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Rates keep moving lower.  If your looking to purchase or refinance, and lower your current interest rate, NOW is the time.  You can get a 4.75% on a 30 Year Fixed Mortgage.  Call today and get pre approved, and lock-in your rate.

Flat Open For Rates. Don't Get Lulled To Sleep By Sideways Price Action

Overseas markets were  volatile last night as the euro dropped to a new four-year low and Asian stocks sold off sharply. Chinese stocks led the decline in Asia, closing 5.1% lower as investors became concerned that recent growth was not sustainable. Stocks in Japan also fell 2.2% and Hong Kong stocks fell 2.1%. “The Shanghai market is now down about 22 percent for 2010, more than any other major market and roughly in line with the decline in Spain,” the New York Times reported.

Both European and U.S. equities are however off their lowest levels of the day but contained in recent ranges.

Commodity prices are mixed: NYMEX crude is down 96 cents to $70.65 per barrel and Gold is up $8.40 at $1,236

Overnight, the euro fell to to $1.2235, a four-year low. Meanwhile, Der Spiegel magazine in Germany quoted ECB’s Jean-Claude Trichet warning of contagion. He called for governments to pool fiscal resources ? “We are now experiencing extreme tensions,” he said.

Elsewhere, FedWatchers may be interested in a lengthy column about Ben Bernanke in the New York Times’s DealBook. It includes this comment about the recent turmoil in markets.

“The brief market plunge ‘was just a small indicator of how complex and chaotic, in the formal sense, these systems have become,’ he says. ‘Our financial system is so complicated and so interactive — so many different markets in different countries and so many sets of rules. What happened in the stock market is just a little example of how things can cascade or how technology can interact with market panic.’”

The key sector this week is housing, as data on new construction and homebuilder confidence are each expected to suggest recent progress. Meanwhile, several reports on inflation are also on the schedule, though they are unlikely to have a dramatic effect on markets as investors are much more concerned with sustained growth than out of control prices. Also, when the FOMC minutes are released on Wednesday, investors will be interested to read into voter sentiment and topics of conversation had at the most recent  Fed meeting.

Here Are The Key Events Of The Week

The stock lever still has a significant affect on the direction of interest rates. S&P 500 futures are now down 2.50 points at 1132.  S&P's have seen a low print 1120.25 and a high of 1140.00 even. 1140 was the only level retested when the S&P contract fell into the 1124 handle. 1140 will be a key resistance level on any move intended to lead the market back up to the 50 day moving average at 1174.52. A quiet schedule has allowed the range to contain directionality so far today. (When do stocks go "ex dividend"? The third week in May)

The 2 year Treasury note is level on the session at 100-13 yielding 0.786% while the benchmark 10 year Treasury note is +0-01 at 100-12 yielding 3.453%. The 2s/10s curve is unch at 267bps. The FNCL 4.5 MBS coupon is +0-07 at 101-27. When you remove the price spike that happened following the 1,000 dip in the Dow,  these MBS price levels are new highs of the year.

While benchmark interest  rate charts remain bullish, fundamentals are as cloudy as ever. I do feel safe enough to say:  THESE BIG PICTURE FUNDAMENTALS STILL APPLY THOUGH

At the moment, the stock lever, shifts in currency valuations, and rising bank borrowing costs are still the main motivational influence over the direction of interest rates. Oh yeh and FINANCIAL REFORM too.

It seems that the EU/IMF/Global Central Banker policy response has yet to convince the market that contagion is contained. One could say risk is still deemed too risky.  I am interested to see if the FOMC addressed the EU debt crisis when they last met for a Fed meeting. FOMC Minutes to be released on Wednesday.

And then there's the whole financial reform thing where Senators introduce amendments one day and vote on them the next. It's a shame that what is likely to become wealth shifting financial reform is taking place in an election year. I can't even keep up with all the amending and voting. This is a highly sensitive subject to the business models of market makers and  money managers...one has to wonder how the marketplace will react to misguided legislation.

Floating one day at a time seems safe when the range trade is in play, just don't get lulled to sleep by a slow and steady grind to the right. When ranges consolidate and day traders run out of room to earn a living (when levels bounce from pivot to pivot and liquidity dries up), stored up energy is usually released and price levels make large moves in one direction or another. Chances for chopatility remain high. 

On Tuesday the House Financial Services Committee approved a request by the Federal Housing Administration (FHA) to raise the ceiling on annual FHA mortgage insurance premiums from its current level of 0.55 percent. 

FHA had requested the increase as one part of a plan aimed at shoring up its capital reserves which have dropped below the 2 percent required by law.  The agency already raised the up-front premium charged to borrowers closing effective April 9.  If the full Congress approves the annual increase, FHA will then shift some of the upfront premium to an annual premium to reduce the burden on borrowers at closing.

FHA says it intends to gradually raise the annual premium to 1.5 percent.  

FHA revealed late last year that its current reserves are at .53 percent, but officials have said that their tightened lending requirements as well as the increase in premiums would allow them to restore the levels by collecting an additional $5.8 billion over the next few years.  The Congressional Budget Office has put the number at a much more conservative $1.9 billion.

While approving the increase, the Committee defeated a proposal sponsored by Scott Garrett (R-NJ) which would have increased the minimum down payment for FHA guaranteed loans from 3.5 percent to 5 percent.  It also would have prohibited sellers from participating in the buyer's closing costs and prohibited the inclusion of any initial services charges such as appraisal, inspections, and other fees in the principal amount of an FHA mortgage loan.  The FHA has already reduced the amount that a seller can contribute to the buyer's closing costs from 6 percent of the loan amount to 3 percent.  Garrett has also submitted separate legislation which would prohibit the buyer from rolling the upfront premium into the loan which would effectively increase the cash required of the borrower at closing.

Had the Garrett Amendment survived the Committee vote it could have had a considerable negative effect on the housing market.  FHA guaranteed loans have historically been a minor factor in mortgage financing, but in the last few years, as credit tightened, the FHA was forced to increase its funding efforts up to 25 percent of all mortgage loans and an even high proportion of loans to first time home buyers.

USDA has notified us this morning that they have 3.8 billion dollars left in the program for funding.  They are expecting this money to run out by the End of April if not sooner.  Once funds are exhausted Rural Development will no longer issue Conditional Commitments (Form 1980-18).  If you are in the Market to purchase a home and get 100% Financing, I would encourage you to start looking for a home immidiatly, so you will have time to find the home that fits you, and so you can reserve your funds for the USDA 100% Loan Program.  If you have any further questions feel free to contact me anytime.

Thank you,

100% FHA HOME LOANS ARE BACK

If you are wanting to purchase a home, that isnt located in the USDA / Rural Development Area, and still get 100% Financing, this is the program for you.  You can get 100% FHA Financing on any home in Oklahoma.  Funds are limited, so hurry in and get yours today. 

Excellent program for First Time Homebuyers, and anyone that has limited funds for a downpayment.  This is your chance to get into a home with out any out of pocket expenses.

Call Beau, for details and with any questions that you may have.