The Texas mortgage market rallied right out of the gate this morning after readings on second quarter economic growth and weekly jobless claims data landed short of investor expectations, reviving the flow of capital out of the stock markets and into the relative safety of bonds and mortgage-backed securities.

The government’s first estimate of second-quarter growth, its broadest measure of national economic activity, posted a 1.9% annualized reading, falling on the Texas mortgage market friendly side of most investors’ forecast for a growth rate of 2.0%. On top of the headline number, first-quarter growth was revised lower, moving to a reading of 0.9% from the earlier estimate of 1.0% and the economic growth rate for the last three months of 2007 posted a contraction of 0.2% versus an earlier reported expansion of 0.6%. No matter how one chooses to interpret this morning’s Gross Domestic Product report - it shows an economy tracing along the knife’s edge of a recession. In the convoluted world of mortgage interest rates, that’s a mortgage market friendly event.

The only major bright spot in this morning’s GDP figures was found in the inventory component - which showed businesses slashed their inventories by $62 billion during the second-quarter. The huge inventory reduction cut 1.9% off of the aggregate economic growth rate for the period. As Tony Crescenzi, chief bond analyst with Miller Tabak & Company points out, “This (the inventory reduction) bodes well for future growth.” “There is at least solace in knowing that inventories, which for decades immensely impacted the ups and downs of the business cycle, are in balance which will make any recovery happen more quickly.”

In a separate report the Labor Department said initial jobless claims for the week ended July 26^th surged higher by 44,000. Most analysts had anticipated claims for unemployment benefits would drop by 11,000 during the period. A Labor Department spokesman said the weekly increase in jobless benefit claims was partly attributed to “an indirect result of the emergency unemployment compensation program.” The long and short of all this initial claims information is that the current numbers will not correlate well with prior figures, rendering the entire data set of little value for the next several weeks.

For the balance of the day I look for trading activity in the Texas mortgage market to tapper-off as mortgage investors put the finishing touches on their risk management strategies in front of tomorrow morning’s much anticipated July nonfarm payroll report. A headline drop of 75,000 jobs together with an uptick in the jobless rate to 5.6% is already priced into the market. If the actual numbers are approximatly close to the consensus, expect Texas mortgage interest rates to bounce around in a very narrow trading range. A more dramatic loss of jobs and/or a jobless rate of 5.7% (or higher) will tend to support fractionally lower rates while a better-than-expected performance from the labor sector (a loss of 65,000 jobs and/or a jobless rate of 5.5% or less) will likely cause investor prices to plunge and note rates to surge notably higher.

Texas mortgage rates have moved slightly lower today. Dallas, Houston, Austin, San Antonio, and College Station interest rates still near all time historical lows.

The Senate has approved a comprehensive housing bill that among other things provides a financial backstop for Fannie Mae and Freddie Mac should it be needed. The legislation has moved on to the President for his signature, which is expected no later than Wednesday. Contrary to what some would have you believe, this new housing package is a good thing for borrowers and lenders alike. The centerpiece of the legislation is a $400 billion three-year FHA program that will enable certain subprime borrowers to refinance into government guaranteed fixed-rate mortgages.

The Texas mortgage market is the temporary beneficiary of some “flight-to-quality” buying created by an early swoon in the stock market. While the flow of capital from the stock market, into the mortgage market is welcome, it won’t necessarily stick around for long.

It’s going to be an active week with a deluge of economic data raining down on mortgage investors, culminating with Friday’s much anticipated July non-farm payroll report. As if the heavy economic calendar wasn’t enough, the Treasury Department will likely be announcing a strong increase in their borrowing appetite on Wednesday with price action in the stock and oil markets adding the “wild card” effect for the balance of the week.

As always, If you have ever have a question on whether it is the best time for you to refinance your Dallas mortgage loans or what interest rate you can get when buying your next Texas home, feel free to give us a call or shoot us an email by filling in your information on the right hand side of this page.

Texas mortgage rates have moved slightly lower today. Dallas, Houston, Austin, San Antonio, and College Station interest rates still near all time historical lows.

The House of Representatives have approved a sweeping housing bill by a vote of 272-152 and the legislation is now being debated by members of the Senate. It’s not likely the legislation will be completely derailed in the Senate, but it may be a number of days yet before the bill lands on President Bush’s desk for his signature, though there are many that expect the President to have it in his hands before the weekend.

Among other provisions this bill will create a program aimed at helping an estimated 400,000 Texas homeowners with subprime home loans to refinance into 30-year, fixed-rate mortgages backed by the government. It will also allow the GSE’s (government sponsored enterprises - a shorthand reference to Fannie Mae and Freddie Mac) to increase their maximum loan size to $625,000, or the median home price for the area plus 15.0%, whichever is lower. I am not sure how the median home price for the area will be determined, but I did read this morning that Representative Barney Frank, one of the architects of this bill, reassured the press the current cap of 417,000 will not decrease.

In a separate report the National Association of Realtors reported a bigger-than-expected 2.6% slump in the pace of June Existing Home Sales. Existing homes sold at their most sluggish clip since the first quarter of 1998. The median home price was $215,100 in June.

