Monday, June 1, 2009

Market Update

From the desk of Alan Vanderheiden
Senior Mortgage Advisor
Regions Mortgage
1409 Sadler Road
Fernandina Beach, FL 32034
904-277-3232 (office) 904-335-0500 (cell) 904-277-2261 (fax)

May 29, 2009

FNMA 30 Year Fixed: 5.00%
FNMA 15 Year Fixed: 4.50%
USDA / FHA / VA: 5.375%

Hello Friends,

WOW! What a week. This has been a week full of economic news and potential moves and it has affected our business. As you can see, mortgage rates are up a bit from the previous week. But don’t panic just yet.

GM has announced it will file bankruptcy on Monday. The markets won’t like this at all. Today, GM’s stock price is $0.73 and will be $0.00 on Monday. With a potential hit on Wall Street next week we are seeing a flood of money into bonds today. Bond yields are up 128 basis points this afternoon. Remember, when bond yields go up, rates go down. This trend may continue into next week and rates may work down again.

The GDP, the measurement of US good and services output, was down 5.7% in the first quarter of this year. This make three straight quarters of decline….the worst since 1974 – 1975. While this number is better that 4Q of 2008 it still shows a lagging economy. This recession may be slowing a bit but we still have a ways to go.

The Fed is concerned about the increase in rates above 5.0%. They feel is will slow this re-fi boom and stale the recent upswing in sales transactions. Home sales were up 2.9% year over year in April. The Fed still has over $300 billion available to buy bad debt from banks and they may use this money next month. They have done this twice before and mortgage rates have gone lower each time. Look for this to happen again next month.

The weak dollar is not helping oil prices…..up to $66 a barrel today. Just as the summer driving season is here gas prices are up 40%. This can be seen as inflationary but mostly it is fueling the recession. If gas costs more there is less money to spend on other stuff.

And let’s not forget employment numbers. We are still losing jobs and this trend will have to change….put people back to work……making money and spending money. This is at least in 4Q of 2009.

As always thank you for your trust and support. Please call on me anytime I may be of service.

See you soon.

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