My New Blog

Weekend Market Update

July 24-25, 2010

Stocks rose more than 3% for the week, ending with up days on Thursday and Friday as the so-called “stress test” of European banks’ liquidity proved not stressful after all.

All of the three major market indexes registered strong gains for a week that included second-quarter earnings from a slew of big-name companies. The latest boost came on Friday, when General Electric raised its quarterly dividend by 20%.

The Dow Jones Industrial Average ended up 102.32 points, or 1.0%, at 10424.62, up 3.2% for the week and just four points shy of where it started the year. If the blue-chip index can keep up its pace, July will be its best month in more than a year.

The S&P 500 index finished up 0.82% at 1102.66, advancing 3.6% for the week and breaking through the psychologically significant 1,100 level for the first time this month.

The Nasdaq Composite rose 1.1% to 2269.47, up 4.2% for the week and breaking back into positive territory for the year.

GE boosted the market after it announced its first dividend increase since cutting its payouts more than a year ago. The company also said it will restart stock buybacks this quarter after an absence of nearly two years. GE's shares rose 3.3%.

The “stress test” included a measure of liquidity and reserves of European banks, and the breath-holding for the announcement turned out to be unwarranted.

Mortgage interest rates treaded water for the week, although the current Fannie Mae contract lost 12 basis points, which was directional for “up” in rates but not enough to change rate pricing signifcantly.

Please call me with any questions about the market or to run a free analysis of what a refinance---with cash out or not---would mean for your financial bottom line. Gary Moore 615-579-8658.

30-Year Conventional Fixed

4.375% $200,000-$417,000

15-Year Conventional Fixed

3.75% $200,000-$417,000


30-Year FHA-100% VA

4.25% $100,000-$393,300


30-Year Jumbo Fixed

5.5% $417,001-$900,000

(Interest-only available-Call me)

THDA Great Start

5.35% $100,000-$393,300

4% of sales price Gift

Call for free pre-approval and to discover

the best financing for you!

...by Gary Moore

Mortgage Planner, First Community Mortgage

...a subsidiary of First Community Bank

Cell: 615-579-8658 Toll-free fax: 866-321-6513

"The greatest thing in this world is not so much where we are, but in what direction we are moving." - Oliver Wendell Holmes

Visit my mortgage website:

http://www.BrentwoodHomeLoan.com

(0% points, 1% origination. Market Update informs consumers and Realtors on market trends, offers subjective opinions and is not a quote for a unique borrower. Reply "remove" with your name and email address to discontinue Update.)

Weekend Market Update

July 17-18, 2010

I hate using the term “no-brainer.” If you tell someone, “It’s a no-brainer,” they may take it the wrong way and feel personally insulted. So I am not going to say, “To refinance in this market is a no-brainer.” I’ll just say, “This market is a game-changer.”

Defying the experts, mortgage rates have gone down this year instead of up as widely predicted. When you get too many people all saying the same thing, you know Mr. Market will do the opposite just for spite.

For all the folks I have helped earlier in this decade to get an extremely low interest rate---like in the mid 5s or higher---I am no longer going to talk you out of refinancing due to costs, no matter how many mail pieces you get from unknown brokers promising pie in the sky.

It is time to seriously look at refinancing, even if you bought a home or refinanced as recently as eight months ago. Rates have stepped a full leg down during the past 75 days. 4.5% is the new 5.5%. Many people are opting to go to 15 years at around 4% or lower to save hundreds of thousands of dollars of interest over the term of the loan, and to have the imposed discipline to pay down the loan more quickly.

Conventional wisdom during my 34 years in real estate/homebuilding/mortgage banking was that you do not pay down your mortgage---that there are better investments. When you pay down your mortgage, it’s like burying money in the back yard. You don't get to dig it back up. You are avoiding interest and nothing more. But, with “safe” investments like CDs and Treasuries yielding a pittance, it suddenly makes sense to avoid paying interest at 5% or 6% or so.

