Last week, the stock market declined and mortgage rates fell, as investors worried about Fannie Mae and Freddie Mac and oil prices reached record highs. In a pivotal reversal, the opposite took place this week. With increased confidence in the financial sector and lower oil prices, the Dow gained over 400 points. As investors returned to stock assets, they sold relatively safer investments such as bonds, which pushed mortgage rates higher.
While Fannie and Freddie dominated most of the headlines this week, Fed Chief Bernanke presented the latest Fed forecast for the economy during his testimony before Congress. The Fed lowered its projections for economic growth for 2008 and 2009 and expressed concern about the risk of higher inflation. Bernanke described the inflation outlook as “unusually uncertain”. From Bernanke’s comments, investors concluded that the Fed’s primary goal right now is to promote stability in financial markets, rather than fighting inflation, and they expect the Fed to hold rates steady in the near-term.
The news in the housing sector was mixed. June Housing Starts rose 9%, far above the consensus. Similarly, June Building Permits, a leading indicator of future housing market activity, rose 12%, which also far exceeded the forecasts. However, a change in the New York City building codes contributed much of the gains. Separately, the National Association of Home Builders (NAHB) sentiment index fell to a record low in July.
The Second Mortgage Industry continues to restrict as well primarily caused by concerns in the banking arena. Many banks announced this week further conservative guidelines or have made the decision to exit this business as further stock pressures arose.
For other real estate question on homes buying, selling, mortgage or anything related call The Derrick Monroe Group at 612-282-7653
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