Our window of opportunity is here again and not sure how long it will last. Interest rates are reaching under 5% and the time to refinance is now if you haven't done so already.
This is due to a bond rally on weak stocks.
Contact me if you have any questions (310) 963-8315
Rick
Wednesday, July 8, 2009
Friday, July 3, 2009
Economic Outlook
There was very little daily movement in mortgage rates during the holiday-shortened week, and they ended the week nearly unchanged. The economic news during the week contained few surprises.
Following better than expected results for May, investors were closely watching the June Employment report for clues about the timing of any economic recovery. Thursday's data showed that the economy lost -467K jobs in June, and the Unemployment Rate rose to 9.5% from 9.4% in May. Average Hourly Earnings, a proxy for wage growth, rose at a slim 2.7% annual rate. High unemployment and slow wage growth have caused consumers to save more and spend less. Since consumer spending accounts for about 70% of economic activity, the slowdown in spending has had a large impact on economic growth. For mortgage rates, however, low wage inflation and slow economic growth are favorable.
While the Employment report may have captured the most attention, the week began with a significant announcement from Chinese officials. According to the head of China's central bank, there will be no sudden changes to China's foreign reserve policy, meaning that China will not pull back from buying US bonds. Over recent months, investors have been concerned that foreign central banks would decide to scale back their purchases of US bonds, so this was very welcome news. Recent Treasury auctions have confirmed that foreign demand remains strong.
Also Notable:
Following better than expected results for May, investors were closely watching the June Employment report for clues about the timing of any economic recovery. Thursday's data showed that the economy lost -467K jobs in June, and the Unemployment Rate rose to 9.5% from 9.4% in May. Average Hourly Earnings, a proxy for wage growth, rose at a slim 2.7% annual rate. High unemployment and slow wage growth have caused consumers to save more and spend less. Since consumer spending accounts for about 70% of economic activity, the slowdown in spending has had a large impact on economic growth. For mortgage rates, however, low wage inflation and slow economic growth are favorable.
While the Employment report may have captured the most attention, the week began with a significant announcement from Chinese officials. According to the head of China's central bank, there will be no sudden changes to China's foreign reserve policy, meaning that China will not pull back from buying US bonds. Over recent months, investors have been concerned that foreign central banks would decide to scale back their purchases of US bonds, so this was very welcome news. Recent Treasury auctions have confirmed that foreign demand remains strong.
Also Notable:
- The Unemployment Rate climbed to the highest level since 1983
- April Pending Home Sales rose for the fourth straight month
- The European Central Bank (ECB) held rates unchanged
- HUD announced that the LTV requirement for the Making Home Affordable plan will be raised to 125% from 105%
Week Ahead:
Treasury auctions may have the greatest impact on mortgage rates next week, with auctions on Tuesday, Wednesday, and Thursday. It will be a light week for economic data. ISM Services will be released on Monday. The Trade Balance, Import Prices, and Consumer Sentiment will come out on Friday.
Friday, June 26, 2009
Economic Outlook
With major economic data, large Treasury auctions, and a Fed meeting on the schedule, it was a busy week for mortgage markets. In the end, it was the Treasury auctions which had the greatest impact on mortgage rates. Demand was very strong at the auctions, which pushed mortgage rates lower. Wednesday's Fed announcement and mixed economic data were roughly neutral for mortgage rates.
Much of the rise in interest rates we saw in late May and early June was due to concern about the enormous supply of debt the government needs to issue to pay for all the stimulus programs. The question was whether investors would require significantly higher yields to continue purchasing bonds. Strong demand from both domestic and foreign investors at this week's Treasury auctions eased those concerns for now and helped mortgage rates to reverse some of their recent increases.
As expected, the Fed made no change in the fed funds rate. However, investor expectations varied widely for the Fed's statement, but the statement revealed no significant shifts in policy. In particular, there was no change in the timing or the quantity of future MBS and Treasury purchases. In addition, the statement contained no discussion about exit strategies to eventually unwind Fed stimulus programs. Overall, the Fed simply held the course, and mortgage rates were nearly unchanged after the news.
In the housing sector, May Existing Home Sales rose 2.4%. It was the first time since September 2005 that Existing Home Sales increased for two months in a row. The inventory of unsold homes declined to a 9.6-month supply from a 10.1-month supply in April. A NAR survey revealed that 29% of sales were to first-time homebuyers, helped by the $8,000 tax credit, low mortgage rates, and favorable affordability levels.
Other interesting facts:
Much of the rise in interest rates we saw in late May and early June was due to concern about the enormous supply of debt the government needs to issue to pay for all the stimulus programs. The question was whether investors would require significantly higher yields to continue purchasing bonds. Strong demand from both domestic and foreign investors at this week's Treasury auctions eased those concerns for now and helped mortgage rates to reverse some of their recent increases.
As expected, the Fed made no change in the fed funds rate. However, investor expectations varied widely for the Fed's statement, but the statement revealed no significant shifts in policy. In particular, there was no change in the timing or the quantity of future MBS and Treasury purchases. In addition, the statement contained no discussion about exit strategies to eventually unwind Fed stimulus programs. Overall, the Fed simply held the course, and mortgage rates were nearly unchanged after the news.
In the housing sector, May Existing Home Sales rose 2.4%. It was the first time since September 2005 that Existing Home Sales increased for two months in a row. The inventory of unsold homes declined to a 9.6-month supply from a 10.1-month supply in April. A NAR survey revealed that 29% of sales were to first-time homebuyers, helped by the $8,000 tax credit, low mortgage rates, and favorable affordability levels.
Other interesting facts:
- The May Core PCE inflation index rose at a tame 1.8% annual rate
- The World Bank cut its forecast for global economic growth this year
- Fed Chief Bernanke performed well during Congressional questioning
- The Fed purchased $22 billion in agency MBS during the week ending 6/24
Next week, the important Employment report will come out on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Early estimates are for a loss of about 370K jobs in June. Before the Employment data, the Chicago PMI and ISM national manufacturing indexes will come out on Tuesday and Wednesday. Pending Home Sales, a leading indicator for the housing market, will be released on Wednesday. Consumer Confidence, Construction Spending, and Factory Orders will round out the schedule. Mortgage markets will be closed on Friday ahead of the July 4th holiday.
Saturday, June 13, 2009
Econonmic Outlook
After rising significantly over the last couple of weeks, mortgage rates moved higher again this week, but at a much slower pace. Strong demand for this week's large Treasury auctions helped keep mortgage rates relatively stable. At current yields, both foreign and domestic investors showed above average interest in adding bonds to their portfolios.
Behind the recent rise in mortgage rates has been an improved economic outlook and concerns about the enormous supply of new debt needed to pay for government programs. This leaves the Fed in a difficult position. Fed officials would like to keep mortgage rates low to lift the economy. To accomplish this, however, the Fed would have to significantly increase its purchases of mortgage-backed securities (MBS), requiring it to issue even more debt and adding to inflation concerns.
Most analysts believe that the Fed is unlikely to expand its MBS purchase program. At the June 24th meeting, they instead expect the Fed to discuss an eventual exit strategy for the program, which might include stretching out their time frame for purchasing MBS. Reducing the weekly purchases would allow the Fed to gradually scale back its involvement in the market. The MBS purchase program has helped bring mortgage rates down since it was announced in November, but the Fed cannot continue to intervene in MBS markets indefinitely. Slowly reducing their MBS purchases may be the best way to minimize the impact on the market as they make their exit.
Other Notable Facts:
Behind the recent rise in mortgage rates has been an improved economic outlook and concerns about the enormous supply of new debt needed to pay for government programs. This leaves the Fed in a difficult position. Fed officials would like to keep mortgage rates low to lift the economy. To accomplish this, however, the Fed would have to significantly increase its purchases of mortgage-backed securities (MBS), requiring it to issue even more debt and adding to inflation concerns.
