Update #3 (of 5)/ week of August 31, 2009

Good Morning Everyone and Happy Wednesday! My apologies in advance to all of you that are cat lovers, but I just don’t get to use this economic expression very often and today is definitely a day for this expression. After a 186 point drop yesterday in the Dow, we have a dead cat bounce this morning, which means there is no bounce and there is no continued drop. What a strange use of the word “cat”. . . don’t you think? Anyway, good for us . . . investors did not chase the market yesterday as the stock market dropped – we rec’d no price improvements from anyone. Yet, as the rebound did not happen this morning, we are getting the benefit as pricing is about .375 better in rebate on most note rates on the 30 year fixed conforming product.

This morning’s ADP Employment Change Report came in worse than expected. Analysts were looking for job losses of 250K, and the number was considerably higher – 298,000 private sector job losses in August. Analysts are now scrambling to adjust their expectations for Friday’s official unemployment report from the Labor Dept. If there is a bright spot in this report, it would be that 360K (a revised number) jobs were lost in July, so the 298K is quite an improvement. Worker productivity is up, which is to expected. If employers are laying off workers, and not hiring . . . then they’re probably getting more work out of those employees that are left. Employees are working harder and longer hours so they aren’t the next casualty. That makes sense, eh?

Factory orders for July came in lower than expected, but still garnered an increase of 1.3%. Analysts were expecting 2.2%, but it is up from the .9% mark in June (which was revised lower to .4%). Rates are sure getting better. Our 4.875% rate today has a substantial rebate of (.369) and our 4.75% on the 30 year conforming product has a small cost of only .279! Nice! In case you’re wondering . . . 4.625 is still a substantial cost of 1.392 . . . and 4.5% will cost you 1.78 . . . so these 2 magical note rates are still a ways off.

I will be in the office all day today. I would suppose today would be a good day to lock, since we did kind of hit a plateau in the stock market. Yet, with the unemployment report coming out Friday, and the spook we rec’d from the ADP this morning . . . we could certainly see more selling in equities. The week after Labor Day has traditionally been an excellent week for rates. If you do want to lock today, email me before faxing over your rate lock, and I’ll get your loan locked for you. Have a terrific Humpday!