Weekly dose of economy and mortgage market news that affects mortgage rates for San Jose Home buyers and Home owners.
The Week that was:
- Economic data last week confirmed once again that inflation fears are way overblown; Dec CPI up just 0.1%. Factory use and industrial production improved again as the economy is bottoming, at least based on recent reports. Somewhat disturbing, and adding to last week’s bounce in rates; Dec retail sales were lower, down 0.3% in a month.
- Consumers, the housing industry and the unemployment rate, now at a whopping 17% when discouraged workers are taken into account; not the building blocks for a sustained recovery.
- Freddie Mac weekly Primary Mortgage Market Survey® reported 30-year fixed-rate mortgage (FRM) averaged 5.06 percent with an average 0.7 point for the week ending January 14, 2010, down from last week when it averaged 5.09 percent. Last year at this time, the 30-year FRM averaged 4.96 percent.
- The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.32 percent this week, with an average 0.6 point, down from last week when it averaged 4.44 percent. A year ago, the 5-year ARM averaged 5.25 percent.
The Week that will be:
- Not much in the way of economic measurements this week; Dec housing starts and building permits and the Dec producer price index, prices on wholesale products, are the headliners this week.
- As long as the outlook for economic recovery remains as solid as it is currently lower rates are highly unlikely. We suggest taking advantage of any further decline in rates.
President Obama signed the congressional resolution extending through 2010 the current conforming loan limits of $417,000 for most areas in the U.S. and $729,750 for high-cost areas, including San Jose. The counties of Santa Clara, Alameda, San Mateo, San Francisco & Contra Costa in the Bay Area will have the maximum loan amount at $729,750. Yesterday’s actions extends the higher conforming loan limits for Fannie, Freddie, and FHA loans through 2010.
The $8000 first time home buyer credit has been extended and expanded for San Jose and rest of the Bay Area buyers. President Obama has signed a bill that extends the tax credit for first-time homebuyers (FTHBs) into the first half of 2010. This program had been scheduled to expire on November 30, 2009.
Action #1 – Buying Mortgage Backed Securities (MBS)
If you are planning to buy a Condo in San Jose or other parts of the Bay Area and planning to get an FHA loan keep reading. FHA has made some major changes to their condo guidelines and they go into effect as of Nov 2nd, 2009. Some of the highlights:
Fannie Mae will change underwriting guidelines for conforming loans for San Jose and rest of the Bay Area. They are doing this to reduce their overall risk. Some of the changes announced recently and going into effect on the weekend of December 12, 2009 further tightens some of the guidelines. Here are the highlights:
A volatile but good week for the rate markets. Mortgage rates fell to their lowest levels since last April. Treasuries continue in demand from foreign central banks and domestic investors; likely some of the buying is associated with new concerns that the economy isn’t on the fast track of recovery as markets were expecting recently. Economic data flowing last week were generally worse than estimates, shaking the confidence that the V shaped economic bottom may be more a W shaped recovery.
