A weeks-long run of rising mortgage rates ended this week despite vague pronouncements from the new Treasury Secretary about forthcoming plans for the second $350 billion of TARP money. Bond markets couldn’t seem to make up their minds, alternately rallying and then selling off amid legislative actions and stock market swoons.
For the week, HSH’s overall average for the cost of mortgage money — our Fixed-Rate Mortgage Indicator (includes conforming, jumbo and ‘expanded conforming’ interest rates) — dropped by eighteen basis (.18%) points to land at 5.76%, the lowest such average in a month. As mortgage rates have risen over the past few weeks, there has been a corresponding slide in applications for home loans, according to the Mortgage Bankers Association of America. Among other factors, at least some of the increase can be attributed to lenders pricing ‘defensively’ to temper an unmanageable crush of business, and it would seem that the crush has subsided enough to warrant an attempt to attract more business.
The FRMI’s 5/1 Hybrid counterpart also eased, shedding thirteen basis points (.13) to close the week at 5.54%. Conforming 30-year FRMs led the charge downward, falling to 5.26%, while jumbos managed a decline of fourteen basis points.
Take Our Quick Survey: On the Stimulus Package
December’s poor economic numbers continue to wander out from their respective sources, but that month’s truly poor showing is fading further in the rearview mirror now. That said, the latest measures of inventory stockpiles at wholesalers, retailers and manufacturers all sported declines during the month. This would be a good thing if the drawdown was due to an increase in demand, but the fact of the matter is that sales have been declining faster than stockpiles are being depleted. This means that the ratio of goods available relative to sales continues to increase… and that means there’s no need for any new orders to be placed at the moment.
However, that gloom must be tempered, at least a little, by the unexpected 1% increase in Retail Sales in January. Typically a low-volume month, forecasts called for another decline in sales to be added to a six-month string of declines, but the expected 0.8% drop was handily beaten by the gain. With the exception of furniture and building-related outlets, increases in sales were fairly across the board; even after excluding auto and gasoline sales, the “core” retail sales figure boasted a gain of 0.8%. Falling prices, big sales events, gift cards and other factors probably contributed to the increase, but after six months of closed purses, it could just be necessity buying which drove sales upward. Whatever the reason, it is warming news amid a cold retailing winter.
The nation’s imbalance of trade remained fairly steady in December, held down by near-like declines in both imports and exports. After running between $50 and $60 billion though October, the collapse of oil prices and the global economy narrowed that gap by about one third, and December’s $39.9 billion difference was almost identical to November’s $40.4b figure. http://www.hsh.com/
