Danny Salas

Archive for September 3rd, 2009

Chico, CA Interest Rates Market Report – Economic Influences – September 3, 2009

Low Today, But Locking Tonight Might Be a Good Idea

I Told Ya So!

In yesterday’s article, I mentioned that it may have been a good time to lock, first thing this morning.  Keep in mind, that I write these article early.  We ended up locking in numerous loan rates, late yesterday.  Here’s why:

Bustin’ Through Trend Lines

We have broken through all of the lines of resistence regarding Trend Lines and where Mortgage-Backed Securities have been.  We, actually, approached the best level we have seen since March.  So, rates were in the 4’s for the afternoon.  When we approached these higher levels (meaning rates are down), we figured we see a sell off, and we did!  So, it was a great opportunity for a lot of buyers. 

What’s happening Now

My advice has been to float for some time now.  We have risen 281 Basis points since August 7, 2009.  That’s almost 3.0% Points, or $6,000 on a $200,000 loan.  Are you glad you listened?  If you haven’t Locked In, or if you’re in a 60 day escrow.  I THINK RATES ARE GOING TO GET EVEN BETTER!  On August 21, even in the face of rising rates, I still indicated that I though rates would be lowering.

Treasury Auctioning More Bonds

That’s right.  The Treasury Department will announce, today, 3, 10, & 30 Year Bond Auctions and how much they’re going to auction.  Keep in mind that the longer the term of the Bond, the more difficult to reap a profit.  If these Auctions don’t fare well, rates will suffer.  However, I think we’ll be fine when the 3rd Quarter Earning’s for Corporations start to come out…starting at the end of this month and going into October. 

Unemployment Figures

The number of Americans filing for unemployment compensation fell by 4,000, however, it’s still higher than expectations, at 570,000.  The other bummer is the four-week average of claims rose to 571,250.  That’s an eight week high.  So, bad for labor, but good for rates.  A nice catch 22. 

Will The Fed Stop Buying MBS?

There is toying with the idea of extending the Mortgage Backed Security Purchase Program AFTER December.  The idea is that the housing industry is too fragile to mess with, right now.  Some Fed members disagree with this idea.  If it’s extended, it should help to keep rates lower, however if they decide not to extend, after October, expect rates to steadily increase to the 6% range by January. 

Locking in?

Ahead of all of the Treasury Auction information and jobs numbers; if you’re in a short escrow…I’d consider locking in.  If you’re beyond 30 to 45 days, I’d wait for a while to lock.  Unemployment will be interesting to see tomorrow morning.  I’ll have an explanation as to the numbers for you…tomorrow.