Stocks sold off hard on Friday on more news about a weak economy, and according to script, Treasuries and mortgage interest rates benefited. The 4% Fannie Mae contract rose 41 basis points this week. A “point” in mortgage world equals 1% of the loan amount, and there are 100 bps (basis points) in one discount point. One point or 100 basis points generally translates into .25% in the interest rate. So, when somebody says “rates fell,” it is more accurate to say it costs less to get such-and-such rate than it did before.

The DJIA dropped 261 points on Friday to close at 10,097 and the S&P 500 lost 31.6 points to close at 1,064. The 10-year Treasury dipped back below 3% yield and closed at a yield of 2.94%. We are looking at the 3% yield mark as a confirming indicator of mortgage rate direction.

Viewing this from another angle, would you be surprised to know that all 15 of the Dow stocks yield more in dividend than the 10-year Treasury?

I do not have the crystal ball, but I do recognize that we are at an all-time low in mortgage rates right now, today, at this time, ahora. I lean toward the concept of locking a low rate while the getting is good. Gut feeling is that this extreme position cannot go on forever or go much if any lower.

Please call me with any questions about the market or to run a free analysis of what a refinance---with cash out or not---would mean for your financial bottom line. Gary Moore 615-579-8658.

30-Year Conventional Fixed

4.375% $100,000-$417,000

15-Year Conventional Fixed

3.875% $200,000-$417,000


30-Year FHA-100% VA

4.5% $100,000-$393,300


30-Year Jumbo Fixed

5.5% $417,001-$900,000

(Interest-only available-Call me)

THDA Great Start

5.35% $100,000-$393,300

4% of sales price Gift

Call for free pre-approval and to discover

the best financing for you!

...by Gary Moore

Mortgage Planner, First Community Mortgage

...a subsidiary of First Community Bank

Cell: 615-579-8658 Toll-free fax: 866-321-6513

"Human-nature will not change." - Abraham Lincoln

Visit my mortgage website:

http://www.BrentwoodHomeLoan.com

(0% points, 1% origination. Market Update informs consumers and Realtors on market trends, offers subjective opinions and is not a quote for a unique borrower.)

Weekend Market Update

July 10-11, 2010

Mortgage rates asked the limbo rock question this week---“How low can you go?”---and the market may have given its answer as rates ended their two-month slide to historical lows. If you are considering refinancing, now is the time to pull the trigger.

Stocks were up on modest volume for the four-day trading week, and the Dow Jones average was up 5.3% and 512 points, to log its best one-week gain in almost a year. The DJIA closed at 10,198. Stocks had been beaten down and were oversold, which likely contributed to this pop.

The 10-year Treasury moved back above 3% yield, in the face of more news of a weak economy, which usually favors bonds and mortgage-backed securities. Inventories held by wholesalers rose in May for a fifth straight month, the government reported on Friday, while sales dropped for the first time in more than a year. Wholesale inventories rose 0.5 percent and sales dropped 0.3 percent. It was the first drop since March 2009, when major stock indexes hit a 12-year low.

Bond prices fell as stocks rose on Friday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.06 percent from 3.04 percent late Thursday.

Crude oil rose 65 cents to $76.09 per barrel on the New York Mercantile Exchange.

Thursday's report of a drop in the number of newly laid off people seeking unemployment benefits ended a string of bad news about the job market, and it likely contributed to investors' more positive mood going into earnings season.

Call me to get pre-approved for a purchase or to explore your refinancing options. Gary Moore 615-579-8658.

30-Year Conventional Fixed

4.5% $100,000-$417,000

15-Year Conventional Fixed

4% $100,000-$417,000


FHA-100% VA

4.5% $100,000-$393,300


30-Year Jumbo Fixed

5.5% $417,001-$900,000

(Interest-only available-Call me)

THDA Great Start

5.35% $100,000-$393,300

4% of sales price Gift

Call for free pre-approval and to discover

the best financing for you!

...by Gary Moore

Mortgage Planner, First Community Mortgage

...a subsidiary of First Community Bank

Cell: 615-579-8658 Toll-free fax: 866-321-6513

"A bank is a place that will lend you money if you can prove that you don't need it." - Bob Hope

Visit my real estate website:

http://www.RealCarte.com

Visit my mortgage website:

http://www.BrentwoodHomeLoan.com

(0% points, 1% origination. Market Update informs consumers and Realtors on market trends, offers subjective opinions and is not a quote for a unique borrower.)

