Mortgage Forecast For The Week of May 14, 2012

May 16, 2012 By Leave a Comment

With earnings season behind us, investors will be deluged with a slew of economic reports that will touch on many segments of the U.S. economy:

  • Retail Sales will be released on Tuesday. This report gives the markets some insight to how consumer spending is holding up.
  • Also on Tuesday, the Consumer Price Index (CPI) will report on inflation at the consumer level. Last week’s Producer Price Index showed that inflation at the wholesale level has moderated, thanks to lower energy prices. Will CPI follow suit?
  • Manufacturing from the New York Empire and Philadelphia Fed Index will also be released Tuesday and Thursday, respectively.
  • Housing Starts and Building Permits data will be delivered on Wednesday.
  • Last — but not least — will be the Weekly Initial Jobless Claims numbers on Thursday. Last week’s data was the lowest in a month.

In addition to those reports, European headlines will continue to dominate the news as the debt woes in that region plague the global economies. Also, the minutes from the Fed’s April meeting of the Federal Open Market Committee will be released and this could move the markets.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on.

When you see these Bond prices moving higher, it means home loan rates are improving — and when they are moving lower, home loan rates are getting worse.

To go one step further — a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Bonds and home loan rates reached record best levels last week. I’ll be monitoring the markets closely this week to see what happens next.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday May 11, 2012)
Japanese Candlestick Chart
* This Forecast is part of the Mortgage Weekly Newsletter we send out every week, the Mortgage Market Guide . If you are interested to regularly receive the Mortgage Market Guide, let me know by e-mailing me at Tricia@MortgageMaui.com
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Mortgage Forecast The Week of April 30, 2012

April 30, 2012 By Leave a Comment

 

 
photo credit: woodleywonderworks via photo pin cc

A slew of economic reports are set for release this week, and investors and traders will be watching the data closely for any signs of an economic slowdown:

  • Right off the bat on Monday the Personal Income and Spending data will be released along with the closely watched Core Personal Consumption Expenditure (PCE) report. The Core PCE is the Fed’s favorite gauge of inflation and comes after Fed Chairman Ben Bernanke said last week that inflation in the short-term has been pressured higher by rising energy costs.    
  • In the manufacturing sector, the Chicago PMI will be released on Monday with the national ISM Index delivered on Tuesday.
  • On Wednesday, the ADP Employment Report will be released ahead of the government’s monthly Non-farm Payrolls and the Unemployment Rate on Friday.
  • Initial Weekly Jobless Claims will be released on Thursday. The recent couple weeks of elevated Jobless Claims is disturbing…and if it continues, rest assured QE3 chatter will re-emerge.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on.

When you see these Bond prices moving higher, it means home loan rates are improving — and when they are moving lower, home loan rates are getting worse.

To go one step further — a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Bonds and home loan rates continue to hover near record best levels. I’ll stay on top of this week’s news to monitor how Bonds and home loan rates are impacted.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Apr 27, 2012)
Japanese Candlestick Chart

To read the entire newsletter,  click: The Mortgage Market Guide 

 

 

 

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Mortgage Market Guide – Forecast of the Week

April 16, 2012 By Leave a Comment

Here is the excerpt from this week’s edition of The Mortgage Market Guide:

Last week in review:
“Wild thing! You make my heart sing!” The Troggs. And that song lyric is certainly an apt description for the volatility in the markets these days, as the ups and downs have given people things to both sing and scream about. Here’s what happened last week…and how home loan rates were impacted.

Inflation news hit the wires, with reports on both the wholesale and consumer levels. The wholesale-measuring Producer Price Index (PPI) showed that prices remained mostly unchanged during March. Remember, inflation hurts the value of fixed investments like Bonds (including Mortgage Bonds, to which home loan rates are tied)…so the lack of inflation on the wholesale side was good news for Bonds and home loan rates.

Also helping Bonds and home loan rates last week was the tame inflation data from the Consumer Price Index (CPI). The headline reading for March was right in line with estimates. When stripping out volatile food and energy, the Core CPI was also inline with estimates…but the year-over-year number was 2.3%, just slightly higher than the previous reading of 2.2%.  While this raises eyebrows a bit, the Fed is still reiterating that inflation remains subdued. That being said, if the Core CPI continues to rise…which is indicative of inflation and as you can see in the chart…Bonds and home loan rates will have a tough time improving much further, regardless of other factors.

