Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – October 1, 2009

Welcome October…Very Welcome

OK, what did I tell you?  We’d be back in the 4%-ages in October.  Don’t know how long we’ll be here, but let’s enjoy it, while we’re here.  Not to mention, I am just LOVING THE WEATHER!  Tomorrow might be the last 80 degree day we see until next summer.  Wow!

Jobless Numbers

Mortgage-Backed Securities have crawled their way back up after ending the day, down, yesterday.  So, we’re back in the 4%’s.  NICE!  Unfortunately, it comes at the expense of Stocks and worse than expected employment information.  Keep in mind tomorrow’s numbers could REALLY shake things up.  Initial Jobless Claims rose by 17,000 claims to 551,000.  Now that just sucks!  551,000!?  They expected 535,000, so, not only was it worse than expectations, but if you read yesterday’s article, you’ll understand the severity of a half a million people losing their job in one week. 

End Of The Day Rates…?

Expect them to move a little bit higher!  The annoucement of another Treasury Auction should stir things up a bit.  So, this morning’s rates might be sacraficed, until tomorrow’s unemployment numbers hit.  Which could take us right back to this morning’s rates.  You can follow rates by logging onto the home page of the website at www.accessloans.net and moving down to the left a little.  It’s a close representation, but not exact, as every borrower is different. 

What’s Better…Low Rates or Low Unemployment?

Employment is the number one category for a healthy housing market.  So, if unemployment keeps hemmorhagging, can it continue to help housing?  It will be interesting to see.  I think that a general increase in interest rates, and a progression toward a better employment situation, in the U.S., is what will drive the housing market further than termporary tax incentives and government purchase programs. 

Personal Spending

This economic factor has not increased this fast in over eight years!  Generally, this would send interest rates skyrocketing because it could show that the economy is moving in record pace leaps and bounds.  But, keep in mind that the “Cash for Clunkers” program has come to an end.  So, it’s an interesting statistic.

Fed’s Favorite Gauge Of Inflation

The Core Personal Consumption Expenditure Index (PCI) chimmed in at a meager 0.1% reading.  This brought the Core PCI year-over-year reading to 1.3%.  The Fed’s desire is to keep this reading below 2.0% to stave off inflation (interest rate’s worst enemy).  This is very good news for interest rates, coupled with tomorrow employment figures, we could be in for very opportunitic times. 

All’s Good On The Housing Front

Pending Home Sales were WAY UP!  6.4%!  /The industry only expected a 1.0% increase, so Kudos to the $8,000 Tax Credit Incentive and Realtors that are understanding the current market and helping people move into wonderfully priced home and interest rates.  I expect that the tax credit will be extended.  There is already a bill, in Congress, to extend this to military personnel that did NOT have an opportunity to take advantage of the program, while out serving our country, overseas.  We’ll see!

Related Must Reads

Why I Thought Rates Would Move Down
$8,000 Tax Credit “FAX”
What Are The REAL Unemployment Numbers?

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This entry was posted on Thursday, October 1st, 2009 at 9:19 am and is filed under Chico Home Loans, Home Buying, Interest Rates, 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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