THE BASIS POINT

WeeklyBasis 09/12/05: Forecasting Rates Post-Katrina

Rates open this week exactly where they were before Hurricane Katrina. Rates dipped on the initial shock, then came up after oil prices rebounded last week. This week is inflation watch with Producer Price Index data Tuesday and Consumer Prices Thursday. Normally, these would be critical for predicting what the Fed will do in its final two 2005 meetings on Nov. 1 and Dec. 13. But I predict even or downward rate movement for late-2005 and early-2006. All economic data this month will be pre-Katrina, and therefore irrelevant. New Orleans alone was $40 billion of U.S. GDP, and has been completely neutralized. This is going to have longer-term effects that won’t be properly assessed for weeks, or even months.

Conforming ($200,000 – $359,650) – NO POINTS
30 Year: 5.75% (5.89% APR)
15 Year: 5.375% (5.515% APR)
5/1 ARM: 5.375% (5.525% APR)

Jumbo ($359,651 – $650,000) – NO POINTS
30 Year: 6.0% (6.14% APR)
15 Year: 5.625% (5.765% APR)
5/1 ARM: 5.5% (5.65% APR)