Hey there - let's agree that today is our Lucky Day - and not fall victim to old superstitions! Below are some great resources to help you get organized so that if disastor strikes you won't be in a lurch! The economic commentaries point to some interesting trends in the housing market and the impact our low rates are having. The last bit of info pertains to FHA and the lack of reserves that this agency is faced with.

As always please call me when I can be of assistance to your clients, friends & associates.

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

Take Stock of Your Stuff...While You Can Imagine the nightmare of having your home damaged or destroyed. Then, to make matters worse, imagine trying to recreate and remember all of the contents of your home for insurance and replacement purposes. Many thousands of Americans find themselves in that situation every year. If it happens to you, will you be prepared? Taking the time to list all of the contents in your home can seem like a very daunting process. But the Insurance Information Institute has streamlined the process by allowing consumers to download a FREE copy of the "Know Your Stuff" software by visiting www.knowyourstuff.org. The software is very user friendly, only takes a few minutes to download, and all the information entered will be saved on your local hard drive. You can even add images of big-ticket items if you want. Once you have completed your home inventory, be sure to have your insurance agent review it to make sure your current policy has sufficient coverage. It is also important to save a copy of your home inventory on a CD and store the CD in a fireproof safe, a safety deposit box, or at a friend's or family member's house.

Mortgage Interest Rates for Fixed Rate Mortgages*

Rates as of Friday, November 13, 2009

Term Conforming APR Conv 30 Yr 360 4.750 % 4.913 % Conv 15 Yr 360 4.250 % 4.529 % Conv 5/1 Arm 360 3.625 % 3.899 % FHA/VA 30 Yr 360 4.875 % 5.742 % FHA 3/1 Arm 360 3.875 % 4.639 %

*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"

Mortgage markets continue to improve early this morning, the 10 yr note however was unchanged through 9:00. The stock indexes traded better early pointing to a better open. Guess why; the dollar is weaker today. Yesterday the dollar had some strength, the DJIA declined and crude oil prices fell over $2.00.

At 8:30 the Sept trade balance came with a deficit of $36.47B, about $5B more than expected and the worst monthly deficit in 10 years. Imports of autos and higher oil prices contributed to the increase. The jump in the trade deficit will cause a downward revision to Q3 GDP growth when the preliminary GDP hits on the 24th; originally reported at +3.5% in the advance report. Import prices for Oct were +0.7%, export prices +0.3%; imports increased 5.8% while exports were +2.9%. Nothing in these reports was a surprise; we still import more than we export and that won't change. Even with the dollar falling almost daily our exports will not match imports as the US cannot produce goods at costs cheaper than we can import them.

The world is in a currency war; America is letting the dollar crumble and it isn't only natural market forces. It is a unannounced, unwritten plan to let the dollar fall in an attempt to make US exports more competitive and fuel the carry trade by enticing investors with stronger currencies to use that strength to buy America on the cheap. Not necessarily a mistake if we view it in the present context, but in the long run a weak currency, especially the US dollar will undermine the value as the world's reserve currency thus lessening the clout in trade the US has always had. The cheap dollar is the prime support for the US stock and bond market and consequently mortgage rates. Both equities and bonds are essentially dollar trades.

Meanwhile, many of the developing countries are trying to no avail to prop up the dollar against their currencies to better compete globally. Russia, Brazil, South Korea and many more buying dollars to stem the tide. Can't do it however, the foreign exchange market is by far bigger than any central bank or combinations of central banks to control. The only way the dollar will strengthen is when US interest rates begin to increase, but the Fed and the Obama administration are in no mood to do that with our economic mess. Higher US rates will send the US recovery back a few steps and further harm the fragile mortgage and housing markets. Much of the greenback's decline stems from investors borrowing funds in the U.S., where the target benchmark interest rate is between zero and 0.25%. They then invest the proceeds in countries with higher rates and faster growing economies.

The last of the data this week, the mid-month U. of Michigan consumer sentiment index; expected to have improved to 71.8 frm 70.6 at the end of Oct, it dropped substantially to 67.0; the one year out expectations fell to 67.0 frm 81.0 at the end of Oct. The declines in the survey are one on hand concerning, but the declines were so intense markets are not taking it too seriously. Sometimes when data is way off expectations markets toss it out or do not take it at face value; so far that appears to be the case given the minor reactions in both stocks and rate markets.

