20071117 - Biloxi here we come!

The Big "self-promotional" item of the month is that Pinnacle is now licensed to conduct business in one of the most exciting real estate markets in the country, Coastal Mississippi.

30 yr - 6.24% w/ 0.4% in fees. UNCHANGED. 1 yr ago - 6.21%
15 yr – 5.88% w/ 0.3% in fees. DOWN from 5.94%. 1 yr ago – 5.87%
5/1 ARM – 5.96% w/ 0.4% in fees. UP from 5.89%. 1 yr ago – 6.04%
1 yr ARM - 5.50% w/ 0.5% in fees. UNCHANGED. 1 yr ago – 5.48%
(Average mortgage rates according to Freddie Mac’s Primary Mortgage Market Survey®, as of 11-15-07)

Note: These rates should be used for trend line analysis only, NOT for comparison shopping. Your rate will vary depending on multiple factors. In general, this simply helps demonstrate which direction mortgage rates have moved from week to week.

Summary: Rates have come down about 1/8 percent from our last report in mid October and very close to exactly where rates were one year ago, almost to the decimal point. I’ve been repeating this for a few years now…mortgage rates are incredibly favorable for anyone looking to finance residential real estate! There was a mixed back of economic reports and events this week that resulted in the market moving neither up or down in great fashion. Of course, anyone paying attention would have observed the gyrations in the stock markets and the gold, oil and other commodity prices over the last few weeks. Interesting times…

Existing Home Sales: The National Association of Realtors reported a surprise 0.2 percent gain in September's pending home sales index, which “might” suggests less decline in existing home sales for October and November. However, this index is still 24 percent below levels from one year ago. Additionally, mortgage applications for October hit a several month high.

Inflation: Inflation, Inflation everywhere and not a lime in my drink. Aren’t you tired of hearing about inflation? The only problem with trying to ignore inflation is that you end up ignoring one of the, if not the most important factor in understanding how and why mortgage rates move. You can see previous posts or send me an email to request our Special Report: "What Makes Mortgage Rates Move". "Is inflation rising or falling? There are “experts” on each side of that question. How can that be? It’s either rising or falling, right? Well, both sides can find evidence to support their claim of either rising or falling inflation.

Producer Price Index (PPI) – A measurement of inflation, the PPI rose 0.1% in October, down from a 1.1% rise in September. This is a trend toward the low-inflation side of things, but PPI is still a whopping 6% higher than prices one year ago. One could certainly argue that this is inflationary…the government does when it fits their needs.

Consumer Price Index (CPI) – Another measurement of inflation, the CPI, rose 0.3% in October, the same as September and over the last 12 months, the CPI is up 3.5%. Again, this level is considered inflationary by historical standards.

Consumer Sentiment - The Weekly ABC News / Washington Post poll of Consumer Comfort for the week of 11/11 fell to a -17 reading, down 2 points from the previous week and down 14 points from mid-May 2007, 6 months ago.

Mortgage Industry – The headline business reports have been featuring the huge write-downs (a fancy word for losses) of billions of dollars worth of mortgage backed securities on Wall Street. It has been estimated that $80 billion in bad loans has already been written off. Some estimates are also saying as much as $400 Billion will need to be written off. Regardless, credit will remain tight and only easily available to only the best qualified applicants until this all improves. This will serve to temper the real estate and economy in general for the near and mid-term future

Forecast – There’s not too much news that will hit the streets and a holiday shortened week will likely result in steady rates. Happy Thanksgiving. Gobble Gobble!

Thought of the Week: "In the confrontation between the stream and the rock, the stream always wins, not through strength but by perseverance." H Jackson Brown, Author