Most 30-year fixed-rate mortgages in the Incline Village market rose by around 20 basis points last week. Analysts are taking this as a sign that we probably won't see 4% mortgages again anytime soon. So those who have waited to get financing in place for various projects may want to do so with all haste now, if possible.

Higher mortgage rates do suggest a stronger recovery to some degree. Unfortunately, the economy--not least the real estate sector--remains confused and confusing.

There is much to be said about this, but one of the most important observations, we suspect, is that the credit markets (and the economy as a whole) have faced an unusual number of well-meaning programs--like the homebuyer tax credits last year--that serve to distort the actual condition of the markets.. So it is difficult to know where we are and equally difficult to plan wisely for the near- to mid-term. By and large, most people seem to be waiting for some clear evidence of the economy's direction.

Potential homebuyers, though, should not wait. Rates are likely to continue rising, taking the cost of a home purchase a bit higher. Now is very likely the time to buy the home that is most attractive and affordable to you.

Weekly Commentary-February 17, 2011

Not quite knowing what—if anything—the turmoil in the Middle East and the debt problems in western Europe will mean to the future of our interest rates and strength of our recovery, investors seem to be overlooking all but the most obvious concerns. There is, as a result, a sense that the markets are waiting for the other shoe to drop.

 

Gold, whose price is an indication of the level of uncertainty among investors, has crept up beyond $1373 again. Silver is climbing even faster, and now stands at a rather amazing $30.77 an ounce. Meanwhile, the ten-year Treasury note rate has been trending higher and now stands at 3.62%. And over the last week, mortgage rates jumped significantly—the HSH 30-year rate (which includes jumbo rates in its computation) climbed 16 basis points to 5.33%, and the Freddie Mac was up 24 basis points to 5.05%.

 

In other words, the 30-year mortgage officially climbed above the high 4% level last week. Unless a problem develops again in Europe or the Middle East, we are unlikely to see the 30-year fixed-rate mortgage back solidly in the 4% range again for quite some time.

 

Remember that the Fed’s QE2 program was designed to buy up longer-term Treasury securities, making sure that continuing demand for them keeps their rates low. That, at least, has been the theory. But QE2 has generally failed to act as the Fed predicted it would. When first unveiled, for example, the program seemed to inspire rate rises—rather than declines. Just give it time, the Fed (and others) assured us.

 

This past week, the Treasury held its scheduled auctions and raised $72 billion in newly-borrowed funds. Under its QE2 program, the Fed continues to buy about $100 billion a month in longer-term Treasury securities. In other words, the Treasury created $72 billion in debt last week and the Fed created something on the order of $25 billion in new debt. The Treasury owes the $72 billion to investors all over the nation and world. The Fed owes the $25 billion to itself (another way of saying that it owes the money to all American taxpayers).

 

Meantime, Fannie Mae and Freddie Mac continue to operate solely because they are being propped up financially by the federal government, which is belatedly suggesting that the support of Fannie and Freddie can’t (and shouldn’t) go on much longer. Current mortgages total more in dollars than all the dollars in the nation’s banks.

 

One stark conclusion: There are serious changes on the horizon—to the way mortgages are written, to the government’s participation in writing and backing mortgages, and to the availability of funds for home financing. Stay tuned!

 

 

February 16, 2011

 

KEY INDICATORS [2/15/11] 

 

Gold $1373.60/ounce [up]

Crude Oil (Brent) $103.59/brl [up]

U.S. Dollar to…

    Euro .7415 [up]

    Japanese Yen 83.78 [up] 

6-mo Treasury Bill Yield 0.16%

10-yr Treasury Note Yield 3.62%

[6-month down 1 bp, 10-yr down 3 bps] 

11th Dist Cost of Funds 1.508%[-] 

30-yr Fixed-rate Mortgage 5.33%

15-yr Fixed-rate Mortgage 4.61%

1-yr ARM 3.81%

[HSH average includes jumbo rates: 30-yr up 16 bps; 15-yr up 13 bps; 1-yr ARM up 4 bps]

Freddie Mac weekly average rate

    5.05% [up 24 bps] 

 

Mortgage Bankers Association Mortgage Applications Index

week ending 2/4 

  Overall 

    Down 5.5%; Up 11.3%

the week prior

  Purchase Money Loans

    Down 1.4%; Up 9.5%

            the week prior

  Refinancing Loans

    Down 7.7%; Up 11.7%

the week prior

 

Jobless Claims 2/5

    383,000 – prior week 419,000 (rev) – Continuing claims down 47,000 to 3.888 million

 

Monthly Retail Sales Jan

    Up 0.3% - up 0.5% (rev) in December

 

NAHB Housing Mkt Index Feb

    Unchanged (16) for 4th month

 






Most 30-year fixed-rate mortgages rose by around 20 basis points last week. Analysts are taking this as a sign that we probably won't see 4% mortgages again anytime soon. So those who have waited to get financing in place for various projects may want to do so with all haste now, if possible.

Higher mortgage rates do suggest a stronger recovery to some degree. Unfortunately, the economy--not least the real estate sector--remains confused and confusing.