One key factor to keep an eye on is the labor market, as Initial Jobless Claims increased 13,000 to 380,000 for the week ending April 7. This marks the highest level since January, and the second highest reading for 2012. The Fed has acknowledged that job creations are short of their goals. In fact, last week Federal Reserve Vice Chairman Janet Yellen said that weakness in housing, the European debt crisis, and government spending cuts are likely to slow the pace of recovery and expansion. She did state that the Fed has plenty of stimulus tools to use, if economic conditions warrant another round of quantitative easing.

The bottom line is that many factors will impact the direction in which Bonds and home loan rates move in the weeks ahead. The good news is that home loan rates remain near historic lows and now continues to be a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.
Forecast for the Week 
The calendar heats up this week with reports on sales, housing, jobless claims and manufacturing:

  • Right off the bat, Retail Sales will be reported on Monday – and investors will be able to gauge how consumer spending is holding up.
  • In manufacturing news, the Empire State Index out of New York and the Philadelphia Fed Index will be released on Monday and Thursday, respectively.
  • Housing will be in the news this week with Housing Starts and Building Permits for March being reported on Tuesday. Those reports will be followed by the Existing Home Salesreport for March, which will be released on Thursday.
  • The weekly Initial Jobless Claims report will be released on Thursday. The report released last week showed that jobless claims rose to their highest level since the week ending January 28. So the markets will be watching this week’s release!

In addition to those reports, Corporate Earnings reports may influence the Stock markets – and as we know, the Bond markets usually move in the opposite direction.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on.

When you see these Bond prices moving higher, it means home loan rates are improving – and when they are moving lower, home loan rates are getting worse.

To go one step further – a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, it’s been a wild, volatile few weeks in the markets. I’ll be monitoring all the news closely to see how the markets and home loan rates respond next.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Apr 13, 2012)
Japanese Candlestick Chart

Click on the link for the complete copy of the Mortage Market Guide

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Mortgage Forecast For The Week

April 10, 2012 By Leave a Comment

 

Japanese Candlestick Chart

The markets will be open the entire week, despite the Easter and Passover holidays…and two reports stand out:

• The economic calendar is light this week, but investors will be closely watching the Producer Price Index on Thursday and the Consumer Price Index on Friday. Higher oil prices have fanned the flames for higher inflation in the short term says Fed Chairman Ben Bernanke…but in the longer term, it remains subdued.
• Initial Weekly Jobless Claims will be released on Thursday. Jobless claims fell to their lowest level in four years last week to 357,000.
• On Friday the first reading of April Consumer Sentiment will be released.
In addition to those reports, corporate earnings will be in the news this week. Earnings reports are closely watched by investors around the globe. If the tone is positive, there could be a shift back into the Stock markets from the Bond markets, which in turn could push home loan rates higher. On the flipside, if earnings come in below expectations, Stocks could fall while Bonds could rise, in turn pushing home loan rates lower.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on.
When you see these Bond prices moving higher, it means home loan rates are improving – and when they are moving lower, home loan rates are getting worse.

To go one step further – a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart above, Bonds and home loan rates benefitted from the disappointing Jobs Report. I’ll be watching the news closely to see which way they move next.
Chart: Fannie Mae 3.5% Mortgage Bond (Friday Apr 06, 2012)

 

* This post is an except from the Mortgage Market Guide that Hawaii’s Premiere Mortgage Company sends out weekly.

Filed Under: Blog, Mortgage Market Guide, Mortgage Maui Weekly, Mortgage Tips and Info Tagged With: , ,

This Weeek’s Mortgage Forecast And Mortgage Market Guide View

February 18, 2012 By Leave a Comment
(Note: This is an excerpt from the Weekly Mortgage Market Newletter that we send out to realtors and all those interested on mortgage and finance topic.  If you would like to receive a copy of the newsletter, please send us your e-mail via the quick contact form on the right side bar or leave a comment on this post.)The capital markets were closed on Monday due to Presidents’ Day and the economic calendar is light the rest of the week with just a few reports.

