Rate Update November 14, 2008

Mortgage rates are mostly unchanged this morning despite a 552 point gain in the stock market yesterday.

This morning stocks are trading lower, which helps mortgage rates, on weak retail sales data.

The Commerce Department reported Friday that retails sales tumbled by a record 2.8% in the month of October.  Although this news appears dreary let’s not forget that lower retail sales is a signal that US consumers are spending less on consumer goods and likely paying down debt and/ or saving money.  This move to “deleverage” household balance sheets is a required step toward getting the economy back on a stable path.

The weaker demand for consumer goods as well as lower oil prices helped drive import prices lower last month.  The Labor Department reported that import prices dropped by 4.7% last month which is the largest one month decline since 1988.  This is great news for mortgage rates because it is a sign that inflation pressures are easing.

Unfortunately, mortgage-backed bonds are having trouble breaking above the 200-day moving average, an important technical level.  We will shift our outlook to neutral.

On another note, HUD announced on Wednesday that they have enacted sweeping changes to RESPA.  These changes are focused on changing the loan disclosure and escrow closing process.  I am currently putting a 1 hour presentation for real estate professionals.  Please visit this link to learn more.  Please send me an email if you’re interested in attending such a presentation.  Assuming your principal broker approves the content we will be able to provide 1 hour continuing education certificates.

Current outlook: neutral