Economic Comments and Rates from our Friends at First Interstate Bank"I'M ON MY WAY…JUST SET ME FREE…HOME SWEET HOME." - Motley Crue
Motley Crue's lyrics were being sung by the housing industry this past week when the number of Housing Starts in August came in better than expected (highest level since last November). Warren Buffet (kinda like E.F. Hutton, when he speaks…people listen) made positive comments last week, he thinks that the US economy has bottomed out. He went on to say that we are through the worst of the residential housing decline. This echoes comments from Fed Chair Ben Bernanke, who said that the recession is likely over.
The Producer Price Index came in more than double expectations (prompting fears of wholesale inflation). However, Consumer Prices (at least Core CPI) came in at a modest 1.4% annual rate, lowest annual rate since February 2004. CPI is an important measure of inflation, it actually measures the average prices paid by consumers for goods and services (this is where the real inflation concerns come in). These two reports balanced each other out and suggest that economic growth appears to be on track for gradual improvement, while inflation in not a short-term concern. Home Loan Rates ended the week nearly unchanged.
This week is full of economic news. The Federal Open Market Committee (FOMC) will start their meetings today to discuss policy (i.e. timing of future rate hikes, status of the MBS purchase program….). We expect no change to the Fed Funds Rate at this time. Existing Home Sales and New Home Sales for August will be released on Thursday and Friday respectively. Durable Goods Orders, even though it is a "less-than-perfect" indicator because of volatility and large revisions in past reports, investors still look to this report as being a leading indicator of manufacturing activity (out on Friday). Consumer Sentiment Index for September (also on Friday) is expected to be a "strong" reading of 70.0. We'll also see another round (record $112 billion) of 2-year, 5-year, and 7-year Treasury Note auctions. Recent auctions have been well received and have supported our "low" Home Loan Rates. Will the investor's appetite to purchase continue?
Whitehouse spokesman Robert Gibbs said that the administration is evaluating the First Time Home Buyers $8,000 tax credit and the effect it has had on home sales and will soon make a recommendation to the President. Although there is talk and speculation regarding the expansion of this program, as of now, potential buyers must complete their sale before December 1st. There truly is an opportunity at hand to purchase or refinance a home with historically low financing rates right now, and it won't last forever. Don’t be one who looks back and wishes they had acted now.
CHEAPER GAS - American consumers spent $31.2 billion at gas stations in August 2009, down $11.4 billion from the $42.6 billion spent at gas stations in August 2008 (source: Commerce Department).
Mortgage Interest Rates as of September 22, 2009 From our friends at First Interstate Bank30 Year FixedConforming (Maximum Loan Amount $417,000)-5.000%
Super Conf (Maximum Loan Amount $693,750) -5.250%
Jumbo (Maximum Loan Amount $2,000,000) -6.375%
15 Year FixedConforming (Maximum Loan Amount $417,000) -4.375% Super Conf (Maximum Loan Amount $693,750) -4.750%
Jumbo (Maximum Loan Amount $2,000,000) -5.750%
5 Year ARMConforming (Maximum Loan Amount $417,000) - 3.750%Super Conf (Maximum Loan Amount $693,750) -4.875%
Jumbo (Maximum Loan Amount $2,000,000) -4.750%
Note: With the current volatility in the mortgage markets, please call for quotes on the various ARM programs.
