Mortgage Market Update

Here is a quick weekly summary of the mortgage market for this week and what may affect prices in the mortgage market this week from our lending partner NYCB. It seems the mortgage market and mortgage rates will be dominated by the chaos in the European financial markets and the unemployment numbers here in the United States.

Last week was a short week, as the stock market was closed on Thanksgiving Thursday and half of Friday. The day after Thanksgiving is considered the start of the holiday shoppingseason… which brings much joy to retailers. According to a survey by the National Retail Federation, total spending over the three-day weekend following Thanksgiving reached a record $52.4 billion, up 16% from the $45 billion lastyear. GSI Commerce reported a three-fold increase in U.S. mobile sales this Black Friday, compared to 2010. Retailers are hoping for a bigger surge on Cyber Monday — which tends to be a peak day for online retail sales, and which
typically surpasses sales from Black Friday. However, due to mixed news from Europe and the lack of strong economic indicators, the stock markets last week never got out of their bearish mode. Even in the minutes from the Nov 1-2 FOMC meeting, the Fed acknowledged that the biggest risk to growth is the potential effects from European sovereign debt developments on financial markets.

Last week, all major indices were down by nearly five percent. The S&P closed at 1,158 while the Dow ended the trading week at 11,232. Moody’s cautious warning on France’s debt rating on Monday shattered investors’ confidence. Stocks gained some ground after the IMF opened a new liquidity line. In mixed domestic indicators, Durable Goods Orders were down for October due to a fall
in aircraft orders. On the positive side, Personal Income for October was up slightly. Also, wages and salaries were up for the month of October. On the employment front, there was some sign of stability as initial jobless claims were below the 400K mark for the straight third month.

The Ten-year treasury yield was up slightly and ended the week at 1.96 percent. Towing the same line, mortgage rates were also up a bit last week. At the end of the week, the Conforming Fixed 30-year rate leveled out at around 3.80%, while the Conforming Fixed 15-year rate finished at around 3.25%. Standard 5/1 ARM rates were last seen hovering at around 2.87%.

This week, investors will be focusing on the France-Germany pact for solving the Euro debt crisis. In other major economic indicators, housing sector health will be gauged from New Home Sales on Monday and Pending Home Sales on Wednesday. The ADP Employment report and the Employment Situation report on Wednesday and Friday respectively will inform investors more as to the unemployment situation.

Our opinion is that it really doesn’t matter how many consumer goods you are selling, but how many homes you are selling along with the mortgage activity that will bring back our economy and facilitate job-growth.

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