  • On Wednesday Existing Home Sales will be released, followed by the New Home Sales report on Friday. The reports come after last week’s positive Housing Starts data.
  • Thursday brings the weekly Initial Jobless Claims Report, which has steadily declined this year to a more job-friendly level.
  • On Friday, the Consumer Sentiment Report will be released.

In addition to those reports, a number of news stories may move the markets, including additional news out of Greece, the Treasury Department’s auction of $99 Billion worth of government securities, and movement in the Stock Market. All of those news stories have the potential to negatively impact the Bond Market, depending on how they develop.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on.

When you see these Bond prices moving higher, it means home loan rates are improving – and when they are moving lower, home loan rates are getting worse.

To go one step further – a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, good economic news late last week reversed the improving trend Bonds and home loan rates experienced early in the week. I’ll continue to monitor this situation closely.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Feb 17, 2012)

 
The Mortgage Market Guide View…
Mileage Rates for 2012If you drive a car, truck or van for work, you’ll want to make sure you know the standard mileage rates that the Internal Revenue Service (IRS) has set for 2012.These mileage rates are used to calculate deductible costs for driving an automobile for business, charitable, medical and moving purposes. So when it comes to filing your taxes this time next year, you’ll need to know these numbers!New for 2012As of January 1, 2012, the standard mileage rates are as follows:

  • Businesses = 55.5 cents per mile driven
  • Medical or moving = 23 cents per mile driven
  • Charitable organizations = 14 cents per mile driven

You’ll notice that the rate for business miles is unchanged from the mid-year adjustment that became effective on July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.

Make Sure You Qualify

Before you calculate your deduction, make sure you qualify. The IRS reminds taxpayers that they cannot use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.

In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously. However, the IRS is accepting public comments on this policy.

Additional Option

Although the IRS provides the standard mileage rate for ease and convenience, you’re not required to use it. If you prefer, you can calculate the actual costs of using your vehicle instead of using the standard mileage rates.

Remember, if you have questions or concerns, talk to a tax consultant or accountant to discuss your options and unique situation.

Economic Calendar for the Week of February 20 – February 24

Date

ET

Economic Report

For

Estimate

Actual

Prior

Impact
Wed. February 22

10:00

 Existing Home Sales

Jan

NA

4.71M

Moderate
Thu. February 23

08:30

 Jobless Claims (Initial)

2/18

NA

NA

Moderate
Fri. February 24

10:00

 Consumer Sentiment Index (UoM)

Feb

NA

72.5

Moderate
Fri. February 24

10:00

 New Home Sales

Jan

NA

307K

Moderate
Filed Under: Blog, Mortgage Market Guide, Mortgage Maui Weekly, Mortgage Tips and Info

The Maui Mortgage Market Guide – Week of 1-30-12

February 1, 2012 By Leave a Comment

 

If at first you don’t succeed, try, try again. Last week, that popular idiom could have applied to the Gross Domestic Product (GDP) Report. Read on to learn why…and how all the week’s news impacted Bonds and home loan rates.The Advanced GDP reading – or first of three readings – for the 4th Quarter of 2011 came in at 2.8%, a bit below expectations of 3.2%. This number will be

revised two more times, but if the final GDP remains at 2.8%…then the overall GDP for 2011 would be a scanty 1.57%. That is certainly a “Gross”

Domestic Product, when you consider that the government has underwritten more than half of that economic growth with the Payroll Tax benefit.

Also in the news last week, the Fed’s Policy Statement after its regularly scheduled Federal Open Market Committee meeting was pretty much the same

story as recent Statements, including stable long-term inflation expectations, a tepid economic recovery, and fragile job market. But there was one big

exception to their norm. The Policy Statement said there will be “exceptionally low levels for the Federal Funds Rate at least through late 2014.” This

is a huge change from the previous statements of “low rates until mid-2013.”

On the surface, extending the zero interest policy until 2015 tells us the Fed thinks the economy will just be slogging along, and accommodative

monetary policy will be required to keep the economy growing at least at a modest pace. One could argue that recent economic data is better of late and

that all this loose monetary policy is unnecessary. But the Fed has spoken, and as the old adage goes: “Don’t fight the Fed.”

