Weekly Mortgage Recap

The cup overflowed with an assortment of economic data last week. Of most interest to mortgage watchers were the disappointing data on inflation. The producer price index for finished goods rose 1.1% in March, after a 0.3% increase in February, while the core index, which excludes food and energy, climbed 0.2% after rising 0.5% in February and 0.4% during January.

The data were equally disconcerting on the consumer end, where prices rose 0.3%, exceeding most economists' expectations. Stripping out volatile food and energy costs, the core consumer price index gained 0.2%. Inflation pressures are being stoked by rocketing crude oil prices, which broached $115-a-barrel last week, and increased food costs as commodity prices around the world continue to soar.

Surprisingly, the mortgage market's reaction to the inflation threat was upbeat, which suggests inflation may not be as onerous as the PPI and CPI numbers would imply. The benchmark 30-year fixed-rate mortgage rose only seven basis points to 6.03%, the 15-year fixed-rate mortgage rose nine basis points to 5.65%, and the 5/1 adjustable-rate mortgage actually fell 10 basis points to 5.85%, according to the Bankrate.com national survey.

Housing starts fell to a 17-year low in March – a decline that exceeded the consensus estimate twice over. However, given the current overhang in housing inventory, it's far better for housing starts to be low than high. Suppliers must reduce inventory to return some semblance of order to the market, and housing starts suggest that's occurring.

A glass-half-full spin could also be applied to the news that Freddie Mac is planning on buying $10 billion to $15 billion in jumbo mortgages in an effort to counterbalance the upper-end housing market. Freddie Mac used to be restricted from buying jumbo loans – mortgages above $417,000. Thanks to Congress, the new limit now exceeds $729,000 in many areas. Freddie Mac's move to purchase larger loans will grant home buyers cheaper rates than they would have otherwise received.

Eric P. Egeland
RE/MAX Advanced
847-337-7090
HomesInBG.com

Buffalo Grove Reports Jan 13 & 14th

Buffalo Grove Realty Reports for January 13th & 14th 2008

Single Family Homes

-2 New Listings

• 1417 Mill Creek a 4bed 3.5bath home listed for $439,900
• 69 Fabish Ct. a 4bed 2.1bath home listed for $450,000

-2 Homes under contract

• 930 Parker Ln. a 3bed 3bath with a list price of $449,999
• 321 Butternut Dr. a 4bed 4.5bath with a list price of $1,200,000

-4 Price Reductions

-1 Closing

• 440 Foxford Dr. a 4bed 2.5bath home closed for $727,500

Attached Homes

-3 New Listings

• 5 Oak Creek #3101 a 1bed 1bath $79,950
• 3 Villa Verde #309 a 1bed 1bath $108,900
• 1149 Miller Ln. #111 a 2bed 2bath $159,900

-3 Under Contract

• 658 Hapsfield #3D2 a 2bed 2bath $198,000
• 81 Le Jardin #81 a 2bed 1.5bath $220,000
• 14 Willoww a 2bed 2bath $269,900

-2 Price Changes

Eric P. Egeland

www.HomesInBG.com