SEK TENDER OPERATION ANNOUNCEMENT FOR ONWARD LENDING

provocationofmind.com
Back to Part 3 The recent bond market sell-off bumps up mortgage rates again Mortgage rates are the lifeblood of the housing market, which is why Bernanke and the Fed began conducting quantitative easing (or QE) in the first place. Lower rates allow homeowners to refinance, which increases their disposable income and helps stimulate economic growth. Lower rates enable first-time homebuyers to move out of an apartment and into a house, which means higher consumption (and good things for home improvement retailers like Home Depot and Lowe’s). Consumption accounts for some 70% of the U.S. economy, and consumption has been depressed since the housing bubble burst. The Federal Reserve would prefer to keep rates as low as possible for as long as possible. (Read more: Bernanke’s comments send mortgage rates screaming higher ) A volatile week in rates, but prices end up largely flat Last week was loaded with important economic data and included the FOMC (Federal Open Market Committee) report. Bonds initially sold off on the stronger-than-expected second quarter GDP estimate, and then rallied back on a dovish (not aggressive) FOMC statement and then the weaker-than-expected jobs report. Mortgage rates rose ever so slightly from 4.35% to 4.38%. (Read more: Mortgage rates fall slightly ) Effect on homebuilders Homebuilder stocks, such as Lennar ( LEN ), Toll Brothers ( TOL ), Standard Pacific ( SPF ), PulteGroup ( PHM ), and KB Home ( KBH ), have rallied strongly over the past year, but they’ve given up ground since Q2 earnings. Most of the builders have reported already, and the only one that missed was Pulte. That said, both Pulte and Beazer noted that the rise in rates has started to depress traffic. Given that the economy could have depressed household formation numbers, there’s real pent-up demand for housing. Housing starts have been below historical averages for the past ten years. With low mortgage rates and increasing demand—and a strengthening economy—homebuilders now have the wind at their backs. The builders that have exposure to the red-hot West Coast market did very well. For homebuilders, the top-down macro picture looks good. (Read more: Annaly Capital Management portfolio yield continues to fall ) Continue to Weekly Realist real estate roundup (Part 5) More From Market Realist What to watch for in real estate next week Real Estate Price Appreciation widely dispersed by location Mortgage rates jump over 4% View comments
Let Go of the Need to 'Fix' Yourself for Personal Growth
Discover the importance of self-acceptance and personal growth without the pressure to 'fix' yourself.