In news out of Europe, yields in European Bonds have come down…and by quite a bit. This sparked some optimism that Europe’s Long-term Refinance

Operation (LTRO) has helped alleviate some pressure in the peripheral countries in the Eurozone, like Spain and Italy. So what’s the takeaway? In honor

of the upcoming Super Bowl, here’s a football analogy: think of the LTRO as a super punt or “kick of the can” down the road. Europe needs to play a

serious offensive line by creating a tighter fiscal union, implementing austerity measures, and developing growth strategies to help pay down the

enormous debt.

The bottom line is that Bonds and home loan rates remain at historic best levels, which means now is

still a great time to purchase or refinance a home.

Let me know if I can answer any questions at all for you or your clients.
Forecast for the Week
Economic reports will be plentiful – and important – this week:

  • The week kicks off Monday with the Core Personal Consumption Expenditure (PCE), which is the Fed’s favored gauge of inflation. Thisreport will be closely watched, since any hint of an uptick in inflation could push Bond prices lower and, in turn, move home loan rates higher.
  • Manufacturing will also be in the spotlight with the Chicago PMI on Tuesday, followed by the ISM Index on Wednesday.
  • Consumer Confidence will also be delivered on Tuesday.
  • The ADP Private Employment Report will be released on Wednesday and comes before the government’s total job’s report on Friday.
  • As usual, Initial Jobless Claims will be released on Thursday. This week’s report comes after an uptick of 21,000 last week.
  • Finally, on Friday the government’s monthly Employment Report will be released. The Employment Report consists of Non-farm Payrolls, the Unemployment Rate, Average Workweek and Hourly Earnings. This is an important report that can have abig impact on the markets. So I’ll be watching it closely.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong

economic news normally has the opposite result.

As you can see in the chart below, Bonds and home loan rates remain near their historic bests. I’ll be watching closely to see which way they move

next.

 

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Jan 27, 2012)

 

Japanese Candlestick Chart
The Mortgage Market Guide View…

 
Share This Site…And Try it YourselfEvery once in a while, you come across a website that’s just plain fun. This is one of those sites.We’ve all seen websites that provide stats about what happened the year you were born. The website whathappenedinmybirthyear.com/takes it a step further. It doesn’t just offer stats andfacts. Instead, it provides a picture of the world you grew up in – including what it looked like and how it was different than the world we live intoday.

But it’s more than just a fun website.

For one thing, it provides you with a light-hearted reason to connect with your clients on a personal level. You can share the site with them on social

media or in one of your outreach pieces (such as a newsletter or email).

In addition, this site offers you a unique way to better understand your clients. If you know when a client was born, you can simply type in the year.

In return, you’ll get a picture of that client’s social influences that have helped shape him or her. And that’s exactly the kind of information you

need to put yourself in your clients’ shoes and understand them a little better. Of course, it doesn’t hurt that it’s entertaining too!

Try the site today…and consider sharing it with your clients as a way to connect with them on a more personal level.

 

Economic Calendar for the Week of January 30 – February 03

Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Mon. January 30
08:30
 Personal Income
Dec
0.4%
0.5%
0.1%
Moderate
Mon. January 30
08:30
 Personal Spending
Dec
0.2%
0.0%
0.1%
Moderate
Mon. January 30
08:30
 Personal Consumption Expenditures and Core PCE
Dec
0.2%
0.2%
0.1%
HIGH
Mon. January 30
08:30
 Personal Consumption Expenditures and Core PCE
YOY
NA
1.8%
1.7%
HIGH
Tue. January 31
08:30
 Employment Cost Index (ECI)
Q4
0.4%
0.4%
0.3%
HIGH
Tue. January 31
09:45
 Chicago PMI
Jan
62.5
60.2
62.2
HIGH
Tue. January 31
10:00
 Consumer Confidence
Jan
67.0
61.1
64.8
Moderate
Wed. February 01
08:15
 ADP National Employment Report
Jan
200K
325K
HIGH
Wed. February 01
10:00
 ISM Index
Jan
54.5
53.9
HIGH
Thu. February 02
08:30
 Jobless Claims (Initial)
1/28
375K
377K
Moderate
Thu. February 02
08:30
 Productivity
Q4
0.7%
2.3%
Moderate
Fri. February 03
08:30
 Non-farm Payrolls
Jan
155K
200K
HIGH
Fri. February 03
08:30
 Unemployment Rate
Jan
8.5%
8.5%
HIGH
Fri. February 03
08:30
 Hourly Earnings
Jan
0.2%
0.2%
HIGH
Fri. February 03
08:30
 Average Work Week
Jan
34.4
34.4
HIGH
Fri. February 03
10:00
 ISM Services Index
Jan
53.0
52.6
Moderate

