Mortgage Market Weekly – Update Mar 2, 2015

In This Issue…

Last Week in Review: Recent housing reports have disappointed, but sales of new and existing homes are up from this time a year ago.

Forecast for the Week: The Jobs Report for February is a must-watch. Also look for news on inflation, personal income and spending, and manufacturing.

View: Boost new ideas and creative thinking with these four tips.

Last Week in Review

They say that March comes in like a lion, but recent housing reports have sounded more like a whimper than a roar.

existing-home-sales-sep2014-jan2015Existing Home Sales slipped in January, coming in below expectations. The annual rate of 4.82 million units was the lowest level since last April as tight inventories, seasonal weather and the ongoing rise in prices kept buyers out of the market. Despite the decline, sales are up by 3.2 percent from a year ago. And while New Home Sales in January were flat, the overall pace of sales hovers near a six-year high as the economy and job market continue to improve. Sales of new homes are up a solid 5.3 percent from a year ago.

Also of note, home prices around the nation rose by 4.5 percent from December 2013 to December 2014, as home price appreciation values are now near more normal sustainable levels. From November to December, prices rose by 0.9 percent, the largest advance since March.

The second reading of Gross Domestic Product for the fourth quarter of 2014 fell to 2.2 percent from the 2.6 percent recorded in the first reading. For all of 2014, GDP grew by just 2.4 percent, compared to 2.2 percent in 2013 and 2.3 percent in 2012. These numbers aren’t ones to write home about, as an annual rate of 3.5 percent is considered strong. GDP is the broadest measure of economic activity, and it will be important to see if 2015 can achieve higher growth.

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

Friday’s Jobs Report for February could be a major market mover. Plus, there’s important news on inflation, personal income and spending, and manufacturing.

  • Right out of the gate on Monday, look for Personal Income, Personal Spending and Personal Consumption Expenditures (the Fed’s favorite measure of inflation).
  • Also on Monday, there will be manufacturing news via the ISM Index. The ISM Services Index follows on Wednesday.
  • Wednesday also brings the ADP Employment Report, the prelude to the government’s Jobs Report.
  • On Thursday, Weekly Initial Jobless Claims will be released, as usual. Also look for Productivity for the fourth quarter of 2014.
  • Friday is the big day with the February Jobs Report, which includes Non-farm Payrolls, Hourly Earnings and the Unemployment Rate.

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 fell in February as Stocks performed well. Home loan rates edged higher but remain near historic best levels.

Chart: Fannie Mae 3.0% Mortgage Bond (Friday Feb 27, 2015)

The Mortgage Market Guide View…

4 Ways to Boost Creative Thinking

To busy business people, creativity often sounds like a lofty and distant thing reserved for artists and musicians. But creative thinking is the antidote to many business problems – look no further than Apple computers for evidence! Here are four suggestions to help get those creative juices flowing:

  1. Promote new ideas. Give yourself and your team permission to come up with ideas that could challenge how you “do things”. This can help you break through outdated paradigms, as well as reaffirm you’re doing some things right!
  2. Cross-pollinate ideas. Visit a colleague’s business and find out how they work, or start a mastermind group to get fresh ideas.
  3. Get help. Coaches and trainers can offer training and insights for boosting creative power for both individual and group settings. Workshops and consulting sessions can be motivating, morale boosting and give you tools for transformation.
  4. Track and measure. When you or your team come up with a creative solution for a new business process, sales boost, or any other advancement, make sure to track its progress over time so that you will understand what works, what doesn’t work and why.

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

Source: American Express Open Forum


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