Most analysts believe that the Fed is unlikely to expand its MBS purchase program. At the June 24th meeting, they instead expect the Fed to discuss an eventual exit strategy for the program, which might include stretching out their time frame for purchasing MBS. Reducing the weekly purchases would allow the Fed to gradually scale back its involvement in the market. The MBS purchase program has helped bring mortgage rates down since it was announced in November, but the Fed cannot continue to intervene in MBS markets indefinitely. Slowly reducing their MBS purchases may be the best way to minimize the impact on the market as they make their exit.
Other Notable Facts:
- May Retail Sales showed small gains from April
- The Fed's Lacker expects a "bottoming-out process" in housing later this year
- Oil prices reached $73 per barrel, the highest level of the year
- The Fed purchased $23 billion in agency MBS during the week ending 6/10
Next Week:
The most significant economic data next week will be the monthly inflation reports. The Producer Price Index (PPI) focuses on the increase in prices of "intermediate" goods used by companies to produce finished products and will come out on Tuesday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Wednesday. CPI looks at the price change for those finished goods which are sold to consumers. In addition, Industrial Production and Housing Starts will be released on Tuesday. The Empire State and Philadelphia Fed regional manufacturing indexes will round out the schedule.
Monday, June 8, 2009
This Week's Economic News
This week brings us the release of four pieces of data for the markets to digest. The most important news will be posted late in the week, so we may see the most movement in rates during those days. The first part of the week will likely be driven by stock market gains or losses.
The week's first but least important data is April's Goods and Services Trade Balance report Wednesday morning. This report gives us the size of the U.S. trade deficit and will be released at 8:30 AM. It isn't likely to cause much movement in the markets or mortgage rates, but nevertheless forecasters are expecting to see a $28.7 billion deficit.
Late Wednesday, the Federal Reserve will release its Beige Book. This data details economic conditions throughout the U.S. by region. It is relied upon heavily by the Federal Reserve during FOMC meetings to determine monetary policy. If it shows surprisingly softer economic activity, the bond market may thrive and mortgage rates could drop shortly after the 2:00 PM ET release. If it reveals signs of inflation growing, we could see mortgage rates revise higher Wednesday afternoon.
May's Retail Sales data will be released Thursday morning. This report measures consumer spending, which is important to the bond market because consumer spending makes up two-thirds of the U.S. economy. Analysts are expecting to see that sales rose 0.3% last month. A smaller than expected rise in sales would be good news for the bond market and could lead to lower mortgage rates Thursday.
The last report of the week is June's preliminary reading to the University of Michigan Index of Consumer Sentiment late Friday morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. It is expected to show a reading of 68.6. A small than expected reading would be considered good news for bonds, but since this report is only moderately important it likely will not influence mortgage rates considerably.
Also worth noting are two relevant Treasury auctions scheduled for this week. The 10-year Treasury Note sale is scheduled for Wednesday while the 30-year Bond sale will be held Thursday. Results of both auctions will be posted at 1:00 PM ET on the sale days. If investor demand was high, we may see bonds rally during afternoon trading, however, weak demand could lead to selling and an increase to mortgage rates.
Overall, it is going to be a fairly busy week for the financial markets, but the most action will probably come in the latter days. I think that Thursday will be the single most important day of the week, but as we saw last week, we don't need significant news from economic reports for the markets to move heavily and mortgage rates to change. Accordingly, this would be a very good week to maintain fairly constant contact with your mortgage professional—particularly after last week's selling.
The week's first but least important data is April's Goods and Services Trade Balance report Wednesday morning. This report gives us the size of the U.S. trade deficit and will be released at 8:30 AM. It isn't likely to cause much movement in the markets or mortgage rates, but nevertheless forecasters are expecting to see a $28.7 billion deficit.
Late Wednesday, the Federal Reserve will release its Beige Book. This data details economic conditions throughout the U.S. by region. It is relied upon heavily by the Federal Reserve during FOMC meetings to determine monetary policy. If it shows surprisingly softer economic activity, the bond market may thrive and mortgage rates could drop shortly after the 2:00 PM ET release. If it reveals signs of inflation growing, we could see mortgage rates revise higher Wednesday afternoon.
May's Retail Sales data will be released Thursday morning. This report measures consumer spending, which is important to the bond market because consumer spending makes up two-thirds of the U.S. economy. Analysts are expecting to see that sales rose 0.3% last month. A smaller than expected rise in sales would be good news for the bond market and could lead to lower mortgage rates Thursday.
The last report of the week is June's preliminary reading to the University of Michigan Index of Consumer Sentiment late Friday morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. It is expected to show a reading of 68.6. A small than expected reading would be considered good news for bonds, but since this report is only moderately important it likely will not influence mortgage rates considerably.
Also worth noting are two relevant Treasury auctions scheduled for this week. The 10-year Treasury Note sale is scheduled for Wednesday while the 30-year Bond sale will be held Thursday. Results of both auctions will be posted at 1:00 PM ET on the sale days. If investor demand was high, we may see bonds rally during afternoon trading, however, weak demand could lead to selling and an increase to mortgage rates.
Overall, it is going to be a fairly busy week for the financial markets, but the most action will probably come in the latter days. I think that Thursday will be the single most important day of the week, but as we saw last week, we don't need significant news from economic reports for the markets to move heavily and mortgage rates to change. Accordingly, this would be a very good week to maintain fairly constant contact with your mortgage professional—particularly after last week's selling.
Saturday, June 6, 2009
Economic Outlook
Investors have been concerned for quite a while about the coming supply of new debt needed to pay for all the government stimulus programs. On top of that, the economic outlook has been improving sooner than expected. The combination of these two potentially inflationary developments pushed mortgage rates higher during the week.
The economic surprise this week came from the Employment report. Although the economy lost -345K jobs in May, it was far fewer than the consensus estimate for a loss of -525K jobs. The Unemployment Rate jumped to 9.4% from 8.9% in April. A surge in people entering the labor force was responsible for the unexpected increase in the Unemployment Rate. The labor market is typically one of the last areas to show improvement during an economic rebound, so signs of a turnaround are particularly significant.
Fed Chief Bernanke supported the notion that the recession would end this year. In testimony before Congress this week, Bernanke stated that he still expects the economy to move higher later this year, although it may take a while for growth to return to average levels. He looked ahead to measures needed once the economic crisis has passed, such as containing the budget deficit and reducing government control of markets. At this point, most investors believe that the Fed is not inclined to expand the mortgage-backed security (MBS) purchase program beyond its current level of $1.25 trillion, unless economic growth falls short of the Fed's outlook.
More evidence that the economy may be rebounding came from this week's housing data. April Pending Home Sales rose for the third consecutive month, increasing 7% from March. Pending Home Sales are a leading indicator, meaning that future New and Existing Home Sales reports may show increases.
Other facts:
The economic surprise this week came from the Employment report. Although the economy lost -345K jobs in May, it was far fewer than the consensus estimate for a loss of -525K jobs. The Unemployment Rate jumped to 9.4% from 8.9% in April. A surge in people entering the labor force was responsible for the unexpected increase in the Unemployment Rate. The labor market is typically one of the last areas to show improvement during an economic rebound, so signs of a turnaround are particularly significant.
Fed Chief Bernanke supported the notion that the recession would end this year. In testimony before Congress this week, Bernanke stated that he still expects the economy to move higher later this year, although it may take a while for growth to return to average levels. He looked ahead to measures needed once the economic crisis has passed, such as containing the budget deficit and reducing government control of markets. At this point, most investors believe that the Fed is not inclined to expand the mortgage-backed security (MBS) purchase program beyond its current level of $1.25 trillion, unless economic growth falls short of the Fed's outlook.
More evidence that the economy may be rebounding came from this week's housing data. April Pending Home Sales rose for the third consecutive month, increasing 7% from March. Pending Home Sales are a leading indicator, meaning that future New and Existing Home Sales reports may show increases.