Weekend Market Update

July 3-4, 2010

NOTE: EVEN IF YOU HAVE A LOW INTEREST RATE ON YOUR PRESENT MORTGAGE, DO NOT HESITATE TO CALL ME AT 615-579-8658 FOR A REFINANCE ANALYSIS TO SEE WHAT YOU CAN SAVE IN MONTHLY PAYMENT. MANY HOMEOWNERS ARE TAKING THIS OPPORTUNITY TO CASH IN THEIR 30-YEAR LOAN FOR A 15-YEAR AT A RIDICULOUS RATE OF 3.875% OR THEREABOUTS. ALSO, IT’S A GOOD TIME TO REFINANCE IF YOU WANT TO PULL SOME CASH OUT OF YOUR EQUITY.

Stocks fell Friday on the heels of more bad news about the economy and job creation, but Treasury yields and mortgage interest rates failed to drop, which could indicate we have gone as low as we can with mortgage rates.

The Fannie Mae 4% MBS August delivery coupon mortgage-backed bond lost 9 basis points on the day but gained 47 points for the week as mortgage rates continued to dwell in a range of historical lows. As basis points go up in price paid for the security, rates and yields go down, and vice versa.

The 10-year Treasury broke through resistance at around 3.1% yield earlier this week, and it closed on Friday at a yield of 2.98% after touching a low of 2.89% on Thursday. Money has flowed into Treasuries and caused lower rates during the last two months of weakness in equities and concerns over the global economy.

A disappointing jobs report sent stocks falling Friday and gave the Dow Jones Industrial Average its longest losing streak since the worst days of the financial crisis. The Dow dropped 46 points Friday for its seventh straight loss and its longest slide since October 2008. The Dow and other major indexes posted big losses for a second straight week.

The government said private employers added only 83,000 jobs last month, fewer than the 112,000 analysts had forecast.

The government cut 225,000 census jobs in June. Overall, 125,000 workers lost their jobs last month, more than the drop of 110,000 analysts predicted. The unemployment rate did drop unexpectedly, sliding to 9.5 percent from 9.7 percent. Economists polled by Thomson Reuters had expected it to rise to 9.8 percent. However, the decrease came as some people gave up looking for work. That means they weren't counted among the unemployed.

The government also reported that factory orders fell in May for the first time in nine months. The 1.4 pCercent drop was the biggest since March 2009, when major stock indexes hit a 12-year low.

The Dow fell 46.05, or 0.5 percent, to 9,686.48, its lowest close since Oct. 5 2009. The Dow hasn't fallen for seven straight days since an eight-day loss that ended Oct. 10, 2008.

The Standard & Poor's 500 index fell 4.79, or 0.5 percent, to 1,022.58.

The Dow is now down 13.6 from its 2010 high of 11,205.03, while the S&P 500 is down 16 percent from its high of 1,217.28.

The Nasdaq composite index fell 9.57, or 0.5 percent, Friday to 2,091.79.

For the week, the Dow dropped 4.5 percent. The S&P 500 index lost 5 percent, while the Nasdaq dropped 5.9 percent.

The S&P 500's two-week drop is the worst since early May.

Call me to get pre-approved for a purchase or to explore refinancing options. Gary Moore 615-579-8658.

30-Year Conventional Fixed

4.5% $100,000-$417,000

15-Year Conventional Fixed

3.875% $100,000-$417,000


FHA-100% VA

4.5% $100,000-$393,300


30-Year Jumbo Fixed

5.5% $417,001-$900,000

(Interest-only available-Call me)

THDA Great Start

5.35% $100,000-$393,300

4% of sales price Gift

Call for free pre-approval and to discover

the best financing for you!

