Last Week in Review

"IT'S A CRUEL, CRUEL SUMMER...LEAVING ME HERE ON MY OWN." From 80's band Bananarama And that's exactly what potential home buyers and refinancers who stay on the sidelines might be singing.

Although home loan rates are very attractive now, the picture could be quite different as some inflationary factors will likely come to light heading into summer. Oil prices may be on the rise as we approach the summer driving season, some of the economic stimulus might begin to take hold, corporate cost-cutting measures could start to bear fruit, and, perhaps most importantly, the Fed will no longer be a buyer of Mortgage Bonds. These are all ingredients in a recipe that could very easily result in significantly higher interest rates this summer...so if you have been thinking about acting on a home loan, do not delay.

But with no hint of inflation in the current market, why would Bond traders be fearful now? Are they listening to strange voices and what did they say? The forward looking markets got an earful from Fed Governor Frederic Mishkin last week...and he's not the only one. Mishkin said that "inflation could come to the forefront, given all of the government programs", and "once the economy recovers, liquidity must be taken out of the markets"...meaning the Fed may need to rapidly hike rates down the road, to control the potential of inflation.

In other news, Stocks around the globe faced heavy selling pressure last week on renewed fears of the deepening worldwide economic slump...and this despite better than expected earnings from Google and IBM, as well as GE meeting earnings expectations. Even with the downward pressure on Stocks which can sometimes benefit Bonds, the mention of the "I" word left its mark, with home loan rates ending the week around .25% higher than where they began.

READY TO MOVE ON THAT HOME PURCHASE OR REFINANCE BEFORE THE LOW RATES GET AWAY? READ THIS WEEK'S MORTGAGE MARKET VIEW FOR A FEW IMPORTANT TIPS ON UNDERSTANDING TODAY'S LENDING CLIMATE, AND KNOWING THE SMART MOVES TO MAKE RIGHT NOW.

Forecast for the Week

Inflation chatter could come around again this week, as the Fed will be holding their regularly scheduled meetings on Tuesday and Wednesday, with their Policy Statement and decision regarding the Fed Funds Rate coming on Wednesday. Remember, the Fed made history last month when they slashed the Fed Funds Rate by .75% to the lowest target range in history of 0% to .25%. The chart below shows an interesting history of the Fed Funds Rate since 1955.

Other potential market movers include Friday's Gross Domestic Product (GDP) Report. GDP is the broadest measure of economic activity, and given the state of our economy, a negative report might not be too much of a surprise. In addition, Thursday's Durable Goods Report (i.e. items that are non-disposable, like cars, furniture, appliances, games, cameras, business equipment, etc) will give us a read on consumer and business consumption and buying behavior. We'll also get a look at the housing market this week with Monday's Existing Home Sales Report and Thursday's New Home Sales Report.

Remember: Inflation is the arch enemy of Bonds and home loan rates, and even the mention of it can have negative ramifications. I will be watching very closely to see how Bonds and rates respond to all the news of the week.

Posted by Ken Gentile on January 26, 2009 at 08:34 AM

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Local Information for Plymouth, MI

Latitude: 42.372636 -- Longitude: -83.46852

Other Area Cities: Plymouth Canton Northville Novi Redford Livonia Farmington Hills West Bloomfield Ann Arbor Beverly Hills Dearborn Dearborn Heights Farmington Garden City Inkster Oak Park South Lyon Southfield Walled Lake Westland Whitmore Lake Wixom Ypsilanti

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The first settlers to come to what is now known as Plymouth, Michigan, were Keziah (Benjamin) and William Starkweather. Farmers from Ct., they purchased 240 acres of land from the United States Government on March 11, 1825, for $1.25 an acre. Mr. and Ms Starkweather came from Preston, CT., where the Starkweather family had lived at least as early as 1694, according to a land gift record in which Captain John Masons gave land to Robert Starkweather, Williams GG Grandfather. William, ninth born of 11 siblings, and his wife Keziah brought their first born son Albert to the area, and built the first home in Plymouth, at the South West Corner of Main Street and Ann Arbor Trail. The first home was a rustic lean to, and was later replaced by a log cabin which has since been lost to time. William's eldest Son Albert died at age 20 while attending the newly formed University of Michigan as a Sophomore. -- Source: Wikipedia.com

Michigan 2000 Census Population Profile Map

	Plymouth	Michigan	United States
Population	9,022	9,938,444	281,421,906
Median age	37.9	35.5	35.3
Median age for Male	36	34.3	34
Median age for Female	39.9	36.6	36.5
Households	4,322	3,785,661	105,480,101
Household population	8,820	9,688,555	273,643,273
Average household size	2.04	2.56	2.59
Families	2,276	2,575,699	71,787,347
Average family size	2.81	3.1	3.14
Housing units	4,498	4,234,279	115,904,641
Occupied units	4,322	3,785,661	105,480,101
Vacant units	176	448,618	10,424,540

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