Matt’s Weekly Market Update

Global stocks climbed for a fifth day as the Group of 20 vowed to clean up toxic assets, Federal Reserve Chairman Ben S. Bernanke said the recession may end this year, and Barclays Plc reported a “strong” start to 2009.

Barclays, the U.K.’s third-biggest bank, jumped 17 percent. Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co., which triggered a record rally in financial shares last week after saying they were profitable in January and February, added at least 1.7 percent. General Electric Co. climbed 5 percent as UBS AG said the chances of more “negative catalysts” are lower. Benchmark U.S. indexes extended gains from the best week since November as Bernanke said the U.S. will avoid a depression.

The principal actors in the market today are the nationalized housing-finance companies, Fannie Mae and Freddie Mac, which purchase mortgage loans. In third place stands the Federal Housing Administration, which insures loans originated by private lenders. All together, the government sector accounts for 87 percent of the mortgages currently being made, says Guy Cecala, chief executive officer and publisher of Inside Mortgage Finance Publications in Bethesda, Maryland. Purely private financing is expensive and scarce.

The government backs only loans of a certain size, known as conforming loans. The lowest available interest rate is generally on a traditional Fannie or Freddie mortgage for as much as $417,000, with a higher limit in Alaska, Hawaii, Guam and the U.S. Virgin Islands. Next step up would be a jumbo conforming loan of as much as $729,750, available in the most expensive counties in the U.S. and costing anywhere from a quarter point to a full percentage point more.

And that’s just for starters. Fannie and Freddie add a quarter-point “adverse market delivery charge” because of declining home prices. They have also initiated “risk-based pricing,” which raises fees on people with less than a perfect borrowing profile. You will pay more if your credit score falls below about 720, you are buying a condominium or you are putting less than 15 percent down.

Monday, Mar 16, 2009
Industrial Production @ 9:15 am et

Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.

Monday, Mar 16, 2009
Capacity Utilization @ 9:15 am et

Important. A figure above 85% is viewed as inflationary. A decrease may lead to lower mortgage interest rates.

Tuesday, Mar 17, 2009
Producer Price Index @ 8:30 am et

Important. An indication of inflationary pressures at the producer level. Lower figures may lead to lower rates.

Tuesday, Mar 17, 2009
Housing Starts @ 8:30 am et

Important. A measure of housing sector strength. Larger than expected decrease may lead to lower rates.

Wednesday, Mar 18, 2009
Consumer Price Index @ 8:30 am et

Important. A measure of inflation at the consumer level. Lower figures may lead to lower rates.

Wednesday, Mar 18, 2009
Fed Meeting Adjourns @ 2:15 pm et

Important. Few expect the change rates, but some volatility may surround the adjournment of this meeting.

Thursday, Mar 19, 2009
Leading Economic Indicators @ 10:00 am et

Important. An indication of future economic activity. A smaller increase may lead to lower rates.