Nashville Real Estate Forum

Weekend Market Update

Nov. 29-30, 2008

Mortgage rates hit the mid-5% range this week, presenting excellent opportunities for homebuyers and refinancers. In an atypical combination in which various asset classes flourished, markets brought Thanksgiving cheer to stocks, Treasuries and mortgage-backed securities.

The 10-year Treasury closed at a yield of 2.92%, which represents a drop from 3.96%, or more than 25%, for November and is an all-time historical low, so far as my data (back to 1962) reflects. Price on Treasury bonds and notes move inversely to yield, so when Treasuries go up and are being bought, the interest yield falls.

After touching lows last seen in 1997 only a week ago Friday, major stock indices booked the largest one-week percentage advance in more than 75 years. The stock market closed three hours early the day after Thanksgiving and locked in gains of 16.9 percent for the Dow since the rally began Nov. 21, 19.1 percent for the S&P 500 and 16.7 percent for the Nasdaq. It was the first time the Dow had risen for five consecutive sessions since July 2007 and was the biggest five-day percentage gain over five sessions since Aug. 8, 1932. For the S&P 500, it was the first five-day string of gains since July 2007 and the largest five-day percentage gain since March 16, 1933.

The market got boosts over the past week from President-elect Barack Obama naming his economic team, the government propping up Citigroup and the Federal Reserve deciding to buy massive amounts of mortgage-backed securities. These efforts sent mortgage rates plunging and reassured the market that broad efforts are still being made to fight the financial crisis that intensified in September with the bankruptcy of Lehman Brothers Holdings Inc.

What could stymie the rally, however, is if the holiday shopping period, which began in earnest Friday, turns out even worse than expected. Wall Street already anticipates that retailers will suffer as consumers— nervous about a difficult job market, lower home values and a jittery stock market—grow more restrained in their spending this year.

A rare drop in year-over-year holiday spending would be troubling, as it is the most important period of the year for most retailers and because consumer purchases account for more than two-thirds of U.S. economic activity. But while some stores around the nation appeared busy Friday as shoppers looked for bargains, the early evidence was anecdotal and Wall Street will have to wait for cash register tallies.

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30-Year Conventional Fixed
5.5% $200,000-$432,500

FHA-VA

5.5 % $100,000-$432,500

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7% (95% first mortgage w/1% discount) $100,000-$432,500

9% fixed 20-year second mortgage for 5% of home value

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6.75% $100,000-$432,500

30-Year Conventional w/Financed MI

6.75% $100,000-$432,500

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...by Gary Moore

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

"A bull market tends to bail you out of all your mistakes. Conversely, bear markets make you pay for your mistakes." - Richard Russell

Visit my mortgage website: http://www.BrentwoodHomeLoan.com

(0% points, 1% origination, 30-day lock. Market Update informs on market trends and is not a quote for a unique borrower. Reply to discontinue Update.)