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.

[Read more…]

Mortgage Market Weekly – Update Nov 3, 2014

In This Issue…

Last Week in Review: The Fed announced the end of its massive Bond-buying program. Plus, key reports on housing and the economy.

Forecast for the Week: The labor sector will be front and center, with the Jobs Report for October coming on Friday.

View: Want to make a great first impression? Make sure you avoid these common word mistakes.

Last Week in Review

So long, farewell, auf wiedersehen, adieu!” Rodgers & Hammerstein, The Sound of Music. Fed Chair Janet Yellen announced that after two years of supporting the economy, the Fed’s latest round of its Bond-buying program (called Quantitative Easing or QE) is over.

aug-s&p-case-shiller-20-city-index_2014-10-31Stock markets initially reacted poorly to the midweek news, but rebounded later in the week due to strong corporate earnings reports. Mortgage Bonds have edged lower but remain near 18-month highs. However, market volatility is likely to continue, as Stocks performed terribly after the first and second rounds of the Fed’s Bond-buying program ended. Whether Stocks will do so again is an important story to watch in the coming weeks. If Stocks worsen, Bonds and home loan rates (which are tied to Mortgage Bonds) could benefit.

It’s important to note that the Fed will still be supporting the markets through another Bond program in the coming months, as economic growth in the U.S. is still modest at best. For example, the advanced or first reading of third quarter Gross Domestic Product came in at 3.5 percent. While this was above expectations, a closer look at the report showed weak manufacturing and consumer demand, far from great news overall.

In the housing sector, the August S&P/Case-Shiller 20-city Index showed home prices increased by 5.6 percent on an annual basis. This is down from the 6.7 percent recorded in July, and it was also the slowest pace of price gains in 21 months. Price appreciation continues to reach more normal levels than those seen in 2013.

The bottom line is that home loan rates remain near some of their best levels of the year, 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

There are just a few economic reports ahead, with the highlight being the October Jobs Report on Friday.

  • Economic news begins on Monday with the ISM Index, a national manufacturing index. The ISM Services Index follows on Wednesday.
  • The first report from the labor sector comes via Wednesday’s ADP Employment Report.
  • Weekly Initial Jobless Claims will be released on Thursday, as claims continue to trend below the 300,000 level.
  • Productivity for the third quarter will also be released Thursday.
  • Friday brings the October Jobs Report, which includes Non-farm Payrolls 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 have moved a bit lower but home loan rates remain near 18-month lows.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Oct 31, 2014)

nov03-bonds-chart

The Mortgage Market Guide View…

5 Common Word Mistakes to Avoid

For many people, a sign of true quality and professionalism lies in the day-to-day details, like writing.

Here are five common word pairings that are frequently misused in business communications. Polish your writing in letters, email and on the web by remembering proper usage.

Complimentary or complementary

  • The first means free. “Receive a complimentary copy of our handbook.”
  • The second means to complete or enhance. “This new pattern will complement any décor.”

Farther or further

  • The first refers to specific, measurable distance. “Drive a little farther and save a lot.”
  • The second refers to something more than what has already been done. In the sentence that follows, for example, you wouldn’t physically stretch your money. You’d do more with it. “Stretch your money further with this option.”

Principal or principle

  • The first means an initial sum of money, first in order of importance, or a person. “Your principal focus should be family.”
  • The second means a fundamental truth or guide. “The principle rule in home ownership is to protect your investment.”

Stationery or stationary

  • The first refers to letterhead, notecards and envelopes. A good reminder is to think “e” for envelope. “Have we ordered new stationery yet?”
  • The second means immobile.

Titled or entitled

  • The first refers to the title of something. “The latest report is titled Top Industry Trends.”
  • The second means having right or claim to. “You are entitled to review your credit report for free.”

econ-calendar-2014-11-03

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

Mortgage Market Weekly Update – June 28, 2013

In This Issue

Last Week in Review: A full slate of economic reports was released. But was the news positive?

Forecast for the Week: A holiday-shortened week is ahead, and so is the all-important Jobs Report for June.

View: The retweet is a big part of what makes Twitter an effective marketing tool. Check out 6 easy ways to master getting more.

Last Week in Review

“Feeling groovy.” Simon and Garfunkel. Consumers are certainly feeling more confident these days, as positive economic news tumbles in. But what does this mean for home loan rates? Read on for details.

consumer-confidence-mar-jun_2013-07-01Consumer Confidence, which measures how optimistic or pessimistic consumers are with respect to the economy in the near future, came in at 81.4 in June. This is the highest level since January 2008, when it stood at 87.3. The Consumer Sentiment Index, a similar measure, also came in above expectations for June.

Housing continues to be a bright spot for the economy as Case-Shiller reported that its 20-city home price index rose by 12.1 percent year-over-year in April. In addition, the 2.5 percent gain in the index from March to April was the largest monthly gain ever recorded. New Home Sales also rose 2 percent, coming in above expectations.

But not all the economic news last week was cause for song. The final reading for 2013 first quarter Gross Domestic Product (GDP) came in at 1.8 percent, below expectations and a pretty anemic reading overall. The good news is that this reading is higher than the meager 0.4 percent reading for the fourth quarter of 2012. And in the manufacturing sector, the Chicago PMI (a key regional report) came in lower than expectations and below May’s reading.

