01 September 2009 ? This morning mortgage bonds opened up 3bps, then went on a turn for the worse as stocks rallied. However the stock market rally was brief and now the Dow is down 161. This is a significant reduction to the stock market, so bonds rebounded nicely and are now up 16bps. There was an array of news including better-than-anticipated housing and manufacturing news. Pending home sales increased 3.2%, more than double the 1.5% that was expected. This is the sixth consecutive month of gains in the pending home sales. I must advise that caution will need to prevail with this report, as many buyers moved up the buying process to take advantage of the $8,000 tax credit and the low mortgage rates. This can mean that we will be in for a significant dip in the housing data when the tax credit expires.

In the manufacturing sector, the ISM reading came in at 50.2; a reading over 50 typically means there is an indication of growth. This is the first reading over 50 since January 2008. Again caution must be used as inventories have been depleted while companies try to maintain sales and profitability by depleting their inventories. This could be a blip in the reading since inventories may have to be restocked. We will get a better indication if this number can remain constant or have slight growth.

The 30-year rate for well qualified buyers is currently at 4.875% to 5% on the 30 year and 4.375% to 4.5% on the 15 year. (Mortgage rate is for a Single Family Home, 740+ credit score, 40% down payment, full documentation, escrow required.)