Francesco Mazzaferro

Week of March 15, 2009 Mortgage Market Commentary

Mortgage rates improved slightly last week, even as stock markets experienced a moderate bounce.

While economic news continues to highlight subpar economic activity, a few more signs of hope

appeared last week. Retail sales slipped by 0.1%, which was less than the 0.4% expected. More

encouraging was that "core" retail sales, which excludes auto-related items, rose for the second month

in a row. This type of news is leading some economists, including Fed Chair Bernanke, to believe that

we could be near the bottom, with a chance of economic recovery starting in 2010.

The Fed meets again this week and is unlikely to change economic policy. However, if the Fed

announces that its programs are working as planned, and it announces that the programs will continue

until economic recovery is fully realized, we could see some downward pressure on rates, especially if

investors, even just a few, begin to move back into the secondary market. Of course, if the rally in

stocks accelerates, rates might be forced upward as money moves out of the bond market.

4.50%

4.75%

5.00%

5.25%

12/24 1/7 1/21 2/4 2/18 3/4

30Yr 15Yr 1Yr ARM

6,500.00

7,000.00

7,500.00

8,000.00

8,500.00

9,000.00

16-Dec 30-Dec 13-Jan 27-Jan 10-Feb 24-Feb 10-Mar

Short-Term 􀃎􀃎 10 Yr T-Note 2.900% COSI 3.760%

Long-Term 􀃎􀃎 6 Month Libor 1.902% CODI 2.572%

Volatility High Prime Rate 3.250% MTA 1.514%

0.00

3.00

6.00

9.00

Mar-04 Mar-05 Mar-06 Mar-07 Mar-08

1 Yr CMT MTA COFI

CODI Prime

Industrial Production

3/16 -1.8% -1.0%

Significant

With expectations for another sizable drop, any reading above -0.5%

would rally stocks, but put some downward pressure on mortgage rates.

Another unexpected jump in the PPI could serve to generate some fears

of upcoming retail inflation and rates could be pushed up slightly.

an above-expectations reading usually pushes rates up, a reading

of 0.2% would calm deflationary fears and help keep rates flat.

With the debate intensifying over government management of this

recession, a statement regarded as weak could move rates upward.

After two months of unexpected increases, a third month could add to the

hopes of economic recovery, but rates would feel upward pressure.

Leading Economic Indicators

3/19 0.4% -0.3%

Moderate

FOMC Policy Announcement

3/18

Significant

Consumer Price Index (core)

3/18 0.2% 0.1%

Significant

Producer Price Index (core)

3/17 0.4% 0.2%

Moderate

Historical Rates

This Week's Top Economic Reports and Events

Mortgage Rate Interest Rates and Indexes

Trends

1 Yr T-Bill 0.680% 11th D. COFI 2.455%

Dow Jones

Mortgage Rates

4.50%

4.75%

5.00%

5.25%

12/24 1/7 1/21 2/4 2/18 3/4

30Yr 15Yr 1Yr ARM

Dow Jones

6,500.00

7,000.00

7,500.00

8,000.00

8,500.00

9,000.00

16-Dec 30-Dec 13-Jan 27-Jan 10-Feb 24-Feb 10-Mar

This Week's Top Economic Reports and Events

Mortgage Rate Interest Rates and Indexes

Trends

1 Yr T-Bill 0.680% 11th D. COFI 2.455%

jkl;\Short-Term 􀃎􀃎 10 Yr T-Note 2.900% COSI 3.760%

Long-Term 􀃎􀃎 6 Month Libor 1.902% CODI 2.572%

Volatility High Prime Rate 3.250% MTA 1.514%

Historical Rates

0.00

3.00

6.00

9.00

Mar-04 Mar-05 Mar-06 Mar-07 Mar-08

1 Yr CMT MTA COFI

CODI Prime

Industrial Production

3/16 -1.8% -1.0%

Significant

With expectations for another sizable drop, any reading above -0.5%

would rally stocks, but put some downward pressure on mortgage rates.

Producer Price Index (core)

3/17 0.4% 0.2%

Moderate

fsdaAnother unexpected jump in the PPI could serve to generate some fears

of upcoming retail inflation and rates could be pushed up slightly.

Consumer Price Index (core)

3/18 0.2% 0.1%

Significant

While an above-expectations reading usually pushes rates up, a reading

of 0.2% would calm deflationary fears and help keep rates flat.

FOMC Policy Announcement

3/18

Significant

With the debate intensifying over government management of this

recession, a statement regarded as weak could move rates upward.

Leading Economic Indicators

3/19 0.4% -0.3%

M-oderate

After two months of unexpected increases, a third month could add to the

hopes of economic recovery, but rates would feel upward pressure.

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