The Treasury is set to auction $21 billion of 5-year notes at 1:00 p.m. ET today. From a technical perspective this offering may require Uncle Sam to push the yield (total return to the investor) higher in order to attract the necessary capital. If my assessment proves accurate, a rising 5-year note yield this afternoon will carry a high potential for nudging Texas home mortgage interest rates fractionally higher as well.

As always, If you have ever have a question on whether it is the best time for you to refinance your Texas loan or what interest rate you can get when buying your next Texas home, feel free to give us a call or shoot us an email by filling in your information on the right hand side of this page.

Texas mortgage rates have moved slightly higher today, keep in mind that we are still near historical lows. Dallas, Houston, Austin, San Antonio, and College Station interest rates are just slightly lower than there highest point so far this month.

The Texas mortgage market was roughed-up this morning by comments made by Philadelphia Fed president Charles Plosser. Plosser, a member of the Fed’s monetary policy-making committee, said earlier today that the central bank “will need to reverse course” from pushing short-term Texas interest rates lower to bumping those same Texas rates higher, and he anticipates “the reversal will need to be started sooner rather than later.”

He went further to say, “If we remain overly accommodating in the face of these large relative price shocks to energy and other commodities, we will ensure that they translate into more broad-based inflation that – once ingrained in expectations – will be difficult to undo. I believe we must and will take the appropriate steps to ensure that does not happen.”

Many Texas mortgage investors believe the Fed was giving fair warning that a series of short-term rate hikes will likely begin before the end of the year, the first such hike probably occurring at the Federal Open Market Committee’s September 16^th meeting. The timing and magnitude of future hikes will be determined by the dynamics of forthcoming inflation data.

In addition to pricing-in expectations the Fed will move to raise short-term interest rates within the next four weeks, investors have been busy making room in their portfolios for a heavy supply of new incoming debt from Uncle Sam. Tomorrow the Treasury will set a new all-time record when they auction off $31 billion of 2-year notes. They’ll follow that event up with a nearly record setting $21 billion 5-year note auction on Thursday. As a “warm-up’ for those two events, Uncle Sam is in credit market today looking to borrow $6 billion in the form of 20-year inflation-indexed securities. Until investors have a chance to digest and redistribute these new offerings (a process that takes a day or three) — it will likely be difficult for Texas mortgage interest rates to draw enough investor attention to make much headway in any effort to move to notably lower levels.

As always, If you have ever have a question on whether it is the best time for you to refinance your Dallas mortgage loan or what interest rate you can get when buying your next Texas home, feel free to give us a call or shoot us an email by filling in your information on the right hand side of this page.

Texas mortgage rates have moved slightly higher today. Dallas, Houston, Austin, San Antonio, and College Station interest rates are just slightly lower than there highest point so far this month.

This morning the bond market was trading weaker and making a test of 4.10% which we believe has an outside chance to hold for awhile. Last Thursday and Friday the bond and Texas mortgage markets were beaten down in price on the return of inflation fears triggered by the big increase in June CPI that hit on Wednesday. Inflation concerns are fueled by investors and central banks in Europe as well as the Fed, but until Wednesday’s CPI US inflation reads were up but not increasing much.

Inflation debates could fill a novel; a fast declining economy and some relief in oil price increases would argue that inflation has little additional push particularly with no reason to expect wages will increase. On the other side of the inflation outlook, there is reason to be concerned that the run-up in food and energy prices (even if they were to stabilize) are beginning to filter down into other prices. All that said, investors are already at panic levels with the Dallas mortgage crisis and the unsettling drama increasing in the banking sector, so there is no desire to lean to any optimistic outlook. Fed Chairman Ben Bernanke said June 15 in his semiannual testimony on the economy to the Senate Banking Committee in Washington that the “upside risks to the inflation outlook have intensified.”The markets this week will focus on (1) whether crude oil prices continue to drop in a continuation of the week-long $18 plunge, (2) whether the S&P 500 can sustain its sharp 5.1% upside recovery seen in the latter half of last week, (3) Fed policy which is likely to become more hawkish if the stock market recovery holds and the US economic data remains only mildly negative, (4) T-note prices which have the potential to extend last week’s slide if the stock market recovery holds and there are no fresh banking blow-ups, and (5) this week’s heavy slate of Q2 earnings reports.

Later this afternoon Sec Treasury Paulson will be talking (3:30) on CNBC; likely on his initiative to get banks to start issuing covered bonds without waiting for legislation from Congress. Regulators can provide the guidance that lenders are asking to be set in law. Paulson will also discuss the agency mess; this morning Freddie is saying it may cut the number (amount) of loan purchases to shore up its capital amid record delinquencies. The government-sponsored company is also considering selling securities and reducing its dividend while it prepares to issue $5.5 billion of stock. Just what we need now; Texas mortgage buyers cutting back on purchases. We don’t believe Freddie can raise money now at rates they can live with; the agency will be a drag on the Texas mortgage markets as it finds the only avenue is to sell off assets.As always, If you have ever have a question on whether it is the best time for you to refinance your Texas loan or what interest rate you can get when buying your next Texas home, feel free to give us a call or shoot us an email by filling in your information on the right hand side of this page.

As always, If you have ever have a question on whether it is the best time for you to refinance your Texas loan or what interest rate you can get when buying your next Texas home, feel free to give us a call or shoot us an email by filling in your information on the right hand side of this page.