Other facts:
- The Unemployment Rate rose to the highest level since 1983
- The European Central Bank (ECB) held rates steady
- Oil prices reached $70 per barrel, the highest level of the year
- The Fed purchased $26 billion in agency MBS during the week ending 6/3
Next week, the most significant economic data will be the Retail Sales report on Thursday. Retail Sales account for about 70% of economic activity. In addition, the Trade Balance and the Fed's Beige Book will be released on Wednesday. Import Prices and Consumer Sentiment will come out on Friday. There will be large Treasury auctions on Tuesday, Wednesday, and Thursday as well.
Monday, June 1, 2009
This Week's Economic News
Monday's bond market has opened down sharply following stronger than expected economic news and a significant rally in stocks. The Dow is currently up over 200 points while the Nasdaq has gained 50 points. This has led to heavy selling in bonds, pushing the benchmark 10-year Treasury Note down 60/32. However, the impact on this morning's mortgage rates will likely be much less than one may expect. We will probably see an increase of approximately .250 of a discount point in this morning's rates compared to Friday's morning rates due to significant strength late Friday.
April's Personal Income and Outlays data was posted at 8:30 AM, but it showed stronger than expected readings in both portions. It revealed an increase in income of 0.5%, which was a large variance form the 0.2% decline that forecasted. The surprise in the spending reading was only by .1%, but the report indicated that consumer ability to spend grew rapidly and that they were spending more than thought. This is bad news for bonds because increases in consumer spending translates into economic growth. The spike in income may also raise wage-inflation concerns once the economy begins to recover.
The Institute for Supply Management's (ISM) manufacturing index also exceeded forecasts, however, by a much more moderate amount. The index rose to 42.8 last month, compared to predictions of 42.3. This means that surveyed manufacturers were more optimistic about business conditions than in April and by a wider margin than analysts had expected. This is also bad news for bonds because expanding manufacturing activity means the economy may be stabilizing.
There is no relevant data due to be posted tomorrow, but Wednesday has two reports scheduled for release. The first and possibly the only relevant news is the Commerce Department's release of April's Factory Orders data late morning. This manufacturing sector report is similar to last week's Durable Goods Orders release, but also includes orders for non-durable goods. It can cause some movement in the financial markets if it varies from forecasts by a wide margin, but it isn't expected to cause much change in rates this month. Current forecasts are expecting to see an increase in orders of 0.3%.
The second report of the day may have a noticeable impact on the markets or be a non-factor depending on its results. The Institute for Supply Management will release its services index late Wednesday morning. It is expected to show a reading of 45.0, with the same principals as Monday's manufacturing index. If this reading varies greatly from forecasts, we may see volatility in the markets and mortgage rates. However, if its results are in the general area of expectations, it will likely have no influence on the markets and mortgage pricing.
April's Personal Income and Outlays data was posted at 8:30 AM, but it showed stronger than expected readings in both portions. It revealed an increase in income of 0.5%, which was a large variance form the 0.2% decline that forecasted. The surprise in the spending reading was only by .1%, but the report indicated that consumer ability to spend grew rapidly and that they were spending more than thought. This is bad news for bonds because increases in consumer spending translates into economic growth. The spike in income may also raise wage-inflation concerns once the economy begins to recover.
The Institute for Supply Management's (ISM) manufacturing index also exceeded forecasts, however, by a much more moderate amount. The index rose to 42.8 last month, compared to predictions of 42.3. This means that surveyed manufacturers were more optimistic about business conditions than in April and by a wider margin than analysts had expected. This is also bad news for bonds because expanding manufacturing activity means the economy may be stabilizing.
There is no relevant data due to be posted tomorrow, but Wednesday has two reports scheduled for release. The first and possibly the only relevant news is the Commerce Department's release of April's Factory Orders data late morning. This manufacturing sector report is similar to last week's Durable Goods Orders release, but also includes orders for non-durable goods. It can cause some movement in the financial markets if it varies from forecasts by a wide margin, but it isn't expected to cause much change in rates this month. Current forecasts are expecting to see an increase in orders of 0.3%.
The second report of the day may have a noticeable impact on the markets or be a non-factor depending on its results. The Institute for Supply Management will release its services index late Wednesday morning. It is expected to show a reading of 45.0, with the same principals as Monday's manufacturing index. If this reading varies greatly from forecasts, we may see volatility in the markets and mortgage rates. However, if its results are in the general area of expectations, it will likely have no influence on the markets and mortgage pricing.
Friday, May 29, 2009
Economic Outlook
As the pressure for higher mortgage rates has increased in recent weeks, investors have speculated that the Fed would step in to "defend" certain interest rate levels, but that hasn't happened. This week, Fed officials explained that their mortgage-backed securities (MBS) purchases are designed to support the mortgage market and not to set rates. The Fed's MBS purchases of $25.5 billion this week were similar to levels seen in recent weeks. Disappointed that the Fed hasn't increased its quantity of asset purchases, investors sold MBS this week, and mortgage rates moved higher.
A number of factors have been developing which typically push interest rates higher. The coming supply of debt needed to pay for government programs will compete for investor funds. Despite strong demand for this week's large Treasury auctions, investors are concerned that higher rates will be required in the future. In addition, an improved economic outlook has made investors more willing to move funds to riskier assets and away from safer assets such as bonds. It also means that higher inflation may be a concern sooner than previously expected.
The difference between short-term and long-term rates reached record spreads during the week. With the Fed-controlled fed funds rate close to zero, short-term rates remained low. Long-term rates, which are market-controlled and influenced by investor expectations, rose significantly. A wide yield curve spread is often found during periods when the economy is strengthening.
Other key factors:
A number of factors have been developing which typically push interest rates higher. The coming supply of debt needed to pay for government programs will compete for investor funds. Despite strong demand for this week's large Treasury auctions, investors are concerned that higher rates will be required in the future. In addition, an improved economic outlook has made investors more willing to move funds to riskier assets and away from safer assets such as bonds. It also means that higher inflation may be a concern sooner than previously expected.
The difference between short-term and long-term rates reached record spreads during the week. With the Fed-controlled fed funds rate close to zero, short-term rates remained low. Long-term rates, which are market-controlled and influenced by investor expectations, rose significantly. A wide yield curve spread is often found during periods when the economy is strengthening.
Other key factors:
- April Existing Home Sales increased 3% from March
- May Consumer Confidence rose to the highest level in eight months
- Continuing Jobless Claims climbed to a new record high
- Oil prices rose to $66 per barrel, the highest level of the year
NEXT WEEK'S FORECAST
Next week, the important Employment report will come out on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Early estimates are for a loss of about 550K jobs in May. Before the Employment Data, the ISM index, Personal Income, and Construction Spending will come out on Monday. Pending Home Sales, a leading indicator for the housing market, will be released on Tuesday. ISM Services will be released on Wednesday, and Productivity is scheduled for Thursday. Fed Chief Bernanke will be testifying on Wednesday.
Tuesday, May 26, 2009
This Week's Economic Outlook
Tuesday's bond market opened in positive territory but has since slipped into negative ground after today's only relevant economic data showed a much higher than expected reading. The stock markets are rallying with the Dow up 170 points and the Nasdaq up 46 points. The bond market is currently down 3/32, which will likely push this morning's mortgage rates higher by approximately .125 of a discount point.
The Conference Board gave us the news that is pressuring bonds and boosting stocks. They said late this morning that their Consumer Confidence Index (CCI) spiked to 54.9 this month, greatly exceeding forecasts. Analysts were expecting to see a reading of approximately 42.0, meaning that consumers were much more optimistic about their own financial situations than many had thought. This is negative news for bonds because rising confidence usually translates into higher level of consumer spending, which fuels the economy.
