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Posted by: Bruce & Sandy Soli | December 2, 2009

Economic Update By Steve Peterson with Sierra Pacific Mortgage

The Pending Home Sale Index is up; the number of purchase money mortgages being applied for has begun to rise again; but construction spending is flat from September to October. It’s nearly impossible to make sense of all this, but we can (I hope) deduce that the trend in the real estate market is toward recovery. It’s a lumpy path and a slow, exhausting hike, but at least we seem to be headed in the right direction.

Mortgage rates continue to be near all time lows (By all time, I  mean as far back as I can remember).

My best conforming 30 year fixed rates (20% down for SFDs with good credit and owner occupied):        4.5% with one point or 4.75% with no points.

My best Jumbo rates: 7/1 Amortizing ARMS (Requires a minimum of 30% down):             4.5% with no points  (primary residence)

Warm regards,

Steve Peterson

Branch Manager

Sierra Pacific Mortgage

Office: 888-232-7687

Cell: 775-219-7151

Fax: 866-649-3235

These rates are as of today and are subject to change until locked in. All locks are subject to loan approval.  Jumbo loan rates will increase if the property is a second home, the loan amount is over $850,000 or the home is a condo.

December 1, 2009


Gold $1199.00/ounce [up]

Crude Oil (Brent) $79.76/brl [up]

U.S. Dollar to…

    Euro .6619 [down]

    Japanese Yen 86.61 [down]

6-mo Treasury Bill Yield 0.14%

10-yr Treasury Note Yield 3.25%

[6-mo up 1 bps, 10-yr down 9 bps]

11th Dist Cost of Funds 1.259%[-]

30-yr Fixed-rate Mortgage 5.18%

15-yr Fixed-rate Mortgage 4.69%

1-yr ARM 4.72%

[HSH averages rates: 30-yr

down 9 bps,15-yr down 7 bps; 1-yr ARM up 11 bps]

Mortgage Bankers Association Mortgage Applications Index

week ending 11/13


    601.0 (down 4.5%; up 0.3% (rev)

the week prior)

  Purchase Money Loans

    223.1 (up 9.6%; down 7.8% (rev)

            the week prior)

  Refinancing Loans

    2818.7 (down 9.5%; up 3.9%

(rev) the week prior)

Jobless Claims 11/14

    466,000 – prior week 505,000 – continuing claims fell to 5.423 m

Construction Spending Oct

    Level with prior month – down 14.4% from Oct 2008

ISM Manufacturing Index Nov

    Down from 55.7 to 53.6 – minimal change

Weekly Commentary


Pending home sales, a leading indicator of existing-home sales based on contracts signed, rose 3.7% in October, the ninth consecutive monthly increase totaling 41.9%. Pending home sales are now up 21.2% from a year ago, the largest gain on record. Based on October’s results, we expect November existing-home sales rose around 3%, to an annualized pace of 6.3 million. That would be the highest reading on existing-home sales since February 2007.” [Aaron Smith, Moody’s Economy.com]

That was yesterday’s news du jour, a welcome relief from last week’s bad news grind. It seemed that whenever we lifted a newspaper, it shouted a dire warning about future foreclosures at us. That worry remains, of course, but now we have to factor some very good news into our sense of where the real estate market is headed.

The consistent improvement, month to month, in the Pending Home Sales Index (the report that attempts to measure the rise or decline in the number of purchase contracts signed from one month to the next, compiled by the National Association of RealtorsÒ) gives great credibility to the news.

Understand, though, how this plays out in the credit markets—and most important, in the mortgage market. We continue to live through a relatively long season in which, on the one hand, there are those who believe the economic recovery is firmly in place and, on the other, there are those who fear the economy may slip back into another period of recession. If the recovery is firmly in place, then it’s time to allow interest rates to rise (or, more specifically, time for the Fed and the Treasury to cease their support of lower rates); inflation hawks will start demanding that we combat the higher inflation that may be waiting just around the corner. And that means higher rates.

If another leg of the recession, though, is waiting just around the corner, then what we need is low rates to stimulate the economy as much as possible. Keep in mind, therefore, that bad news tends to push rates lower; good news tends to push them higher. Yesterday’s good news—which included a bit more confidence about the unraveling of Dubai World—pushed rates up slightly.

The future? Time will tell. But we can expect the back-and-forth to continue until we have fairly firm evidence that the economy is indeed improving, or is heading for another cliff. Lets pick the former, but adequate proof won’t be along for, at best, a few months.


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