After several weeks of economic announcements generally exceeding forecasts, weaker than expected labor and manufacturing data, along with comforting comments from Fed officials about inflation, helped mortgage markets this week. Reacting to the data, investors shifted funds out of the stock market and into bond markets, and mortgage rates ended the week at the lowest levels since May.

Right now there are exceptional spreads between 30YR Fixed and all ARMs there is a full 1% difference in a 7/1 ARM - it may make sense if the time line for ownership is shorter to go this direction .vs. a 30YR.  Ask us to run a cash flow comparison.

The labor market is at it's weakest point since 1983 with reported unemployment at 9.8% - an economist once told me that the true unemployment rate is usually 5% higher (this includes those who do not report and have quit looking for a job)... while this seems gloomy a very interesting report was issued by several economist for money managers believing that higher earnings will lead to a turn-around where companies will begin adding jobs in Q1 2010.  While this is still a few months away we are getting toward a bottom.  While I personally believe the growth upward will be slow it will be good for home sales.

At this point there is still no news on a extension of the first time home buyer tax credit.  While "experts" remained split - I seem to go with those who say that the Fed needs to raise capital and not give more away.  While this makes fiscal sense - politics does not always make sense. 

Keeping with our theme of counting down business days until the end of the tax credit there are only 38 business days until the credit expires - we are getting very close to the deadline for buyers.  By the way banks are closed next Monday Oct 12th for Columbus day and no one can fund that day.  I did count this as a day in my business day

For those wishing to use House Charlotte or NC Bond for down payment assistance, this is even closer, as many of the first time home buyer classes are full for two weeks out...  We may be able to work a miracle but your buyer must have already gotten their home buyer training certificate.  MCC is always a good choice for buyers with funds they can take advantage of good rates and get additional tax credits - up to $2000 per year or 20% of interested expense paid whichever is higher.

On a personal note I do hope that the government does extend the tax credit I am being told we will not know until November.  I know you who have first time home buyer clients' and friends are trying to get them off the sidelines now.  Let's get the contracts in so we can get them closed on time.

Have a great week and remember we are here for you.

The Valeo-Croy Team

Deanna, Todd and Ryan

NMLO license #91421, #91428 and # 154891

Equal Housing Lender