Mortgage Rate Indicators For Dallas

Market Comment - Week of May 24th, 2010
Mortgage bond prices rose last week applying downward pressure to mortgage interest rates. The Greek economic turmoil spread throughout the globe with equities falling precipitously. As a result we saw a tremendous amount of flight to quality buying of US debt instruments. The majority of the data came in bond-friendly with higher than expected weekly jobless claims helping rates improve. Rates fell by about 3/4 of a discount point for the week.

The Treasury auctions, gross domestic product data, and the PCE core inflation reading will be the most important events this week. Look for continued choppy trading amid global economic instability.


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Economic Factors
Economic Indicator Release Date Time Consensus Estimate Analysis
Consumer Confidence Tuesday, May 25, 2010 58.5 Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates.
2-year Treasury Note Auction Tuesday, May 25, 2010 None Important. $42 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Durable Goods Orders Wednesday, May 26, 2010 Up 0.9% Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
New Home Sales Wednesday, May 26, 2010 Up 2.2% Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
5-year Treasury Note Auction Wednesday, May 26, 2010 None Important. $40 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates
Q1 GDP Thursday, May 27, 2010 3.3% Important. The aggregate measure of US economic production. Weakness may lead to lower rates
7-year Treasury Note Auction Thursday, May 27, 2010 None Important. $31 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Personal Income and Outlays Friday, May 28, 2010 Up 0.4%, Up 0.2% Important. A measure of consumers' ability to spend. Weakness may lead to lower mortgage rates.


New Home Sales

New Home Sales data is compiled monthly by the Department of Commerce's Census Bureau and is gathered from builders throughout the country. The data represents new home sales for the nation as well as four areas of the country: the Northeast, the Midwest, the South, and the West. Information on the average price of a home, the number of homes for sale, and the supply of unsold homes are also provided. The data is an important indicator because it shows any strength or weakness in the housing sector. A slowdown in new home sales tends to lead to a slowdown in housing starts, which will continue to affect other indicators. New Home Sales data is often volatile and difficult to predict. The data remains significant and can move mortgage interest rates.

The City of McKinney, TX Down Payment Assistance Program

The City of McKinney Down Payment Assistance Program provides down payment and closing cost assistance to low-to-moderate-income first-time homebuyers within the City of McKinney. Assistance is provided in the form of up to $7,500 as a 0% interest 5-year forgivable loan for down payment and non-recurring closing costs associated with the purchase of the new home. The loan is repayable only if you refinance, pay off the first mortgage, sell or otherwise convey title to the property within the 5-year period.

These funds are made available through a grant from the Texas Department of Housing & Community Affairs' HOME Investment Partnership Program.

You are Eligible if:
■You are a first-time homebuyer. A first-time homebuyer is an individual or household who has not owned a home in the last three years or is a displaced homemaker.
■You are able to provide proof of U.S. citizenship or permanent legal resident alien status.
■You are able to qualify for a mortgage loan with a private lender.
■You will reside in the home as your principal residence.
■The home is located within the city limits of McKinney, Texas.
■Your income does not exceed 80% of the Area Median Income.
■The home does not cost more than $132,000
■You complete a HUD and City of McKinney approved homebuyer counseling workshop.

Market Comment- Week of May 10, 2010

Mortgage bond prices rose last week pushing mortgage interest rates lower. Trading was once again dominated by foreign influences as the Greek debt concerns spread across the globe. US stocks fell precipitously Thursday afternoon. At one point the DOW was down over 900 points. This sent a flood of investor funds into mortgage bonds helping rates improve. The data for the week was mixed with higher than expected unemployment and a larger than expected payrolls figure. Oil prices fell to around $77/barrel, which helped alleviate inflation concerns. Rates fell by about 3/4 of a discount point for the week.

The retail sales data Friday will be the most important event this week. The Treasury auctions will also take center stage as market participants cautiously await the result to determine foreign investor appetite for US debt instruments.


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Economic Factors
Economic Indicator Release Date Time Consensus Estimate Analysis
3-year Treasury Note Auction Tuesday, May 11, 2010 None Important. $38 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Trade Data Wednesday, May 12, 2010 $39.5 billion deficit Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
10-year Treasury Note Auction Wednesday, May 12, 2010 None Important. $24 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims Thursday, May 13, 2010 410k Moderately important. An increase in claims may bring lower rates.
30-year Treasury Bond Auction Thursday, May 13, 2010 None Important. $16 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Retail Sales Friday, March 14, 2010 Up 0.4% Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates.
Industrial Production Friday, March 14, 2010 Up 0.5% Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates.
Capacity Utilization Friday, March 14, 2010 73.3% Important. A figure above 85% is viewed as inflationary. A decrease may lead to lower mortgage interest rates.


Global Uncertainty

The inability of Greece to pay their debt continues to result in economic uncertainty across the globe. The recent announcement that Greece would receive aid from the other Euro members initially resulted in some stability. However, the aid package didn't erase the concern that Greece could still default and the contagion may spread to other countries.

The positive for US dollar-denominated securities is the flight to quality buying that often occurs with the turmoil abroad. Investors often exit troubled markets and pour their money into US securities such as mortgage bonds. This pushes mortgage bond prices higher causing rates to fall in the short term. Unfortunately the improvements can evaporate just as quickly as they appear if the inverse flight occurs. With that in mind be cautious in the event the wild market swings continue.