Weekly Unemployment Claims hit the tape plus 11K to 531K, well above the 515K economists had expected. Continuing Claims when the other way, falling 98K to 5.92 million, a level not seen since March 2009. The fall in Continuing Claims looks good on the surface but in reality reflects unemployed workers exhausting their 26 week’s worth of benefits.
Market action, as I mentioned earlier has been a two way street. With earning season (stocks) in full swing, volatility has really picked up in both equities and bonds. Mortgage backs have been the worst performer on the day with spreads to treasuries widening as sellers continue to lean on the market. Currently, the 10 year note is off 7/32’s (yield 3.45%), MBS off 9/32’s, and stocks off only 1 point on the big board. Technically, we are trading a lower lows, lower highs type of pattern. By nature it is bearish and suggests higher interest rates, worsening Austin mortgage pricing present the higher probability. We will want to pay close attention the 10 year yield as it approaches 3.48% - 3.50%. That level is key support and “should” provide a near term bottom, followed by a rebound. If that level does not hold, MBS could feel another ½ point of pain. Play defense as the trend is not your friend!
Austin Mortgage Market Update - 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.
With the FOMC dust settled, a couple of points are worth mentioning. First up, the FOMC made no mention of an exit strategy, instead talking about keeping Austin mortgage rates low for an extended period of time. Number two was the statement about continuing the purchase of Treasuries and MBS and extending the period until the end of Q1, allowing for a wind down period. Seems obvious that they are more concerned about housing and the economy versus inflation and deficits. One reason for the accommodative policy may be the building inventory due to future delinquency and foreclosures, estimated to be 7 million units. This is what we call “shadow inventory”, not yet on the books but in the pipeline nonetheless. That number is huge, representing an entire year of sales. We shall see.
Weekly Unemployment Claims hit the tape this morning down 10K [...]
Both Weekly Unemployment Claims and Retails sales missed expectations as [...]
Hard to tell what’s going on in the Treasury/MBS market [...]
Oh what a difference a day makes. Yesterday’s failure from [...]
Weekly Unemployment Claims hit the tape plus 8K to 652K [...]
Retail Sales hit the tape this morning, down .1% while [...]
