Price of Gold: A Warning? In a scenario of a strong recovery, inflation could reign and that should translate into much higher rates. The good news? Well, believe it or not, the good news is actually the bad news from our discussion last week. The recovery is not expected to be strong. We may be able to tolerate the deficits in the short-run because we will not have strong private demand for borrowing. Even the scenario of a stronger recovery and higher rates could serve to slow borrowing and thus the recovery. Therefore, a weak and slow recovery could be the best news we could have. As long as it does not revert to a dip back into recession.
The Markets. Rates fell slightly in the past week. Freddie Mac announced that for the week ending September 10, 30-year fixed rates averaged 5.07%, down slightly from 5.08% the week before. The average for 15-year fixed fell to 4.50%. Adjustables were mixed with the average for one-year adjustables rising slightly to 4.64% and five-year adjustables decreasing to 4.51%. A year ago 30-year fixed rates were at 5.93%. “Rates remained historically low over the past two weeks, keeping housing very affordable,” said Frank Nothaft, Freddie Mac vice president and chief economist. “As a result, applications leapt 17 percent over the week ending September 4, led by a 23 percent jump in refinance demand, according to the Mortgage Bankers Association. While the economy lost 216,000 jobs during August, it was the smallest monthly job loss since August 2008. This and the Federal Reserve’s latest ‘Beige Book’ suggest that the economy may be on the road to recovery. Based on information up through late August, most Federal Reserve Bank districts noted that their business contacts remained cautiously positive that economic activity was stabilizing in July and August. Two out of the 12 districts also indicated that local house prices were firming.” Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.
Current Indices For Adjustable Rate Mortgages
Updated September 11, 2009
| Daily Value | Monthly Value | |
| Sept. 10 | August | |
| 6-month Treasury Security | 0.21% | 0.27% |
| 1-year Treasury Security | 0.40% | 0.46% |
| 3-year Treasury Security | 1.42% | 1.65% |
| 5-year Treasury Security | 2.29% | 2.57% |
| 10-year Treasury Security | 3.36% | 3.59% |
| 12-month LIBOR | 1.427% (Aug) | |
| 12-month MTA | 0.758% (Aug) | |
| 11th District Cost of Funds | 1.473% (July) | |
| Prime Rate | 3.25% (Dec) |
