Wednesday, July 21, 2010

Rates to Remain Exceptionally Low: Bernanke

Bernanke's comments today are good for the Mortgage Market and are holding up prices at an all time high (rates remain at an all time low).  Remember, low inflation is good for mortgage rates, so is generally bad economic news (unemployment, low economic growth, troubled loans in the banking industry).  

Here's how the day played out with news from Bernanke's speech today:

2:32 PM ET - Many banks still have large volume of troubled loans - Bernanke.

2:13 PM ET - Bernanke: My colleagues on the Federal Open Market Committee (FOMC) and I expect continued moderate growth, a gradual decline in the unemployment rate, and subdued inflation over the next several years.

2:01 PM ET - Bernanke: conditions to warrant exceptionally low interest rates for an extended period of time. His prepared statement mimics last week's Fed minutes. 

9:17 AM ET - Mortgage Bond prices are being capped by the strong earnings reports this morning...Mortgage Bonds have a direct impact on home loan rates. As Mortgage Bond prices rise, home loan rates tend to move lower. They work in an inverse relationship.

Tuesday, July 20, 2010

REO sales outselling New Homes

New home sales are usually 20% of the market of homes sold and are currently at 11% (sales of homes so far in 2010), and REO sales (Bank Owned Properties) are at 19.50% of total homes sold, with 69.50% as resale homes (which includes short sales). 

With the excellent buys of REO and Shortsales, it is no wonder why sales are skewed in favor (at the expense of new home sales) of existing home sales. 

I read an article yesterday which made a good point about the shortage of homes and apartments which will be available once the economy turns around.  With the low number of building permits and new home sales right now, a shortage of housing looks realistic.