Marc's Mortgage Matter's

An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today." (Is that a great quote, or what?) At the start of the year, not only were the smartest guys in the room talking about how mortgage rates would go up when the Fed ended their $1.2 trillion purchase program, but that rates would be going up in general given the expected economic rebound. Of course, neither turned out to be true. And yet, another refi boom, albeit open only for borrowers with equity, job, luck, and decent credit.


Last weeks economic news did nothing to suggest that higher rates will arise in the near future - assuming foreign investors don't mind the US's level of debt compared to GDP. Take Leading Economic Indicators, for example, coming in +.1% but lower than many had hoped. LEI is comprised of 10 series: the factory workweek, new consumer goods orders, nondefense capital goods orders, stock prices, the Treasury yield curve, initial jobless claims, vendor deliveries, building permits, consumer expectations and M2 money supply. Five of the 10 indicators in the leading index contributed to the increase in July, led by the interest-rate spread between the overnight federal funds rate and the yield on the 10-year Treasury note. An increase in the factory workweek and longer delivery times also added to the monthly gauge. Four components retreated, including a drop in consumer expectations and fewer building permits.

The Philadelphia Federal General Economic Index, which like most numbers pales in comparison to the overall European debt crisis, for example, was yet another sign of a slow economy here in the US. It fell to minus 7.7 this month, the lowest reading since July 2009, from 5.1 in July - shrinking for the first time in a year. (Readings less than zero signal contraction in the area covering eastern Pennsylvania, southern New Jersey and Delaware.)

"Zillow", which for better or worse certainly seems to generate a large number of economic indicators, announced that "Homeowner Confidence in Real Estate Market Dips; 1 in 3 Think Worst Is Yet to Come, While 38% Think Local Home Values Have Reached Bottom."

However, For better news, after touching 2010 lows a couple weeks ago, the level of Consumer Comfort reported by the ABC News/Washington Post survey has bumped back up for the past two. The two-tick improvement to minus 45 for the week ending August 15 puts us back at mid-July levels and about mid-range for the year.

This week, we'll likely see the continuing distortion to the housing market from this Spring's tax credit. Both new and existing home sales are due to be reported and it's hard to see how there would be any substantial improvement given the economic situation. Another couple of regional looks at manufacturing activity are also due, but we'll be more interested to see the revised report for second quarter GDP. The initial estimate was 2.4%, but we think we'll be lucky to hang on to a 2% figure. A one-point-something report may give mortgage rates some new space to fall...but any additional decline might not last. Mortgage specialists are starting to get a little busy, so if you're jumping into a refinance, you may need to have a little patience.

Rates were steady this week, but given the behavior of other influential yields we think they have a little room to fall even before next week's data come out. Or, they could climb a bit too - rates in the 4's though are nuts enough to lock in now so if you are closing within the next 30 days you should have locked a rate by now. 

IT'S SO HOT IN GEORGIA ....... ....the birds have to use potholders to pull the worms out of the ground. ....the trees are whistling for the dogs. ....the best parking place is determined by shade instead of distance. ....hot water comes from both taps. ....you can make sun tea instantly. ....you learn that a seat belt buckle makes a pretty good branding iron. ....the temperature drops below 95 F (35 C) and you feel a little chilly. ....you discover that in July it only takes two fingers to steer your car. ....you discover that you can get sunburned through your car window. ....you actually burn your hand opening the car door. ....you break into a sweat the instant you step outside at 7:30 A.M. ....your biggest bicycle wreck fear is, "What if I get knocked out and end up lying on the pavement and cook to death"? ....you realize that asphalt has a liquid stage. ....the potatoes cook underground, so all you have to do is pull one out and add butter. ....the cows are giving evaporated milk. ....farmers are feeding their chickens crushed ice to keep them from laying boiled eggs.



IT'S SO DRY IN GEORGIA............ That the Baptist are starting to baptize by sprinkling, The Methodists are using wet-wipes, Presbyterians are giving rain checks, And the Catholics are praying for the wine to turn back into water!