Mortgage rates dive on job losses, stock market plunge.
Mortgage rates fall when the economy is weak. Based on a litany of economic data over the past month and fresh data today on the US job market, the US economy is extremely weak. Consequently mortgage rates are heading toward all-time lows again. Borrowers would be well-advised to lock-in these low rates for new home purchases or refinance because most analysts believe the economic weakness is temporary.
Over the past week an additional 9,000 Americans filed claims for unemployment benefits for the first time. The continuing claims number also exceeded the 400,000 threshold (<400K suggests job gains) for the 11th straight week. While the Federal Reserve acknowledged that they were surprised by the job losses and weakness in the economy, they did indicate that they expect improvement by the end of the year.
New home sales will be released at 10:00 AM ET and may provide a bright spot on a very dark day. Analysts are expecting a drop from last month, yet anecdotal evidence suggests that new homes a selling extremely well in many markets across the country.
A surprise “emergency meeting” has been called this morning in Paris by the International Energy Agency. This international agency is calling for a coordinated release of 60 million barrels of oil held by nations around the world in domestic reserve. Half of this release will come from the US Strategic Petroleum Reserve. The purpose of this action is to try to bring down the price of oil and gas to stimulate the global economy. When OPEC, due to intransigence from Iran, declined to increase oil production, other efforts to affect the price of oil have been sought. While this should bring down oil and gas prices the impact will be temporary (30 million barrels of oil = 3 days of imported oil).
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