This week, uncertainty about the pace of the economic recovery caused investors to shift to relatively safer assets, including government insured mortgage-backed securities (MBS). Also positive for mortgage markets, the economic data released this week showed that inflation remains extremely low. As a result, mortgage rates declined during the week, reaching the lowest levels of the year.
Euro is in the driver seat for every market. It goes like this; as the Euro weakens, the dollar strengthens, stocks go lower, oil goes lower, gold goes higher, and 10 year note/mortgage backed security pricing gets better. Flip side is Euro strengthens and then you know the rest of the story.
USDA UPDATE: In a nut shell, the USDA program is out of money (except for disaster funds in a few areas). The Senate now has three competing bills so the work out process has begun. Nothing scheduled on the Senate floor so this could take some time. USDA issued guidance stating that they would issue condition commitments so we could proceed with the loan process but not close until the program was funded. USDA has now pulled that guidance to issue conditional commitments. As you can see, this is a mess. Investors such as Chase, etc. will not take locks unless you have a conditional commitment or are in a county that has adequate disaster funds available as they see this as hedging a “phantom” pipeline.
Last Tuesday the National Association of Realtors (NAR) reported the Q1 median price for existing homes was up in 91 out of 152 metro areas compared to a year ago, showing the housing market is starting to stabilize. This was a nice gain over Q4 of last year when prices were up in only about 40% of the cities tracked. Even more encouraging, the percentage price increases in 29 cities were in double-digits.
The latest news regarding the Euro zone’s debt crisis was again good news. Spain announced sharp austerity programs to cut its budget deficits and the EU aims to seek further power over member country budgets. In a nutshell, the news added more of a boost to global stocks after opening higher.
With more supply coming tomorrow and Thursday, coupled with a stock market that may have found it’s sea legs, borrowers looking to lock an Austin mortgage rate should stay defensive short term. More in a few.
Austin mortgage rates and pricing can go one way or the other in short order but most likely hold steady at current levels. Best to stay on defense as stocks certainly look better, Europe looks better, and the Federal Reserve Chairman hints of Fed Funds rate hikes sooner than later. Personally, we like the chart (better chance of lower Austin mortgage rates/better pricing) but the fundamentals (economic data) points to a steady recovery. A tug of war for Austin mortgage interest rates seems in the cards.
Last Tuesday the National Association of Realtors reported pending home sales were UP 5.3% in March over February, and UP 21.1% over March of last year. This gain in contracts on existing homes, following February's 8.3% rise, indicates a nice boost should be coming in existing home sales for April. Buyers who signed contracts before the end of March now have till the end of June to qualify for their homebuyer tax credit.
Despite stronger than expected economic data, the financial situation in Greece held the greatest influence on mortgage rates this week. A flight to quality and prospects of slower economic growth in Europe were favorable for mortgage markets and negative for the stock market, and Austin mortgage rates ended the week lower.
oday’s early trade pushed treasuries to higher yields and worsened mortgage pricing, but only slightly. That occurred on a flat to slightly higher open for the Dow. Currently, the big board is off 68 points as sellers are still looking for any strength to get out. Reasons being that as Greece is on the edge of the cliff, global slowing will occur or even worse, a default in the Euro zone that could really put a pinch on global credit and stock earnings.