There is much to be said about this, but one of the most important observations, we suspect, is that the credit markets (and the economy as a whole) have faced an unusual number of well-meaning programs--like the homebuyer tax credits last year--that serve to distort the actual condition of the markets.. So it is difficult to know where we are and equally difficult to plan wisely for the near- to mid-term. By and large, most people seem to be waiting for some clear evidence of the economy's direction.

Potential homebuyers, though, should not wait. Rates are likely to continue rising, taking the cost of a home purchase a bit higher. Now is very likely the time to buy the home that is most attractive and affordable to you.

Warm regards,

 

 

Steve Peterson

Branch Manager

Sierra Pacific Mortgage

Office: 888-232-7687

Cell: 775-219-7151

Fax: 866-649-3235

 

NMLS #245017

Company  NMLS #1788

 

Office Address:

Sierra Pacific Mortgage

937 Tahoe Blvd. #220

Incline Village, NV 89451

 

Mailing Address:

Sierra Pacific Mortgage

5680 Stonehaven Lane

Granite Bay, CA 95746

 

This electronic message contains information from Sierra Pacific Mortgage Company, Inc., which may be confidential or privileged.  The information is intended to be for the use of the individual or entity named above.  If you are not the intended recipient, be aware that any disclosure, copying, distribution or use of the contents of this information is prohibited.  If you have received this transmission in error, please notify me by telephone 888-232-7687 or by electronic mail .

Weekly Commentary-February 16, 2011

 

Not quite knowing what—if anything—the turmoil in the Middle East and the debt problems in western Europe will mean to the future of our interest rates and strength of our recovery, investors seem to be overlooking all but the most obvious concerns. There is, as a result, a sense that the markets are waiting for the other shoe to drop.

 

Gold, whose price is an indication of the level of uncertainty among investors, has crept up beyond $1373 again. Silver is climbing even faster, and now stands at a rather amazing $30.77 an ounce. Meanwhile, the ten-year Treasury note rate has been trending higher and now stands at 3.62%. And over the last week, mortgage rates jumped significantly—the HSH 30-year rate (which includes jumbo rates in its computation) climbed 16 basis points to 5.33%, and the Freddie Mac was up 24 basis points to 5.05%.

 

In other words, the 30-year mortgage officially climbed above the high 4% level last week. Unless a problem develops again in Europe or the Middle East, we are unlikely to see the 30-year fixed-rate mortgage back solidly in the 4% range again for quite some time.

 

Remember that the Fed’s QE2 program was designed to buy up longer-term Treasury securities, making sure that continuing demand for them keeps their rates low. That, at least, has been the theory. But QE2 has generally failed to act as the Fed predicted it would. When first unveiled, for example, the program seemed to inspire rate rises—rather than declines. Just give it time, the Fed (and others) assured us.

 

This past week, the Treasury held its scheduled auctions and raised $72 billion in newly-borrowed funds. Under its QE2 program, the Fed continues to buy about $100 billion a month in longer-term Treasury securities. In other words, the Treasury created $72 billion in debt last week and the Fed created something on the order of $25 billion in new debt. The Treasury owes the $72 billion to investors all over the nation and world. The Fed owes the $25 billion to itself (another way of saying that it owes the money to all American taxpayers).

 

Meantime, Fannie Mae and Freddie Mac continue to operate solely because they are being propped up financially by the federal government, which is belatedly suggesting that the support of Fannie and Freddie can’t (and shouldn’t) go on much longer. Current mortgages total more in dollars than all the dollars in the nation’s banks.

 

One stark conclusion: There are serious changes on the horizon—to the way mortgages are written, to the government’s participation in writing and backing mortgages, and to the availability of funds for home financing. Stay tuned!

 

 

February 16, 2011

 

KEY INDICATORS [2/15/11]

 

Gold $1373.60/ounce [up]

Crude Oil (Brent) $103.59/brl [up]

U.S. Dollar to…

    Euro .7415 [up]

    Japanese Yen 83.78 [up]

6-mo Treasury Bill Yield 0.16%

10-yr Treasury Note Yield 3.62%

[6-month down 1 bp, 10-yr down 3 bps]

11th Dist Cost of Funds 1.508%[-]

30-yr Fixed-rate Mortgage 5.33%

15-yr Fixed-rate Mortgage 4.61%

1-yr ARM 3.81%

[HSH average includes jumbo rates: 30-yr up 16 bps; 15-yr up 13 bps; 1-yr ARM up 4 bps]

Freddie Mac weekly average rate

    5.05% [up 24 bps]

 

Mortgage Bankers Association Mortgage Applications Index

week ending 2/4

  Overall

    Down 5.5%; Up 11.3%

the week prior

  Purchase Money Loans

    Down 1.4%; Up 9.5%

            the week prior

  Refinancing Loans

    Down 7.7%; Up 11.7%

the week prior

 

Jobless Claims 2/5

    383,000 – prior week 419,000 (rev) – Continuing claims down 47,000 to 3.888 million

 

Monthly Retail Sales Jan

    Up 0.3% - up 0.5% (rev) in December

 

NAHB Housing Mkt Index Feb

    Unchanged (16) for 4th month