RATES FLAT ON MIXED ECONOMIC DATA
Mortgage interest rates didn’t move this week while economic reports came in mixed and the stock market was relatively flat. The Dow Jones Industrial Average has held last week’s gains, currently at 10,292. Retail sales increased 1.4%, led by a 7.4% rebound in auto sales, without auto data retail sales increased .2% on expectations of a .4% rise. The Producer Price Index (PPI) rose .3% and Industrial Production rose .1%, despite declines in manufacturing, with both indicators coming in just below forecast. Consumer Price Index (CPI) increased .3%, slightly more than expected. New Housing Starts dropped 10.6%, continuing the slide to a 529,000 annual pace, lower than the forecast of 600,000.
As mortgages slip below 5.00%, refi demand will shortly insert a floor. The big news of the week was an all-sector weakening in housing (mercifully for Colorado, NOT all-location). From new-builds to existing delinquencies, everything deteriorated badly in October — so much so that I think the Fed et al will soon revisit ways to help, possibly extending or increasing MBS purchases. The tax credit won’t do it: it takes little suction to pull nearby demand from the future hose, but once that’s in the market it takes larger and larger incentives to pull farther future demand into the present. Also, I think serious parties (Fed, Treasury), know that a “jobs program” will have political effect only. Markets will freeze for Thanksgiving week, then the December 4 employment report will be the next big mover.
Read more commentary by Lou Barnes here: http://www.pmglending.com/loubarnes/creditnews.html