Mortgage Weekly Update - Last Week in Review - December 11, 2006
Foster Weeks does a weekly mortgage update.- Mick Orton
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"...Overall this is a very good picture, although the rate of unemployment crept up slightly to 4.5%, and Hourly Earnings were lower than expected, showing that the average worker in the US earns $16.94 per hour. Now remember that Bond pricing and home loan rates tend to worsen on positive economic news like a strong jobs number - so had it not been for the two factors of slightly worse than expected Unemployment Rates and Hourly Earnings, the damage to home loan rates could have been much worse. But Bonds did fall on Friday afternoon, meaning home loan rates could be slightly higher heading into next week.
"...following the excitement in the market last week - the coming week brings even more, as the economic calendar is loaded with high impact releases being headlined by Tuesday's Fed Meeting, after which they will release their Monetary Decision and Policy Statement.
"The Fed has said it remains concerned about the core rate of inflation which is "uncomfortably high" at 2.4% year-over-year and "out of their comfort zone", which is in a range of 1 to 2%. The Fed is likely to once again remain in a "paused" mode at this meeting, but if the Fed continues to express concerns about inflation in the words of the Policy Statement, Bonds may move lower and cause home loan rates to rise following the statement on Tuesday.
"Bonds and home loan rates are hurt by inflation...or even the hints of inflation...since it erodes the buying power of the fixed dollar amount of return that a Bond provides. And speaking of inflation...the Consumer Price Index (CPI) will be released on Friday and this report has been a market mover of late, as inflation takes center stage. If the scent of inflation remains in the air in this release, home loan rates may edge higher at the end of the week. But if inflation appears to ease a bit, home loan rates may improve..." Read this week's report...
- Foster Weeks
posted by SFResidence.com @ 7:05 AM
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