Mortgage Market Update

So what’s happening in the markets today?  A couple of things:

• Earnings reports came out for GE, Citibank, Bank of America and a few others.   The results were decidedly mixed.
• Like I wrote earlier, housing starts came in unexpectedly higher than planned.    This seems like it would be a good thing but it’s actually posing a bit of a problem for the bond market.   Why’s that?   Because of inventory concerns.   Many areas of the country still have inventory problems and there’s concern that we’re adding to the problem by building more inventory.  It will be interesting to watch and see whether we’re starting to see the new home market hit a “bottom” and limp along at a bottom or whether this is a minor statistical variation.   Time will tell.

My recommendation remains to lock all loans.   There are significantly more upside risks due to perceived risk of inflation (long term), perceived signs of economic strength that are pushing rates up, and signs that the worst is over in the banking industry, than there are issues that would push rates down.