Month in Review
There's nothing like a little historical perspective when it comes to the market. A comprehensive look at where last month went and where next month is going, puts yet another powerful tool in your hands. Why not share it with your clients and realtors? Interesting and informative, it's another great marketing tool available exclusively to MBSQuoteline subscribers.
Demo based on market events from: Friday March 5, 2010
| 03-31-10 |
| Mortgage rates moved higher during the month of March. The 30-yr fixed FNMA required net yield (60 day) rose to 4.90%, from 4.77%. As expected at its meeting on Tuesday, the Fed held the fed funds rate steady, and the accompanying statement contained few changes. The statement retained the language about the fed funds rate remaining at extremely low levels for at least several months. The Fed's assessment of the economy was a little more upbeat at this meeting, but pointed out that economic improvement will occur slowly. To support the economy, the Fed purchased almost $1.25 trillion of MBS since the start of 2009, but the MBS purchase program ended on March 31. Forecasts for the impact on mortgage rates of reduced demand for MBS varied from slight to as much as a one percent rise. While mortgage rates rose, yields in other bond markets posted comparable increases, meaning that the effect of the end of the MBS purchase program was close to the lower end of the estimated range this week. In a speech, Fed Chief Bernanke added to the volatility in mortgage markets with his comments about the possible timing of future sales of MBS from the Fed's portfolio. The Fed has made clear from the start that the MBS purchases were a temporary measure and that it would eventually sell its MBS holdings when the economy was healthy enough. Earlier in March, Bernanke stated that he did not expect the Fed to sell assets "in the near term". In this speech, however, his language changed a little. While Bernanke assured investors that MBS sales would be gradual and that they would only take place if the economy were strong enough to handle it, he opened the door for the start of Fed MBS sales at an earlier date than previously anticipated. Against a consensus forecast for a decline of -50K jobs, the economy lost -36K jobs in February, and the revisions from prior months showed more jobs than previously reported. The Unemployment Rate remained unchanged from January at 9.7%, which was lower than expected. The payrolls figures and the unemployment rate are calculated from two separate sets of data. The payrolls report focuses on larger companies, while the unemployment survey covers all companies. The more volatile unemployment survey surprisingly showed an increase of 308K jobs in February, indicating that smaller companies were a source of job gains. This month's inflation data showed that inflation is not a concern right now. The February Core Consumer Price Index (CPI) increased at a low 1.3% annual rate. The Fed's target range is commonly believed to be a 1.5% to 2.0% annual rate. The current low inflation environment makes it easier for the Fed to continue to hold the fed funds rate low to stimulate the economy. In the housing sector, January Pending Home Sales fell 7.6%, far below the consensus forecast for a small increase. They were still 12% higher than one year ago, however. The expected surge in sales from the extended homebuyer tax credit has failed to materialize so far. The chief economist of the National Association of Realtors (NAR) suggested that unusually harsh weather "hampered shopping activity" in many regions, so a pickup in sales still may be seen as buyers take advantage of the tax credit before the April 30 deadline. |
