News

They say that no news is good news. And while that may be true, last week two economic reports were good news. Read on to learn what happened…and how home loan rates were impacted.
Last Thursday, Initial Jobless Claims come in at 381,000. Not only was this lower than expectations, the number was a nine-month low, signaling that the labor market is slowly improving. Then on Friday, Consumer Sentiment reached a six-month high, rising above expectations to 67.7. These aren't the only economic reports here in the US that have improved in recent weeks, which gives us reason for some optimism when it comes to our economy. But how the Eurodrama plays out may determine which way the fragile US economy goes next.
And it was a big week in Europe, with the European Central Bank (ECB) holding a policy meeting on Thursday and the two-day European Union Summit on Thursday and Friday. Before the Summit even began, rating firm Standard & Poor's put 15 of the 17-nation Euro currency bloc on a downgrade review, citing "continuing disagreements among European policy makers on how to tackle" the Euro debt crisis.
So what were the results of the EU Summit? Leaders agreed to a new, tighter "fiscal integration" across the Eurozone. This means that a new treaty will be drafted, setting guidelines such as annual budget deficits being limited to three percent, and failure to meet guidelines like these would automatically spark disciplinary procedures. As expected, Germany was the winner in this negotiation as they demanded a tighter fiscal union in lieu of firing up the printing press and buying troubled sovereign debt.
So what does all of this mean for home loan rates here in the US? It's important to remember that when our economy is struggling and economic reports are less favorable, our Bond Market usually benefits as investors seek a safe haven for their money. And since home loan rates are tied to Mortgage Bonds, our home loan rates are sometimes at their best when our economy is struggling. In a way it makes sense...in times of economic struggle, good home loan rates can help kick start our economy in other areas.
Though our economic reports have been improving of late, our Bond markets - and therefore home loan rates - have continued to benefit from the uncertainty in Europe, as investors have been staying put in the relative safe haven of US Bonds. That's why now remains a great time to purchase or refinance a home, with home loan rates still near historic lows. Let me know if I can answer any questions at all for you or your clients.

Weekly Info 12/9/2011

The newest European maneuvers have trigged a stock rally, but credit markets are not buying the deal. The small upward pressure on US yields today is preparatory to a big borrowing binge by the Treasury next week, not anything fundamental. Through the fog of Europe, dominating and concealing everything, one pattern is clear: the US economy is doing better than forecast 90 days ago, and the rest of the world is in some stage of sinking. The two surveyors of US consumer confidence have each reported November-December gains. New claims for unemployment insurance last month were the lowest since February, and the small-business org, NFIB, has also found the first up-turn in small-business hiring since 2008. The Fed's Z-1 reported a couple-trillion-dollar drop in US household net worth in the 3rd quarter; however, all of it was attributable to stock market losses then, all of which have been recovered.

Weekly Info 12/2/2011

Everybody struggles now to find guideposts in the thicket of new economic information. Two old ideas may help. First, the time-sense of humanity is more calibrated to getting the bear out of the cave than musing about why bears like caves. Second, a version of frog-in-hot-water: we tend not to notice the gradual onset of lunacy, grasping the insanity only in retrospect. US data are pretty good -- relative to fears of new recession. November payrolls gained 120,000 jobs, and inclusive of all revisions added that many to prior months. If markets had any idea in September that payrolls had jumped by 210,000, double the original announcement, we would not have had that mortgage refinance party. Reality break: the Treasury borrows and spends about $120 billion each month, and for that stimulus we get 120,000 jobs. Instead, why not just pay each of these people a million bucks and let them stay home? Europe is struggling with austerity, not us. Yet.