In This Issue…
Last Week in Review: Recent housing reports were disappointing, while inflation remains low.
Forecast for the Week: February ends on a busy note, with key reports on housing, consumer attitudes, U.S. economic growth and inflation.
View: Protect yourself from identity theft with these important tips.
Last Week in Review
“I knew the record would stand until it was broken.” Yogi Berra. Record low temperatures have hit much of the nation, but that’s not the only chill in the air.
January Housing Starts fell by 2 percent from December to an annual rate of 1.065 million units. The weaker than expected numbers were due in part to a big decline in single-family homes, as student debt, tight credit conditions and rising prices have kept some first-time homebuyers from entering the market.
Housing Starts peaked in early 2006 at an annual rate of 2.27 million units. They subsequently fell to 500,000 units in 2009, during the height of the recession. On the positive side, in this latest report Housing Starts are up 19 percent from this time a year ago.
Building Permits, a sign of future construction, also came in below expectations at 1.053 million in January, while the February National Association of Home Builders Housing Market Index declined 2 points to 55. Readings above 50 mean that builders are positive about market conditions, so at least the decline didn’t cross that important threshold.
In other news to note, wholesale inflation remains tame, dropping the most in one month since November 2009 thanks to falling gas prices. Low inflation is Bond-friendly news, since inflation reduces the value of fixed investments like Bonds. And since home loan rates are tied to Mortgage Bonds, low inflation is typically beneficial for rates as well. Also helpful for Bonds and home loan rates: Greece’s debt woes and the continued fighting in Ukraine means investors see our Bond markets as a safe haven for their money.
The bottom line is that home loan rates remain attractive, and now is a great time to consider a home purchase or refinance. Let me know if I can answer any questions at all for you or your clients.
Forecast for the Week
The economic calendar is jam-packed with reports scheduled for release every day this week.
- Housing news is plentiful beginning Monday with Existing Home Sales. The S&P/Case-Shiller Home Price Index follows on Tuesday, while New Home Sales will be released on Wednesday.
- We’ll get a read on how consumers are feeling with Consumer Confidence on Tuesday and the Consumer Sentiment Index on Friday.
- Look for the closely-watched Consumer Price Index on Thursday, along with Durable Goods Orders and Weekly Initial Jobless Claims.
- Manufacturing news via the Chicago PMI will be reported on Friday.
- Also on Friday, Gross Domestic Product for the fourth quarter of 2014 will give us an important update on the U.S. economy.
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 on which home loan rates are based.
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, Mortgage Bonds have fallen lately but have managed to rebound in recent days. Home loan rates remain just above historic lows.
Chart: Fannie Mae 3.0% Mortgage Bond (Friday Feb 20, 2015)
The Mortgage Market Guide View…
Protect Yourself From Identity Theft
More than 10 million people are victims of identity theft each year. The most common forms of identity theft are government documents and benefits fraud, followed by credit card fraud, phone or utilities fraud and bank fraud.
Those who steal your identity can damage your reputation and your credit status, in addition to costing you time and money. Follow these tips to protect yourself:
- Guard your social security number. Don’t carry your card and only give out your SSN when absolutely necessary.
- Create hard-to-guess PINs and make sure you change them every so often.
- Keep your PINs private. Avoid writing a PIN on a credit or debit card, or on a slip of paper.
- Collect mail promptly. Ask the post office to put your mail on hold when you are away for more than a few days.
- Watch for routine mail. If bills or statements are late, contact the sender.
- Keep receipts. Compare receipts with account statements to monitor for unauthorized transactions.
- Shred unwanted documents like receipts, account statements and expired cards.
- Cut up credit offers that come in the mail.
- Store personal information in a safe place at home and at work.
- Don’t respond to unsolicited requests for personal information in the mail, over the phone or online. The IRS, for example, doesn’t request information via email.
- Fortify your home computer by installing firewalls, virus-detection software and updated security.
- Check your credit report once a year to monitor unauthorized activity.
The Federal Trade Commission has a series of articles on “Immediate Steps to Repair Identity Theft,” which includes advice for placing a fraud alert and creating an identity theft report. This helpful information can be found on the FTC website.
Please feel free to pass these helpful tips along to your team, clients and colleagues!
Sources: bjs.gov, consumer.ftc.gov, irs.gov, usa.gov
The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.
As your mortgage professional, I am providing you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.
Commerce Mortgage – NMLS 2105
450 Newport Center Drive Suite 350
Newport Beach, CA 92660
2130 Main Street Suite 260
Huntington Beach, CA 92648