Mortgage Market Weekly Update – Dec 16, 2013

In This Issue

Last Week in Review: There was important labor and housing market news, and fear regarding the Fed tapering its Bond purchases led to volatility in the markets.

Forecast for the Week: This week’s calendar is packed with key reports on U.S. growth, manufacturing, inflation, housing and jobs data. Plus the Fed meets.

View: Never quite know what to say in your sales emails? Check out the great guide below.

Last Week in Review

“A step in the right direction.” Barbra Streisand obviously wasn’t singing about the housing market in her 1980’s song. But those lyrics were fitting with last week’s housing news. Read on for details.

Initial-Jobless-Claims_2013-nov9-dec7There was good news on the foreclosure front as research firm CoreLogic reported that completed foreclosures in October declined by 30 percent from those completed in October 2012. In addition, the foreclosure inventory declined by 28 percent this year while the rate of serious delinquency is at its lowest level since November 2008. RealtyTrac also reported that foreclosure inventory fell by 15 percent from October to November. This is good news for the housing industry, but with almost 900,000 properties across the nation still in foreclosure a level four times the normal the housing recovery still has more to go.

In other news, Weekly Initial Jobless Claims surged in the latest week by 68,000 to 368,000, which is the highest level since early October. The previous week, Weekly Initial Jobless Claims dropped to 300,000, but that was most likely influenced by the Thanksgiving holiday, as filers could have waited until after the holiday to process their claims. Also of note, Retail Sales for November came in above expectations.

What does this mean for home loan rates? The labor and housing markets are key areas the Fed has been watching as it determines when to taper its Bond purchases. Remember that the Fed has been purchasing $85 billion in Bonds and Treasuries each month to stimulate the economy and housing market. One of the key topics the Fed will be deciding at its December 17-18 meeting is whether to taper its purchases before or after the new year. Fear regarding this decision has led to volatility in the markets in recent weeks, and this topic is sure to impact the markets and home loan rates in the coming weeks and months.

The bottom line is that home loan rates remain attractive compared to historical levels and now remains 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

This week’s packed economic calendar is filled with key reports each day.

Monday brings news on Productivity for the third quarter and the Empire State Manufacturing Index. The Philadelphia Fed Manufacturing Index will be reported on Thursday.
Look for inflation news on Tuesday with the Consumer Price Index.

Also on Tuesday, the National Association of Home Builders Housing Market Index will be released. More housing news follows on Wednesday with Housing Starts and Building Permits. Existing Home Sales will be delivered Thursday.

As usual, Thursday brings Weekly Initial Jobless Claims and comes after last week’s big spike.
On Friday, the final reading on Gross Domestic Product for the third quarter will be announced.

In addition, the two-day Federal Open Market Committee (FOMC) meeting begins on Tuesday and ends on Wednesday with the Fed’s monetary policy statement being delivered at 2:00 p.m. ET. All eyes will be watching to see if the Fed decides to begin tapering its Bond purchases.

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, volatility has been rampant, as some positive economic reports have caused concern that the Fed will taper its Bond purchases sooner rather than later. I will be watching the news closely this week to see what happens after the Fed meeting.

Fannie Mae 4.0% Mortgage Bond (Friday Dec 13, 2013):

FannieMaeMortgageBond2013_12-16

The Mortgage Market Guide View…

Getting It In Writing
5 Steps to the Perfect Sales Email

Not all email is created equal, and that’s the reason you wouldn’t send the same email to a new prospect as you would your old Uncle Ned. If you’ve got something to sell–an idea, a meeting, a product, or even yourself–and you want to do it by email, keep these five step-by-step instructions handy:

STEP 1: Research Roundup. The first step in writing the perfect sales email is to not write anything until you’re prepared. It only takes a few minutes to Google the background of your recipient and gather other facts or trigger events to provide context and legitimate reasons for making contact.

STEP 2: Subject Scrutiny. You won’t close a deal on your first email, so focus exclusively on getting a response. The subject line has one purpose and one purpose only: to get the recipient to read your email.

Be as direct as possible:

  • Question about [personalized topic]
  • Idea for [something important to them]
  • Fred Jones said I should get in touch
  • Janet, quick question for you

STEP 3: For Openers. Don’t start by introducing yourself, start with something you noticed about them (a blog post or news item), something you have in common (mutual membership), or someone you both know–your reason for writing:

  • Janet, I noticed you…
  • Bob, Fred Jones mentioned that…
  • Mike, Congratulations on…

STEP 4: Connect the Dots. The main body of your email is where you should show your value. Remember, it’s all about response–so start a dialog by asking an insightful question. This highlights your value better than a long list of qualifications or product benefits.

STEP 5: Focused Farewell. In addition to “Sincerely” your salutation should be short, be in plain text with your contact info (no obtrusive logos), and include a link to one online profile of choice.