...by Gary Moore

Mortgage Planner, First Community Mortgage

...a subsidiary of First Community Bank

Cell: 615-579-8658 Toll-free fax: 866-321-6513

"It's a recession when your neighbor loses his job. It's a depression when you lose your own." - Harry S. Truman

Visit my mortgage website:

http://www.BrentwoodHomeLoan.com

(0% points, 1% origination. Market Update informs consumers and Realtors on market trends, offers subjective opinions and is not a quote for a unique borrower.)

Weekend Market Update

June 19-20, 2010

Mortgage interest rates continued to slide into historical lows in the mid-4s this week as government data about the economy and the absence of inflation supported the value of Treasuries and mortgage-backed securities.

That slide could run into resistance this coming week, however, as traders are poised for money to return to equities after China announced on Saturday that it would let its currency float against the dollar. May’s fall in rates was accompanied by selling in stocks as money flowed into the relative safe haven of U.S. Treasuries, which loosely correlate with mortgage-backed securities and mortgage interest rates. If equities return to favor, that scenario is likely to be reversed.

China has pegged its currency to the dollar for 23 years, but this move will clear the way for Chinese currency to appreciate. This will most benefit U.S. corporations that sell to China, such as Caterpillar, as China’s buying power is raised. It will also make China’s exports more expensive.

Last week's relatively successful bond sales in peripheral euro zone countries and expectations that the Federal Reserve and other central banks will keep borrowing costs low are also adding to investors’ appetite for risk. The Federal Open Market Committee will meet this week and is expected to keep interest rates low in the face of a weak economy.

The Treasury will be selling debt this week in such volume that it could impact mortgage rates, depending on the demand. The 10-year Treasury closed at a 3.22% yield on Friday.

Call me to get pre-approved for a purchase or to explore refinancing options. Gary Moore 615-579-8658.

30-Year Conventional Fixed

4.5% $100,000-$417,000


FHA-100% VA

4.5% $100,000-$393,300


30-Year Jumbo Fixed

5.5% $417,001-$900,000

(Interest-only available-Call me)

THDA Great Start

5.35% $100,000-$393,300

4% of sales price Gift

Call for free pre-approval and to discover

the best financing for you!

...by Gary Moore

Mortgage Planner, First Community Mortgage

...a subsidiary of First Community Bank

Cell: 615-579-8658 Toll-free fax: 866-321-6513

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value." - Alan Greenspan

Visit my real estate website:

http://www.RealCarte.com

Visit my mortgage website:

http://www.BrentwoodHomeLoan.com

(0% points, 1% origination. Market Update informs consumers and Realtors on market trends, offers subjective opinions and is not a quote for a unique borrower. Reply "remove" with your name and email address to discontinue Update.)

Weekend Market Update

June 5-6, 2010

Mortgage interest rate pricing improved by 63 basis points on Friday as a tepid job creation report was a downer for the economy and for stocks.

The DJIA closed under 10,000 for the first time since Feb. 8. Stocks slumped after a government report showed employers added fewer jobs than expected last month, and the euro plunged to a new four-year low, reviving worries about the health of the European economy.

The Dow Jones industrial Average lost 324 points, or 3.2%, closing at 9,931.97.

Bad news elsewhere is often good news for Treasuries, mortgage-backed securities and mortgage interest rates. The 10-year Treasury closed at a yield of 3.2%. While the short-term outlook for rates is to remain low, it is notable as a technical indicator that the yield has touched this range three times but has not been able to crack below 3.1% over the past year.

Translation: We are at extreme lows, and it is time to pull the trigger on a contemplated refinance. Call me to structure your unique loan scenario, be it refinance or purchase.

30-Year Conventional Fixed

4.5% $100,000-$417,000


FHA-100% VA

4.75% $100,000-$393,300


30-Year Jumbo Fixed

5.5% $417,001-$900,000

(Interest-only available-Call me)

THDA Great Start

5.35% $100,000-$393,300

4% of sales price Gift

Call for free pre-approval and to discover

the best financing for you!

...by Gary Moore

Mortgage Planner, First Community Mortgage

...a subsidiary of First Community Bank

Cell: 615-579-8658 Toll-free fax: 866-321-6513

"The surest way for an executive to kill himself is to refuse to learn how, and when, and to whom to delegate work." - James Cash Penney

Visit my mortgage website:

http://www.BrentwoodHomeLoan.com

(0% points, 1% origination. Market Update informs consumers and Realtors on market trends, offers subjective opinions and is not a quote for a unique borrower.)

