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The Week in Review:

The US Treasury sold a record amount of government debt last week to support stimulus plans. With such a large amount of debt being issued, last week could have been a tough one for the bond market and home loan rates. As it turns out, the demand for the debt issuance was high and as a result the bond market ended the week on a positive note and home loan rate decreased by approximately .25%.

What to Expect:

Volatility can often occur in a holiday-shortened week, particularly when there are a good number of reports on tap. This week we’ll get a read on the housing market, consumer confidence, manufacturing and most importantly the job market. Home loan rates have been on a decreasing trend since June 10th. Unless we get some really poor economic data, I don’t believe rates will improve any more this week.

Breg-ometer:

Next 7 days: Daily ups and downs ending with slightly higher rate
Next 30 days: We’ll see rates in this same general range
Next 90 days: Neutral

Courtesy of:

Bob Bregitzer

[where: 30080]

The week in review:

Home loan rates have been on an uphill climb the past several weeks. Although mortgage rates were able to turn the corner and muster up improvement the last two days of the week, they still ended the week up .25% to .375%.

What to expect:

The best news for rates is that the Treasury will not be selling additional treasury bonds into the market this week. Hopefully, the break from the added supply will help the bond market continue the trend started on Thursday and Friday of last week and result in rate improvement.

Tuesday and Wednesday will give us a picture of where we are from an inflation standpoint. We have heard several times from Fed members that inflation is expected to be tame in the short term. So, we would not expect any negative inflation rising news.

There are several other reports this week that gauge the overall economy. Weak economic news generally causes rates to go down.

Breg-ometer:

Next 7 days: Rates decrease from steep climb over past weeks
Next 30 days: Volatile conditions. Rates could improve.
Next 90 days: Neutral. What will the Fed do next? Is recession ending?

Courtesy of:

Bob Bregitzer

[where: 30339]

The week in review:

Recession or no recession? Is the economy improving or just getting worse at a slower pace? I say it frequently in my interest rate updates - good economic news generally means there will be a rise in rates. Last week we learned that there were much fewer jobs lost than anticipated and signs are indicating that the economy is close to making a recovery. As a result, home loan rates went up about .375% on the week.

What to expect:

We’ve experienced a large rate increase over the past two weeks and we are unfortunately still stuck in the upward trend. The Fed is in a tough position at the moment. What impact will the sudden increase in rates have? The Treasury will be selling a large quantity of bonds again this week to support Government run programs. Will the Fed be able to do anything to help bring rates back down? Many believe the Fed’s ability to drive rates back down will be limited.

Breg-ometer:

Next 7 days: Large market fluctuations with rates still on the increase
Next 30 days: Could and should see rates improve; but not to where we were before
Next 90 days: Recession or no recession? The more signs pointing to economic stability, the more likely rates to climb

Courtesy of:

Bob Bregitzer

[where: 30080]

The week in review:

Wow! The financial markets are so unpredictable and volatile right now. Rates went up .375% to .50% in just a few days.
Here is the perfect storm that hit quickly:
1) Financial markets began to wonder about the US Government’s ability to repay its record debt obligations
2) The Treasury sold a record $162 Billion of US debt last week
3) Consumer confidence rises
4) NABE saying recession may end in 3rd quarter
5) Several big names in the news talked about inflation being a factor once the economy turns around

So what happens from here?

That’s a tough one but here it goes: The markets are known to overreact and they definitely overreacted last week. The big unknown question: Is there enough demand to want to buy all the debt our Government is offering? Looking forward, the Fed still has availability to purchase substantial amounts of mortgage-backed securities. We should improve from here. Will we get back to rates below 5%? Don’t know.

For those who are waiting for rates to go lower than we have seen over the last couple months, let this be a wake up call. Sub-5% fixed rates are something we’ll see possibly once in a lifetime. Take advantage of the rate environment before it’s gone.

Breg-ometer:

Next 7 days: Choppy waters ahead - large daily fluctuations likely
Next 30 days: Would expect rates to improve from recent overreaction
Next 90 days: Could the recession really be over? We might see rates on the rise.

[where: 30080]

Good news for first-time homebuyers, who will now have access to quick cash to help them with their down payments.

The U.S. Department of Housing and Urban Development (HUD) announced that first-time homebuyers using FHA-approved lenders can now get an advance on the $8,000 tax credit created by the stimulus package and apply it toward their down payments or closing costs.

Until now, the only way to receive the $8,000 first-time homebuyer tax credit was to claim the credit when you filed your 2008 or 2009 tax return. By creating the ability for first-time homebuyers to receive the money in advance, this should result in more homebuyers entering the market and stimulate new home sales.

The announcement details FHA’s rules allowing state Housing Finance
Agencies and certain non-profits to ‘monetize” up to the full amount of the tax credit (depending on the amount of the mortgage) so that borrowers can immediately apply the funds toward their down payments.

The initiative also authorized similar programs already offered in Colorado, Missouri, New Jersey, Pennsylvania, Tennessee, Washington and other states. To quickly infuse cash into their housing markets, the housing finance authorities in these states created bridge loans to allow buyers to borrow against the $8,000 credit and then repay it with their tax refunds.

It will now be up to the State of Georgia or other non-profit organizations to implement a program under the guidelines set out by the FHA.

Needless to say, it is a buyer’s market. With the $8,000 first-time homebuyer tax credit and the $1,800 Georgia homebuyer tax credit, low interest rates and great home prices, now is a great time to buy a home.

Contact us if we can be of assistance in your Smyrna Vinings home search or if you have any questions on the tax credits.