Mortgage Times

[Adam in CO]

Mortgage Market News for the week ending June 15, 2007

Compliments of
CORE
PHONE:
303-770-2262
adam@corefinancegroup.com
5310 DTC Pkwy
Greenwood Village, CO 80111



Events This Week:

Employment Solid
Inflation Lower
Retail Sales Strong
Manufacturing Up

Events Next Week:
Tues 6/19
Housing Starts
Thurs 6/21
Philly Fed
Leading Indicators

Mortgage Rates Stabilize


After four straight weeks of rising mortgage rates, tame inflation data announced late last week may have halted the trend. On Wednesday, mortgage rates climbed to the highest levels seen since last July, but they dropped lower late in the week to finish close to where they began the week. As a result, many investors are now hopeful that mortgage rates have peaked, at least in the short term. During this stretch, mortgage rates ended more than one half-point higher than on May 11.

Another notable change last week was that investors began again to respond to incoming domestic economic data to make trading decisions. During the prior four weeks, worldwide investors steadily shifted their portfolios from mortgage securities to investments with higher expected returns. The release of what would ordinarily have been mortgage market friendly US economic reports rarely had much impact, but on Friday, in particular, there was a clear reaction to favorable data. The most watched inflation report of the month, Friday's Consumer Price Index (CPI), came in a little lower than expected, and mortgage rates immediately dropped. Later that day, Consumer Sentiment also fell below the consensus forecast, and this produced another decline in mortgage rates.

In the housing sector, the Mortgage Bankers Association (MBA) released two reports last week. The first indicated a quarter-point weekly rise in average mortgage rates, measured from Wednesday to Wednesday, accompanied by a surge in both purchase and refinancing activity during that time frame. According to the other report, the delinquency rate for mortgage loans declined marginally during the first quarter of 2007 from the fourth quarter of 2006, while the foreclosure rate rose by a slightly greater amount. The performance varied greatly between different states.

• Also Notable:
• The NAHB estimated that tighter subprime lending standards are keeping 500,000 first-time home buyers out of the market
• The Fed's Kroszner cautioned that care must be taken to preserve incentives for responsible lending while adding rules to prevent abuses
• The Dow Jones equity index surged about 300 points to close near record levels
• Oil prices rose to $68 per barrel in response to heightened geopolitical tensions in many oil-producing countries

Average 30 yr fixed rate:
Last week:+0.27%
This week:+0.02%Stocks (weekly):

Dow:13,645+291
NASDAQ:2.624+59

Week Ahead

Squeezed between two crowded weeks, next week's schedule of economic events is virtually empty. Tuesday's report on Housing Starts will provide important information about the health of that sector. Beyond that, two reports which are generally not market movers, the Philly Fed manufacturing index and Leading Indicators, will be released on Thursday. In addition, Fed officials will deliver a final round of speeches before the blackout period leading up to the FOMC meeting on June 28.