WeeklyBasis 05/14/07: Local Market Still Sees Strong Demand

Rates are about even this week after a two-week rising trend that has been driven by stronger than expected corporate earnings. This has caused investors to sell bonds and buy stocks, and when bond prices drop in a sell-off, bond yields (or rates) rise. The Fed stayed on their ‘data dependent’ message at their meeting last week, meaning that they will hike or lower rates as trends in monthly economic data dictate. Economic activity is roughly one-third corporate and two-thirds consumer. That’s why great corporate earnings haven’t hurt rates too much. Consumer data will be the key to the rate picture, and this week we’ve got Consumer Prices Tuesday, Housing Starts Wednesday and Consumer Sentiment Friday. All of this following Friday’s paltry retail sales data for April, and rising gas prices ahead of the summer driving season. If consumer data weakens further in the coming months, we may see rates drop before 2007 is over. On a much more local consumer level, I am seeing strong demand from buyers that aren’t overly leveraged. The only shakeout I am really seeing is with the leveraged buyers. For buyers that have even 5% in cash, the market is showing them good purchase prices – and good rates too.

Conforming ($200,000 – $417,000) – NO POINTS
30 Year: 6.25% (6.39% APR)
10/1 ARM: 6.25% (6.39% APR)
5/1 ARM: 6.25% (6.4% APR)

Jumbo ($417,001 – $650,000) – NO POINTS
30 Year: 6.375% (6.515% APR)
10/1 ARM: 6.5% (6.64% APR)
5/1 ARM: 6.25% (6.4% APR)