Mortgage Purchases are Up as Rates Fall Slightly

It has been a rough and tumble week in the markets.  Although there were only a few economic reports released during the week, corporate earnings and projections seemed to play the most on the emotions of investors.

The Dow Industrial Average started the week at 16,424.  With a decline to as low as 16,254 and with a peak as high as 16,500, by the end of the trading day on Thursday the market closed almost exactly where it started at 16,417.

The roller coaster started the early part of the week on the upswing with the retail sales report coming stronger than expected.  In December the index rose .2%, which was better than expected.  When you factor out gasoline and auto sales the index rose .6%.  The surprise comes in two places:  the holiday shopping season was slower than hoped by most retailers, combine that with the poor unemployment report from last week, the surprise was that retail increased at all.

The poor unemployment report had investors thinking mid week that the Fed may slow down the planned tapering of the government stimulus plan.  The irony of the whole stimulus focus is that mid last year the markets tanked when the Fed discussed starting the tapering.  In today’s market mindset investors want the Fed to taper the program.  The belief is that the tapering means the economy is healthy and growing, which is good news for investors. 

To prove once again just how sensitive home owners and home purchasers are to interest rates, the recent drop in mortgage rates created a surge in loan applications according to the Mortgage Bankers Association.  Rates have been declining slightly over the last 2 weeks, which created a 12% surge in mortgage applications for home purchases.  Home owners who have still yet to refinance elected to jump on the rate drop as well, with refinance applications surging 11.0% for the week of January 10^th.

On Friday the report on housing starts will be released at 8:30AM.  The expectations for the report is a decline in starts after a 22.7 jump in November.  The reason for the expected decline is that in November the number of permits filed to begin construction declined 3.1%.  Typically, when there is a decline in permits in the prior month, the following month housing starts declines.

The privacy of the American consumer is fast becoming the hot topic.  After the latest security breach at target in which data from over 110 million consumers was stolen, privacy fears are growing like wildfire.  So much so…that there was an article on CNNMoney.com that discussed growing fears of lack of privacy inside our motor vehicles.  Seriously, between GPS devices, smart phones, internet service providers, traffic light cameras, security cameras, store cameras…. Do you think the word “privacy” even exists? (Latest estimates are that our pictures are taken a minimum of 300 times a day)

Next week is an extremely light week on the economic data front:

·        Monday January 20^th – Martin Luther King Holiday – All Markets Closed

·        Thursday January 21^st - First Time Jobless Claims, Existing Home Sales, FHFA HPI

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I appreciate your business and look forward to talking to you soon! Have a great day!!!
 

Sincerely,

Cindy Tomlinson
Loan Officer

USLending Company

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