WeeklyBasis 01/05/04: Welcome to 2nd Best Home Sales Year Ever

Rates/commentary for the week of January 5, 2004. Happy New Year to everyone, and welcome to the second-best year ever (behind 2003) for new and existing home sales according to NAR’s chief economist. During the last two weeks of 2003, fixed and ARM rates rose by .125% because of positive economic data. As I’ve mentioned in past reports, the consumer sector of the economy has been improving for a few months. Now the corporate sector is improving as well, most recently demonstrated by Friday’s ISM Manufacturing Index rising to its highest level since 1983. Such news causes rates to rise because investors sell bonds (which drives yields up) and buy stocks in hopes of quicker and larger returns. This market effect on rates isn’t as pronounced as the monetary or “Fed” effect on rates. But the Fed won’t raise rates until they see inflationary pressures, which we aren’t likely to see until mid-year. Rates early this week will move mostly around stock and bond market trading. The biggest economic news comes Friday with the Employment Report, which could have a more pronounced rate effect if it’s outside its consensus estimate. Hope your 2004 starts off great.

Conforming ($50K – $333,700K) – NO POINTS
30 Year: 5.875% (6.015% APR)
15 Year: 5.125% (5.265% APR)
5/1 ARM: 4.875% (5.025% APR)

Jumbo ($333,701 – $650,000) – NO POINTS
30 Year: 6.125% (6.265% APR)
15 Year: 5.375% (5.515% APR)
5/1 ARM: 5.0% (5.15% APR)