The National Association of Realtors will give us the Existing Home Sales report late tomorrow morning. This data tracks resales of homes in the U.S., giving us a measurement of housing sector strength. However, it is not considered to be of much importance to the bond market unless it varies greatly from forecasts. Current forecasts are calling for a small increase in sales between March and April.
Overall, I think we have a busy week ahead of us. The big reports of the week were today's CCI and Thursday's Durable Goods Orders data. If Friday's GDP revision varies greatly from forecasts, it can also lead to sizable changes in rates.
There are also a couple of Treasury auctions that are also worth noting. The 5-year sale Wednesday and the 7-year auction on Thursday may influence bond trading and possibly mortgage rates if they are met with an exceptional demand or if there is lackluster interest from investors. There is a pretty good possibility of seeing mortgage rates change several times this week, so please proceed cautiously if still floating an interest rate.
The Conference Board gave us the news that is pressuring bonds and boosting stocks. They said late this morning that their Consumer Confidence Index (CCI) spiked to 54.9 this month, greatly exceeding forecasts. Analysts were expecting to see a reading of approximately 42.0, meaning that consumers were much more optimistic about their own financial situations than many had thought. This is negative news for bonds because rising confidence usually translates into higher level of consumer spending, which fuels the economy.
The National Association of Realtors will give us the Existing Home Sales report late tomorrow morning. This data tracks resales of homes in the U.S., giving us a measurement of housing sector strength. However, it is not considered to be of much importance to the bond market unless it varies greatly from forecasts. Current forecasts are calling for a small increase in sales between March and April.
Overall, I think we have a busy week ahead of us. The big reports of the week were today's CCI and Thursday's Durable Goods Orders data. If Friday's GDP revision varies greatly from forecasts, it can also lead to sizable changes in rates.
There are also a couple of Treasury auctions that are also worth noting. The 5-year sale Wednesday and the 7-year auction on Thursday may influence bond trading and possibly mortgage rates if they are met with an exceptional demand or if there is lackluster interest from investors. There is a pretty good possibility of seeing mortgage rates change several times this week, so please proceed cautiously if still floating an interest rate.
Friday, May 22, 2009
Economic Outlook
While weaker than expected economic data pushed mortgage rates lower last week, concerns about the coming supply of debt needed to pay for government programs moved mortgage rates higher this week, leaving rates nearly unchanged over the past two weeks.
This week, the economic data had little impact, but mortgage rates moved higher for a variety of other reasons. The Treasury announced a huge $101 billion in auctions next week, meaning additional supply for the market to absorb. Compounding the problem, the UK was placed on the watch list on Thursday for a possible downgrade of the credit rating for its debt, due to its high level of government debt. A lower credit rating implies greater risk, pushing yields higher. Investors are now concerned that the US also may be at risk of a downgrade. Finally, there was hope that the Fed would step up its asset purchases, but the Fed held steady its level of Treasury and mortgage-backed security (MBS) buying this week, disappointing many investors.
The housing data released this week was mixed. While April Housing Starts and Building Permits fell to record lows, the weakness came from multi-family units. Construction of single-family homes actually rose 3% from March, its second consecutive monthly increase. In addition, the National Association of Home Builders (NAHB) May confidence index rose to the highest level since September 2008.
Last week, the Secretary of the Department of Housing and Urban Development (HUD) announced that home buyers would be able to use the $8,000 first-time homebuyer tax credit for down payments on FHA loans through the use of bridge loans. HUD also posted the information on its website (HUD Mortgagee Letter 09-15). Since then, HUD has completely removed the information from its website. While no official explanation has been given, it appears that HUD and the IRS need more time to research the details of the program before moving forward.
This week, the economic data had little impact, but mortgage rates moved higher for a variety of other reasons. The Treasury announced a huge $101 billion in auctions next week, meaning additional supply for the market to absorb. Compounding the problem, the UK was placed on the watch list on Thursday for a possible downgrade of the credit rating for its debt, due to its high level of government debt. A lower credit rating implies greater risk, pushing yields higher. Investors are now concerned that the US also may be at risk of a downgrade. Finally, there was hope that the Fed would step up its asset purchases, but the Fed held steady its level of Treasury and mortgage-backed security (MBS) buying this week, disappointing many investors.
The housing data released this week was mixed. While April Housing Starts and Building Permits fell to record lows, the weakness came from multi-family units. Construction of single-family homes actually rose 3% from March, its second consecutive monthly increase. In addition, the National Association of Home Builders (NAHB) May confidence index rose to the highest level since September 2008.
Last week, the Secretary of the Department of Housing and Urban Development (HUD) announced that home buyers would be able to use the $8,000 first-time homebuyer tax credit for down payments on FHA loans through the use of bridge loans. HUD also posted the information on its website (HUD Mortgagee Letter 09-15). Since then, HUD has completely removed the information from its website. While no official explanation has been given, it appears that HUD and the IRS need more time to research the details of the program before moving forward.
Monday, May 18, 2009
This Week's Economis News
This week brings us the release of only two pieces of economic news in addition to the minutes from the last FOMC meeting. Neither of the economic reports can be considered of high importance to the markets and mortgage rates, so we may see a fairly calm week for mortgage rates.
April's Housing Starts is the first data of the week but is the less important of the two. This data measures housing sector strength and mortgage credit demand by tracking new permits and actual starts of new home construction. It is expected to show a small increase in new starts from March's readings. But, since this report is not considered to be of high importance to the bond market, it likely will have little impact on mortgage rates unless it varies greatly from forecasts.
There is no relevant economic news scheduled for release Wednesday, but we will get to see the minutes from the last FOMC meeting. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation concerns in the economy. The goal is to form a guess about when the Fed may make another move to help the economy. The minutes will be released at 2:00 PM ET, so if there is a market reaction to them it will be evident during afternoon trading.
The last data comes late Thursday morning with the release of April's Leading Economic Indicators (LEI) at 10:00 AM ET. This Conference Board report attempts to measure economic activity over the next three to six months. It is expected to show a fairly large increase of 0.7% from March's reading, meaning that economic activity is likely to gain momentum during the next few months. A decline would be good news for the bond market and mortgage rates, while a larger increase could cause mortgage rates to inch higher Thursday.
Overall, I think it will be a fairly calm week for mortgage rates, at least compared to last week. We could see little movement in rates if the stock markets remain calm and the week's data doesn't reveal any major surprises. The FOMC minutes may lead to some volatility in the markets, but neither of the economic reports are of great concern.
Also worth noting is an early close in the bond market Friday afternoon ahead of the Memorial Day Holiday Monday. These early closes sometimes lead to additional volatility in bond prices as investors prepare for the long weekend and trading thins with many traders starting the weekend early.
April's Housing Starts is the first data of the week but is the less important of the two. This data measures housing sector strength and mortgage credit demand by tracking new permits and actual starts of new home construction. It is expected to show a small increase in new starts from March's readings. But, since this report is not considered to be of high importance to the bond market, it likely will have little impact on mortgage rates unless it varies greatly from forecasts.
There is no relevant economic news scheduled for release Wednesday, but we will get to see the minutes from the last FOMC meeting. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation concerns in the economy. The goal is to form a guess about when the Fed may make another move to help the economy. The minutes will be released at 2:00 PM ET, so if there is a market reaction to them it will be evident during afternoon trading.
The last data comes late Thursday morning with the release of April's Leading Economic Indicators (LEI) at 10:00 AM ET. This Conference Board report attempts to measure economic activity over the next three to six months. It is expected to show a fairly large increase of 0.7% from March's reading, meaning that economic activity is likely to gain momentum during the next few months. A decline would be good news for the bond market and mortgage rates, while a larger increase could cause mortgage rates to inch higher Thursday.
Overall, I think it will be a fairly calm week for mortgage rates, at least compared to last week. We could see little movement in rates if the stock markets remain calm and the week's data doesn't reveal any major surprises. The FOMC minutes may lead to some volatility in the markets, but neither of the economic reports are of great concern.
