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September 21, 2012

Week in review: Major stock indexes up 4 percent in September, economic data mixed

by Rylan Stewart
Wall Street (2)

Remember when we mentioned that September has historically been the worst month for stocks? Even after stocks closed slightly lower after a week of (relatively) uneventful trading, the major averages are still up 4 percent on the month. Stocks have been spurred by major Central Bank action, beginning with the European Central Bank’s plan to purchase government bonds and stabilize the tricky European sovereign debt situation. Then, last week, the U.S. Federal Reserve announced QE3, an ambitious bond-buying program to keep rates low, stabilize the mortgage market, and ultimately combat unemployment. The stimulus plan spurred major stock indexes to close at multi-year highs.

The 10-year Treasury yield, which tracks mortgage rates, closed at 1.7648 percent. Mortgage rates generally fell during the week, as Freddie Mac reported that at 3.49 percent, the “national average” for the 30-year fixed was a record low. Our 30-year fixed rate shaved off about 0.030 in APR during the week, to finish well below the national average: 3.250 percent (3.271 percent APR).

 

Articles of note:

The New York Times discussed the difficulties of refinance, and profiled the people who need it most but often don’t qualify – underemployed and debt-strapped family. The article addresses the question: what steps can these folks take to ultimately qualify for refinance and the thousands in monthly savings it offers?

 

Did Obamacare implement a 3.8 percent tax on home sellers? Jason Grote addresses the rumor that a “sneaky” clause in the new health care law will implement a 3.8 percent tax on profits from real estate sales. Check it out… but the short answer is that this is a gross exaggeration.

 

To buy or not to buy: Central Coast Lending makes the argument why now is a good time to consider taking the plunge and buying a home. Besides the obvious benefits of low interest rates, demand in the renters market has caused rent prices to skyrocket. A recent Trulia report notes that it is cheaper to buy a home than rent in the nation’s 100 largest Metropolitan areas.

 

Numbers from the week:

  1. Home builder confidence has reached a five-year high
  2. Weekly jobless claims came in at 382,000, just 3,000 lower from the previous week
  3. August housing starts came in at a 0.750 million unit yearly pace, which is up over 29 percent from last year
  4. August existing home sales rose 7.8 percent from July to a pace of 4.82 million. This is the best pace since May 2010.

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