Mortgages are holding today so far, as is the 10 yr note. It is the coiling spring scenario; once the tight range is breached it will set a big move in the direction of the breakout. Tight ranges usually imply the market is in balance between bearish and bullish outlooks, the longer the balance is maintained the possibility of a huge move in the direction of the break increases. The likelihood is a break to higher interest rates based on present concerns on inflation as the dollar falls and the recovery improves.

From Freddie Mac: Long-Term Rates Fall to Lowest Level in Five Weeks

30-Year FRM Below 5 Percent for Five of the Last Seven Weeks

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 4.91 percent for the week ending November 12, 2009, down from last week when it averaged 4.98 percent. Last year at this time, the 30-year FRM averaged 6.14 percent.

The 15-year FRM this week averaged 4.36 percent down from last week when it averaged 4.40 percent. A year ago at this time, the 15-year FRM averaged 5.81 percent.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.29 percent this week, down from last week when it averaged 4.35 percent. A year ago, the 5-year ARM averaged 5.98 percent.

"Mortgage rates eased further over the week, helping to promote an affordable home-purchase market and stimulate refinance," said Frank Nothaft, Freddie Mac vice president and chief economist. "This comes at a time when house price declines are moderating and consumer demand for prime mortgages at commercial banks has picked up.

"The National Association of Realtors® reported that national median sales price of existing homes fell 11.2 percent in the third quarter relative to the same period last year. Moreover, almost 20 percent of the top metropolitan areas experienced positive annual growth, compared to only about 12 percent in the first quarter of this year."

From Wall Street Journal: Housing Agency Reserves Fall Far Below Minimum

By NICK TIMIRAOS

The Federal Housing Administration's capital reserves have fallen to razor-thin levels, increasing the likelihood the agency will eventually require a taxpayer bailout, and adding fuel to the debate about how much support the U.S. should provide to the mortgage market.

The FHA has said for months that its reserves for unexpected loan losses would fall short of the required 2% level by this fall. But an audit of the FHA released Thursday showed that reserves have been depleted much faster than the agency and analysts had expected. The FHA's capital-reserve fund fell to $3.6 billion as of Sept. 30, down 72% from a year earlier, leaving reserves at just 0.53% of the $685 billion in total loans insured by the FHA.

A sign promotes the government's tax credit for first-time home buyers outside a house for sale in Aurora, Colo., in October.

Administration officials said the losses, while large, come as the FHA is helping to heal the housing market. "That reserve account is playing exactly the role that Congress intended it to," said Shaun Donovan, secretary of Housing and Urban Development.

Mr. Donovan, whose agency oversees the FHA, also played down the idea that the FHA would need a federal subsidy, except under the most severe economic scenarios. That is because the FHA still has around $30 billion in capital to pay for losses.

But the projected capital losses in 2009 were worse than the most pessimistic assumptions from last year's review, and some housing analysts and economists say it is increasingly likely the agency will need to ask Congress for money in the years ahead.

"If it were private, it would need a substantial capital infusion now, period," said Thomas Lawler, an independent housing economist. "They're a monoline mortgage insurance company that has just gone through the worst housing environment since the Great Depression. How can anyone argue that they wouldn't need more capital now?"

The FHA doesn't make loans but insures lenders against defaults on mortgages that meet standards set by the agency. The volume of loans insured by the agency jumped 75% in the 2009 fiscal year, which ended Sept. 30, as lenders shied away from risk and as policy makers used the agency to help jump-start the ailing housing market.

The FHA's rising losses reveal one of the hidden costs of the U.S. government's extraordinary efforts to rescue the housing market, raising questions about how much more support the U.S. should give to the mortgage market. A sharp pullback by the FHA could undo recent stabilization in the housing market, but the agency's outsize role in the mortgage market could make it harder to attract private lenders back to the market.

"The longer you have government-subsidized mortgage insurance, or government-subsidized mortgages, or a first-time home-buyer tax credit, the harder it is to scale back," said Mr. Lawler.

Even if the FHA doesn't ask Congress for money, the agency probably will need to raise the insurance premiums it collects from borrowers. Officials said a final decision on premiums hadn't been made.

The FHA largely avoided the subprime bust by requiring minimum down payments and documentation of incomes when many lenders didn't. But the New Deal-era agency has seen its market share swell, to around one-quarter of the mortgage market today, up from 2% in 2006, according to Inside Mortgage Finance.

The U.S. Federal Housing Administration's cash reserves drops well below the congressionally mandated level. The News Hub discusses whether we should expect another housing bailout.

