Consumer Sentiment Continues to Rise

Consumer Sentiment plays a very large roll in housing.  Simply put, if consumers feel good about their prospects and the overall economy – they are more likely to purchase a Kentucky home.  So, it is great news that the Reuters/University of Michigan’s Consumer Sentiment Index rose for the third consecutive month.  It came in at a revised reading of 71.6 which far outpaced the market expectations of 69.5.

Also, the national economy grew at a much faster pace than originally thought. The U.S. Gross Domestic Product (GDP) for the third quarter was upwardly revised from 2.0% to 2.5%.  A half point in an economy our size is a very large move upward and marks the best reading in five quarters and the third straight quarterly improvement.  Both of these reports are a big positive for housing demand.

What Happened to Rates Last Week

Kentucky Mortgage - What Happened To Rates Last Week

Mortgage backed securities (MBS) lost -34 basis points last week causing 30 year fixed rates to increase from the previous week.  This marks the third straight week of increasing mortgage rates.  This further proves that you should not listen to news reports about mortgage rates.  The U.S. government cannot and does not control mortgage rates.  These are set by an open market place of willing sellers and purchasers of MBS.  And as our economy continues to rebound, we will continue to see a longer-term trend of higher mortgage rates when compared to our artificially low mortgage rates in October.

What to Watch Out For This Week

The following are the major economic reports that will hit the market this week.  They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages.  We will be watching these reports closely for you and let you know if there are any big surprises:

We understand that is extremely difficult to keep track of the economy and other factors that impact Kentucky mortgage and housing markets. That’s why we gladly monitor the live trading of Mortgage Backed Securities for you. They are the only thing government and conventional mortgage rates are based upon.

Mike Dunn, Holleigh Sharp & Jeff Sharp

Employment Picture Helps Housing

Housing and employment levels are directly linked, so it is great news that our nation’s employment picture has brightened.

The U.S. Labor Bureau reported that their national unemployment rate remained unchanged at 9.6% from the previous month.  But the real story is the increase in the private sector.  It is the private job growth that is reflective of economic growth.  Non-Farm Private Payrolls grew at the best pace in over a year, adding 159,000 jobs.  Plus, their last month’s figures were revised upward by 110,000.

This along with very positive manufacturing data has put the final nail into the coffin of the “double-dip” recession theories.  After this month’s blistering Existing and New Home sales data, the positive job growth adds further stability to our nation’s housing market.

What Happened to Rates Last Week

What Happened To Rates Last Week

Mortgage backed securities (MBS) gained +29 basis points last week causing 30 year fixed rates to decrease from the previous week.  Most of our gains occurred Wednesday afternoon after the Fed’s announcement that they would purchase $600 billion of Treasuries by the end of the 2nd quarter in 2011.  But we gave up much of our gains by Friday’s close on the very strong employment data.

What to Watch Out For This Week

The following are the major economic reports that will hit the market this week.  They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages.  We will be watching these reports closely for you and let you know if there are any big surprises:

It’s extremely difficult to keep track of the economy and other factors that impact Kentucky mortgage and housing markets. We are happy to monitor the live trading of Mortgage Backed Securities for you. They are the only thing government and conventional mortgage rates are based upon.

Mike Dunn, Holleigh Sharp & Jeff Sharp