June 22, 2010

Falling Claims

By Amanda Parsons - ALM Specialist

Initial jobless claims rose to 472,000 last week from 460,000 the week before. The four-week average in claims of 464,000 is up from 454,000 just four weeks ago. The recent rise in claims may not mean much in the long run, given that they may have been boosted somewhat by census and oil-spill-related layoffs. That said, there may have been some change in momentum because generally claims have been falling in recent months.

This week, in addition to paying close attention to the June Federal Open Market Committee meeting statement Wednesday afternoon, we’ll be watching for the new and existing home sales numbers. Generally new home sales are expected to drop dramatically due to the expiration of the homebuyer tax credit April 30. New home sales data is based on initial contract agreements. Existing home sales may still be benefitting from the tax credit because the data is based on contract closings (cutoff June 30).

Is your credit union seeing a decrease in interest for new mortgages, or are you keeping busy because rates are so low? How are you funding those mortgages? If your credit union has the capability to model various “what-if” scenarios, now is a good time to run a few scenarios and take a look at what happens to your balance sheet if you add mortgages. You should be able to model down to the dollar amount, term, and interest rate you’re thinking of offering (including whether it’s fixed- or adjustable-rate).

If your current ALM solution doesn’t let you run “what-if” scenarios like these, please call or email me anytime at 1-800-622-7494, extension 3265, or aparsons@midatlanticcorp.org.