RETREAT...FNMA 4.5% FELL 38 bps today but is still in a strong position to support the rates in the 5.125% range for 30 year fixed loans.

The PPI or "Producers Price Index" actually fell...showing that it is "cheaper to manufacture goods" and indicates less worry of inflation in the short term
...the "CORE" PPI or the index without energy or food prices actually came in right where expected.
(Remember: when something comes in "as expected" the markets don't move....drama comes when things are either better or worse than investors expect.
If you can imagine: it is a catalyst to move money around as part of a reactive strategy betting on the future.)

The "Housing Starts" (holes in the ground for new housing construction) as well as Building Permits reported actually
rose again in July...but was still lower than expectations.

The above in addition to other factors indicate a general "stabilization" in the Real Estate Market. I imagine there are some very important people
keeping their eyes on things in attempts to protect this fragile position. Remember that if rates bumped up a full percentage point...we would again
experience less buyers on the market which is what is part of the quandary we are in now.

With the elimination of so many loan products...people who otherwise would have purchased homes are not able to anymore...and "out of the market."
Think: stated income, 2nd mortgages, 100% financing readily available. When there are SO many buyers on the market: it is easy to sell homes.
When financing does not require down payments: APPRECIATION is much more readily available. Eliminating borrowers AND 100% financing...
with the exception of RD and VA...has led to lack of demand and then depreciation.

The reason behind the removal of the "exotic" loan products is another story...for another day.


Hope this message finds each of you well,

Chad