Weekly Letter May17th

May 17, 2010
The Housing Market Update
Waterstone Mortgage
Brought to you by:

Barb Perry
Branch Manager
Office: 208-472-8877
Cell: 208-859-9696
bperry@waterstonemortgage.com

5583 Glenwood
Boise, ID 83714



Foreclosure Rates Fall:
The most recent sign of growth in the housing industry comes from a new report released by RealtyTrac. They reported that foreclosures in the U.S. fell by more than 2% in April from a year earlier. The great news is that this is the very first year-over-year decline since the housing crisis began.

RealtyTrac's index fell 9% from March 2010 to April 2010 and 2.4% from April 2009 to April 2010. This data shows that the foreclosure situation is slowing and may have already hit a plateau. Currently, 1 out of 387 homes are in foreclosure. That means that 386 out of 387 homes are not in foreclosure!

Consumer Sentiment Strong:



The University of Michigan's Consumer Sentiment Index rose to its best levels since our Recession began. This is very important because housing demand is very clearly tied with how consumers feel about economic conditions and their own financial outlook.

Consumer Sentiment rose to 73.3 in May, up from the April reading of 72.2. Buried within this report were two other nuggets: The survey showed that the consumer inflation expectation index rose to 3.1% which is the highest reading since June of 2009. Inflation naturally causes mortgage rates to increase, so we need to keep an eye on this.

The survey's gauge of current economic conditions edged upward to a very high 81.1 and the barometer of consumer expectations also rose in May to 68.3.

What Happened to Rates Last Week:


Mortgage backed securities (MBS) gained +7 basis points last week which caused 30 year fixed rates to decrease for both government and conventional loans to their best levels of 2010. MBS pricing increased (which causes mortgage rates to go down) due primarily to Greece. Although there is over $1 trillion that has been made available through loans by the IMF, the European Union, and individual countries in the EU, most economists are skeptical that it is enough to stem the tide. The global uncertainty causes investors to park their money into U.S. treasuries and MBS. This artificial (and temporary) demand helped to push mortgage rates down after a very volatile week.

What to Watch Out For This Week:
The following are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises:

Date ET Release For
17-May 9:00 Net Long-Term TIC Flows Feb
18-May 8:30 Building Permits Apr
18-May 8:30 Core PPI Apr
18-May 8:30 Housing Starts Apr
18-May 8:30 PPI Apr
19-May 8:30 Core CPI Apr
19-May 8:30 CPI Apr
19-May 10:30 Crude Inventories 15-May
20-May 8:30 Continuing Claims 15-May
20-May 8:30 Initial Claims 15-May
20-May 10:00 Leading Indicators Apr
20-May 10:00 Philadelphia Fed May

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.





Waterstone Mortgage
5583 Glenwood, Boise ID, 83714
Phone: 208-472-8877
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