The economic challenges that Europe has been facing recently has made investors nervousness about the health of the global economy, has created an opportunity for homeowners here in the US.  Investors have been fleeing riskier securities and moving to the perceived safety of U.S. Treasury securities.  This has created a significant demand for US Treasury securities which  has bid up the price of these securities and in turn driven down interest rates to historical lows.

The average rate on a 30-year fixed rate mortgage nationwide dropped to 4.92 percent at the end of May, from 4.96 percent the previous week, the lowest level since Bankrate.com began keeping track 25 years ago.

Rates have been hovering in the 5 percent to 5.5 percent range for some time. They last touched above 6 percent in November 2008, just as the U.S. financial crisis was unfolding.

Refinancing out of risky adjustable loans or lowering existing fixed rate loans is something every homeowner should be looking into right now.  There have been many changes to lender underwriting guidelines and we know property values are lower than they were several years ago.  Not everyone will be able to take advantage of these lower rates but it costs nothing to at least find out if refinancing is an option so don’t wait until rates start trending back up, make a call today and find out.

Quote of the week

It is wonderful what we can do if we are always doing – George Washington

New home sales up … 26.9%? Yes. The stampede was on in March as buyers raced to qualify for expiring tax credits, leading to the greatest month-over-month jump in new home purchases since 1963. According to the Census Bureau, new home prices averaged $258,600, almost unchanged from 12 months ago.₁

Existing home sales also jump. National Association of Realtors data had residential resales up 6.8% for March. In year-over-year terms, sales were 16.1% improved.₂

Notable gain in PPI. In March, wholesale inflation increased by 0.7%, above the 0.4% forecast by economists. Labor Department figures showed core PPI (minus energy and food costs) up by 0.1%.₃

Durable goods orders down. They slipped by 1.3% last month according to the Commerce Department. The silver lining? With transportation orders taken out, the category was +2.8% in March.₄

(Further) indications of improvement. The Conference Board’s index of leading indicators went up 1.4% in March, the twelfth straight monthly gain. February’s gain was revised upward to 0.4%.₅

8 straight for the Dow. Eight consecutive winning weeks, that is – on Friday, the Dow closed at 11,204.28 after rising 1.68% across five trading days. Even with fresh concerns over the debt of Greece, the NASDAQ gained 1.97% last week and the S&P 500 advanced 2.11%

Citations.

1 money.cnn.com/2010/04/23/news/economy/new_home_sales/index.htm [4/23/10] 2 npr.org/blogs/thetwo-way/2010/04/home_sales_rise_68.html [4/23/10]3 smartmoney.com/Investing/ETFs/Late-Rally-Boosts-ETFs-and-Stocks/ [4/22/10]4 online.wsj.com/article/SB10001424052748703709804575201793952864632.html [4/23/10]5 marketwatch.com/story/march-leading-indicators-rise-recovery-continuing-2010-04-19 [4/19/10]6 cnbc.com/id/36738472 [4/23/10]7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=4%2F23%2F09&x=0&y=0 [4/23/10]7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=4%2F23%2F09&x=0&y=0 [4/23/10]7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=4%2F23%2F09&x=0&y=0 [4/23/10]7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=4%2F22%2F05&x=0&y=0 [4/23/10]7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=4%2F22%2F05&x=0&y=0 [4/23/10]7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=4%2F22%2F05&x=0&y=0 [4/23/10]7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=4%2F24%2F00&x=0&y=0 [4/23/10]7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=4%2F24%2F00&x=0&y=0 [4/23/10]7 bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=4%2F24%2F00&x=0&y=0 [4/23/10]8 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [4/23/10]8 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [4/23/10]9 treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [1/12/00]

Quote of the week.

Reputation is what other people know about you. Honor is what you know about yourself.”

– Lois McMaster Bujold

4Q GDP: 5.7%: That is the preliminary reading from the Commerce Department, and that is the best reading since 3Q 2003. Economists

pointed out that much of the increase reflected companies rebuilding their inventories rather than personal spending.1

Consumers think positive. The final University of Michigan/Reuters consumer sentiment index for January improved 1.6 points to 74.4. Economists polled by Briefing.com felt it would come in at 73.0.2

New concerns about home sales. Both new and existing home sales retreated markedly in December with the threat of federal tax credits being pulled. Existing home sales fell by 16.7% in that month while new home sales slipped 7.6%. In annual terms, residential resales for 2009 were about 5% higher than 2008 totals. Just 373,000 new single-family homes were sold in 2009, the fewest since the government began tracking sales stats in 1963.3,4

A $5K hiring rebate? Last week, President Obama pitched the idea of giving companies of all sizes a $5,000 credit to offset payroll taxes for each new worker, up to a $500,000 ceiling. Net new hires (increasing employee hours) and salary increases could also make companies eligible. A proposal to enact the plan is now in the Senate.5

Dollar hits highest level since August. The buck went on an intraday climb to 90.92 yen and the euro traded below $1.39. The new GDP report helped.6

So long to a subpar month. Stocks retreated in the last week of January, with the Dow ending the month at 10,067.33, the NASDAQ at 2,147.35 and the S&P 500 at 1,073.87.7

(Source: CNBC.com, CNNMoney.com, ustreas.gov, bls.gov, 1/29/10)7,8,9,10
Indices are unmanaged, do not incur fees or expenses, and cannot be
invested into directly. These returns do not include dividends.

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