Feel free to pass these tips along to your team, clients, and colleagues.

Economic Calendar for the Week of December 16 – December 20

econ-calendar-20131216

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 USE THIS LINK or email: don@donparsons.com

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

Don Parsons
Jayco Capital – NMLS 2105
18831 Von Karman Ave.
Suite 100
Irvine, CA 92612

Mortgage Market Weekly Update – Dec 9, 2013

In This Issue

Last Week in Review: Key housing and jobs data was released. Plus a surprising read on Gross Domestic Product, the broadest measure of economic activity.

Forecast for the Week: This week’s economic calendar is light, featuring readings on retail sales, jobless claims and wholesale inflation.

View: See the important time tip that can make all the difference any time of year.

Last Week in Review

“Tomorrow is often the busiest day of the week.” Spanish Proverb. And it sure seemed that way with last week’s busy economic calendar, as Friday’s Jobs Report capped off a week filled with data. Here are the highlights.

GDP_2013-12-06The highly anticipated November Jobs Report revealed that employers created 203,000 jobs last month, above the 188,000 expected. The Unemployment Rate fell to a 5-year low of 7 percent while the Labor Force Participation Rate (LFPR) managed to tick up to 63.0 percent, though it is still at lows not seen since the late 1970s. The LFPR is a measure of how many people are looking for work. All in all this was a good report, but the labor market is not out of the woods yet.

[Read more…]

Mortgage Market Weekly Update – August 12, 2013

In This Issue

Last Week in Review: The housing market continues to improve, plus the tapering talk carried on.

Forecast for the Week: A busy week is ahead, with important inflation, manufacturing and housing news being released.

View: Staying sharp is important for today’s busy professionals. Check out the simple tips below.

Last Week in Review

“Every day you make progress.” Winston Churchill. And the housing market continues to progress in the right direction. Read on for details.

corelogic-home-price-index-jun-2011-may-2013Last week, research firm CoreLogic reported that home prices across the U.S. rose by nearly 12 percent from June 2012 to June 2013. By comparison, home prices only rose 3.76 percent from June 2011 to June 2012. In addition, research and analytics firm Clear Capital said that prices rose 9.3 percent in the year ended in July.

The housing markets have turned the corner to greener pastures, but it’s important to note that this pace of growth may be unsustainable. With home loan rates rising over the past several months, this rate of appreciation could slow.

In labor market news, Weekly Initial Jobless Claims rose by 5,000 in the latest week to 333,000, but this was below the 340,000 expected. This followed the Jobs Report for July, which was a bit of a disappointment with less jobs created than expected.

What does this mean for home loan rates? One of the biggest questions on everyone’s mind is: When will the Fed start tapering their Bond purchases? Remember that the Fed has been buying $85 billion of Bonds a month to help stimulate the economy and housing market. This includes Mortgage Bonds, to which home loan rates are tied, and these purchases have helped home loan rates remain attractive.

The Fed has said the rate of their purchases will continue to depend on economic data, and could be increased or decreased accordingly. Last week, several Fed members spoke out in favor of tapering these purchases as early as the Fed’s meeting in mid-September. However, with our economy growing at sub 2 percent, economic data between now and September will be a key factor in this decision.

The bottom line is that home loan rates remain attractive compared to historical levels and now remains 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

After last week’s slow calendar, this week features a steady stream of reports.

  • Economic data kicks off on Tuesday with Retail Sales for July. This comes after a decent reading in June.
  • Inflation data from the wholesale-measuring Producer Price Index and the Consumer Price Index will be released on Wednesday and Thursday, respectively.
  • In the manufacturing sector, the Empire State Index and Philadelphia Fed Index will be released on Thursday along with Weekly Initial Jobless Claims.
  • To round out the week, Housing Starts, Building Permits and Consumer Sentiment will be disseminated on Friday.

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 have improved from multi-year lows in recent weeks. I’ll be watching closely to see if they can improve further.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Aug 09, 2013)

july2013-bonds-chart

The Mortgage Market Guide View…

Brain Breakthroughs

Many people think intellect is a matter settled at birth, and mistakenly believe there’s no way to boost their brain brilliance. But scientific studies prove just the opposite. In fact, small lifestyle adjustments combined with a few mental gymnastics can not only increase intelligence, but also improve general brain health, helping prevent aging disorders, such as Alzheimer’s disease.

According to most neurologists, the key is staying mentally active, whatever your age. The following tips will help boost your mental acuity and increase your intelligence.

All You Have To Do Is Dream. An adequate amount of restful sleep is an important component of brain function (its effect on memory and learning is contested among scientists). Restful sleep provides energy as well as the ability to focus, both vital factors in achieving mental stimulation. Some studies have also shown the reverse to be true, that is, that more mental stimulation during the day gives you better sleep at night.

