By: Fred Arnold
With the belief that the Fed is not rushing to begin the tapering of their economic stimulus program the stock market moved into record territory this week. Additionally the panic that has gripped the bond market has subsided and interest rates have been dropping. Although rates are not heading anywhere close to record lows, they are at least giving potential home buyers a little sigh of relief that they are not going to continue their rapid ascent.
The Fed released the minutes from their most recent policy meeting and it was clear that they are not ready to make any changes to economic policy. However it does appear that the board is becoming more and more divided on what economic data would create a shift in policy.
Don’t miss a thing. Get breaking Santa Clarita news alerts delivered right to your inbox.
It is hard to predict what is going to happen in the economy for the simple reason that overall the labor market is improving as well as the housing market. However the recent rise in mortgage rates combined with the rapid rise of home prices in many markets is causing the home affordability index to decline. Simply put if the cost of acquiring a home rises as well as the cost of borrowing for the home, ownership becomes less affordable.
Additionally the recent rise in oil is starting to be felt at the gas pumps. Prices are not yet at the point that they will cause most consumers to change their spending habits however if the increases continue consumer behavior will likely be impacted.
Despite the rates gradual retreat the impact of the rapid run up was felt in the mortgage and real estate market last week. The Mortgage Bankers Association reported that purchase applications declined by 3% and refinances went down by 4%.
More than likely with the rate improvement this week the MBA 2019s next report will show an increase in mortgage applications for both purchases and refinances. Rates overall are at the highest point they have been in 2 years.
First time jobless claims shot up however the July 6th week is filled with special factors that could cause the jump. Claims rose 16,000 to 360,000 which is far above the Econoday consensus for 337,000. The 4-week average is up a sizable 6,000 to 351,750 which, against the month-ago comparison, is also up 6,000 in a reading that doesn’t point to improvement underway in the labor market.
Do you have a news tip? Call us at (661) 298-1220, or drop us a line at firstname.lastname@example.org.
The special factors that could play a role in jump are the holiday shortened week, the summer retooling in the auto industry, and the end of the school year. All these factors make today’s report very hard to interpret as a trend or just a blip.
Market moving reports for next week are:
- Monday July 15th2013 Retail Sales
- Tuesday July 16th – Price Index, Industrial Production and Housing Market Index
- Wednesday July 17th – MBA Applications and Housing Starts
- Thursday July 18th 2013 First Time Jobless Claims
The President of Coca Cola makes a phone call to Russian President Vladimir Putin:
– Vladimir, I have noticed that you have changed Russian anthem, do you have any plans to change the flag as well – return to the previous purely red flag? If you would put our Coca-Cola trademark in a corner, we would solve all your problems with pensions, salaries of officials for couple years ahead…
Vladimir puts the call on hold and asks his colleague:
– Hey, when does our contract with Aqua Fresh end?
As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate information. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at 661-505-4300.
Source: Santa Clarita News