Mtg rate update Fri 9-11, Impact of Inflation

Hey there - today is a somber day (9-11) - take a moment to be silent and ponder--- Here are today's rates - and some various economic commentaries below. It's a great time to buy or refinance - please let me know how I can be of assistance to you and/or your clients. I look forward to working with you!

Mary Taylor Sales Manager/Sr. Loan Officer Golf Savings Bank Phone: (503) 701-2269 Fax: 1-888-287-1675 metaylor@golfsavingsbank.com

How Does Inflation Impact Interest Rates? If you've seen the news lately, you know that inflation is a very serious issue that will likely be on the rise as the year proceeds. But What Does This Really Mean to You? The bottom line is that as inflation increases, home loan rates will rise too. That's because lenders know that a rise in inflation actually diminishes the value of the money they receive over the life of a loan, as the money they receive for payment simply won't go as far. So when lenders see changes in inflation or even anticipate a rise, they increase their interest rates to make up for the loss in future buying power that will happen as a result of inflation. What Should You Do? Work with a home loan professional who pays close attention to what's going on with inflation-not only with the reports that come out, but also with the concerns that legislators and lenders express. After all, lenders may raise rates to protect their money as soon as they feel the tide turning. More importantly...if you or any of your family, friends, neighbors or co-workers have been considering a purchase or refinance, this is a great time to act as home loan rates could be on the rise.

Mortgage Interest Rates*

Rates as of Friday, 11th September, 2009:

Conforming APR Payment per $1,000 Jumbo APR Payment per $1,000 Conv 30 Yr 4.875% 5.005% $5.29 % 0.000% $0.00 Conv 15 Yr 4.375% 4.501% $4.99 % 0.000% $0.00 Conv 5/1 Arm 3.75% 3.969% $7.27 % 0.000% $0.00 FHA/VA 30 Yr 5.0% 5.131% $5.37 % 0.000% $0.00 FHA 3/1 Arm 3.875% 3.998% $4.70 % 0.000% $0.00

*Rates are subject to change due to market fluctuations and borrower's eligibility.

All loans subject to credit approval and property appraisal. Programs, rates, and terms subject to change without notice. For ARM loans, rate may increase after settlement. Prequalification is not a commitment to lend, a condition of loan approval, or an application for credit. Pre-approvals will result in a loan decision subject to conditions. Consult a tax advisor regarding the deductibility of interest.--

From "Think Big, Work Small"

At 9:55 the U. of Michigan consumer sentiment index, expected better at 67.8 frm 65.7, jumped to 70.2; the expectations index increased from 65.0 two weeks ago to 67.3 and the 12 month out index exploded to 79 frm 69 two weeks ago. Big increases in consumer sentiment but the initial reaction to the data didn't move stocks or interest rates.

At 10:00 July wholesale inventories, expected down 1.0%, were -1.4%; sales were +0.5% and there is a 1.23 months of inventory based on present sales; in June the sales ratio was 1.25 months. The equity markets saw some selling on the release and rate markets improved more.

Later this afternoon at 2:00 Treasury will report its August budget, expectations are for a deficit of $162B for the month.

Atl Fed Pres Lockhart said yesterday the U.S. recovery will probably be "lackluster," hobbled by strains in financial markets and weak consumer spending. Consumers are not, will not spend at levels some in the markets continue to believe; consumer credit has plunged $37.1B in June and July, one of the largest declines since WW II, a clear indication consumers will not buy into the speedy economic rebound. Consumer nest eggs are gone, consumers fear job security, and consumers are increasingly more concerned about saving than anytime in the past 20 years. Not the building blocks for a quick recovery and growth. Don't hear the bulls chanting that consumers account for 70% of GDP growth; the bullish case has to ignore it to continue the run-up in equity markets. All attention is directed to better earnings forecasts from businesses; based primarily on huge cutbacks in expenses and strong outlook in the tech sector.

The bond and mortgage markets continue to benefit from belief the Fed and other central bankers have no plans to increase interest rates for many months as the global economic climate remains very subject with more shoes expected to fall before the financial systems are completely out of the woods. So far we are not even at the edge of the forest. Demand for government securities also increased this morning after a Japanese report today showed the world's second-biggest economy grew less last quarter than earlier estimated. Japan's economy expanded at an annual 2.3% pace in the three months ended June 30, slower than the 3.7% reported last month.

The bellwether 10 yr note has technical resistance at 3.28%, 5 basis points from where we trade this morning; that level has been hit twice and so far has failed to break through it. Once it does fall it will set a move for the 10 yr note to make a run to the 3.10% area taking mortgage rates below 5.00% on 30s; however to get that low we will need a move lower in equity markets.

The remainder of the session likely will be subdued; it is Friday with next week filled with key economic reports (August retail sales the most significant on Tuesday). Four separate reports on the manufacturing and business sector and August housing starts and permits also to be digested.

From Dick Lepre, San Francisco

Thursday September 10, 2009

Initial Jobless Claims were 550,000 which is better that previous and expectation. Ther trade gap widened as "Cash for Clunkers" proved a boon for foreign car manufacturers in August.

Wednesday September 9, 2009

There is still strong demand for Treasuries but yesterday and today it is concentrated at the short (duration) end. The tech for the 30 year remains bearish. This should be indicative of higher mortgage rates. Folks continue to listen to Wall Street and are buying equities. Trusting bunch of folks they must be.

MORTGAGE RATES DOWN SLIGHTLY THIS WEEK

McLean, VA - Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 5.07 percent for the week ending September 10, 2009, down from last week when it averaged 5.08 percent. Last year at this time, the 30-year FRM averaged 5.93 percent.

The 15-year FRM this week averaged 4.50 percent down from last week when it averaged 4.54 percent. A year ago at this time, the 15-year FRM averaged 5.54 percent.

"Mortgage rates remained historically low over the past two weeks, keeping housing very affordable," said Frank Nothaft, Freddie Mac vice president and chief economist. "As a result, mortgage applications leapt 17 percent over the week ending September 4, led by a 23 percent jump in refinancing demand, according the Mortgage Bankers Association. In fact, nearly three out of five applications were for refinancing current loans.

"While the economy lost 216,000 jobs during August, it was the smallest monthly job loss since August 2008. This and the Federal Reserve's latest "Beige Book" suggest that the economy may be on the road to recovery. Based on information up through late August, most Federal Reserve Bank districts noted that their business contacts remained cautiously positive that economic activity was stabilizing in July and August. Two out of the 12 districts also indicated that local house prices were firming."