Mortgage Pricing Ticks Up Slightly on Positive Housing and Employment Data

October 29, 2010

Daily Mortgage Updates

Doug Katz Mortgage Broker 29 Oct 2010 – The past week once again gave me pause as to the duality of my job. Pricing for Fannie Mae and Freddie Mac mortgage loans increased slightly over the prior week. For that, I shed a tear, since this can put some drag on the very robust refinance market. This movement, however, was primarily driven by market reaction to some positive news in two areas of the economy essential to overall recovery, i.e. employment and housing. While it would mean the end of crazy, low historic rates, this data could signal a sustained reversal of the financial ugliness of the last few years.

In housing, the sale of existing homes increased. This not only means that the purchase market is beginning thaw, but also that there is hope that the excessive inventory of homes currently on the market could begin to shrink. This is extremely important as significant inventory reduction is the only way to regain the loss in property value that we have seen over the past few years. It should be noted, however, that while the number of homes sold did increase, the price of the homes sold decreased in many areas of the country. This should represent a sign to potential buyers that while we are still firmly in a buyer’s market, the best prices could evaporate as the market recovers.

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Employment is widely considered the primary aspect of the economy needed for sustained recovery. Most new foreclosures and mortgage late payments are not the in-over-their-head scenarios that dominated the beginning of the housing crisis. On the contrary, the recent problems are more related to families who have been paying on time, but have lost jobs as a result of the continued poor economy and have exhausted reserves. Only by getting these and other job seekers back to work can we expect foreclosures to stabilize and I am glad to report that this week employment improved. Specifically, the number of applications for first time benefits dropped by 21,000 to 434,000, which was not only a significant improvement from the previous week, but also a number well below expectations. While this trend needs to continue for us to claw our way out of the current economic abyss, every little improvement helps.

I am recommending that my clients closing in 15 days or less from today LOCK. For those closing more than 15 days out, I would suggest FLOATING for now with a watchful eye on the markets for the best opportunity.

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About Doug Katz

As the Senior Mortgage Banker and Sales Manager for Chicago Bancorp, Doug not only originates loans for his personal business, but also oversees affiliations with banks and other financial institutions that depend on Chicago Bancorp to meet their client’s lending needs. In this role, Doug directs the day-to-day mortgage sales operations of over 25 branches in a multitude of Chicagoland’s diverse communities. He brings to these relationships a wealth of industry experience and a dedication to an exceptional client experience that has established Chicago Bancorp as Chicago’s pre-eminent mortgage solution providers. Prior to joining Chicago Bancorp, Doug attended and graduated from West Point. Upon graduation, he was commissioned as an officer in the United States Army Artillery, where served 5 years in numerous roles and in various deployments include service in Kuwait. In addition to his Bachelor’s Degree from West Point, Doug holds an M.B.A. from Loyola University Chicago, where he was also inducted into the Beta Gamma Sigma Honor Society. He also served as President for the West Point Society of Chicago from 2003 to 2005 and still serves on the Board of Directors. When not working, he spends his time with his wife and three children in their hometown of Oak Park, as well as pursuing his passions for fitness, cooking and the banjo. Doug can be reached by phone at 312.738.6079, by email at doug@chicagobancorp.com, on his own blogs, BankerDoug.com and Vet Money Matters. He’s also on LinkedIn.

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