Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – September 22, 2009

Rates are Bouncing Back & Forth

Fed Statement Nervousness

Mortgage-Backed Securities are bouncing back and forth between the floor of support, at the 25-Day Moving Average, and the ceiling of resistance, at the 200-Day Moving Average.  Today’s nervousness has to do with an auction of $43 Billion of 2-Year Notes.  While these auctions have fared well, as of late, with the Fed meeting yesterday and today, and publically speaking tomorrow…investors may be hesitant to purchase bonds until they know a little more about what the Fed’s position on the economy is. 

Signs Of The Recession Turning

The private Conference Board reported their Index of Leading Economic Indicators was up for the fifth month in a row.  This is the first steady increase of this index since March of 2009.  Interestingly enough, this indicator has been accurate in all recessions since 1960.  So, if history sets a precedent, we are, currently, at the bottom of the recession. 

Housing Prices

The Federal Housing Finance Agency released their “Housing Price Index” for July.  The bad news was the housing prices, nationally, had declined by 4.2%, however, the good news is that housing prices actually increased 0.3% from June to July.  This supports Warren Buffet and Ben Bernanke’s Statements made this past month, that we’re moving out of the housing slump and out of the recession.

Why Buy Now

Rates are at historic lows.  Home buyers will wish that they would have acted now, before the Government runs out of its purchasing power of Mortgage Backed Securities.  The Fed has purchased $870 Billion of the $1.25 Trillion it has promised to the program.  Not to mention that the program is scheduled to end at the end of this year.  When that purchasing power is gone, rates will go up.  So, tell your friends, clients, buyers, refinance opportunities, to make their move…and soon.

Locking Advice

We’re in a float mode, however, again, watching the market very delicately.