Economic Roundup: Week of December 24, 2012

The fiscal cliff talks were the primary influence on mortgage rates last week. As investor optimism for a deal rose and fell during the week, so did mortgage rates. For the week, mortgage rates ended just a little lower.

If no fiscal cliff deal is reached, the spending cuts and tax increases which will occur beginning January 1 are perceived as negative for stocks but positive for bonds.  As a result, when comments from political leaders at the beginning of the week hinted at progress, mortgage rates moved higher and stocks gained. The reverse took place later in the week and especially on Friday following the failure in the House to pass the “Plan B” fiscal cliff proposal. The fiscal cliff talks most likely will continue to have a major impact on mortgage rates until a deal is reached.

The housing sector data released this week was encouraging. November Existing Home Sales rose 6% to the highest level since November 2009. Total housing inventory of available existing homes declined 4% to the lowest level since September 2005. November Housing Starts declined 3%, but Building Permits increased 4% to the highest level since July 2008. The December NAHB Home Builder Confidence index rose for the eighth consecutive month to the highest level since April 2006.

Investors will be mostly focused on the fiscal cliff talks during Christmas week. It will be a light week for economic data. New Home Sales and Consumer Confidence will come out on Thursday. Chicago PMI Manufacturing and Pending Home Sales will be released on Friday. Mortgage markets will close early on Monday and will be closed on Tuesday.

December 22, 2012 by · Leave a Comment

About James

James A. Williamson is currently the Sr VP of Sales Development for Shelter Lending Services (formerly Fairfield Mortgage). James joined Shelter in 1994 and was the company's top Loan Officer in GA for 20 straight years helping over 2500 families finance their homes. James now oversees an incredible group of Loan Officers in Atlanta while further building Shelter's Atlanta business.

Leave a Comment