Nashville Real Estate Forum

Weekend Market Update

May 9-10, 2009

Stocks continued their two-month rally off the March 6 bottom as 19 banks passed the government's stress test, and jobless claims were regarded as bad but not worse. Mortgage rates were pressured up, with intra-day pricing revisions from lenders, as money moved into stocks and out of Treasuries and mortgage-backed securities.

The market for equities is wanting to move higher, using any excuse and finding the positive in any government data. The April jobs report on Friday showed that non-farm employment fell by 539,000, which was less than the expected 600,000. The unemployment rate rose to 8.9%.

Good news in stocks is often bad news for Treasuries, mortgage-backed securities and mortgage interest rates. Treasuries continued to be sold, thus dropping in price and rising in yield. The yield curve is steepening, and at Friday's close the 10-year was yielding 3.29%, and the 30-year was yielding 4.27%. The 10-year is yielding its highest rate since November, about the time mortgage interest rates began to tumble hard. Mortgage rates this week moved like a low-slung, kiddie roller coaster, rising and falling but within a narrow range of ups and downs, until Friday's pop up.

In the past week, more than $70 billion was auctioned by the Treasury, which had an effect of holding down prices/pushing up yields as massive supply had to be priced to get absorbed. The Fed will be doing the reverse next week--- with buybacks of bonds scheduled for Monday, Tuesday and Thursday. Next week's action should serve to continue to hold down mortgage interest rates.

Anecdotal evidence from Realtors and others indicates we are experiencing an upturn of activity. Data from the National Association of Realtors indicates that about half of all buyers are first-time homebuyers, who can get a gift of $8,000 from the government just for buying a home---while rates are extremely low and prices are depressed---by the end of November this year. When first-timers buy, it sets off a potential ripple effect up through the market, as those who sell to first-timers can free up their equity for another purchase, and so on, up through various levels of move-up properties.

30-Year Conventional Fixed
4.75% $200,000-$417,000

FHA-100% VA
5% $100,000-$393,300

100% Guaranteed Rural Housing w/no MI

5.25% $100,000-$417,000

30-Year Jumbo 5/1 ARM (10% down, No MI)

5.2% $417,001-$900,000

(Interest-only available-Call me)

Call for free pre-approval and to discover

the best financing for you!

...by Gary Moore

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

"The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice." - Henry Hazlitt

Visit my real estate web site:

http://www.REALCarte.com

Visit my mortgage website:

http://www.BrentwoodHomeLoan.com

(0% points, 1% origination, subject to program and lock period. Market Update informs on market trends and is not a quote for a unique borrower.)