Also worth noting is an early close in the bond market Friday afternoon ahead of the Memorial Day Holiday Monday. These early closes sometimes lead to additional volatility in bond prices as investors prepare for the long weekend and trading thins with many traders starting the weekend early.
Sunday, May 10, 2009
This Week's Economic News
There are several important pieces of economic news scheduled for release this week, but three stand out above the others. There are a total of six reports scheduled, so it can be considered a fairly active week. There is no relevant data due out tomorrow, so expect the stock markets to help drive bond trading and mortgage rates.
March's Goods and Services Trade Balance report will be released early Tuesday morning. This report gives us the size of the U.S. trade deficit but likely will not have much of an impact on the bond market or mortgage pricing. It is the least important of this week's data.
The first important piece of data is the release of April's Retail Sales early Wednesday morning. This is an extremely important report for the financial markets as it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, this data can have a pretty significant impact on the markets. Current forecasts are calling for a 0.1% decline in sales from March to April. A weaker than expected level of sales should push bond prices higher and mortgage rates lower Wednesday. However, a larger increase could fuel bond selling and lead to higher mortgage rates.
The second important report of the week is April's Producer Price Index (PPI) early Thursday morning, which helps us measure inflationary pressures at the producer level of the economy. If this report reveals weaker than expected readings, indicating inflation is not a concern at the producer level, we should see the bond and stock markets rally. The overall index is expected to show an increase of 0.1%, while the core data that excludes food and energy prices is also expected to rise 0.1%. A smaller than expected increase in the core data would be ideal for mortgage shoppers.
There are three relevant reports scheduled to be posted Friday. The first is the week's most important. April's Consumer Price Index (CPI) will be posted at 8:30 AM. It is similar to Thursday's PPI report, but measures inflationary pressures at the more important consumer level of the economy. Its results will be watched closely and can lead to significant volatility in the bond market and mortgage pricing. Current forecasts are calling for no change in the overall index and a 0.1% increase in the core data reading. The core data is the more important of the two since it excludes more volatile food and energy prices.
April's Industrial Production is Friday's second relevant report. It measures manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is expected to show a 0.6% decline in production, indicating that manufacturing activity is slowing rapidly. A larger decline in output would be good news for the bond market and mortgage rates because it would indicate that the manufacturing sector is weaker than expected.
The last report of the week is May's preliminary reading to the University of Michigan's Index of Consumer Sentiment. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. It is expected to show a reading of 65.0, which would be little change from last month's final reading. If it shows a decline in consumer confidence, bond prices will likely rise, assuming the CPI does not give us a significant surprise.
Overall, it likely will be a pretty active week for mortgage rates. Besides the week's important economic news, look for the stock markets to be a major influence on trading. The most important day of the week is Friday with three reports on the agenda, including the CPI. But Wednesday is important due to the Retail Sales report. I am expecting to see several noticeable changes to rates this week, and would not be surprised to see multiple intra-day revisions also. Accordingly, please be attentive to the markets if still floating an interest rate.
March's Goods and Services Trade Balance report will be released early Tuesday morning. This report gives us the size of the U.S. trade deficit but likely will not have much of an impact on the bond market or mortgage pricing. It is the least important of this week's data.
The first important piece of data is the release of April's Retail Sales early Wednesday morning. This is an extremely important report for the financial markets as it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, this data can have a pretty significant impact on the markets. Current forecasts are calling for a 0.1% decline in sales from March to April. A weaker than expected level of sales should push bond prices higher and mortgage rates lower Wednesday. However, a larger increase could fuel bond selling and lead to higher mortgage rates.
The second important report of the week is April's Producer Price Index (PPI) early Thursday morning, which helps us measure inflationary pressures at the producer level of the economy. If this report reveals weaker than expected readings, indicating inflation is not a concern at the producer level, we should see the bond and stock markets rally. The overall index is expected to show an increase of 0.1%, while the core data that excludes food and energy prices is also expected to rise 0.1%. A smaller than expected increase in the core data would be ideal for mortgage shoppers.
There are three relevant reports scheduled to be posted Friday. The first is the week's most important. April's Consumer Price Index (CPI) will be posted at 8:30 AM. It is similar to Thursday's PPI report, but measures inflationary pressures at the more important consumer level of the economy. Its results will be watched closely and can lead to significant volatility in the bond market and mortgage pricing. Current forecasts are calling for no change in the overall index and a 0.1% increase in the core data reading. The core data is the more important of the two since it excludes more volatile food and energy prices.
April's Industrial Production is Friday's second relevant report. It measures manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is expected to show a 0.6% decline in production, indicating that manufacturing activity is slowing rapidly. A larger decline in output would be good news for the bond market and mortgage rates because it would indicate that the manufacturing sector is weaker than expected.
The last report of the week is May's preliminary reading to the University of Michigan's Index of Consumer Sentiment. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. It is expected to show a reading of 65.0, which would be little change from last month's final reading. If it shows a decline in consumer confidence, bond prices will likely rise, assuming the CPI does not give us a significant surprise.
Overall, it likely will be a pretty active week for mortgage rates. Besides the week's important economic news, look for the stock markets to be a major influence on trading. The most important day of the week is Friday with three reports on the agenda, including the CPI. But Wednesday is important due to the Retail Sales report. I am expecting to see several noticeable changes to rates this week, and would not be surprised to see multiple intra-day revisions also. Accordingly, please be attentive to the markets if still floating an interest rate.
Friday, May 8, 2009
Improved Economic Outlook
Increased optimism about the pace of an economic recovery helped the stock market and hurt bond markets this week. As a result, mortgage rates ended the week a little higher. Mortgage rates are being pressured by concerns that an economic rebound will bring increased inflation sooner than recently thought. In addition, large Treasury auctions are adding significant supply to the market, forcing yields higher. Fortunately, foreign investors remain active buyers and Fed purchases continue at a strong pace.
Comments from Fed Chief Bernanke and generally stronger than expected economic data fueled upward revisions to the consensus economic forecast this week. In Tuesday's testimony to Congress, Bernanke offered his most optimistic economic outlook since the recession began. He expects economy activity to "bottom out, then to turn up later this year". He warned that the labor market may recover very slowly, but he expects that the Unemployment Rate will peak below 10%. He pointed to the decline in mortgage rates as a successful outcome of Fed programs and suggested that there have been signs that the housing market may be near a bottom. Housing sector data released during the week supported his view. Pending Home Sales, a leading indicator for the housing market, rose 3%, and Construction Spending posted gains as well.
In a typical economic recovery, the labor market is one of the last areas to turn around, and the pattern is expected to hold this year. The April Employment report showed that the economy lost -539K jobs, which was a large number but fewer than expected. The Unemployment Rate rose to 8.9% from 8.5% in March. The consensus outlook is that a pickup in the job market will lag an improvement in the overall economy by several months.
Comments from Fed Chief Bernanke and generally stronger than expected economic data fueled upward revisions to the consensus economic forecast this week. In Tuesday's testimony to Congress, Bernanke offered his most optimistic economic outlook since the recession began. He expects economy activity to "bottom out, then to turn up later this year". He warned that the labor market may recover very slowly, but he expects that the Unemployment Rate will peak below 10%. He pointed to the decline in mortgage rates as a successful outcome of Fed programs and suggested that there have been signs that the housing market may be near a bottom. Housing sector data released during the week supported his view. Pending Home Sales, a leading indicator for the housing market, rose 3%, and Construction Spending posted gains as well.
In a typical economic recovery, the labor market is one of the last areas to turn around, and the pattern is expected to hold this year. The April Employment report showed that the economy lost -539K jobs, which was a large number but fewer than expected. The Unemployment Rate rose to 8.9% from 8.5% in March. The consensus outlook is that a pickup in the job market will lag an improvement in the overall economy by several months.
Tuesday, May 5, 2009
Advertising in Real Estate
In real estate, advertising remains to proliferate with more ways that could increase productivity.