Weekend Market Update

May 29-30, 2010

Jumbo loan borrowers who got accustomed to seeing rates in the 8’s and 7’s over the past few years should take a look at my Jumbo rates below. A fixed-rate Jumbo in the mid-5’s can open up buying opportunities for this relatively difficult borrowing niche. Realtors, call me to work up scenarios for your Jumbo listings.

The stampede of money out of stocks and into Treasuries and mortgage-backeds slammed on the brakes Thursday before returning to the near-term trend on Friday. The Dow Jones Industrial Average dropped 122 points on Friday and closed at 10,136, which represented a decline of 7.92% for the month, making it the worst May percentage performance since 1940. Its 871.98 drop in aggregate points was the largest May point drop in history.

The 10-year U.S. Treasury touched a low yield of 3.1% this week before ending at a yield of 3.3% at Friday’s close. Technical resistance thus held and remained established just below 3.3% and just above 3.1%. That range was last touched with a sharp down spike pattern like this one---but was not penetrated---on Oct. 7 and Dec. 1, 2009.

That technical reading tells us we have re-visited the bottom and cannot expect rates to move lower from here. If that level is pierced on the down side for the 10-year Treasury, however, on heavy trading volume, a new down leg in rates could be signaled. Price and rate move in opposite directions in trading bonds and Treasuries---when bonds are being bought, the price goes up and the rate goes down, and vice versa.

Markets this month have been responding to bad news, such as the European debt crisis.  A bad day for stocks is often a good day for mortgage rates.  Mortgage rate pricing was slightly higher week-over-week after also recently touching lows of the year. Mortgage rates loosely correlate with Treasuries.

Mortgage rates remain in a channel of historic lows, but this opportunity will be meaningless unless buyers and borrowers commit to taking action. Call me for a free pre-approval and loan strategy for would-be buyers, and call me for a free refinance checkup to confirm whether you can improve your situation with a new refinance.

30-Year Conventional Fixed

4.75% $100,000-$417,000


FHA-100% VA

4.75% $100,000-$393,300


30-Year Jumbo Fixed

5.5% $417,001-$900,000

(Interest-only available-Call me)

THDA Great Start

5.35% $100,000-$393,300

4% of sales price Gift

Call for free pre-approval and to discover

the best financing for you!

...by Gary Moore

Mortgage Planner, First Community Mortgage

...a subsidiary of First Community Bank

Cell: 615-579-8658  Toll-free fax: 866-321-6513

“Collective fear stimulates herd instinct, and tends to produce ferocity toward those who are not regarded as members of the herd.” – Bertrand Russell

Visit my real estate website:

http://www.RealCarte.com

Visit my mortgage website:

http://www.BrentwoodHomeLoan.com

(0% points, 1% origination. Market Update informs consumers and Realtors on market trends, offers subjective opinions and is not a quote for a unique borrower.)

Weekend Market Update

May 22-23, 2010

Mortgage interest rates fell to lows for 2010 as bad news for other markets drove money into safer instruments, such as U.S. Treasuries. Mortgage-backed securities have not moved in 1-to-1 lockstep with Treasuries during this cycle, but on Friday they went along for the ride sufficiently to plunge into the mid-4s.

Call me ASAP to get your refinance application in the house so that we can lock a rate in this range.

The 10-year Treasury closed at a yield of 3.2%, its lowest in 2010.

The Euro hit a four-year low of $1.21 mid-week on nagging worries that the Greek debt crisis will continue to drag down the rest of the Euro zone economy and possibly spread beyond Europe. By Friday the beleaguered currency had rebounded to nearly $1.26, but it is down 13% for the year.

Major stock market indices were down more than 4% for the week, and the Dow average, the S&P and Nasdaq entered the “correction” zone of down 10% from the previous high, which was just set in April. The Dow swung 279.71 points on Friday, dipping below the 10,000 mark before erasing all of its losses to close up 125 points for the day.

