8% Moderate
F
Oct 16
09:15 Capacity Utilization Sep 69.7% 69.6% Moderate
F
Oct 16
09:55 Univ. of Michigan Consumer Sentiment–Prelim. Oct 73.5 73.5 Moderate

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months. Fed Chairman Ben Bernanke told Congress last Thursday that interest rates will probably stay low for some time. But he also said that as the economy recovers, the Fed won’t hesitate raising rates If inflation picks up. 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 3%
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

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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