Week of Feb 21 – Econmic Roundup
February 21, 2012 by James Williamson · 1 Comment
Mostly good news to report as the DOW Jones stock index has recently climbed to its highest point in years and January Housing Starts are up to the highest level since October 2008. Here are three other key recent economic developments of which you should be aware:
Good News from Greece
After several weeks of uncertainty, European officials have agreed to provide a $172 billion bailout package to Greece, and Greek officials also reached a debt deal with private investors. As a result, Greecewill be able to avoid defaulting on debt maturing on March 20. Anticipating that European leaders would not allow Greeceto default, investors showed little reaction to the news. Questions remain about whether Greek leaders will fully implement the unpopular austerity measures called for by the terms of the deal. This announcement is probably not the end of this story…..
Inflation Concern
Recent inflation data indicates that core inflation (which exclude food and energy) is on the rise. Core CPI inflation was 2.3% higher than one year ago, which was the highest annual rate since September 2008. Fortunately, Fed officials forecast that core inflation levels will moderate later in the year. However, if it unexpectedly continues to rise, the impact could be detrimental to mortgage rates as higher inflation is always negative for mortgage rates. In addition, it would be more difficult for the Fed to maintain its current loose monetary policy. Needless to say, investors will be closely watching core inflation levels in the coming months to see if the Fed’s forecast proves correct.
Good News on the Job Front
Weekly Jobless Claims have unexpectedly dropped to 358K and are now at the lowest level in nearly four years. Considering this measure has been consistently over 400K for a number of years, it is good news to see this figure maintaining sub-400K levels for the last few months. This is significant because in the past when this figure improves so does the labor market. In January, the Unemployment Rate dropped to the lowest level since February 2009, and the recent Jobless Claims reports provide additional evidence that the labor market is moving in the right direction.
Looking ahead, this will be a light week for US economic data. Existing Home Sales will be released on Wednesday and then New Home Sales and Consumer Sentiment will be released on Friday. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday of this week.
Mortgage Insurance Guidelines Easing Up
February 21, 2012 by James Williamson · Leave a Comment
A few years back, mortgage insurance guidelines got so strict that it became common for a loan officer to obtain a mortgage approval from an investor and then run into a Private Mortgage Insurance (PMI) approval problem. The main reason for this is that the PMI guidelines had become stricter than the investor guidelines. Well, good news to report on this front as not only are the PMI guidelines easing up a bit, but a new trend has emerged where PMI companies are once again automatically approving a loan if the lender obtains an approval through either Fannie Mae’s DU or Freddie Mac’s LP automated underwriting system. This is a wonderful development that will be of great benefit to realtors, lenders, and borrowers alike. When a borrower submits an application for a Conventional loan, he will once again be seeking just one approval, rather than two. This is another sign that things are headed in the right direction…..