However, for those who still don't know how to maximize the potential of advertising in increasing their real estate sales, here are some ways to consider:
1. Web site listings
Real estate businesses may consider the benefits of advertising their products or services online. In this manner, they could even increase their market share by accessing those who cannot be reached by simple ways of promotions and advertising.
People behind the real estate business may choose from the different web site listings available in the Internet today.
2. Search engines registration
Real estate businessmen may also opt for the sear engines that are available in the Internet. With a reasonable amount, real estate businesses may promote their products online and may get more exposure through search engines. Two of the most common search engines are Google and Yahoo. So, if the business is listed at these sites, chances are they'll reap more profits than they could imagine.
3. Banner ads
Banner ads are those ads that appear on top of a certain sponsoring website. It contains the business' name and the hyperlink that connects the customer to the business' site.
In this way, real estate entrepreneurs may take the chance of increasing their exposure online by letting the people know that they exist.
4. Emails
Real estate businesses may also resort to this kind of advertising. Though, special considerations should be made when constructing emails so that it will not be categorized as spam.
Also, to maximize the use of this advertising technique, the real estate business must also have an email list of their potential buyers. I recommend Christian Stefferud at Master My Maketing. Christian teaches how to create email campaigns and build a referral based business with social networking.
5. The Basics
It still pays to be traditional. In fact, one of the best ways to advertise a product is to use the traditional method of advertising - the print and the broadcast advertisements. There are people who would rather see the ads on television or in newspapers than online.
But whatever type of advertising a real estate business use, one thing is bound to help them boost their sales and profit. It just needs the skill to decide which would go best with the business.
However, for those who still don't know how to maximize the potential of advertising in increasing their real estate sales, here are some ways to consider:
1. Web site listings
Real estate businesses may consider the benefits of advertising their products or services online. In this manner, they could even increase their market share by accessing those who cannot be reached by simple ways of promotions and advertising.
People behind the real estate business may choose from the different web site listings available in the Internet today.
2. Search engines registration
Real estate businessmen may also opt for the sear engines that are available in the Internet. With a reasonable amount, real estate businesses may promote their products online and may get more exposure through search engines. Two of the most common search engines are Google and Yahoo. So, if the business is listed at these sites, chances are they'll reap more profits than they could imagine.
3. Banner ads
Banner ads are those ads that appear on top of a certain sponsoring website. It contains the business' name and the hyperlink that connects the customer to the business' site.
In this way, real estate entrepreneurs may take the chance of increasing their exposure online by letting the people know that they exist.
4. Emails
Real estate businesses may also resort to this kind of advertising. Though, special considerations should be made when constructing emails so that it will not be categorized as spam.
Also, to maximize the use of this advertising technique, the real estate business must also have an email list of their potential buyers. I recommend Christian Stefferud at Master My Maketing. Christian teaches how to create email campaigns and build a referral based business with social networking.
5. The Basics
It still pays to be traditional. In fact, one of the best ways to advertise a product is to use the traditional method of advertising - the print and the broadcast advertisements. There are people who would rather see the ads on television or in newspapers than online.
But whatever type of advertising a real estate business use, one thing is bound to help them boost their sales and profit. It just needs the skill to decide which would go best with the business.
10 Tips on How to Know if Your Buyer is Working With the Right Lender
Your buyer says, "Let's make an offer on that property!"
You ask, "Have you been Pre-Qualified?"
Your buyer says, "Of course I have. My cousin's son, who just finished some courses at community college and landed a job at the local bank got me this pre-qualification certificate."
That should be a RED FLAG.
It's always been said, it's not the bank you go to, but the agent originating your file that's going to make a difference on how fast and smooth the loan gets done.
So what makes a good loan agent, mortgage consultant, or home loan originator?
You ask, "Have you been Pre-Qualified?"
Your buyer says, "Of course I have. My cousin's son, who just finished some courses at community college and landed a job at the local bank got me this pre-qualification certificate."
That should be a RED FLAG.
It's always been said, it's not the bank you go to, but the agent originating your file that's going to make a difference on how fast and smooth the loan gets done.
So what makes a good loan agent, mortgage consultant, or home loan originator?
- Agent needs to answer the phone. A good agent will answer your phone call when you need them to. If they don't, leave a message and they should return your call that same day. If they don't call back, they're either swamped with leads or golfing.
- Call potential leads immediately. A good agent understands 'Time is of the Essence'. They should call your buyer asap and get started on the pre-qualification procedure. After the pre-qualification is done, agent should fax and email a pre-qualification letter and CALL the realtor to make sure they received it. That letter is needed to submit the offer.
- Have quick access to run credit. Personally I have my own account with my credit report agency. I ask for the borrower's permission to order the credit report and I order it at my expense. I do not need a manager's permission or tell my client I will need to go to the office to order it. I have the capability of ordering credit through my lap top or blackberry.
- Take a complete 1003. A 1003 is a loan application. The more detailed information on the loan application, the quicker and smoother the process of the loan can be. This part is very important. There have been deals rejected because of lacking info or too much info. An experienced loan agent knows exactly what the underwriter is looking for, how to make the underwriter's job less stressful, and how to get an approval with minimum conditions.
- Gathering necessary documentation. A good loan agent knows what is needed to get the deal done and it's not only pay stubs, W-2's, and bank statements. There is more to it, but each case has it's own individual needs.
- Presenting a fair Good Faith Estimate. This is what makes a difference between the honest loan agent and the dishonest loan agent. It's very simple to make the buyer believe their fees are going to be low by saying escrow will be $100 and title will be $100, but what happens at closing when the buyer is presented with the actual fees? They get upset, uncomfortable, and the experience becomes negative. Personally I like to pad my GFE. My cost, interest rate, and monthly payments have mostly appeared less at time of signing docs. Therefore the buyer is signing freely and appears to be very satisfied with the transaction.
- Returning call to Realtor with realistic numbers. After talking to buyer a loan agent should immediately call the Realtor and review ratios and price scenarios. The Realtor needs a good offer price to begin negotiations just in case the seller counters the offer and prices start to change. How high of a price can the buyer qualify for? Can they pay for their own closing cost just in case seller denies paying for closing cost?
- Offer gets accepted and loan begins process. At this stage a good loan agent will have most of the process already started. Ordering appraisal, verifications, escrow, and title should be the only concerns left. A great support team is needing in the operations department. I have 3 processors pushing to get deals done FAST.
- Updates. A great loan agent will have a system in place keeping track of all loans and updating Realtors on a weekly basis unless things happen faster, then it can be on a daily basis.
- Offering their weekends at open houses. Helping a Realtor on the weekends can make a difference between opening escrow or multiple offers. Being at the open houses, well equipped and ready to approve a buyer can get a realtor one step closer to opening escrow.
Once a loan agent has proven to the Realtor that teaming up with him/her can make a positive outlook in their success, THE SKY IS THE LIMIT!
Your loan agent should be helping with your success.
Monday, April 27, 2009
This Week's Economic News
The first of this week's seven relevant economic reports comes late tomorrow morning when the Consumer Confidence Index (CCI) for April will be released. This Conference Board index is a key indicator of future spending by consumers. The group surveys 5000 consumers from across the country about their personal financial situations. If sentiment is strong or rising, it is believed that consumers are more apt to make large purchases in the near future. However, if they are concerned about issues such as job security and investments, they will probably delay making large purchases. The latter is better for the bond market and mortgage rates because the expected slowdown in spending would keep inflation concerns to a minimum. But, a sizable increase could hurt the bond market, pushing mortgage rates higher tomorrow. It is expected to show a reading of 28.8, which would be an increase from March's 26.0 reading.