On Friday the CBOE’s volatility index, VIX, hit a 15-month high of 48.2 as the selling continued. That mark was last seen in March 2009, when the market bottomed with the Dow in the mid-6,000s.

30-Year Conventional Fixed

4.5% $100,000-$417,000


FHA-100% VA

4.75% $100,000-$393,300


30-Year Jumbo Fixed

5.5% $417,001-$900,000

(Interest-only available-Call me)

5.35% $100,000-$393,300

4% of sales price Gift

Call for free pre-approval and to discover

the best financing for you!

...by Gary Moore

Mortgage Planner, First Community Mortgage

...a subsidiary of First Community Bank

Cell: 615-579-8658  Toll-free fax: 866-321-6513

"Nothing beats a little cash in a bear market, of course, and the oldest form of cash is gold." - James Grant

(0% points, 1% origination. Market Update informs consumers and Realtors on market trends, offers subjective opinions and is not a quote for a unique borrower.)

Weekend Market Update

May 15-16, 2010

Stocks fell on Friday on a combination of weak earnings from retailers, Senate backing for limits on credit card fees and concerns over the sustainability of European public debt.

Bank and credit card companies' shares slumped a day after the Senate voted to limit fees charged on credit and debit card transactions. The limits added to fears that beefed-up financial reform legislation could hurt profits in the sector. Visa's stock fell almost 10 percent. Gary’s comment: Boo-hoo, I hate it for the credit card thugs.

Investors who had taken comfort in signs of strength in the U.S. economy were faced with more below-par forecasts from retailers such as Nordstrom and J.C. Penney, casting doubt on the strength of the recovery in consumer spending.

Daily volume was above average while declining stocks outnumbered advancers by a ratio of about 7 to 1 on the New York Stock Exchange. The CBOE Volatility Index, or VIX, a measure of market turbulence, surged 17.1 percent to 31.24, echoing moves when the stock market plunged last week.

Stocks had rallied sharply on Monday after news that European Union finance ministers had agreed to a $1 trillion aid package for debt-laden Greece. But the optimism was short-lived, with stocks down three days this week as market watchers said, not so fast---where is the money coming from and how is Greece going to repay it?

Despite Friday's sharp sell-off, all three major U.S. stock indexes scored their biggest weekly percentage advance in the last 10 weeks, thanks largely to Monday's gains.

For the week, the Dow rose 2.3 percent, the S&P 500 added 2.2 percent and the Nasdaq climbed 3.6 percent. However, after the recent volatility the Dow and the S&P 500 are up just 1.8 percent for the year, while the Nasdaq is up 3.4 percent.

As the initial optimism over moves to stem the euro-zone debt crisis ebbed, investors moved out of riskier assets. Global shares and commodity prices dropped sharply while the euro sank to an 18-month low against the dollar. Gold, a classic safety play, hit a record high before getting caught up in the commodities sell-off.

Shares of British Petroleum (BP) broke down on Friday after CEO Tony Hayward conceded the firm was caught off guard by the April 20 explosion on the Deepwater Horizon rig in the Gulf of Mexico, and President Obama met with cabinet members to consider further action that could be taken to contain the spill.

Hayward told journalists Wednesday night in Houston that it was “probably true” that the firm “should have done more” to prepare for such an emergency, according to an article Friday in the Wall Street Journal.

Estimates continue to creep up for the pace of the spill. A Purdue University researcher, analyzing underwater footage, said on NPR that the pace of the spill is 70,000 barrels per day, more than ten times the 5,000 cited by BP. and a Florida State University research team told the New York Times the rate of spill could be at least four or five times the 5,000 figure.

BP shares are off 23% since April 20, a loss of $44 billion in market capitalization.

Transocean (RIG), meantime, the owner of the Deepwater Horizon, was off $1.57, or 2.4%, at $65.12. Halliburton (HAL), which provided contract services in setting up and maintaining the rig, was off 90 cents, or 3%, at $28.11.

And Cameron International (CAM), which made the blowout preventer that may or may not have failed to prevent the blast, was down $1.10, or 3%, at $37, which is significant for a stock that had held up relatively well during most of this.