 

 

Equal Housing Lender

 

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The Mortgage Market Guide 10-17-2011 Part 3 of 3

October 18, 2011 By Leave a Comment

The Housing and Mortgage Markets in 2012

Last week, the Mortgage Bankers Association (MBA) released its outlook for the housing and mortgage markets in 2012. Overall, the news is mixed, but there’s some good news to glean out of it. Here are three positive elements in the MBA forecast that you should know about:

1. Home Sales Steady Before Slight Increase

The MBA expects total existing home sales will stay around the 4.9 million unit pace for 2011 and 2012. But in 2013, the MBA expects home sales to increase slightly to 5.2 million units, as the broader economy recovers.

New home sales are expected to be similar to the overall trend. As the MBA stated in its release: “The recovery in the new home sales will have a comparably slow start…but will show some meaningful increases in 2013.”

2. Slight Growth in Home Purchases

Despite an expected decrease in refinances, the MBA forecasts some slight growth in the number of mortgages for home purchases. Specifically, the MBA anticipates home loans for purchases to increase to $412 Billion in 2012, which would be up from the anticipated 2011 total of $400 Billion.

Better still, the MBA expects home loans for purchases to jump significantly to $700 Billion in 2013 as the economy, home sales, and home prices are all anticipated to pick up.

3. Rates to Remain Low

Overall, fixed home loan rates are expected to remain low by historical standards. The MBA expects rates to end 2011 around a 4.5 percent average, and then possibly dropping slightly to 4.4 percent at some point in 2012. But by 2013, the MBA expects rates to climb back up to 4.9 percent – which is still low by historical standards but does indicate a change in direction.

As always, forecasts can change based on numerous factors not just in the U.S., but also in the global markets. And while the MBA forecast does contain some negative aspects for the markets, it does hold some slightly positive aspects as well.

Economic Calendar for the Week of October 17 – October 21

Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Mon. October 17
08:30
 Empire State Index
Oct
-4.0
-8.85
-8.82
Moderate
Mon. October 17
09:15
 Industrial Production
Sept
0.2%
0.2%
0.2%
Moderate
Mon. October 17
09:15
 Capacity Utilization
Sept
77.5%
77.4%
77.3%
Moderate
Tue. October 18
08:30
 Producer Price Index (PPI)
Sept
0.2%
0.8%
0.0%
Moderate
Tue. October 18
08:30
 Core Producer Price Index (PPI)
Sept
0.1%
0.2%
0.1%
Moderate
Wed. October 19
08:30
 Building Permits
Sept
610K
620K
Moderate
Wed. October 19
08:30
 Housing Starts
Sept
595K
571K
Moderate
Wed. October 19
08:30
 Core Consumer Price Index (CPI)
Sept
0.2%
0.2%
HIGH
Wed. October 19
08:30
 Consumer Price Index (CPI)
Sept
0.3%
0.4%
HIGH
Wed. October
Filed Under: Blog, Mortgage Market Guide Tagged With: , , ,

Manufacturing, Inflation and Housing Reports. (The Mortgage Market Guide 10-17-2011 Part 2 of 3)

October 18, 2011 By Leave a Comment

Manufacturing, inflation, and housing reports dominate the news this week:

  • The manufacturing sector accounts for one-quarter of the economy, so it’s especially important during the current economic situation. This week, the New York State Empire Manufacturing Index as well as Industrial Production and Capacity Utilization will be released on Monday. Later in the week, thePhiladelphia Fed Index will be reported on Thursday.
  • Inflation news from the Producer Price Index (PPI) and the Consumer Price Index (CPI) will be delivered on Tuesday and Wednesday respectively. The last report on consumer inflation was a bit hotter than expected, so Bond market players will be closely watching those reports.  
  • Housing Starts will be reported on Wednesday and on Thursday Existing Home Sales will be delivered. 
  • The weekly Initial Jobless Claims report will be released on Thursday. As of last week’s report, they continue to remain above the 400,000 level.