During the second quarter, the FHA backed nearly half of all mortgages made to first-time home buyers, and today it accounts for around half of all new home loans in some of the nation's hardest-hit housing markets.

"The role the FHA is playing in the market right now is helping to...prevent a much worse, more toxic economic decline," said Sarah Rosen Wartell, an executive vice president at the Center for American Progress, a liberal think tank.

The FHA has been particularly exposed to the economic downturn, because it allows borrowers to finance purchases with down payments as low as 3.5%. In a declining housing market, that means borrowers could soon end up owing more than their homes are worth, and raises the risk of default when borrowers face job loss or other hardships. More than half of all FHA-insured loans outstanding had an initial loan-to-value of 95% or more.

Rep. Scott Garrett (R., N.J.) introduced a bill last month that would raise minimum down payments to 5%, something that the agency opposes. "Others are beginning to see that this could be the next major bailout," he said.

David Stevens, the commissioner of the FHA, warned on Thursday that the "biggest mistake" that the agency could make would be to "overcorrect."

Write to Nick Timiraos at nick.timiraos@wsj.com

TGIF - I wish I had solid confirmation that the Tax Credit will be extended but we're being kept in suspense - nonetheless folks need to be looking at buying anyway as there is no better time than the Present! Here is a great website that you might consider signing up for - it's geared mainly toward loan officers but it has great updates that anyone in our industry can relate to and be happy to made aware of: http://www.thinkbigworksmall.com Have a great weekend - please call me when I can be of assistance to you or your clients!

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

Points are up-front fees paid to obtain a better interest rate on a loan. One point equals one percent of the loan amount. A lower interest rate may result in a lower monthly payment, but it is important to consider how long you intend to be in the loan, and to compare current rates to historical market trends. If you take out a $300,000 mortgage and decide to pay one point, this translates into an up-front closing cost of $3,000. Paying a point up front saves $100 a month but it will take 30 months to recuperate the cost of that point. If you decide to refinance or sell the home before the 30-month mark, your money is lost. In this case, you would benefit financially by remaining in the home longer than the 30 months. Rates run in cycles. When rates are at historical lows, it is sensible to pay points if you plan to live in the home for an extended period of time. It is unlikely that rates will go down; hence, there will be no need to refinance. When rates are up, there is a strong likelihood that they will come down. This is no time to pay points. The chances of refinancing in the future are extremely high, and you will likely not be in the loan long enough to recuperate the cost of the points.

Mortgage Interest Rates for Fixed Rate Mortgages*

Rates as of Friday, 2nd October, 2009:

Term Conforming APR Payment per $1,000 Jumbo APR Payment per $1,000 Conv 30 Yr 360 4.75% 4.879% $5.22 % 0.000% $0.00 Conv 15 Yr 360 4.25% 4.375% $4.92 % 0.000% $0.00 Conv 5/1 Arm 180 3.75% 3.969% $7.27 % 0.000% $0.00 FHA/VA 30 Yr 360 4.875% 5.005% $5.29 % 0.000% $0.00 FHA 3/1 Arm 360 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"

Continue to float but stay tuned for rate alerts. Rate markets are overbought and unless the stock market really implodes today there is no more to the rally with Treasury auctions looming next week and near term technical overbought oscillators drawing attention.

At 8:30 Sept non-farm jobs were reported down 263K against market estimates of -180K to -200K, the unemployment rate at 9.8% was in line and +0.1% form August. Average hourly earnings in Sept were up just 0.1%, also seen as a negative to the economic optimism. August non-farm jobs were revised a little better, from -216K to -201K.

The reversal in the equity markets is finally taking hold after a month of waiting; even the most bullish investors are now having to face the reality that the equity markets may have over-shot. That said, listening to various guests on CNBC after the employment report suggests the bulls are not going to give up easily. Lot of chatter coming from the NYSE floor that traders are excited about the turn lower in the stock market, as have noted previously traders say they want a decline in the stock market so they can buy at lower levels. As far as we are concerned, talk is a very cheap commodity; we do not take those thoughts seriously. Changes in sentiment can occur rapidly based on unfolding data. At the end of the day, the basic question in the markets now is whether or not we will have a double dip recession? The bond market is leaning that way while the equity markets are tilted toward no double dip; will likely to increase market volatility over the next few weeks.

