By Fred Arnold
I want to share an Informative video interview with Arif Halaby-
The irony of the markets is that we have a complete turn of events. While the housing market continues to improve the stock market continues to head south.
Mortgage rates have once again hit record lows and the numbers are showing up all over how the housing market is responding. Last week the Mortgage Bankers Association reported a jump in purchase mortgage applications of 11% and refinance applications of 13%. These are by far the largest increases we have seen in a single week all year.
The Fed keeps pumping money into the bond market to keep interest rates low, however the uncertainty about the “fiscal cliff”has the stock market struggeling to catch it’s feet because investors are purchasing government bonds in record numbers. (I will talk more about the fiscal cliff” in a moment)
Next week there will be a lot more housing data to digest which will give a better picture of the real improvements taking place. The reports on existing homes sales, housing starts and the housing market index will all be released on Monday and Tuesday. Given that next week is a holiday week, it is expected that a lot of investors will be taking the week off so trading volume on this news will be light. “I will be happy to be in the office helping those of you take advantage of the lower rates.”
The fiscal cliff is making headlines daily and more and more talk is focused that there is an ever increasing chance that the government will NOT act fast enough to avert the massive spending cuts that will be triggered on January 2nd.
A few months ago most people were saying “there is no way Congress will let it happen. The election will be over and they will get this thing handled”. Well…the election IS over and Congress is behaving no different than they were before the election. Time is running out and employers and consumers are becoming more and more concerned.
Employers are not hiring right now and first time jobless claims jumped last week by 78,000. This jump blasts through the all-important 400,000 mark and puts us at 439,000 claims for the week. Although Hurricane Sandy is playing a role in the jump, the huge increase cannot be ignored and the reality is that the Hurricane represents only part of the increase. Employers are very concerned about the fiscal cliff and have made it clear that they are not going to increase payrolls without knowing if we are going to be thrust back into recession because our elected officials cannot come to an agreement.
The stock market has been getting hammered in the last 30 days with the DOW dropping over 1000 points. This drop is almost entirely due to investor concern about the fiscal cliff becoming a reality. My personal thought is that congress and the president will come up with some type of an aggreement, “kicking the can down the street” putting off much of the decisions needed for 6 months to a year.
This week’s economic reports are:
- Monday November 19th – Existing Home Sales and Housing Market Index
- Tuesday November 20th – Housing Starts
- Wednesday November 21st – MBA Applications and Jobless Claims
- Thursday November 22nd – Markets Closed for Thanksgiving Holiday
- Friday November 23rd – Markets close early at 1:00PM
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.