Weekly Economic Update 01/16/12
By: Stuart Crawford, V.I.P. Mortgage, Inc
Increased concerns about Europe helped mortgage rates improve last week, although the impact of the recently passed extension to the payroll tax reduction is beginning to push up mortgage rates for specific loans (discussed below).
The news from Europe was mostly negative last week (no surprise there). Economic growth in Germany was slower than expected. Negotiations on restructuring Greek debt did not progress as planned, increasing the risk of default. The S&P is downgrading the debt of several European countries, including France. Finally, the European Central Bank (ECB) provided no relief, as it gave no indication that it would increase the level of aid available to troubled countries. As a result, investors shifted funds to relatively safer investments, including US mortgage-backed securities (MBS), which helped mortgage rates move lower.
The recently passed extension to the temporary payroll tax reduction contained a lightly publicized revenue raising provision to increase the guarantee fees charged on Fannie Mae and Freddie Mac loans. This fee results in higher rates for borrowers, and mortgage rates for loans not expected to close within the next month or so have begun to reflect this coming increase in guarantee fees.
**Many of our investors are stating that we must LOCK loans prior to the end of January to avoid these inevitable price changes!!!**
The most significant economic data this week will be the monthly inflation reports. The Producer Price Index (PPI) focuses on the increase in prices of “intermediate” goods used by companies to produce finished products and will come out on Wednesday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Thursday. CPI looks at the price change for those finished goods which are sold to consumers. Housing Starts will be released on Thursday, and Existing Home Sales will come out on Friday.
Average Home Price for the Phoenix Metro Area
- 261239.74,259806.72,259961.31,261230.92,268221.89,273752.68,282144.16,286780.76,296867.98,310872.95,325738.63,336869.67
- 162490.90,159061.18,151487.93,152798.62,162151.57,163630.65,169954.62,169470.04,175205.70,193363.61,202483.06,204597.90
- 158847.96,161387.29,154804.30,151715.49,152922.35,153801.77,160502.13,163469.75,163948.82,166457.30,180785.12,188962.70
Information is deemed to be reliable, but is not guaranteed. © 2012
Home Level for the Phoenix Metro Area
- 38203,35809,33545,32117,31292,31429,31261,30117,28868,28289,26500,24485
- 10098,9309,8275,8951,7595,7578,7093,6496,8434,8325,8662,7527
- 9796,10352,8428,8738,8019,7513,7117,7664,6422,7291,8880,8471
Information is deemed to be reliable, but is not guaranteed. © 2012