Wednesday brings us the release of a very important report along with the FOMC meeting results. The report is the preliminary version of the 1st Quarter Gross Domestic Product (GDP). This is arguably the single most important report that we see on a regular basis. The GDP is the sum of all products and services produced in the U.S. and is considered to be the best indicator of economic growth or contraction. I expect this report to cause major movement in the financial markets Wednesday and therefore the mortgage market also. Analysts are expecting to see a decline in output at an annual rate of 4.9%. A larger decline would be ideal for mortgage rates. But, a stronger than expected reading would almost certainly cause stock prices to rise and bond prices to fall, leading to higher mortgage rates Wednesday morning.
This week's FOMC meeting will begin on Tuesday but will not adjourn until Wednesday afternoon. It will likely adjourn with an announcement of no change to key short-term interest rates, but we may see some volatility in the markets following the 2:15 PM ET post-meeting statement.
Overall, look for plenty of movement in the financial markets and mortgage rates this week. Wednesday will likely be the most important day of the week with the GDP being posted along with the FOMC adjournment, but we may see noticeable changes to rates tomorrow and Friday also. If this week's reports reveal weaker than expected economic conditions, the bond market should rally and mortgage rates should fall significantly for the week.
Wednesday brings us the release of a very important report along with the FOMC meeting results. The report is the preliminary version of the 1st Quarter Gross Domestic Product (GDP). This is arguably the single most important report that we see on a regular basis. The GDP is the sum of all products and services produced in the U.S. and is considered to be the best indicator of economic growth or contraction. I expect this report to cause major movement in the financial markets Wednesday and therefore the mortgage market also. Analysts are expecting to see a decline in output at an annual rate of 4.9%. A larger decline would be ideal for mortgage rates. But, a stronger than expected reading would almost certainly cause stock prices to rise and bond prices to fall, leading to higher mortgage rates Wednesday morning.
This week's FOMC meeting will begin on Tuesday but will not adjourn until Wednesday afternoon. It will likely adjourn with an announcement of no change to key short-term interest rates, but we may see some volatility in the markets following the 2:15 PM ET post-meeting statement.
Overall, look for plenty of movement in the financial markets and mortgage rates this week. Wednesday will likely be the most important day of the week with the GDP being posted along with the FOMC adjournment, but we may see noticeable changes to rates tomorrow and Friday also. If this week's reports reveal weaker than expected economic conditions, the bond market should rally and mortgage rates should fall significantly for the week.
Tuesday, April 21, 2009
How to Get a FREE Appraisal and Credit Report on Your Next Transaction
I have had the opportunity to help buyers and homeowners with their appraisal and credit report fees. Appraisal reports can cost anywhere from $350. to $500. (depends on size and usage of property). Credit Reports can cost anywhere from $30. to $60. (depends on number of borrowers on loan).
I can pay for the appraisal and credit report fee, however the appraisal fee will have to be paid upfront by borrower and I will reimburse the fee at closing. It's that simple.
If you want to hear more about it or have other questions:
I can pay for the appraisal and credit report fee, however the appraisal fee will have to be paid upfront by borrower and I will reimburse the fee at closing. It's that simple.
If you want to hear more about it or have other questions:
- How can I buy a home with a low down payment?
- How can I find a good REO agent with foreclosed homes?
- Can I use my parents as co-signers?
Just call me at (310)963-8315.
Sunday, April 19, 2009
This Week's Economic News
This week is fairly light in terms of economic news scheduled for release. There are four reports scheduled, but only one of them is likely to cause much movement in mortgage rates. Accordingly, there is a fairly decent possibility of seeing a fairly calm week in the mortgage market, assuming that the stock markets do the same.
The week's first data comes tomorrow morning when the Conference Board will release their Leading Economic Indicators (LEI) for March. This data attempts to measure economic activity over the next three to six months. If it estimates an increase in activity, the bond market may fall and mortgage rates could rise. If it shows a weaker than expected reading, the bond market may move higher and mortgage rates should improve slightly. This is considered to be a moderately important report, so we may see a slight movement in rates as a result of this report. It is expected to show a decline of 0.3%.
There is no relevant data scheduled for release Tuesday or Wednesday. The National Association of Realtors will post March's Existing Homes Sales numbers Thursday morning, which are expected to show a drop from February. A similar report to this one and actually the week's least important data- March's New Home Sales will be released Friday morning. Both of these releases give us an indication of housing sector strength and mortgage credit demand, but unless they vary greatly from analysts' forecasts, I don't think they will cause much movement in mortgage rates.
March's Durable Goods Orders will also be posted Friday morning. This report gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. Current forecasts are calling for a decline of 1.5%. This would be a sign of manufacturing sector weakness that would be good news for bonds, especially if the report shows a larger than expected decline. A stronger level of new orders could lead to stock strength and weakness in bonds, translating into higher mortgage rates Friday.
Overall, look for Friday to be the most important day of the week with the Durable Goods report being posted. The rest of the week will likely be heavily influenced by the stock markets. If the major stock indexes rally, bonds will likely suffer and mortgage rates will move higher. If stocks fall for the week, we could see mortgage rates move lower the next few days.
The week's first data comes tomorrow morning when the Conference Board will release their Leading Economic Indicators (LEI) for March. This data attempts to measure economic activity over the next three to six months. If it estimates an increase in activity, the bond market may fall and mortgage rates could rise. If it shows a weaker than expected reading, the bond market may move higher and mortgage rates should improve slightly. This is considered to be a moderately important report, so we may see a slight movement in rates as a result of this report. It is expected to show a decline of 0.3%.
There is no relevant data scheduled for release Tuesday or Wednesday. The National Association of Realtors will post March's Existing Homes Sales numbers Thursday morning, which are expected to show a drop from February. A similar report to this one and actually the week's least important data- March's New Home Sales will be released Friday morning. Both of these releases give us an indication of housing sector strength and mortgage credit demand, but unless they vary greatly from analysts' forecasts, I don't think they will cause much movement in mortgage rates.
March's Durable Goods Orders will also be posted Friday morning. This report gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. Current forecasts are calling for a decline of 1.5%. This would be a sign of manufacturing sector weakness that would be good news for bonds, especially if the report shows a larger than expected decline. A stronger level of new orders could lead to stock strength and weakness in bonds, translating into higher mortgage rates Friday.
Overall, look for Friday to be the most important day of the week with the Durable Goods report being posted. The rest of the week will likely be heavily influenced by the stock markets. If the major stock indexes rally, bonds will likely suffer and mortgage rates will move higher. If stocks fall for the week, we could see mortgage rates move lower the next few days.
Sunday, April 12, 2009
This Week's Economic News
This week brings us the release of seven relevant economic reports for the bond market to digest. We are also heading into corporate earnings season, which could lead to fluctuations in the stock markets. If earnings come in lighter than estimates, the stock markets may fall, leading to an influx of funds into bonds. But, if earnings and forecasts are strong, the major stock indexes may rally, pulling funds from bonds and leading to higher mortgage rates.
There is no relevant economic news scheduled for release Monday. The first important report comes early Tuesday morning when the Commerce Department will release March's Retail Sales data. This piece of data gives us a measurement of consumer spending, which is very important because consumer spending makes up two-thirds of the U.S. economy. Current forecasts call for a 0.3% increase in sales last month. If we see a larger increase in spending, the bond market will probably fall and mortgage rates will rise. However, a weaker than expected reading could push bond prices higher and mortgage rates lower Tuesday.
The Labor Department will post March's Producer Price Index (PPI) early Tuesday morning also, giving us an important measurement of inflationary pressures at the producer level of the economy. There are two portions of the report that analysts watch- the overall reading and the core data reading. The core data is more important to market participants because it excludes more volatile food and energy prices. If it shows rapidly rising prices, inflation fears may hurt bond prices, leading to higher mortgage rates Tuesday morning. However, a small increase, or better yet a decline in prices, would be good news for the bond market and mortgage rates. Current forecasts are calling for no change in the overall reading and a 0.1% rise in the core data.