What does all of this mean for home loan rates?

[Read more…]

Mortgage Market Weekly Update – April 29, 2013

In This Issue

Last Week in Review: Weak economic news continues here at home and abroad, but is that good or bad news for home loan rates?

Forecast for the Week: Look for important reports on inflation, housing, manufacturing, and the labor market.

View: Want to know the key to being remarkable? Be sure to read the tips below.

Last Week in Review

You’re riding high in April and shot down in May.” The lyrics from the old Sinatra tune “That’s Life” haven’t applied to the economy this year, as it has limped along in April. Read on for the latest news, and how home loan rates were impacted.

apr29-existing-home-salesIn housing news, New Home Sales for March met expectations, coming in at 417,000. However, Existing Home Sales were down 0.6 percent and below expectations and February’s numbers were revised lower to 4.95 million units from 4.98 million units. There has not been much of an improvement in the Existing Home Sales numbers of late, but on the bright side they are higher than the 4.48 million mark from March 2012.

Gross Domestic Product (the broadest measure of economic activity in the U.S.) rose by 2.5 percent in the first quarter of 2013. However, this number was below the 2.8 percent to 3.2 percent that was expected. While the report showed that consumer spending rose at its fastest pace in two years and that businesses ramped up their inventories, overall this is not a great number. However, it is just the first of three readings and revisions will most likely be forthcoming. Also of note, March orders for Durable Goods (which are products that last for an extended period of time) also came in below expectations.

What does this mean for home loan rates? Bonds have benefited from the string of weak economic reports here at home, as investors typically move their money into safer investments like Bonds during weak economic times. This includes, Mortgage Bonds, to which home loan rates are tied. Bonds and home loan rates have also benefited from weak economic news overseas, as investors there continue to see our Bonds as a safe haven for their money. In addition, if inflation remains in check and economic data remains weak, this gives the Fed cover to continue its Bond purchase program known as Quantitative Easing–which should also benefit Bonds and home loan rates as a result.

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

Forecast for the Week

The economic calendar will be busy all week. Plus the Fed meets.

  • The week begins on Monday with Personal Consumption and Expenditures, the Fed’s favorite measure of inflation, as well as Personal Income and Personal Spending.
  • In housing news, Pending Home Sales will also be released Monday, followed by Tuesday’s Case-Shiller Home Price Index.
  • We’ll get a sense of how the consumer is feeling with Tuesday’s Consumer Confidence reading for April.
    Several key manufacturing reports will be released, beginning on Tuesday with the Chicago PMI followed by Wednesday’s ISM Index.
  • Weekly Initial Jobless Claims will be reported on Thursday. Last week, jobless claims fell to 339,000 after averaging 362,000 in the previous four weeks.
  • On Friday, we end the week with the often market-moving Jobs Report for April, which includes Non-Farm Payrolls and the Unemployment Rate. ISM Services Index will also be reported.

In addition, the Fed’s regularly scheduled two-day meeting of the Federal Open Market Committee begins on Tuesday, with their Policy Statement scheduled for 2:15 p.m. ET on Wednesday.

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 remain near historic best levels. I’ll be watching their movement closely.

apr29-bonds-chart

The Mortgage Market Guide View…

6 Keys to Being Remarkable

“The key to success in any field is, to a large extent, a matter of practicing a specific task for a total of around 10,000 hours.”
Malcolm Gladwell, Outliers, 2011

“Strenuous individual application is the price paid for distinction; excellence of any sort is placed beyond the reach of indolence.”
Samuel Smiles, Self-Help, 1859

“We are what we repeatedly do. Excellence, then, is not an act, but a habit.”
Aristotle, 345 BC

The myth that people are born talented is rapidly dispelling. The scientific community is at last catching up with what even Aristotle knew; the difference between success and non-success, outstanding skill and mediocrity, is a matter of dedication and time rather than innate ability. But can the way you practice make a difference? Yes, says Tony Schwartz, author of The Way We’re Working Isn’t Working, who offers six principles for becoming really good at anything:

  1. Pursue your passion. Passion will keep you motivated better than anything. If you can’t be passionate, find something else or you may burn out.
  2. Hard work first. Most experts–and experts who study experts–say that practicing first thing in the morning when you have the most energy is best.
  3. Practice intensely, but not too long. Working without interruption for short periods of no longer than 90 minutes with short breaks–and not longer than 4.5 hours each day–seems to be the norm for top performers.
  4. Get feedback in small doses. Too much advice too frequently can impede learning and make you gun shy.
  5. Refresh regularly. All work and no play… stinks. And it won’t help you in the long run. Plus, if it’s breakthroughs you want, rest is the best thing for activating your creative, right-hemisphere.
  6. Ritualize practice. Time-blocking your practice ensures you don’t have to expend any energy thinking about when you’ll work.

Please feel free to pass these tips along to any clients and colleagues who may benefit!

economic-carlendar-apr29

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.

In the unlikely event that you no longer wish to receive these valuable market updates, please email me at don @ donparsons.com.

If you prefer to send your removal request by mail the address is:

Don Parsons
20250 Acacia Street, Suite 120
Newport Beach, CA 92660