It’s like a broken record. Investors jump into stocks and mortgage rates go up. By the end of the week, corporate profit warnings, new records in oil prices, and new lows on the Dow have sent investors “running for the hills” into the safe haven of bonds and pushing mortgage rates back down. That is where we were as of last Friday afternoon as consumer confidence was once again at it s lowest level in the 28 years that it has been tracked.
The Chicago PMI (a measure of manufacturing) reported better than expected results this morning and mortgage bonds are reacting slightly negatively. We look to the hourly earnings report and the unemployment claims report on Thursday of the holiday shortened week for further guidance on how to proceed with rate locks and investing.
Oil has been a point of frustration for many as the price has risen to stratospheric levels defying logic and reason. Blame has been placed from OPEC to Congress to speculators to the gluttonous American car, boat, RV, ATV owner. While on a conference call this past week with a Wall Street executive, he made a very valid point I wanted to share. He said commodity pricing is about supply and demand. And not the supply and demand for oil but the supply and demand of an investment vehicle that combats the continuing devaluation of the dollar and offsets inflation. In other words our economy is in such dire shape, investors have chosen oil futures as a spot to make money with there holdings because nothing else, domestically, looks very attractive for the near term. Hence, a huge demand for oil futures continues to outstrip supply.
A recovery in the housing market is shifting further out as prices continue to fall amid accelerating rates of foreclosure, subsequently adding to inventories in many areas of the country. The current market continues to provide outstanding opportunities for home-buyers and investors, alike.
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Stay tuned and stay in touch with your mortgage professional. Thank you for the opportunity to serve you and your clients. David. 919.851.0999.