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| As Gas Prices Rise, Mortgage Rates Are Rising, Too Posted: 22 Oct 2009 07:45 AM PDT
It's bad news for home buyers and mortgage rate shoppers. The same force that's driving oil higher is linked to rising mortgage rates. We're talking about the weakening U.S. Dollar which is now at its worst levels versus the Euro in 15 months. Crude oil is priced in U.S. dollars, by the barrel. When the dollar loses value, more of them are needed to buy the same barrel of oil. As a result, predictably, the price of crude oil goes up. Now, there are other reasons why crude oil is rising, but the fading U.S. dollar is one of the major ones and it's why we're addressing it. The dollar has a similar impact on mortgage rates. Mortgage rates are based on the price of mortgage bonds that -- like crude oil -- are also denominated in dollars. As the dollar loses value, so do mortgage bonds. This causes demand for bonds to drop and prices on bonds to fall. Because bond prices and bond rates move in opposite directions, mortgage rates rise and thisis precisely what's happening on Wall Street today. Since touching a 5-month low in early-October, mortgage rates have tacked on as much as 1/2 percent, depending on the product. Moreover, with the dollar showing no signs of a rebound, the upward pressure on rates should continue. If you're trying to time the market bottom, you may have already missed it. Consider locking your mortgage rate before rates increase even more. And your everyday signal that rates are rising? Just check your price at the pump. If gas prices are up, it's likely that mortgage rates are, too.  |
| Housing Starts Rise In 8 Months Out Of 9 This Year Posted: 21 Oct 2009 07:45 AM PDT
A "Housing Start" is a home for which the foundation has been excavated and, considered alongside other key market metrics, September data suggests that the housing market stabilization is complete. Momentum in housing is overwhelmingly positive:
Despite the positive news, the press is calling September's Housing Starts data a "bummer". Citing a drop in monthly building permits, the media purports that housing will slow in the months ahead. The conclusion may be right, but the rationale may be wrong. The probable cause for fewer permits isn't that the housing market is overdone. It's that home builders are choosing to exercise caution given the pending expiration of the First-Time Home Buyer Tax Credit and a still-growing number of foreclosed homes. It's unclear what housing demand will be beginning in December and the last present a builder wants for the holidays is an excess of inventory. It makes sense that building permits are down, in other words. Looking back at February of this year, there's a host of signs that housing is on the path to recovery. Now, that path won't be a straight line and there's bound to be setbacks, but September's Housing Starts is not one of them. Housing Starts are up 40 percent on the year.  |
With crude oil at its highest levels since October 2008, retail gas is 
Housing Starts on single-family homes gained last month, marking the 8th time that's happened this year.| You are subscribed to email updates from Atlanta Real Estate -- Peter Bright, Mortgage Blogger To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
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