“THE BEST OF ALL LUCK…IS THE LUCK YOU MAKE FOR YOURSELF.” (General Douglas MacArthur) But although they tried, home loan rates didn’t manage to get lucky at all this past week. Economic news was mixed and Mortgage Bonds attempted to rally, but they couldn’t convincingly hold any gains. Home loan rates were choppy midweek, and ended the week unchanged overall.

But one report of interest that came bubbling to the surface was Housing Starts. Although the media continues to strike fear in the hearts of homebuyers by their relentless hammering of housing bubble rhetoric…the housing sector remains hot, as Housing Starts were reported last week at the highest rate in 21 years!

AND THE LOVE AFFAIR WITH HOME BUYING IN AMERICA IS ALSO BECOMING A “FOREIGN AFFAIR”…AS MORE FOREIGNERS THAN EVER ARE PURCHASING HOMES HERE IN THE US. WHAT’S THE SUDDEN INTEREST OF LATE? READ THIS WEEK’S MORTGAGE MARKET VIEW TO FIND OUT WHO MIGHT BE LOOKING TO BUY IN YOUR NECK OF THE WOODS…AND WHY.

It’s sure been a brutal path higher for home loan rates lately. The recent downward trend in Mortgage Bond prices – meaning an upward trend in home loan rates – is easy to see, just take a look at the chart below. The well-defined trend began on February 8th, but when will we see a turnaround, if at all? The catalyst to provide some relief may be just around the corner. The Fed will meet next Tuesday for their Monetary Policy Decision. The Fed is widely expected to stay the course of a “measured pace”, and increase short-term interest rates by 25 basis points. Because a hike in short term rates will help to combat inflation – the arch-enemy of Bonds – home loan rates may improve on the news.

And as always, Traders will listen closely to what the Fed has to say in their Policy Statement to get an idea on the rate hikes to come. In the absence of any surprises, Bonds may be able to improve on Tuesday and provide home loan rates with some welcome relief.

Bottom line: expect home loan rates to stabilize…and perhaps improve slightly this coming week.

CASA…MAISON…HAUS? Any way you say it…housing in the US continues to be hot. And there has been a recent surge of foreigners buying in the US. Although there are no statistics, foreigners have always purchased real estate in America. But the current buying spree has a bit more heat, for a few interesting reasons.

The recent weakness of the US Dollar has suddenly made the possibility of owning a vacation home or investment property in America very attractive for many foreigners due to pure affordability. For example, the Euro has risen more than 50% against the US Dollar in the last three years, making properties in the US significantly less expensive for Europeans in terms of their own currency. Although home prices in the US continue to climb, so have home prices in Euroland…thus the strong Euro makes prices in the US look like a bargain.

Additionally, the creation of the single-currency euro in 1999 is driving European bargain hunters to the US, because they can no longer take advantage of weak currencies of countries within the European continent to get deals on homes, says Jeremy Siegel, professor of finance at the Wharton School at the University of Pennsylvania.

Another interesting factor is simply cheaper airfare. Deregulation of the airline industry fueled competition and led to cheaper flights, making the US more accessible for overseas travelers.

Realtors and home sellers love the trend, as it brings a new batch of interested buyers into many markets. In fact, many real estate agents are cashing in, by developing relationships with clients and agents in foreign markets.

The Fed’s policy decision and commentary will take center stage this week, along with data on inflation at the consumer and producer levels. The markets will be closed all day on March 25th in observance of Good Friday. Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

For the week of March 21 – March 25