Market Insights: 8-21-2009
By Larry Baer:

The National Association of Realtors reported this morning that sales of previously owned homes jumped 7.2% higher in July – posting its best performance since August 2007. July’s percentage increase was the largest monthly gain since the data series started in 1999. The July existing home sales data marked the fourth consecutive monthly improvement in this measure of activity in the housing sector.
There is a notable “fly-in-the-ointment” in this data set -- much of the recent sales gain in existing home sales has been a function of falling prices created by foreclosure sales and other distress motivated transactions. The median existing-home price has fallen by 15.1% on year-over-year basis. The share of homes sold as foreclosures or otherwise distressed properties held at 31% in July.
The massive government borrowing spree continues unabated – with Uncle Sam in the credit markets on Tuesday looking to borrow $42 billion in the form of 2-year notes, followed by Wednesday’s demand for $39 billion in the form of 5-year notes and wrapping up with Thursday’s request for $28 billion in 7-year notes. Be aware that last time around the demand for the 2- and 5-year notes was downright awful – which provided mortgage investors with all the justification they needed to push mortgage interest rates higher.
Keep your fingers crossed that the “safe-haven” appeal of government debt obligations and mortgage-backed securities continues to shine bright as the investment community debates the sustainability of the stock market rally. If, as I expect, those that argue stock values cannot be sustained at current levels without a solid increase in consumer spending ultimately win the debate – the rotation of capital out of riskier assets like stocks into safer investments like bonds and mortgage-backed securities should limit the upward trajectory of mortgage interest rates over the course of the next couple of weeks.
PROGRAM- Purchase

30 DAY
RATE DISCOUNT


CONFORMING 30 YEAR FIXED
80% LTV and >275,000 <= 417,000
5.125
0


CONFORMING 15 YEAR FIXED
80% LTV and >275,000 <= 417,000
4.50
0


CONFORMING 3-1 ARM
80% LTV and >275,000 <=417,000
4.125
0


CONFORMING 5-1 ARM
80% LTV and >275,000 <=417,000
4.125
0


CONFORMING 7-1 ARM
80% LTV and >275,000 <=417,000
4.625
0


VA/FHA 30 YEAR > $200,000
5.00

0


CONV. JUMBO 30 YEAR FIXED
75% LTV and > 417,000
6.45
0


CONV. JUMBO 5/1 ARM
75% LTV
4.50
0


120,150,180,270,360 day extended locks available
RATES AND POINTS ARE SUBJECT TO CHANGE WITHOUT NOTICE





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