Five Ways to Spend Family Day!
January 31st, 2010
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By Parmida Modiri, AMP
The hustle and bustle of the city leaves many finding it hard to spend time with their family. That’s why in 2008, the Ontario Government introduced Family Day, a provincial holiday reserved for spending time with family and cherishing the family we have. It typically falls on the 3rd Monday in February, [...]img alt=”" border=”0″ src=”http://stats.wordpress.com/b.gif?host=muddyyork.comblog=5188131post=2149subd=centraltorontorealestateref=feed=1″ /img src=”http://feeds.feedburner.com/~r/MuddyYorkARealEstateBlog/~4/IHtDgv2Yj3Y” height=”1″ width=”1″/
Categories: Real Estate
domestic Product) showed an increase of 5.7% for the 4th quarter, a full point better than expectations., Chicago PMI and the consumer confidence index also came in stronger than expected. Improvement in the economy (Good News) means a possibility of inflation down the road, so this is usually cause for the mortgage bond market to sell off and for mortgage rates to rise. But today the opposite occurred. Mortgage rates took in all the good news and improved (marginally ) in spite of it. Go figure. The real reason mortgage rates are better is because first, we are still in the same range, and traders are picking their buy and sell points based on points in this range, which means we will head back the other way sometime next week. The second reason for the improvement is because stocks sold off again today. When money comes out of stocks, bonds, and mortgages improve. Whether this trend will continue, or not, we will know soon enough. In the mean time, rates are great, and if you are in a position to lock, you are going to get a great rate.
Unemployment claims came in slightly higher than expected this morning with initial claims of 470,000 for the week. Durable Goods numbers were worse than expected, too. These reports both indicate that the economy is still bumping along and a recovery is still hidden behind some future bend. The State of The Union speech last night emphasized job creation, which everyone agrees is our nation’s biggest problem. The stock market approves. Fed Chairman Ben Bernanke’s confirmation is up for a vote today, and though not all are in his camp, he is expected to get in for his second term. Add all this in and bonds are fluctuating, but mortgage rates are basically flat.
parses their language, and in order to decipher their intent you need to read between the lines to see what they are thinking of the future, and how their actions will impact rates down the line. the take away from this announcement is that the economy is picking up and we are in far better shape then we were at this time last year. But any improvement will be moderate because of high unemployment, a weak housing market and tight credit. This means inflation is not on the horizon and the Fed is more concerned with maintaining conditions for a growing economy. The Fed will keep rates at or near zero, for an extended period of time. This language should be friendly toward mortgage rates, but they also reaffirmed that they were ending the mortgage bond repurchase program (as expected) at the end of March. The net result is that rates are a little worse this afternoon than they were this morning, but we are still in the same range we have been in for the last month. Mortgage rates are still near their lows, but that may not last.
and Urban Development) which administers FHA, is now switching entirely to a new condominium approval process. While this looked like great news when it was first announced several months back, the reality is that this is turning into a major headache for lenders, and condo buyers. For now, there will be fewer condo properties that are eligible for FHA financing, making it harder for buyers without a large down payment to get the best financing. 
Under the new FHA condo approval process, HUD needed more documentation, and more express warranties from the direct endorsement lender approving the project. If the lender got something wrong – and some of the documentation needed is hard to insure accuracy – this means the lender is on the hook with HUD for any loans made in the project. This means a lot of risk for a small reward. The deadline for this was extended twice while HUD tried to iron out the kinks and get the lenders on board, and they allowed the spot loan to continue as a way to keep financing open. But now the spot loan is about to become history, and the new improved process isn’t ready to take its place. 
President Obama is about to announce that the Government is going on a diet, of sorts. The new plan will freeze non-security related Government spending (with some exceptions) and is supposed to mean a savings of $250 billion in savings over the next 10 years. There has been so much fear in the financial markets based on the increased Federal debt, so this is probably a good political move. But saving with one hand while spending with the other is likely to continue for some time. The mortgage rates market has benefitted over the last year as the Fed aggressively bought mortgage backed securities. They have now spent 92% of the amount allotted for purchase, and the program is near the end. In normal markets (remember those?) mortgage rates would shoot higher as we near the expected close date. That hasn’t happened yet, and part of the reason may be that some traders are expecting that someone is going to come in and pick up the slack so mortgage rates don’t spike higher. High (relative) mortgage rates could put a hit on the housing market, which so there will be a real push to keep rates in an affordable range. The Fed Open Market Committee (FOMC) meets tomorrow, and there is likely to be some volatility as we wait to see what they have to say on this, and how it will affect mortgage rates. Anticipation! For now, rates are great.
resistance levels), but much improved on the week. Heading into the weekend we are seeing the best mortgage rates of the last month. So the $64,000 question is, will this last? Will mortgage rates continue to improve, or is this just a nice positive bump in the midst of an upward move? All the smart money is saying that mortgage rates will rise this year, probably soon. The big mover is the fact that the FED will be ending their mortgage backed securities purchase program ($1.25 Trillion worth) at the end of the first quarter. But some people are saying they will find a way to back door the buying (maybe through Government entities Fannie Mae and Freddie Mac) and continue to keep rates low. If this is going to happen, we should be getting some kind of sign soon. In the mean time the rate movement is really a function of the weakness in the stock market. Today was the 3rd down day in a row. Stocks have surged in the last year and a pullback in prices isn’t unreasonable. But the trend is still holding so far, so we could see stocks regain their Mojo on Monday, and if that happens mortgage rates are likely to move higher, again. If you are in a position to lock, this could be a good time to do so.