 

Plus, earnings season is in full swing this week. Some big names reporting earnings are Citigroup, Bank of America, Coca-Cola, Apple, and AT&T. If the reports come in better than expected, it could push investing dollars over to the Equity markets.

 

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

 

As you can see in the chart below, Bonds and home loan rates faced pressure last week but remained above a key technical level. I’ll be watching the markets closely this week to see what happens.


Chart: Fannie Mae 3.5% Mortgage Bond (Friday Oct 14, 2011)

 

Japanese Candlestick Chart


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The Mortgage Market Guide 10-03-11

October 10, 2011 By Leave a Comment

People say that “life is full of surprises.” And indeed, last week’s Jobs Report contained several surprises. Read on to find out if they were good or bad…and what they meant for home loan rates.

Overall, the Jobs Report wasn’t great, but it did surprise by being better than anticipated. One thing that wasn’t a surprise was the unemployment rate which held steady at 9.1%. But the headline number came in at 103,000 jobs created, which was better than expectations of 60,000 and even higher than some of the more frothy expectations. In addition, 137,000 jobs were created in the private sector, which offset more government job losses and which was a lot better than the 83,000 private job gains expected.

Another surprise in the report was the significant upward revisions, which added 99,000 jobs to what was previously reported in prior months, and this added to the positive tone of the report. These upward revisions really change a very pessimistic jobs picture to something a bit more optimistic. For instance, last month the Jobs Report showed zero job creations and now that figure has been revised to show 57,000 jobs created. Once again, these aren’t great numbers—but they are better than bad, and they tell us that the economy is not in a recession…at least for now.

So, what did all of this mean for home loan rates? It’s important to remember that when our economy is struggling, our Bond Market usually benefits as investors seek a safe haven for their money. And since home loan rates are tied to Mortgage Bonds, our home loan rates are sometimes at their best when our economy is struggling. In a way it makes sense…in times of economic struggle, good home loan rates can help kick start our economy in other areas.

Yet, when good or better than expected economic news hits the wires, like it did with Friday’s Jobs Report, investors often move their money out of Bonds and into Stocks in an attempt to take advantage of these gains. And that’s a big reason why we saw Bonds and home loan rates worsen late last week.

The most important thing to remember is that now is still a great time to purchase or refinance a home, as home loan rates remain near historic lows. Let me know if I can answer any questions at all for you or your clients.

Filed Under: Blog, Mortgage Market Guide, Mortgage Maui Weekly

Inflation Is In The News, Why Is It Significant to Your Mortgage …

October 8, 2011 By Leave a Comment
The summer may be over, but some parts of the economy are just starting to heat up. One economic indicator that has come in hotter lately is inflation. At the end of September, the final reading of GDP in the 2nd Quarter showed inflation at 2.5%, which was up from the previous reading of 2.4%.That elevated inflation reading was released on the heels of a hot Core Consumer Price Index (CPI), which has risen steadily and jumped to the upper-end of the Fed’s comfort level in the latest release.Although Fed Chair Ben Bernanke stated a couple weeks ago that inflation has “moderated” of late and should continue to do so, there are still some reasons for concern. For example, we are experiencing an unprecedented amount of stimulus and low rates, which is something never seen before in history.

So why is this significant?

The concept is simple: If inflation rises, investors in Bonds demand a higher yield to offset the lost buying power inflation imposes on a fixed payment. And as home loan rates are tied to Mortgage Bonds, this would mean home loan rates move higher. 

Once inflation starts to emerge it can manifest rather quickly.  Future inflation readings will be closely watched to see if a trend higher is emerging, and last month’s elevated number will certainly heat up the debate surrounding more stimulus, as more money into the system fuels inflation further. 

If inflation heats up even more, the Fed will likely back off their “low rates until mid-2013″ mandate. Inflation really does change everything, so the markets will continue to follow this story closely.

The bottom line is that home loan rates remain near historic lows, and now is still a great time to purchase or refinance a home. If I can answer any questions at all for you, call or email me anytime.

 

  
 
Filed Under: Blog, Mortgage Market Guide
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