Howard Sobel’s Weekly Mortgage Newsletter
Week of Dec. 20, 2009

Mortgage Market Commentary for the week of December 20, 2009

As expected, the Federal Reserve left its interest rates unchanged at the end of last week’s meeting. However, there were some significant changes in the accompanying policy announcement. The Fed is noting that economic activity is picking up, and the labor market is beginning to show signs of recovery. While this may have helped drive rates higher for the week, the Fed’s identifying timelines for the sunsetting of a number of financial market support programs may have set the stage for the final weeks of sub-5% 30-year fixed-rate mortgages. With financial markets slowly regaining their footing, the Fed will begin unwinding itself from the markets. Over the next few months, we should begin to see interest rates affected more and more by the marketplace rather than the government.

This holiday-shortened week does have some important economic data. However, if GDP remains fairly close to estimates, we could see rates staying fairly level for this week, perhaps even sliding back slightly. We’ll also get some insight into how the housing market is fairing.

Housing Flipping Beginning to Make a Comeback

Anecdotal evidence is growing that “house flipping” may be making a comeback, but not exactly in the same form as before. Unsurprisingly, the number of foreclosed properties hitting the auction market is a primary driver of this new wave of flipping. While previous house flippers were able to cash in on appreciating property by leveraging easy-to-get mortgages, today’s flippers are primarily cash buyers with nerves of steel, as many auctions are run site unseen.