CHARLOTTE METRO REAL ESTATE TRENDS AND STATS

Market Comment - 3/23/2009
March 23rd, 2009 6:38 PM
Market Comment - Week of March 23rd, 2009

Mortgage bond prices rose last week applying downward pressure on mortgage interest rates. The bond market got a boost from the Fed announcement (read below) to buy more mortgage debt. There was some profit taking in bonds Thursday afternoon following the run-up in prices Wednesday. Higher than expected core readings of the consumer and producer price indices reignited some inflation concerns. The Fed's continued efforts to pump money into mortgage bonds helped keep mortgage interest rates favorable. For the week, interest rates on government and conventional loans fell by about 1/2 of a discount point.

The Treasury auctions will once again take center stage this week as additional debt supply hits the market. Durable goods orders and consumer sentiment data will be important.


Economic Factors
Economic Indicator
Release Date Time
Consensus Estimate
Analysis
2-year Treasury Note Auction
Tuesday, March 24, 2009
None
Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Durable Goods Orders
Wednesday, March 25, 2009
Down 2.0%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
New Home Sales
Wednesday, March 25, 2009
Down 2.9%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
5-year Treasury Note Auction
Wednesday, March 25, 2009
None
Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Q4 GDP final revision
Thursday, March 26, 2009
Down 6.6%
Important. The aggregate measure of US economic production. Weakness may lead to lower rates.
7-year Treasury Note Auction
Thursday, March 26, 2009
None
Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Personal Income and Outlays
Friday, March 27, 2009
Down 0.1%, Outlays up 0.3%
Important. A measure of consumers' ability to spend. Weakness may lead to lower mortgage rates.
U of Michigan Consumer Sentiment
Friday, March 27, 2009
56.0
Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates.

Additional Fed Money

Last week the Federal Reserve announced it would pump another $750 billion into purchasing more mortgage-backed securities, the bonds that directly dictate 30 year and 15 year fixed rate Government and Conventional mortgage interest rates. This is in addition to the $500 billion being used between January and June to drive mortgage interest rates lower and help stimulate the economy.

So far the Fed has been able to keep mortgage interest rates relatively low while not destroying the functioning secondary market where investors buy and sell mortgage bonds. The potential negative is that the Fed has become the primary purchaser of these bonds. In the short term take advantage of these advantageous rates. There is uncertainty how things will play out once the Fed begins to unwind those positions in the future.


Posted in:General
Posted by Philip Jernigan on March 23rd, 2009 6:38 PMPost a Comment

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