The Bond market started the week on a positive note as National City received a $7 Billion cash infusion from investors. This was perceived as positive and an indicator that perhaps the "Credit Crisis" has hit bottom and money may start coming back in to the financial markets. The week then unraveled as the existing and new home starts came out. Existing home numbers came in as expected and there is a glimmer of hope that that segment has hit bottom. New homes, on the other hand, fell short of expectations only to confirm that the bottom is still below. Finally, on Friday the bond market rallied as global inflation numbers were reported and the outlook is not good…hurting our bond pricing.

In the end, after a week of volatility, we ended up with mortgage rates at roughly the same levels as when we started the week.

This week is packed with economic news and will prove to be very volatile. On Wednesday the Fed will announce its interest rate decision and the market is anticipating only a .25% reduction. The current logic is that the Fed will slow down the pace of rate reductions for a few periods and try to ascertain what impact the past rate cuts and other economic stimulus programs have had. It’stime to watch the inflation meter!

On Thursday the Personal Consumption Expenditure Index will be released followed by the jobless numbers on Friday. Labor is a leading indicator and the trend has been negative for the last 3 periods.

Recommendations are to lock early in the week ahead of the midweek volatility. Have a great week!

Conforming ($417,000 or below)

30yr 6%

3yr ARM 5.375%

5yr ARM 5.375%

7yr ARM 5.875%

10yr ARM 6.375%

Jumbo (Greater than $417,000)

30yr 7.625%

3yr ARM 5.25%

5yr ARM 5.25%

7yr ARM 5.75%

10yr ARM 7%