Industry News
Mortgage Industry News
ECB Launches Liquidity Program
12/22/2011
Stronger than expected US economic data and reduced concerns about Europe were negative factors for mortgage rates this week. After dropping lower early in the week, mortgage rates ended a little higher.
On Tuesday, the European Central Bank (ECB) launched a new liquidity program which provided low cost loans to banks. This increased their liquidity and reduced the risk of failures. While the program does not directly address the debt troubles of European countries, it eased investor concerns about a broad collapse of the European banking system. As a result, investors partially reversed the flight to safety trade, lifting stocks and hurting mortgage-backed securities (MBS) and mortgage rates.
Nearly all of the housing sector data released this week was positive. November Existing Home Sales rose 4% from October. November Housing Starts increased 9% from October to the highest level since April 2010, although much of the increase was due to strength in multi-family units. Building Permits, a leading indicator, also exceeded expectations. Finally, the NAHB home builder sentiment index rose to the highest level since May 2010.
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