Monday Morning Update
One of the objectives in doing this blog was to help keep you current on what is happening in the financial sector as it relates to mortgage lending and Real Estate. I also wanted to provide you with information as to what moves interest rates and the "why behind the market". One way I am attempting to accomplish my objectives is to post a Monday Morning Update. This update will provide a brief summary of the past week and also take a peak into the upcoming week. I will post this each and every Monday (with a few exceptions!). So with this said.. enjoy!
Lindbergh I am certain that Congress has had more than a couple cups of coffee this past week as the final decisions were made on the $789 Billion Stimulus Plan. Let's hope that this new plan stimulates our economy and provides some new life into the housing market as well.The one item that has generated the most calls to my office is regarding the tax credit for first time Homebuyers. There was talk of this being as large as $15,000 and available to anyone who purchased a primary residence. The tax credit in the Stimulus Bill has been scaled down to $8,000, or 10% of the value of the home for any first time homebuyer who purchases a home from January 1, 2009 to November 30, 2009. The credit does have income limits and will begin to phase out for couples with incomes above $150,000 and single filers with incomes greater than $75,000. If you sell your home within the first three years you will have to repay the credit. I do not have the exact information on how you receive the credit and how you would repay the credit, but will post it here when I have accurate information.
In addition, there's news that the Obama administration is trying to hammer out a new program to subsidize mortgages to fight the credit crisis. The plan would seek to help homeowners before they fall into arrears on their loans, whereas current programs only assist borrowers that are already delinquent. There are no details yet on this plan, but I will be monitoring this news closely in the weeks ahead.
Last Thursday we were surprised as the Retail Sales report indicated an increase in Retail Sales in January for the first time in seven months! It could take some time for the Stimulus Plan to positively impact the economy, but if it works, the improvement in Retail Sales could continue later in the year.
We'll get news on the inflation (or deflation) front, with Thursday's Producer Price Index (PPI) Report and Friday's Consumer Price Index (CPI) Report. With the recent concerns about deflation, it will be important to see which way these reports have moved, and what the impact may be on home loan rates.
Also this week, we'll get a read on the new construction housing market with Wednesday's Housing Starts and Building Permits Reports. And on Thursday, the Philadelphia Fed Report will be released. This monthly survey of manufacturing purchasing managers conducting business around the tri-state area of Pennsylvania, New Jersey, and Delaware is one of the most-watched manufacturing reports, and given the state of the economy, this is likely to be a negative report.
As a reminder, weak economic news typically helps out Bonds. The reason for this is money flows out of Stocks and into Bonds and therefore mortgage rates improve. However, of late not all investors are passing on their recent gains. Many homeowners and homebuyers have been taking advantage of current low rates and investors have reached (or surpassed) their capacity so they are being a little stingy with their rate improvements until they can get caught up.
This past week Bonds and home loan rates faced some tough technical resistance which hampered the way to finding improvement. As always, I will be watching closely to see what happens this week.
Thanks for reading this post and as always, feel free to post a comment or call me to further discuss.
Denelle Geibel, Mortgage Planner
