Mortgage Time – Week Ending March 28 2008

03/29/2008 – 1:24 pm


Mortgage Time
Mortgage Market News for the week ending March 28, 2008

Compliments of
John Premysler
Applied Wholesale Mortgage

PHONE:
(877) 912-9669 x302

johnp@awnow.com

184 Technology Dr
Suite 200

Irvine, CA 92618

Events This Week:

Jobless Claims Down

GDP Flat

Manufacturing Mixed

Income Higher


Events Next Week:

Mon 3/31
Chicago PMI

Tues 4/1
ISM Manufacturing
Construction

Thurs 4/3
ISM Services

Fri 4/4
Employment

Mortgage Rates Higher

After two weeks of nice declines, mortgage rates rose during the week, back to the levels seen at the end of February. March was an extremely volatile month, with large daily swings a common occurrence. Investors bought mortgage backed securities during periods of increased concern about the stability of the credit markets. Just as quickly, they sold mortgage backed securities when the fears eased. Last week, investors generally felt that the Fed’s rate cuts and other actions were sufficient to combat the difficulties in credit markets, demand for mortgage investments fell, and mortgage rates rose.

Mortgage rates were also hurt last week by a series of Fed officials who talked tough about inflation. Higher inflation is bad news for mortgage markets, as investors require a higher yield to offset the inflation. With all the attention on inflation, Friday’s release of the Fed’s preferred inflation indicator was highly anticipated. The February Core PCE price index rose at a 2.0% annual rate, as expected, which was at the upper boundary of the Fed’s perceived comfort zone.

In the housing sector, the news was somewhat encouraging. February Existing Home Sales came in stronger than expected. The inventory of unsold homes declined modestly, while median prices fell. Sales activity has held in a narrow range since September, and the chief economist of the National Association of Realtors (NAR) suggested that the data was “another sign that the market is stabilizing”. February New Home Sales also came in a little higher than the consensus. Separately, the government’s OFHEO housing index showed that January prices were down 3% from one year earlier.

Also Notable:

  • March Consumer Confidence plunged to the lowest level in five years
  • Fannie Mae and Freddie Mac must raise up to $20 billion in capital to further reduce restrictions
  • Treasury Secretary Paulson supported greater Fed oversight for investment banks
  • The Treasury announced that the Hope Now program assisted 167K struggling borrowers in January


Average 30 yr fixed rate:

Last week:

-0.38%

This week:

+0.31%

Stocks (weekly):

Dow:

12,330

-31

NASDAQ:

2,291

+33

Week Ahead Next week’s main event will be Friday’s Employment report. As usual, this data on the number of new jobs created, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month, since the health of the labor market is perhaps the single biggest factor in the performance of the economy. Early estimates are for a loss of 40,000 jobs in March.

Other than the Employment report, the only major economic data will be the two national manufacturing indexes. Chicago PMI will come out on Monday and the ISM index on Tuesday. Thursday’s ISM Services index will also be closely watched. Constructions Spending and Factory Orders will round out the week.

 


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