Mortgage Times

[Adam in CO]

Mortgage Market News for the week ending April 11, 2008

Events This Week:

Jobless Claims Lower
Import Prices Higher
Pending Sales Down
Sentiment Fell

Events Next Week:

Mon 4/14
Retail Sales
Tues 4/15
PPI
Wed 4/16
CPI
Housing Starts
Industrial Prod.
Thur 4/17
Philly Fed

Fed Minutes Reveal Growth Concerns

While there were no quiet days in the mortgage market during the week, the enormous swings in rates seen recently were absent. The sparse economic news did little to change the outlook for future economic growth and inflation, and the net result of a series of medium sized daily rate movements was a slight drop in mortgage rates for the week.

The most notable economic news during the week was the release of the minutes from the March 18 Fed meeting. According to the minutes, the three quarters point rate cut was made to help avoid a worse than expected downturn in economic growth. The Fed forecasted that rate cuts and government stimulus packages will lead to faster economic growth during the second half of the year. Falling home prices and turmoil in financial markets were cited as the two most significant reasons for the slowdown. Two of the ten voting Fed officials wanted a smaller rate cut due to inflation concerns. Investors are now evenly split between an additional quarter point or half point rate cut at the next meeting on April 30.

In the housing sector, the February Pending Home Sales index fell a little more than the expected from January, and the index was down -21% from one year ago. Pending Home Sales are a leading indicator of future housing market activity, so the next Existing and New Home Sales reports may show small declines. The National Association of Realtors (NAR) latest forecast predicted that conditions will remain flat for the next few months, but that activity will pick up during the second half of the year. The Chief Economist of the NAR expects that higher mortgage loan limits will lead to increased sales later in the year.

Also Notable:

• April Consumer Sentiment fell to the lowest level since March 1982
• Oil prices climbed to record levels above $112 per barrel, up from $70 p/b in August
• Politicians proposed various homeowner assistance packages focused on expanded FHA programs
• The Bank of England cut interest rates by one quarter point, while the European Central Bank made no change

Average 30 yr fixed rate:
Last week:-0.13%
This week:-0.05%

Stocks (weekly):
Dow:12,441-162
NASDAQ:2,320-49

Week Ahead

Wednesday will be the big day next week. First, though, Retail Sales will come out on Monday. Consumers account for about 70% of economic activity, and this report is a major indicator of spending levels by consumers. The Producer Price Index (PPI) will hit Tuesday morning. Almost without exception, higher inflation leads to higher interest rates, and PPI focuses on the increase in prices of "intermediate" goods used by companies to produce finished products. The Consumer Price Index (CPI), the most widely watched inflation indicator, will be released on Wednesday. CPI looks at the price change for those finished goods which are sold to consumers. Industrial Production (an important indication of economic activity), the Fed's Beige Book, and Housing Starts will come out that day as well. After that, Leading Indicators and the Philly Fed regional manufacturing index on Thursday will round out the week.

admin@corefinancegroup.com.

[mdoyle]

The only reason jobless claims are lower is that only those collecting unemployment are counted.

Everyone that has already used up their benefit isn't accounted for.

Opinions of the issue aside, that's no way equal to an accurate count.

Go ahead and put on those rose colored glasses anyway.......