Mortgage Market Trends for week ending February 26, 2010


Much of the optimism about the pace or economic recovery evaporated last week, as economic news turned mostly sour. Consumer confidence plunged, and both new, and existing, home sales slowed considerably. While mortgage rates moved upward in last week’s Freddie Mac survey, they may begin trending downward if economic news this week continues to point to a stuttering recovery.

This week brings us the usual cascade of first-of-the-month data, with very important insight into manufacturing and employment. While GDP was adjusted upward last week, most of the increase was due to inventory-related adjustments. If the ISM Manufacturing Survey comes in below 55.0, w could see mortgage rates begin the week on a decidedly downward bent as traders begin worry about a manufacturing slowdown. However, if the ISM shows any improvement, rates will flatten, or perhaps even move slightly upward. Friday’s employment report will be hugely influential as usual. If we get an unexpected month of job creation we could see rates moving back upward next week.

Graph Courtesy from NY Times in an article by Bob Tedeschi February 24, 2010.  Data provided by Jeff Carpenter, Director of Finance, GFI Mortgage Bankers, Inc.

This Week’s Top Economic Reports and Events

Report/Event Date Prior Est. Impact
ISM Manufacturing Index 3/1 58.4 57.8 Significant
with manu
facturing leading this recovery, any big signs of slowing could help create some significant downward pressure on mortgage rates.
ISM Services Index
3/3 50.5 51.0 Moderate
If this index jumps unexpectedly higher, rates could f
eel some upward pressure, with services taking over some recovery from manufacturing.
Federal Reserve Beige Book
3/3 Moderate
The Beige Book paints a picture of the overall economy. If its tenor is slanted toward a stuttering reco
very, rates may feel downward pressure.
Unemployment Rate 3/5 9.7% 9.8% Significant
ter last month’s surprise drop, a second surprise decrease might really surprise the market, and would put upward pressure on interest rates.
Non farm Payrolls
3/5 -20K -20k Significant
A return to job creation is the big boost the economy needs, but another month of
job losses will keep some downward pressure on rates.

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