Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – December 4, 2009

Unemployment Down To 10.0%

Fewer Lossed Jobs and Lower Unemployment Rate =

Fewer jobs were cut last month than expected.  11,000 jobs were cut and the market expected 125,000 to 130,000.  Now that’s an important number!  Also, a very important Unemployment Rate dropped to 10.0% from last month’s 10.2%.  These numbers, coupled with the fact that the last two months’ numbers were overstated by 159,000 jobs, led interest rates to spike up quite aggressively.  “Temp-Jobs” numbers spiked up 40,000 in number.  This is important because we’ve learned from prior recessions that we see an increase in temporary positions before we see an increase in permanent positions.  Makes sense! 

Higher Rates…Who Cares…More Jobs…More Buyers

Is the worst of the recession behind us?  These numbers appear to support that we may be in a modest recovery.  What’s interesting about this is that even if rates move up, it’s better that we have people returning to the work force, than keeping rates in the 4’s and not having the labor statistics emerge confidently.  People working means people buying homes! 

$1.25 Trillion Well Is Drying

In an effort to try to help keep interest rates low, the Federal Reserve purchased $16 Billion in Mortgage-Backed Securities this past week.  So far, $1.054 Trillion has been spent on the program.  With only $1.25 Trillion for the total program funds…you can see that the reservoir is drying up.  When it does dry up, the effort to keep mortgage interest rates low, will dissipate. 

Locking In…

If you didn’t follow the afternoon advice we gave to lock, you’ve lost a lot of money, or you’ll have a higher interest rate than November 30th’s warning.  However, we are sitting above the 50-Day Moving Average.  If we can stay above that strong layer of support…it may be beneficial to float your rate into next week.  If we do, however, break that barrier, than locking, immediately, would be prudent.  Have an excellent weekend! 

Related Must Reads

Higher Rates…Period!

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Chico, CA Interest Rates Market Report – Economic Influences – November 6, 2009

Another Perfect Day To Lock

How’d I Do?

Well, The Labor Department reported that we lost 190,000 jobs last month.  We were expecting to lose only 175,000.  The other fact that I prognosticated was, “others are heeding my advice to, what I think will pan out to be, about a .25% Point Savings on their loan costs.”  Unemployment rolling in at 10.2%.  Yesterday, I was stating that many analysts were expecting a 9.9% reading, but that it didn’t make sense, with all of the new claims.  Well, now the results have been presented.

The “Real” Unemployment Numbers

I’ve mentioned the “real” unemployment numbers before.  Remember, we’re in the worst economic crisis since The Great Depression.  Unemployment benefits only last for a specified amount of time, when those benefits run out, you’re no longer a statistic on the “Unemployment Numbers.”  Also, keep in mind that so many people have had to take part-time jobs to feed their families, that they no longer hit the Unemployment statistics, either.  So, things are ugly, is what I’m trying to say.  The worst numbers since 1983.

Dialed In!

The Average Work Week came in at a record low 33 hours.  Yesterday’s article touched base on this, as well.  And, just as mentioned regarding rates, Mortgage-Backed Securities moved up exactly 25 basis points, bounced right off of the 25-Day Moving Average, and came right back down to where they ended yesterday afternoon.  So, your interest rate will cost about .25% Points less, today, compared to yesterday morning.  Now THAT is healthy prognostication!  And, by following this blog, you and your clients were Dialed In!

House Passes Tax Extension

So the Senate version of the Tax Extension was passed by the House.  The only thing left is for President Obama to sign it.  Here’s the Scoop:  $8,000 for couples, $4,000 for Singles.  Cannot have owned a home in the last three years.  Income restrictions of $125,000 for singles and $225,000 for married couples.  If you’re a current homeowner, for five of the last eight years, than you’d qualify for a $3,250 Credit for Singles and a $6,500 for Married Couples.  Your application must be dated by April 30, 2010, and the escrow must close by June 30, 2010.

Military Exceptions

If you’re in the military, servicing our country out of the country on official duty for 90 days, from January 1, 2009 until May 1, 2010, you’re eligibility is extended to May 1, 2011, as a contract date, and  July 1, 2011, as the close date.

Locking Advice

I think we’ve reached another pinnacle and it will be very difficult to break through the 25-Day Moving Average.  So, if you float, or lock when the market changes, it may not get any better than it is right now, anyway.  Until Next Week…

Related Must Reads

Yesterday’s Article Was Right On!
The REAL Unemployment Numbers
Tax Credit FAX

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