The 10-year U.S. Treasury note closed at a yield of 3.44%. Mortgage interest rates remained under generally downward pressure this week as money moved to Treasuries and mortgage-backed securities during spells of weakness in stocks.

30-Year Conventional Fixed

4.75% $100,000-$417,000


FHA-100% VA

5% $100,000-$393,300


30-Year Jumbo Fixed

5.75% $417,001-$900,000

(Interest-only available-Call me)

THDA Great Start

5.35% $100,000-$393,300

4% of sales price Gift

Call for free pre-approval and to discover

the best financing for you!

...by Gary Moore

Mortgage Planner, First Community Mortgage

...a subsidiary of First Community Bank

Cell: 615-579-8658   Toll-free fax: 866-321-6513

“Collective fear stimulates herd instinct and tends to produce ferocity toward those who are not regarded as members of the herd.” –Bertrand Russell

Visit my mortgage website:

http://www.BrentwoodHomeLoan.com

Weekend Market Update

May 8-9, 2010

U.S. Treasury issues and mortgage-backed securities often benefit when stocks are being sold, and this week was a classic example as equity markets plunged and Treasuries were being bought as a safe place to park money. Mortgage rates softened from the move, but not to the same magnitude as Treasuries, as the spread---the difference between Treasury pricing and the Fannie Mae mortgage contract---widened with Treasuries outpacing mortgage buying. This was accompanied by the Euro plunging vs. the USD.

Not even a positive employment report could stem the tide of selling as the Dow Jones average dropped 5.7% for the week and closed at 10,380, more than 900 points below its 52-week closing high of 11,205, which was just set April 23. The VIX, or volatility index, spiked to above 40 at Friday’s close. Trending high volatility has been a precursor to massive selloffs and bear markets in the past. If the VIX crosses 50, it’s Katie bar the door.

Rioting in Greece amid that country being on the brink of financial collapse---and fears that Portugal will be next and that other European countries, and even Great Britain, may follow with sovereign debt issues---drove panicked sellers to dominate the markets. Money flowed into the perceived safety of U.S. Treasuries with such demand that yields fell, with the government being able to sell debt and pay out less interest. The 10-year Treasury closed at a yield of 3.43%, and the Fannie Mae mortgage contract gained 74 basis points for the week, which roughly translates to an improvement of between .125 and .25 in rate.

After stocks dropped by more than 1,000 points intra-day on Thursday, rumors circulated that a trader at Citigroup had entered an order that mistakenly added three zeroes---in other words, a billion units vs. a mere million. I am not sure what the trade consisted of, beyond a basket of stocks that triggered a sell signal, but Proctor and Gamble stock was cut in half at one point and Accenture PLC dropped from $41 a shares to one penny. While the three zeroes entry makes a good story, it was more likely a computerized program trade of “intermarket sweep orders” which skewed trading radically and temporarily.

Private employers stepped up job creation in April, expanding payrolls by 231,000, the strongest surge since March 2006. With another 66,000 temporary government jobs created to conduct the census, the total for April settled at 290,000. However, with more jobs available, 805,000 job-seekers returned to their search for work, causing the unemployment rate to rise 0.2% to 9.9% overall.

30-Year Conventional Fixed

4.75% $100,000-$417,000


FHA-100% VA

5% $100,000-$393,300


30-Year Jumbo Fixed

5.75% $417,001-$900,000

(Interest-only available-Call me)

THDA Great Start

5.35% $100,000-$393,300

4% of sales price Gift

Call for free pre-approval and to discover

the best financing for you!

...by Gary Moore

Mortgage Planner, First Community Mortgage

...a subsidiary of First Community Bank

Cell: 615-579-8658 Toll-free fax: 866-321-6513

"It's not the most intellectual job in the world, but I do have to know the letters." - Vanna White

Visit my mortgage website:

http://www.BrentwoodHomeLoan.com

(0% points, 1% origination. Market Update informs consumers and Realtors on market trends, offers subjective opinions and is not a quote for a unique borrower.)