Bernanke yesterday said the expansion may not be strong enough to "substantially" bring down unemployment, indicating the central bank will be slow to drain the trillions of dollars it's pumped into the economy. With the Fed expected to not initiate any tightening moves for most of 2010 and inflation off the radar at the moment, the fixed income markets are benefiting in a major short covering move triggering huge stop loss selling. Carrying on with the rally so far this morning on the weaker than expected employment data

Additional bad news for the economic outlook this morning from the Labor Dept; its preliminary estimate for the annual benchmark revisions to payrolls that will be issued in February. They showed the economy may have lost an additional 824,000 jobs in the 12 months ended March 2009. The data currently show a 4.8 million drop in employment during that time.

At 10:00 August factory orders concluded the data this week; expected to be +0.5%, orders were down 0.8%; August durable goods orders revised to -2.6% from -2.4%.

Looking ahead; next week Treasury will auction a total of $71B in 3s, 10s and 30s on Tuesday, Wednesday and Thursday ($39B of 3 yr notes, $20B of 10 yr notes and $12B of 30 yr bonds); Monday Treasury will also auction $7B of 10 yr inflation-indexed notes. Demand for US debt has been very strong from foreign and domestic investors in the past three months. This time the auctions will face the lowest yields in six months if rates hold current levels.

By 10:00 the rally early ended; Not likely to see much movement through the rest of the day. The stock market is slowing finding a little traction from the worst levels at 9:00 this morning.

Continue to float but stay tuned for rate alerts. Rate markets are overbought and unless the stock market really implodes today there is no more to the rally with Treasury auctions looming next week and near term technical overbought oscillators drawing attention.

30-YEAR FIXED-RATE MORTGAGE LOWEST IN FOUR MONTHS, NEARING ALL-TIME LOW SET IN SURVEY IN APRIL

5-Year Fixed Mortgage Rates Are The Lowest Since Freddie Mac Records Began In 1991; 5-Year ARM Rates Also Hits Record Low

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 4.94 percent for the week ending October 1, 2009, down from last week when it averaged 5.04 percent. Last year at this time, the 30-year FRM averaged 6.10 percent. The last time the 30-year FRM was below 5 percent was the week ending May 28, 2009, when it averaged 4.91 percent.

The 15-year FRM this week averaged 4.36 percent, down from last week when it averaged 4.46 percent. A year ago at this time, the 15-year FRM averaged 5.78 percent. This is the lowest the 15-year FRM has been since Freddie Mac started tracking it in 1991.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.42 percent this week, down from last week when it averaged 4.51 percent. A year ago, the 5-year ARM averaged 6.00 percent.

The one-year Treasury-indexed ARM averaged 4.49 percent this week, down from last week when it averaged 4.52 percent. At this time last year, the 1-year ARM averaged 5.12 percent.

"Low mortgage rates are helping to stabilize home sales," said Frank Nothaft, Freddie Mac vice president and chief economist. "New home sales in August rose to the highest annualized pace since September 2008 and the inventory of unsold houses fell to the lowest level since February 1983.

Although existing home sales fell somewhat in August, it was still the second strongest showing in 23 months. Furthermore, house prices increased for the second month in a row in July, after adjusting for seasonality, based on the 20-city composite S&P/Case-Shiller Home Price index®. Moreover, the increases were more broad-based in July with house prices rising in 17 of these metropolitan areas, compared to 16 in June.

From Dick Lepre, San Francisco

Thursday October 1, 2009

Initial Jobless Claims were 551,000 above previous and consensus. Personal Income was +0.2%. Personal Spending was +1.3%. Construction Spending was +0.8%. Pending Home Sales was +6.4%. All of this may well be the makings of another jobless recovery. Yes, jobs trail in a recovery but the fact is that technology and the world economy are eliminating jobs. The Treasury techs are bullish which is good news for rates.

TGIF! Here are today's rates - and below the rates are various commentaries on the current economic climate. There are rumors that the Tax Credit might be extended beyond the end of November; I'll keep you updated as this rumor develops.

