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Rate Update

The first ever US credit rating downgrade and generally negative reports on the housing sector sent mortgage rates slightly lower last week. Standard & Poor’s affirmed its AAA rating on US debt but cut its long-term ratings outlook from stable to negative. Relative to other AAA-rated peers, the US has very large budget deficits and rising government indebtedness. S&P stated that more than two years after the beginning of the recent crisis, US policymakers have not agreed on a strategy to reverse recent fiscal deterioration or address longer-term fiscal pressures. Optimists believe that this rating change will give politicians a warning; pessimists feel that this doesn’t change anything, and that the political bickering will continue. National housing data also continued to disappoint with Housing Starts and Building Permits both slightly higher in March following historic lows during the prior month. Existing Home Sales were up 3.7% with distressed home sales making up 40% of total volume. Not surprisingly, homebuilder sentiment remains very low according to the National Association of Homebuilders.

Currently, the 30 Year Fixed is 4.375% (4.531% APR) and the 15 Year Fixed is 3.625% (3.935% APR). This will be a busy news week with New and Pending Home Sales, Consumer Confidence, Durable Goods Orders, and the Q1 GDP report. Wednesday will feature the FOMC statement and the first post-FOMC press conference from Chairman Bernanke.

Written by Central Coast Lending - Go to Central Coast Lending's Website/Profile