
| Mortgage Time Mortgage Market News for the week ending March 23, 2012 | 
| | Events This Week: Existing Sales Rose Housing Starts Fell Jobless Claims Down Manufacturing Mixed
Events Next Week: Mon 3/26 Pending Sales Wed 3/28 Durable Orders Thur 3/29 GDP Fri 3/30 Core PCE Chicago PMI Income |
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| | Will Fed Expand MBS Purchase Program? Mortgage rates remained volatile this week, mostly due to shifting expectations about future Fed action. Early in the week, mortgage rates continued last week's move higher. Comments from Fed officials helped them recover their losses later in the week, though, and they ended the week slightly lower. While the Fed does not control mortgage rates directly, it's important to remember that the Fed maintains an enormous influence. Mortgage rates are largely determined by mortgage-backed securities (MBS) prices. One primary reason why MBS have performed so poorly since last week's Fed statement is clear. To boost the economy after the financial crisis, the Fed has taken extreme actions, including the purchase of enormous quantities of MBS, called quantitative easing (QE). This extra demand from the Fed has helped push mortgage rates down to record lows. The Fed has said from the start that these are temporary measures, though, and recent economic conditions have caused reduced expectations for another round of QE. The result is that investors are less inclined to hold positions in MBS if the Fed is no longer expected to be a major buyer. On Wednesday, however, comments from Fed Chief Bernanke caused investors to question whether the shift in sentiment had gone too far. Fed officials may be more concerned about the risk of slower future economic growth than the consensus investor outlook might indicate. Many Fed officials remain open to the possibility that additional monetary stimulus may be called for, and the majority seem to prefer to be too slow to tighten monetary policy rather than too quick. Bottom line, in the near-term, mortgage rates will likely be heavily influenced, higher or lower, by changing expectations for additional Fed MBS purchases. |

| Also Notable: - Jobless Claims fell to the lowest level since February 2008
- Building Permits climbed to the highest level since October 2008
- The NAHB Housing Market Confidence index was at the highest level since June 2007
- The Treasury will auction $99 billion in 2-yr, 5-yr, and 7-yr securities next week
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| Average 30 yr fixed rate: | Last week: | +0.20% | | This week: | -0.02% | |
| Stocks (weekly): | Dow: | 13,100 | -150 | NASDAQ: | 3,050 | -10 |
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| Week Ahead Next week, Pending Home Sales will be released on Monday. Durable Orders, an important indicator of economic growth, will come out on Wednesday. The final revisions to fourth quarter GDP will be released on Thursday. The Fed's preferred inflation measure, the Core PCE price index, will come out on Friday, along with Chicago PMI Manufacturing and Personal Income. Consumer Confidence and Consumer Sentiment will round out a busy week. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday. |
To learn more about news impacting interest rates and mortgage markets, go towww.mbsquoteline.com To learn more about the newsletter, please call 800-627-1077 All material Copyright © Ress No. 1, LTD and may not be reproduced without permission.
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