LanCo RE Weblog

Analysis & Commentary (10/18/09):  Mortgage interest rates continue to hold steady as better than expected economic data and earnings reports dominate the newswires.

Great news on the job’s front – the U.S. Department of Labor reported that first time claims for unemployment benefits continue to improve.  514,000 new claims were made which is better than the 520,000 economists were expecting.   This is the lowest level of claims since January.   Continuing claims posted a weekly decline, falling from 6.040 million to 5.99 million.  Less jobless claims means that there is more likelihood that consumer spending will start to improve which and in turn, would spark an increase in inflation.  However, the latest release of the Consumer Price Index indicates that the cost for goods is still under control.  On a year over year basis, overall consumer prices are down 1.3% indicating that inflation is still at bay which should allow the Fed to maintain their current accommodative stance with the Fed fund rate.

If you’re planning on taking advantage of the Federal First Time Homebuyer Tax Credit, you better get on your horse.  The deadline for settling on a home is now less than 45 days.  My advice is to get your loan application submitted TODAY, even if you haven’t found a home yet.   Some lenders will underwrite your loan with a “to be determined” address.  This will help speed up your final approval once you find a home and ensure you qualify for the tax credit.  One note, you will be unable to lock your interest rate until you have found a home.  Additionally, if you lock and change your mind on the original home for a different home, you will be required to do a new lock at the current market rate since the lock goes with the specific and not with the applicant.

So what should we make of all this economic news – - – ??????.  My educated guess is that rates will hold steady in the short term, but are subject to volatility depending on the economic reports that are released on a weekly basis.

I continue to urge caution to anyone that is still floating an interest rate.  We are in the 5% to 5½% range on rates.  With the battle between the bulls and bears, the markets are very volatile and things can change quickly.  As always, rates move higher at a faster pace than they move lower.    If you are within a closing window of 30 days, consider locking today.

Want to know how the local housing market is faring?  Click on the Market Info tab of this blog.

Click on one of the links below for additional mortgage information:
• Financing Glossary
• Monthly Payment Calculator 
• Mortgage Application
• Rent vs. Buy Calculator
• Tax Benefits Calculator
• Qualification Calculator

Related articles of interest:

• Industrial output rises, inflation stays tame (money.cnn.com)
• Consumer prices drop in September (financialpost.com)
• No Social Security Increase in 2010 (usnews.com)
• Does the MBS Extention Signal the Same for the Homebuyer’s Tax Credit? (hsh.com)