Initial Jobless Claims Point to Stronger Housing:
Initial Jobless Claims are new filings for unemployment benefits. The latest report was released last Thursday and showed that initial claims plunged by 52,000 to a much lower than expected 565,000. It was the lowest reading since January, and psychologically very important because claims have finally dropped below 600,000.
More than interest rates, employment is the number one factor that affects housing demand. And with initial claims starting to wane, it is yet another positive sign for housing. Remember, the $8,000 tax credit for first time homebuyers (someone that has not owned a home in the past three years) will expire in November so you need to take full advantage of today’s temporary low home prices.
What happened to rates last week:
Mortgage backed securities gained +59 basis points last week which gave us some fantastic rates. On Wednesday we saw our best 30 year fixed rates since 05/26/2009. But we gave up a big portion of our gains on Thursday with the release of the Initial Jobless Claims Data. This data was very positive for the economy and for housing but put the squeeze on mortgage rates. Mortgage rates typically rise as the economy starts to recover. I will be keeping an eye on this for you.
I know you are busy and it is virtually impossible for you to keep track of what is going on in the economy. I monitor the trading of Mortgage Backed Securities; the only thing conventional mortgage rates are based upon. So I know if there is going to be a trend reversal in mortgage rates.
