January 30th Mortgage rates and Market conditions

Mortgage Market Minute: Back on the upswing this morning - - the 4.5% MBS up +.19 to 100.66, and the 5.0% MBS up +.16 to 101.20, and the 5.5% MBS up +.19 to 102.34. The low end of the market saw the 4.5% open much more strongly, but we have backed off a bit to the current levels.4th Quarter GDP shrinks by -3.8%, revised figure will likely approach -5%. The economy shrank at a -3.8% percent pace at the end of 2008, the worst pace since 1982 (-6.4%), the Government reported this morning. The result, which marked a huge slowdown versus the -0.5% decline posted in the third quarter, was better than the -5% that many economists had expected. However, the number stands a good chance of being revised lower in coming months. A build-up in business inventories—which inflates the GDP calculation — masked the fourth-quarter's true weakness. When inventories are stripped out, the economy would have contracted at a -5.1% percent pace in the fourth quarter, in line with expectations. Many economists see the 1st quarter as the worst quarter for the recession, as consumers and business cut back on all fronts, and as domestic and overseas sales of goods and services plummet. In the fourth quarter of 2008, big-ticket "durable" goods, including cars, appliances and furniture plunged at rate of -22.4%, the most since 1987. A -7.1% annualized cutback in spending on "nondurables," such as food and clothing was the deepest since the end of 1950. "The downturn is intensifying. The fourth quarter is worse than it looks," said Mark Zandi, chief economist at Moody's Economy.com. A new trend toward frugality among consumers and businesses is causing analysts to predict a very weak economy for the duration of 2009. For all of 2008, the economy grew by just +1.3%, marking the slowest growth since the last recession in 2001.“Bad Bank” plan currently in limboTreasury Department and FDIC officials are holding around the clock meetings with senior Wall Street execs on how to a new government bank to buy bad assets from major financial firms. However, insiders are indicating that there is no consensus on how the plan would work or whether it will ever take shape. Stocks reacted negatively to the news on Friday morning, with the major indices all trading off. The “bad bank” would theoretically buy up toxic mortgage assets from banks to attempt to shore up balance sheets and get lending to resume. Similar to a Bush Administration plan, the new idea has hit a similar bump in the road: how to value the assets. Too low, and the banks selling the assets would be declared insolvent after the ensuing write-downs. Too high, and taxpayers would end up overpaying for Wall Street’s blunders. Talks have bogged down over lack of agreement on how to move forward from there. The banking system holds more than $1 trillion in illiquid assets, and there is no consensus on how to approach a problem that large and complex. Another issue is that Timothy Geithner, the new Treasury Secretary is still assembling his staff, which would then need time to develop a proposal to take to Congress. Treasury yields jump on protectionist rhetoric.Treasuries sold off for the eighth time in nine sessions on Thursday, amidst rising concerns of protectionism. U.S. two-year yields were up 5.6 bps to 0.95%, with five-year yields up 14.4 bps to 1.84%, 10-year yields up 19.7 bps to 2.86% and 30-year yields up 18.9 bps to 3.61%. The past 2 sessions saw bond yield jumping 36 basis points overall, the largest two-day rise in over a year. A total of $2 trillion in debt is expected to be issued this year, and it may be more difficult to place than expected. Worries about the growing supply of long-term debt have led to a dramatic sell-off in the past two sessions. Worse, growing protectionist rhetoric -- Treasury Secretary Timothy Geithner said the new administration believes that China is manipulating its currency -- could be worrying debt holders, leading to the sharp drop in bond prices. "Geithner sort of got the ball rolling," said Carl Lantz, interest rate strategist at Credit Suisse First Boston. "We're so reliant on foreign appetite for U.S. debt...an obvious reaction from countries if they want to retaliate is to sell Treasuries." Evidence of protectionism is growing. A provision in a stimulus bill being considered by U.S. lawmakers requires infrastructure projects to use U.S. steel exclusively. Canadian Prime Minister Stephen Harper reacted strongly to the proposed legislation on Thursday. He said he expects the U.S. to respect international obligations and that the proposal is a "serious matter." "The protectionist trend is gaining strength much faster than we thought even just a few weeks ago," says Merrill Lynch chief investment strategist Richard Bernstein.

On today’s date: January 30…1774: Capt Cook reaches 71 degrees 10' S, 1820 km from S pole (record)1847: Yerba Buena renamed San Francisco 1972: Bloody Sunday: British soldiers shoot on Catholics in Londonderry, 13 die1973: 1st Kiss concert (Queens New York)1989: 5 pharaoh sculptures from 1470BC found at temple of Luxor

LA MORTGAGE INC. a Rodeo Realty company
15300 Ventura Bl. #101 Sherman Oaks, CA 91403
Jeffrey Fink Email: jefffink@lamortg.com
Mobile: 818-723-1638 Office: 818-986-7300 ext 120 E Fax: 206-203-4720
CONFORMING, CONFORMING JUMBO, FHA, SUPER JUMBO LOANS


Conforming Limits: $100,000 to $417,000 January 30, 2009
Rates
4.625% 10-Year Fixed

5.25% 30-Year Fixed


NEW CONFORMING



Conforming Jumbo: $417,001-$625,500
Rate: 5.75% 30 Year Fixed
Rate
JUMBO LOANS

LOAN AMOUNTS $625,5001 -$10,000,000
5/1 Year Fixed 5.125 %
10/1 Year Fixed 6.125%
Interest only available

FHA LOANS LOAN AMOUNTS TO 96.5% LOAN TO VALUE30


30 Year Fixed $100,000-$ 625,500
5.5%

Rates are based on a 1 point origination and are subject to change without notice and are for.

There are a lot of changes taking place every day and clients have a lot of questions so please do not hesitate to have your clients call me.

Remember that LA Mortgage is a mortgage broker and we do refinancing as well as purchase money loans.