Marketweek 10/27/03: Home Sales Set New Record

Rates and commentary below are as of October 27, 2003. This is a big economic week, starting today with good news for Realtors about home sales. Existing home sales were up 3.6% in September, setting a new monthly record. The second-to-last Fed meeting of 2003 is tomorrow, and they are expected to leave rates unchanged. Also released Tuesday are Sept. Durable Goods Orders which measure manufacturing sector strength, and Consumer Confidence Index which measures consumers’ willingness to make large purchases. Scheduled for Thursday is preliminary 3rd quarter gross domestic product (GDP), which serves as the benchmark for economic growth.

All of this week’s economic indicators are expected to increase marginally, but if increases are larger than expected, this positive economic sentiment will cause rates to rise. This is because investors sell bonds and buy stocks when they expect the economy to improve (selling bonds causes their prices to drop and yields to rise). Interestingly though, stock earnings momentum has been strong all year-so strong that many investors believe increases will be muted as we move into 2004. This could keep the focus on bonds and help keep rates near current lows.

Conforming ($50K – $322,700K) – NO POINTS
30 Year: 5.875% (6.015% APR)
15 Year: 5.125% (5.265% APR)
5/1 ARM: 4.75% (4.90% APR)

Jumbo ($322,701 – $650,000) – NO POINTS
30 Year: 6.25% (6.39% APR)
15 Year: 5.5% (5.64% APR)
5/1 ARM: 4.875% (5.025% APR)