Mortgage Market Weekly – Update Jan 26, 2015

In This Issue…
Last Week in Review: Housing news was plentiful, while market volatility was rampant.Forecast for the Week: Look for news on housing, consumer attitudes, and economic growth. Plus, the Fed meets!

View: These six tips will not only make you a better listener, they’ll also help improve your business relationships.

Last Week in Review

“There’s no place like home.” News from the housing sector was front and center, and with rates remaining near historic lows, great opportunities remain for those looking to purchase or refinance. Housing Starts sizzled in December, rising 4.4 percent from November to 1.089 million annualized units, coming in above expectations. The rise in Housing Starts was the strongest annual pace in seven years and it was led by a jump in starts for single-family homes, which reached their highest level since early 2008.

Building Permits, a sign of future construction, did decrease by nearly 2 percent in December but still came in at a strong 1.03 million. Both Building Permits and Housing Starts figures were also revised higher in November.

Also of note, the January National Association of Home Builders Housing Market Index was 57. Readings above 50 are considered positive sentiments about market conditions. Meanwhile, December Existing Home Sales rose from November. However, sales in 2014 were lower compared to 2013 due to a sluggish start in the beginning of the year. Overall, the housing sector continues to improve.

In news overseas, the European Central Bank has announced that it will enact a massive Quantitative Easing, or QE, style of Bond purchases to fight off deflation and promote economic growth in the region. The news has caused extreme volatility in U.S. markets. However, Mortgage Bonds and home loan rates (which are tied to Mortgage Bonds) remain near historic best levels.

The bottom line is that 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

Economic data is plentiful this week, while the first Federal Open Market Committee (FOMC) meeting of the year will take place.

  • Look for several key housing reports, including New Home Sales and the S&P/Case-Shiller Home Price Index on Tuesday and Pending Home Sales on Thursday.
  • Also on Tuesday, Durable Goods Orders for December will be released.
  • We’ll get a sense of how consumers are feeling with Consumer Confidence on Tuesday and the Consumer Sentiment Index on Friday.
  • As usual, Thursday brings Weekly Initial Jobless Claims.
  • On Friday, look for the first reading on Q4 2014 Gross Domestic Product, the Employment Cost Index, and manufacturing news via the Chicago PMI.

In addition, the FOMC meeting kicks off on Tuesday and will end Wednesday with the 2:00 p.m. EST release of the Fed’s monetary policy statement. This always has the potential to be a market mover—be sure to stay tuned!

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, the Mortgage Bond market has been volatile of late. Home loan rates are still hovering near record lows, making now a great opportunity for anyone looking to purchase or refinance.

Chart: Fannie Mae 3.0% Mortgage Bond (Friday Jan 23, 2015)
mtg-bonds_2015-01-26

The Mortgage Market Guide View

Are You Listening?Active listening is an important part of business relationships. It demonstrates respect to everyone in a conversation. Plus, it helps ensure you are receiving complete details and clarity of the message.

Whether on the phone or in person, these six strategies for active listening will keep you tuned in to the conversation.

1. Power down. Don’t get distracted by technology. Email pop ups and cell phone notifications disrupt the conversation and distract both you and the speaker. Put your phone on silent, close your laptop or turn your desktop monitor away from you. Your messages will be there when your conversation is complete.

2. Sit up. How you physically carry yourself carries through into your energy and attentiveness. Sit up straight and give the speaker your full attention. If you are on the phone, you can stand up to be alert and attentive.

3. Don’t interrupt. Hold your clarifying questions until the speaker is done. Jot your questions down, so you don’t forget. They may get answered along the way.

4. Cue you are listening. Simple verbal cues like “uh-huh” and “okay” let the speaker know you are still present in the conversation. If you are in person, an occasional nod goes hand in hand with making eye contact.

5. Summarize key points. When the speaker is done, summarize his or her key points to illustrate you were listening. Start with, “What I’m hearing you say is…” or, “If I’m understanding you correctly….”

6. Clarify. Ask questions that provide additional details about a situation. You can also clarify what actions or outcomes the speaker anticipated by having the conversation with you.

Please feel free to pass these great tips along to your team, clients and colleagues!

Economic Calendar for the Week of January 26 – January 30

Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Tue. January 27
08:30
Durable Goods Orders
Dec
NA
Â
-0.9%
Moderate
Tue. January 27
09:00
S&P/Case-Shiller Home Price Index
Nov
NA
Â
4.5%
Moderate
Tue. January 27
10:00
Consumer Confidence
Jan
NA
Â
92.6
Moderate
Tue. January 27
10:00
New Home Sales
Dec
NA
Â
438K
Moderate
Wed. January 28
02:00
FOMC Meeting
Jan
NA
Â
0.25%
HIGH
Thu. January 29
10:00
Pending Home Sales
Dec
NA
Â
0.8%
Moderate
Thu. January 29
08:30
Jobless Claims (Initial)
1/24
NA
Â
NA
Moderate
Fri. January 30
08:30
Gross Domestic Product (GDP)
Q4
NA
Â
5.0%
Moderate
Fri. January 30
08:30
GDP Chain Deflator
Q4
NA
Â
1.4%
Moderate
Fri. January 30
08:30
Employment Cost Index (ECI)
Q4
NA
Â
0.7%
HIGH
Fri. January 30
09:45
Chicago PMI
Jan
NA
Â
58.3
HIGH
Fri. January 30
10:00
Consumer Sentiment Index (UoM)
Jan
NA
Â
98.2
Moderate
ÂÂ
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 sending 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.
Don Parsons
Commerce Mortgage – NMLS 2105
450 Newport Center Drive Suite 350
Newport Beach, CA 92660
2130 Main Street Suite 260
Huntington Beach, CA 92648