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

Financial Reasons to Buy There are a number of personal and emotional reasons to buy a home. But there are also some strong financial reasons to make the investment. Here are just a few of those reasons: Increase Net Worth: Few things have a greater impact on net worth than owning a home. In a comparison of renters versus homeowners, the Federal Reserve Board of Consumer Finance found that the average net worth of renters was just $4,000 compared to homeowners at $184,400. A Big Tax Deduction: One of the largest tax deductions available is the amount of interest paid on a mortgage. In fact, a $150,000 home at a 5.50% interest rate can add up to approximately $8,000 in first year's interest. This amounts to a significant savings - effectively reducing the amount of a homeowner's monthly mortgage payment. Long-Term Appreciation: Over the last few years, home prices have corrected and become more affordable. While that's good news for potential buyers, it has overshadowed the long-term appreciation of a home's value. The reality is, despite market ups and downs between 1950 and 2002, US home prices appreciated at an annual growth rate of 4.8%. Even if you calculate a modest appreciation of 3%, a home purchased today for $150,000 will grow in value to $364,000 over 30 years. In addition, don't forget that the government is offering an $8,000 tax credit for first-time buyers through November 30, 2009.

Mortgage Interest Rates*

Rates as of Friday, 18th September, 2009:

Conforming APR Payment per $1,000 Jumbo APR Payment per $1,000 Conv 30 Yr 5.00% 5.131% $5.37 % 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 5.00% 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

Treasuries and mortgages opened weaker this morning,

No follow-through from the strong rally yesterday. Pushing prices lower, the stock indexes started better pointing to a firm opening at 9:30.

There are no economic reports to deal with today; it is however a day that may see increased volatility with all financial options expiring as well as futures contracts, quadruple witching.

Yesterday's better headline economic reports are getting the credit this morning for the better open in the equity market, but as we noted in yesterday's afternoon report the interior data on the Philly Fed business index, weekly jobless claims, and housing starts were not so strong. Nevertheless, with Bernanke, Warren Buffet and about every analyst now convinced the recession is over, investors are continuing to buy equities. As long as the economic outlook remains positive lower interest rates will be difficult to achieve. Not much concern in the markets yet that the recovery will likely be at a snails pace compared to other recessions in the past 50 yrs.

Given the lack of follow-though frm yesterday so far this morning the rate markets may be vulnerable to more selling next week ahead of Treasury's $112B of supply (2 yr, 5 yr, and 7 yr note auctions). Technically the 10 yr note and MBSs are still holding key moving averages and chart support levels, (3.50% for the 10 yr note and 100.03 on the Nov FNMA coupon now at 100.07). Still will hold to our slightly bullish outlook for rates but time and price equation is working against us; unless the 10 yr note and mortgages gain traction in the next few sessions both may turn technically bearish. The 10 can't sit at this level for much longer before traders will turn more bearish. Mtg rates hovering at 5.00% levels have to break below it or that market also will give up the fight.

From Dick Lepre, San Francisco

Thursday September 17, 2009

Initial Jobless Claims was 545,000. Housing Starts were 598,000 (annualized). Treasury yields are down today.

Wednesday September 16, 2009

Core CPI was +0.1% (overall was +0.4%). Industrial Production was +0.8%. Capacity Utilization was 69.6%. The Capital and IP data are not nearly as significant as they were when this was a manufacturing economy but their psychological value is helping equities and endorsing the message that the recession in ending.

LONG-TERM RATES DOWN FOR THIRD CONSECUTIVE WEEK

Shorter-Term Rates Are Mixed

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 5.04 percent for the week ending September 17, 2009, down from last week when it averaged 5.07 percent. Last year at this time, the 30-year FRM averaged 5.78 percent. The last time the 30-year FRM was lower was the week ending May 28, 2009, when it averaged 4.91 percent.

The 15-year FRM this week averaged 4.47 percent down from last week when it averaged 4.50 percent. A year ago at this time, the 15-year FRM averaged 5.35 percent. This is the lowest the 15-year FRM has been since Freddie Mac started tracking it in 1991.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.51 percent this week, up from last week when it averaged 4.51 percent. A year ago, the 5-year ARM averaged 5.67 percent.

"Interest rates for fixed-rate mortgages eased for the third consecutive week and remained at 3-month lows," said Frank Nothaft, Freddie Mac vice president and chief economist. "Interest rates for 30-year fixed-rate mortgages have averaged just above 5 percent through mid-September, which is roughly a percentage point below last year's average and suggests that 2009 may reach a record annual low since the survey began in 1971.

"Low mortgage rates are aiding new home construction. Housing starts for single family homes have increased consecutively over the five past months ending in July, although starts eased slightly in August. Moreover, homebuilder confidence improved for the third straight month in September, with all four regions showing positive gains, according the National Association of Home Builder's Housing Market Index."

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."