Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – September 25, 2009

We're Getting Close...I'd Lock...

Probably A Good Day To Lock

Here’s what we’re looking at, today.  We have managed to climb above the 200-Day Moving Average.  This is good for interest rates.  I do think, however, that to get any better, would prove difficult.  There are two levels, just above our current level of pricing, that kind of act like a signal to the markets.  What I mean is once we hit a certain level of pricing, investors see that level and realize that it might be a good time to cash in on their investment.  Just like stocks, when it reaches a certain price, there is always a good time to sell.  That’s what I see here.

Signs Of A Not So Good Recovery

Durable Goods Orders, for August, well…sucked.  Much worse than expectations at a 2.4% loss, when they estimated a 0.4% gain.  When stripping out transportation, they were unchanged, however, they expected a 0.1% increase.  Durable Goods Orders are household items that the consumer is expected to hold onto for more than three years.  Dishwashers, television sets, etc.  This is an important figure because, as we’ve been reading, things have been looking fairly rosy, however, this report shows that possibly, businesses have been re-ordering items recently, because they haven’t this past year, because of the recession.  So, are they just re-stalking their shelves becasue they’re out of supplies?  Hmm?

Another Sign Of Higher Rates

This is very important to talk with your buyers about.  Or, Buyers…this is why it’s so important to start being very serious about buying now.  I expect rates to be O.K. through the rest of the year.  However, they will start to climb, into 2010, maybe a little sooner.  The New York Federal Reserve purchased about $23 Billion of Mortgage-Backed Securities this week.  Of interest…they bought at around the 5.5% Coupon (Rate).  So, when those rates “hit the street,” so to speak, to the consumer, there is a cost.  To service the loan, to pool it or bundle it up for sale to Fannie Mae or Freddie Mac, even Wall Street wants a piece of the action.  That cost is approxmiately .75% on top of the 5.5%.  So, when those funds are sold “on the street,” the rate equates to 6.25%.  Hence, higher rates!

Other Economic Stuff

Consumer Sentiment was higher than expected.  This may come down after third quarter earnings reports are realeased from corporations.  I’ve been talking about this, and its effects on intrest rates, in other articles.  New Homes Sales were lower than expected.  Interestly enough, homes only sat an average of 7.3 months, on the market, as opposed to 7.5 months, last month.  This is the best reading since January of 2007.  Good news for housing, however, is it the tax credit, or the lack of construction, causing this?  We’ll have to wait and see

Locking In

So, the graph shows a sliding down of rates, however, I think we have an opportunity here.  Once we get into October, things may change, a little, but I like today’s feeling.  See ya next week!

This entry was posted on Friday, September 25th, 2009 at 10:52 am and is filed under Chico Home Loans, Home Buying, Interest Rates, Loan Qualification, Weekly Market Report. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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