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Mortgage
Rates End Near Historic Lows
Many
investors wanted to avoid risk during the final week of the year, which
helped relatively safer assets such as US mortgage-backed securities (MBS).
As a result, mortgage rates fell a little to end near the lowest levels of
the year.
While
economic growth was well below average for the first three quarters of
2011, a pickup during the fourth quarter bodes well for stronger housing
market activity next year. Nearly all of the economic data released during
the fourth quarter pointed to improvement. The labor market picked up,
consumer confidence rose, and home sales activity increased. This week, in
the final piece of housing data for 2011, Pending Home Sales rose 7% from
the prior month, to the highest level of the year.
Low
mortgage rates also contribute to the improving environment for the housing
market. As we enter 2012, mortgage rates are at the lowest levels in
decades, making homes very affordable. While there are factors which could
push rates higher, such as an unexpected increase in inflation or a major
reversal in European debt troubles, the outlook is for mortgage rates to
remain relatively low next year as well.
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Also Notable:
- Chicago PMI manufacturing showed its 27th
straight month of expansion
- Consumer Confidence rose to the highest level
since April
- The value of the euro versus the dollar fell to
the lowest level of the year
- Gold prices fell below $1,600 per ounce for the first
time since July
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Average
30 yr fixed rate:
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Last
week:
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-0.05%
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This
week:
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-0.03%
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Stocks
(weekly):
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Dow:
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12,200
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+50
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NASDAQ:
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2,600
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+10
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Week
Ahead
The
biggest economic report next week will be the important Employment data on Friday.
As usual, this data on the number of jobs, the Unemployment Rate, and wage
inflation will be the most highly anticipated economic data of the month.
Before the employment data, ISM Manufacturing, Construction Spending, and
the FOMC Minutes from the December 13 Fed meeting will be released on
Tuesday. Factory Orders will come out on Wednesday. ISM Services and ADP
Employment are scheduled for Thursday. Mortgage markets will be closed on
Monday in observance of the New Years holiday. |
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