Don Polletta - CT FHA loans

Looks like this will be the year of the First Time Homebuyer! The interest rates for Connecticut's leading home purchase program just dropped to 4.875%. This is the lowest rate offered for a first time homebuyer in years, and coupled with low home values there has never been an opportunity to buy a home like now! You can apply for a CHFA mortgage buy visiting www.ToMortgageServices.com , or call us directly if you have any questions at (800) 922-3210 Ext 122.

Market Comment

Mortgage bond prices remained unchanged for the week keeping mortgage interest rates steady. Trading remained volatile with rates improving the first portion of week. However, some of the data came in surprisingly better than expected Thursday and Friday which caused mortgage bond prices to fall and rates to rise. The labor cost component of the productivity report along with the Fed Chairman's concerns about the possibility of future inflation caused some steep price declines the latter portion of the week. Unfortunately this eroded most the improvements from Monday and Tuesday. For the week, interest rates finished near unchanged. The consumer and producer price data will be the most significant economic events this week. Trade and retail sales data may also result in some mortgage interest rate volatility. LOOKING AHEAD

Market Conditions

There is a Chinese proverb that states, "May you live in interesting times." It is often argued that the word interesting is meant to be a synonym for turbulent or dangerous. This phrase hits the bull's-eye given the current state of the financial markets. While stocks and bonds are swinging around wildly there is some good news. Interest rates for conforming and FHA/VA loans are still historically low by many standards. However, low rates are not a given considering the escalating inflation fears that reemerged recently. Oil prices rose most of last week and Fed Chairman Bernanke expressed concerns about "how to wind down the federal balance sheet" and "avoid inflation." When a Fed official mentions inflation it is generally not positive for bonds. Inflation, real or perceived, erodes the value of bonds causing bond prices to fall and rates to rise. The last thing the economy needs now is rising mortgage interest rates. If inflation emerges that very well may happen despite the continued Fed efforts to keep rates low. With so much uncertainty, a cautious approach to float lock decisions, especially heading into the inflation data this week, would be wise. For more news and information on purchasing or refinancing you can visit www.ToMortgageServices.com.

Mortgage bond prices fell last week applying upward pressure on mortgage interest rates. Trading remained extremely volatile with daily swings of 3/8's in discount points a common occurrence. The economic data released was mixed with no clear indication of the direction of the US economy. The Federal Reserve met last week and the governing body indicated the pace of economic deterioration is slowing. For the week, interest rates rose by about 5/8's in discount points. The employment report to be released Friday will be the most significant data this week. Productivity data will be important also. Additional debt supply hits the market this week with the Fed auctioning $71 billion of 3, 10, and 30 year Treasuries. It will be interesting to see if the market can continue to absorb the additional debt. LOOKING AHEAD

Employment The employment report provides an abundance of information for almost every sector of the economy. Not only does the employment report give basic employment payroll statistics for the major working sectors, it also provides the average hourly earnings and the average workweek. Using this information provided by the Bureau of Labor Statistics (BLS) of the U.S. Department of Labor, economists estimate many other economic indicators such as industrial production, personal income, housing starts, and GDP monthly revisions. Since there is little data for economists to base their estimates on, the margin of error for the estimates tends to be high. As a result, the employment report can cause substantial market movements. The BLS compiles data from two unrelated surveys that they conduct, the household survey and the establishment survey, in order to complete the employment report. This explains why sometimes there is an unexpected divergence between the unemployment rate and payrolls figures each month. This week's employment data will provide valuable insight into the state of the economy. For more information on the governments new loan modification and mortgage refinancing plan visit http://www.affordablehomerefinanceonline.com

If you have been thinking about buying a home now is the time to get in. In the last 20 years there has never been a time to take advantage of low interest rates and housing values like right now. You can just take a look at the recent rates posted by the Connecticut Housing Finance Authority (CHFA), and there is no denying the time to buy is NOW!

Homebuyer Mortgage Program

Interest rate: 5.000 % (APR range 5.100 - 5.500 %)
Term - 30 years, fixed rate

Down Payment Assistance

Interest rate: 5.000 % (APR range 5.100 - 5.500 %)
Term - 30 years, fixed rate

Urban Rehabilitation Homeownership (UR Home) Program

Interest rate: 4.750 % (APR range 4.850 - 5.250 %)
Term - 30 years, fixed rate

Pilot Homeownership and Downpayment Assistance Program for Manchester

Interest rate: 4.750 % (APR range 4.850 - 5.250)
Term - 30 years, fixed rate

Homeownership Program,
Home of Your Own Program,
Police Homeownership Program,
Teachers Mortgage Assistance Program, and
Military Homeownership Program

Interest rate: 4.875 % % (APR range 4.975 - 5.375 %)
Term - 30 years, fixed rate

Combine these low fixed rates with the low housing values and there is no doubt that today's first time homebuyer will be sitting pretty 5 years down the road. For more news and information about purchasing a home you can visit www.ToMortgageServices.com

Mortgage bond prices rose last week applying downward pressure on mortgage interest rates. The bond market as a whole absorbed the additional debt supply the Treasury issued. There were some surprises with the retail sales figure not being as weak as expected and significant stock strength. However, the Fed's continued efforts to pump money into mortgage bonds helped keep mortgage interest rates favorable. For the week, interest rates on government and conventional loans fell by about 1/4 of a discount point. The Fed meeting Wednesday will take center stage. While the Fed is expected to leave rates unchanged their post meeting remarks will be carefully analyzed. The producer price index and consumer price index releases will be the most important data this week. LOOKING AHEAD

Foreign Demand

China's Premier expressed concerns last week about the US debt holdings they have. "We have made a huge amount of loans to the United States. Of course we are concerned about the safety of our assets. To be honest, I'm a little bit worried," Wen Jiabao said. "I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese Assets." These remarks quickly caused panic in fixed income trading. The panic was eventually calmed but uncertainties were left regarding the future of the entire US debt market. China is the largest foreign holder of US debt and continues to debate future purchases. Global investors are constantly searching for opportunities that will provide the greatest return with the least amount of acceptable risk. Investment products inherently all possess some sort of risk. As global financial markets struggled, many market participants searched for a safe haven in the US financial markets even with their shortcomings. With the backing of the US Government, investors viewed the US Treasury and mortgage bond markets as less risky investment opportunities amid global economic uncertainty. This resulted in an increased demand for US investments, such as the mortgage-backed securities that affect mortgage interest rates. Increased demand for mortgage bonds moves prices higher and interest rates lower. A reversal of this foreign demand could result in rates spiking higher. Caution is the key. You can find more information on purchasing a new home or refinancing at www.ToMortgageServices.com or calling us at (800) 922-3210.