Wednesday, October 27, 2010

Wednesday, October 27, 2010

The Commerce Department reported earlier this morning that sales of new homes rose in September by 6.6% to an annual rate of 307,000 as compared to the prior month. Even with this month's gain, the pace of sales is barely above its 47-year low. Slow job growth, tight credit, and low consumer confidence remain the primary impediments to improvement in the housing sector. Nothing new here - so mortgage investors shrugged off the report.



In a separate release, the Mortgage Bankers of America reported their national mortgage application index, a combined view of the demand for both refinance and purchase money mortgages, climbed 3.2% higher during the week ended October 22nd. Purchase applications rose 3.9% following two consecutive weekly declines while refinance demand rose 3.0% after falling 11.2% the previous week. Refinance requests continue to represent four out of every five loan applications currently in process on a national basis.



Uncle Sam will be conducting an auction of $35 billion worth of 5-year notes this afternoon. The broad consensus among analysts is that this offering will be very well bid -- since both by rhetoric and by action the Fed is telegraphing their intention to maintain their benchmark interest rates at exceptionally low levels for an extended period of time.

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