November 20, 2009
November 20, 2009 by admin
Stocks finished the week on a down note. The stock market lost a bit of momentum this week, after the S&P 500 passed the 1100 point mark earlier in the week, finishing on Friday at 1091. The month of November is still on pace to be a great month for both stocks and mortgage rates. The housing market is benefitting from yet another dip in long term interest rates as the yield on the ten year treasury bonds has continued to slide lower this month. Friday, the ten year closed at 3.36%, down over fifteen basis points for the month. The anomaly of bond yields going down in a rising equity market has been a great relief to the mortgage industry this year and the trend has carried through this month. Long term interest rates on thirty year fixed rate loans were at 5.125% or lower with most national mortgage lenders and continue to be well below 5% on fifteen year loan terms, November mortgage rates have now hovered near 2009 lows for the entire month.
The market this week struggled with some key economic news that took away some of the trading momentum and brought a bit of economic recovery reality back into view. One of the leading issues the economy has to find a way to address is the continued escalation of home foreclosures. Home foreclosures continue to increase as consumers across the country fall behind with their house payments. The governments approach with streamlined refinances and loan modifications has been slow in helping out struggling borrowers. The escalation in unemployment is a large contributing factor with the rise of home foreclosures, but the simple desire for many to walk away is also a large variable at play.
Housing starts dropped to their lowest level in the past six months, and this seemed to help build some momentum in the doubts of a quick recovery. In fairness, analyzing data from the housing market over the past sixty days will be challenging. The uncertainty associated with the government’s extension of the first time home buyer tax credit (which finally passed earlier in the month) has certainly played a role with both builders and consumers. This factor should work itself out of the equation over the next few months and the residual impact for housing should be beneficial.
The overall consensus from the corporate sector is one of caution. Numerous companies have reported earnings over the past few weeks, which have aided in lifting the overall markets, but attempting to predict a robust future has been challenging for every sector. The investment markets will have to settle for future guidance clarification in the first quarter of 2010 as companies get past the holiday season and have a better feel for consumer confidence. There appears to be limited reason to believe the markets will fluctuate in a large degree higher or lower for the balance of the year, but this is worth watching.