Did You Enjoy Last Week’s Ride??? More to Come This Week???
If you thought last week’s “roller coaster” ride was fun, you could be in for more of the same this week. Last week we started the week with a surprise .75% emergency rate cute which most likely kept the DOW from finishing down over 500 points last Tuesday after the overseas markets went into the tank on Monday.
This move by the FED temporarily sent mortgage rates to their lowest point since 2003 but as was predicted in last week’s Market Watch, this did not last very long as mortgage rates shot up close to .375% in rate within the next 48 hours only to finish the week almost unchanged from the week before.
So, the FED cuts by .74% and mortgage rates were virtually unchanged but the ride was certainly interesting. Mortgage rates recovered late in the week on the announcement that the President’s stimulus package included the possibility of raising the FNMA/FHLMC limits as well as FHA limits. FNMA/FHLMC limits could be raised up to as high as $729,150 and FHA limits could also soar close to that level. this raise in limits will most likely give a boost to the crippled mortgage industry as much needed “liquidity” will be reintroduced back into the market. The combination of rates breaching below 5% and increased lending limits will certainly boost mortgage originations.
This week’s calendar will give us another opportunity to ride the “roller coaster” starting with the FED’s decision on Wednesday afternoon. A .25% cut will most likely push rates lower and the DOW will likely take yet another hit. However, a .50% cut will actually help the DOW and push rates slightly higher before they once again move lower. After we survive Wednesday’s news, this Friday brings us another round of employment data. The market is only looking for a 70K increase in non farm payrolls and for the unemployment rate to remain unchanged…numbers below expectations will move rates marginally lower.
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