This weeks Economic Calendar is dominated by Treasury Auctions:
- Monday Nov 10: Treasury Auctions $25 BILLION of 3 year notes. This is the first auction of the week which is expected to be a record for a Treasury auction in November (Last November we saw $18 billion)
- Monday 2pm: credit markets will likely close early for Veteran's Day
- Tuesday Nov 11: Mortgage market is closed for Veteran's day
- Wednesday Nov 12: Treasury Auctions $20 Billion of 10 year notes.
- Thursday Nov 13: Initial Jobless claims for week ended 11/8, expected up 1,000. Unlikely to have any market reaction to this report.
- Thursday 1pm: Treasury Auctions $10 BILLION worth of 30 year Bonds. There is a chance that we will get a quick relief rally at the end of this auction since the excess supply will be out of the way, but that all depends on how well received the auctions are.
- Friday Nov 14: October Retail sales, expected down 1.9% (ex auto down 1.0%) This information should already be priced in. So it will take a surprise number to move the market. Retail sales down over 2% and we may see rates start to drop, but if it is stronger than expected, rates are likely to move higher
- Friday Nov 14: September Business Inventories, expected to be flat: Unlikely to be a market mover especially since it is announced just 90 minutes after the Retail sales number.
Since September of last year the FED has slashed interest rates by 4.25%, injected $1 TRILLION into the economy and are expected to add an additional $2 TRILLION in the next 10-12 months as the government bails out banks, automakers, insurance companies and even homeowners. In order to keep the money train rolling the Treasury will continue these auctions to fund these projects. The excess supply in the markets will make it difficult to get the price up on mortgage Backed securities which is necessary for the yields to come down.
If you compare FED Funds today VS Mortgage rates and 2003, we are probably a full percent higher in Mortgage rates now with even weaker economic data that we had in early 2000's that lead to the 40 year low interest rates we had that sparked the housing boom.
Rates are still well below the historic average over the past 20 years, so things on the interest rate front could surely be worse.
As far as my advice this week... I am projecting a pretty flat week for interest rates even with the excess supply we may see rates slightly lower by the end of the day Friday. But with the excess supply floating around, it will be wise to pay close attention.
Have a great week!
Rob
Real Estate Mortgage Network
That's the latest! I hope you find this to be useful
I try and follow what Barry at MMG says as for the most part he is close. I agree and think the rates should be lower than they are right now and my take is the lenders are looking to cover some debt right now. heck- Wells just raised their fee's again for Underwriting and I have not even been using them that long..................
Geoffrey, I actually think the higher rates right now are showing the markets lack of appetite for mortgages. The word "mortgage" carries a risk that investors are not willing to make. There is also a lot of banks and institutions hoarding cash (the liquidy crunch). One of these days we will see an appetite for mortgages come back and at that time we will either see rates come down, or plateau as other rates catch up.
We are on a roller coaster but have hit to the low 6% range with no points or origination here. When it gets to that level jump on the train is what I say. I think we are still going to see the ups and downs for awhile to come.
Thanks for the very concise update on the mortgage market Robert. Banks here are playing it really tight with funds. It is hard to get financing. Need something to break.
Connie, we are pretty much in the same boat on the east coast as you. I would say: HOP on 5.875 and DONT look back! it will be bumpy as the market tries to figure things out.
Kathy, While things are tigher than they were, it is not that much different than it was in the 1990's.
We have much of the same product we had back than. Still have Reduced doc loans, (you dont have to verify income, but do need a job and need to verify down payment)
And there are pretty significant restrictions on investment property and the number of loans one person can have. But there are still MANY ways to finance your buyers, the problem is that there are a lot of LO's out there that do not know how to qualify because it was so easy to do a NO-Doc instead of learn how to qualify.
Rob, thanks for keeping us posted.