There are three pieces of news scheduled for release Wednesday. The first is the sister report of the PPI. March's Consumer Price Index (CPI) will be released early Wednesday morning. This index is very similar to Tuesday's PPI, but tracks prices at the more important consumer level of the economy. This is one of the most important pieces of data we see each month, so stronger than expected readings will undoubtedly lead to higher mortgage rates. Current forecasts are calling for an increase of 0.2% in the overall index and 0.1% in the core data.
The second is March's Industrial Production report at 9:15 AM ET. It gives us a measurement of output at U.S. factories, mines and utilities, translating into an indication of manufacturing sector strength. Current forecasts are calling for a decline in production of 0.9%. Since signs of a weakening economy are considered favorable to bonds and therefore mortgage rates, a larger decline would be good news for mortgage pricing. However, the CPI is by far the most important data of the day.
The Federal Reserve will post its Fed Beige Book report at 2:00 PM ET Wednesday. This report, which is named simply after the color of its cover, details economic conditions throughout the U.S. by region. Since the Fed relies heavily on it during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any surprises.
March's Housing Starts report is Thursday's sole report, but it will most likely be a non-factor in the market. It gives us a measurement of housing sector strength and mortgage credit demand, however, usually doesn't cause much movement in mortgage pricing unless it varies greatly from forecasts. It is this week's least important report.
The final release of the week is the University of Michigan's Index of Consumer Sentiment at 9:45 AM ET Friday. Their consumer sentiment index will give us an indication of consumer confidence, which hints at consumers' willingness to spend. If confidence is rising, consumers are more apt to make large purchases. But, if they are growing more concerned of their personal financial situations, they probably will delay making that large purchase. This influences future consumer spending data and can have a moderate impact on the financial markets. Good news would be a decline from March's 57.3 reading. Current forecasts are calling for a reading of approximately 58.5.
Overall, look for the most movement in rates the middle part of the week. The Retail Sales, PPI and CPI reports are the biggest names on the agenda. Any of the three can cause significant movement in the markets and mortgage rates. Fed Chairman Bernanke is expected to speak at a Kansas City banker's conference mid-day Friday, but I don't think his words will influence trading or mortgage rates. Regardless, we have a very active week ahead of us so please proceed cautiously if still floating an interest rate.
There is no relevant economic news scheduled for release Monday. The first important report comes early Tuesday morning when the Commerce Department will release March's Retail Sales data. This piece of data gives us a measurement of consumer spending, which is very important because consumer spending makes up two-thirds of the U.S. economy. Current forecasts call for a 0.3% increase in sales last month. If we see a larger increase in spending, the bond market will probably fall and mortgage rates will rise. However, a weaker than expected reading could push bond prices higher and mortgage rates lower Tuesday.
The Labor Department will post March's Producer Price Index (PPI) early Tuesday morning also, giving us an important measurement of inflationary pressures at the producer level of the economy. There are two portions of the report that analysts watch- the overall reading and the core data reading. The core data is more important to market participants because it excludes more volatile food and energy prices. If it shows rapidly rising prices, inflation fears may hurt bond prices, leading to higher mortgage rates Tuesday morning. However, a small increase, or better yet a decline in prices, would be good news for the bond market and mortgage rates. Current forecasts are calling for no change in the overall reading and a 0.1% rise in the core data.
There are three pieces of news scheduled for release Wednesday. The first is the sister report of the PPI. March's Consumer Price Index (CPI) will be released early Wednesday morning. This index is very similar to Tuesday's PPI, but tracks prices at the more important consumer level of the economy. This is one of the most important pieces of data we see each month, so stronger than expected readings will undoubtedly lead to higher mortgage rates. Current forecasts are calling for an increase of 0.2% in the overall index and 0.1% in the core data.
The second is March's Industrial Production report at 9:15 AM ET. It gives us a measurement of output at U.S. factories, mines and utilities, translating into an indication of manufacturing sector strength. Current forecasts are calling for a decline in production of 0.9%. Since signs of a weakening economy are considered favorable to bonds and therefore mortgage rates, a larger decline would be good news for mortgage pricing. However, the CPI is by far the most important data of the day.
The Federal Reserve will post its Fed Beige Book report at 2:00 PM ET Wednesday. This report, which is named simply after the color of its cover, details economic conditions throughout the U.S. by region. Since the Fed relies heavily on it during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any surprises.
March's Housing Starts report is Thursday's sole report, but it will most likely be a non-factor in the market. It gives us a measurement of housing sector strength and mortgage credit demand, however, usually doesn't cause much movement in mortgage pricing unless it varies greatly from forecasts. It is this week's least important report.
The final release of the week is the University of Michigan's Index of Consumer Sentiment at 9:45 AM ET Friday. Their consumer sentiment index will give us an indication of consumer confidence, which hints at consumers' willingness to spend. If confidence is rising, consumers are more apt to make large purchases. But, if they are growing more concerned of their personal financial situations, they probably will delay making that large purchase. This influences future consumer spending data and can have a moderate impact on the financial markets. Good news would be a decline from March's 57.3 reading. Current forecasts are calling for a reading of approximately 58.5.
Overall, look for the most movement in rates the middle part of the week. The Retail Sales, PPI and CPI reports are the biggest names on the agenda. Any of the three can cause significant movement in the markets and mortgage rates. Fed Chairman Bernanke is expected to speak at a Kansas City banker's conference mid-day Friday, but I don't think his words will influence trading or mortgage rates. Regardless, we have a very active week ahead of us so please proceed cautiously if still floating an interest rate.
Saturday, April 11, 2009
What is FHA?
What is the Federal Housing Administration?
What is FHA Mortgage Insurance?
Why does FHA Mortgage Insurance exist?
How is FHA funded?
Click here for the answers to these questions
Friday, March 13, 2009
Ortiz Bros. Moving & Storage
I would like to introduce a great company: Ortiz Bros. Moving & Storage
Ortiz Bros. has been around for 3 generations and has moved from small families to large companies, from local to international, and from easy to complex. They've also had the great opportunity to move for celebrities, athletes, and many other public figures.
Please take your time to visit their website and if you know of anyone who is making a move very soon, keep Ortiz Bros. in mind because "It's the Right Move"
Currently Ortiz Bros. is offering 50% off on boxes. Just present this promo code: OKI-R309
If you've ever had Ortiz Bros. move for you in the past, please submit your testimonial on this blog.
Thanks! Have a great weekend!
Ortiz Bros. has been around for 3 generations and has moved from small families to large companies, from local to international, and from easy to complex. They've also had the great opportunity to move for celebrities, athletes, and many other public figures.
Please take your time to visit their website and if you know of anyone who is making a move very soon, keep Ortiz Bros. in mind because "It's the Right Move"
Currently Ortiz Bros. is offering 50% off on boxes. Just present this promo code: OKI-R309
If you've ever had Ortiz Bros. move for you in the past, please submit your testimonial on this blog.
Thanks! Have a great weekend!
Wednesday, March 11, 2009
Loan Modifications
I'll get right to the point.
It's today's talk....Home Loan Modification.
What does it consist of? Do I qualify for it?
What about the government support? Will I be able to get help from the government?
These are all good questions, and fortunately I have some answers. Too many to type on my blog.
Educate yourself. Go to NPR website and place the follow title in their search engine:
Missing Mortgage Notes Delay Some Foreclosures
http://www.npr.org/
You will hear what is happening in today's market.
Leave a comment. Tell us what you think.
Contact me if you have questions.
Thanks
Rick
It's today's talk....Home Loan Modification.
What does it consist of? Do I qualify for it?
What about the government support? Will I be able to get help from the government?
These are all good questions, and fortunately I have some answers. Too many to type on my blog.
Educate yourself. Go to NPR website and place the follow title in their search engine:
Missing Mortgage Notes Delay Some Foreclosures
http://www.npr.org/
You will hear what is happening in today's market.
Leave a comment. Tell us what you think.
Contact me if you have questions.
Thanks
Rick
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