Jumpin’ Jack Flash Memory. Exercise brings oxygen-rich blood to the brain and regulates blood-sugar levels. Exercises such as aerobics, dance, and martial arts all require memorization and are great for promoting mental stimulation. They also help to develop the rhythm and timing circuitry that runs across multiple regions of the brain.

Playing Those Mind Games Together. Crossword puzzles and Sudoku, board games and card games are all excellent for mental stimulation–now you can add video games to the list. Each type of game makes various demands on brain function such as recall, hand-eye coordination, attention, memory, logic, and pattern recognition. The key here is to keep upping the skill or level of challenge as you progress.

Don’t forget to pass these helpful tips along to your clients and colleagues.

Economic Calendar for the Week of August 12 – August 16

july2013-bonds-chart

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 USE THIS LINK or email: 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

Vantage Production, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated. Vantage Production, LLC does not grant to you a license to any content, features or materials in this email. You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.

Mortgage Market Weekly Update – July 22, 2013

In This Issue

Last Week in Review: Key inflation and housing data was released, plus Fed Chairman Ben Bernanke made some important remarks.

Forecast for the Week: Look for more key housing data, as well as Jobless Claims and Consumer Sentiment.

View: Add hours to your day with these great tips.

Last Week in Review

“Be willing to make decisions.” General George Patton. And that’s exactly what the Fed must be willing to do when it comes to their Bond purchase program known as Quantitative Easing (QE). Read on to find out what this could mean for home loan rates.

cpi_jan-jun2013Remember that the Fed has been purchasing $85 billion a month in Bonds to help lower unemployment and stimulate the housing market and the economy overall. Last week, Fed Chairman Ben Bernanke noted that these purchases are by no means on a preset course and that Bond buying could be reduced at faster pace, a slower pace, or even increased for a time, depending on outlook. Bernanke also mentioned the word deflation last week for the first time in recent memory, and this could pave the way for QE to last into 2014.

The bottom line is that the Fed’s decision on QE will be data dependent. If inflation starts to rise and economic reports continue to be strong, the Fed could consider tapering its Bond purchases sooner rather than later. Whether this will lead to higher home loan rates–and how much higher–remains to be seen.

Speaking of key data points released last week, the Consumer Price Index rose by 0.5 percent from May to June due to rising prices in gasoline, food, clothing, medical costs and housing. This number was above expectations and the second highest reading this year. It is important to note that the year-over-year Core CPI (the reading that strips out volatile food and energy prices) ticked down a notch, which is likely why the Fed continues to say that inflation remains tame.

Over in the housing market, Housing Starts declined by nearly 10 percent in June from May to 836,000. This was below expectations and the lowest level since August 2012. The drop was attributed towards a big decrease in apartments. Building Permits, a sign of future construction, also fell by 7.7 percent, below expectations.

Meanwhile, Retail Sales in June declined to 0.4 percent from 0.5 percent in May. It’s important to note that Retail Sales make up 30 percent of consumer spending. The latest Jobs Report showed a lot of part-time jobs were created and confirmed that wages for most people have not grown at all. Without wage growth, we should not expect any robust Retail Sales or pickup in economic activity. This is another data point the Fed will be watching as it makes decisions regarding QE.

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

Forecast for the Week

Several key housing reports will be released this week.

  • Existing Home Sales data kicks off the week on Monday and New Home Sales will be released on Wednesday. The reports come after last week’s big drop in Housing Starts.
  • As usual, Weekly Initial Jobless Claims will be reported Thursday. Last week’s claims fell by 24,000 to 334,000, but the decline was due in part to factories undergoing their usual summer shutdown for a few weeks.
  • Look for the Consumer Sentiment Index on Friday.

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 attempted to rally last week. I’ll continue to monitor their movement closely.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Jul 19, 2013)

economic-calendar2013-07-22

The Mortgage Market Guide View…

Power Productivity
9 Ways to Add 5 Hours to Your Day

Never wait alone. Checkups, oil changes, long lines and hold times –  all of these contribute to significant chunks of idle time. Rather than catching up on the latest celebrity gossip, bring something to work on. (30 minutes)

One-touch rule. Don’t get back to it later–if a voicemail, email, or piece of paper takes one minute or less to handle, do it and move on. (20 minutes)

News fast. Avoid watching or listening to news first thing in the morning – it’s more important to build a positive mood as you prepare for your day. (30 minutes)

News faster. Get your news sources, blogs, and favorite daily content fed to a single location instead of clicking around willy-nilly. Bloglines is one resource. (20 minutes)

Write everything down. How many times have you gone to the grocery store with the list in your head, and still forgotten something? Write short lists on a sticky note, or simply text yourself. Same goes for the office: carrying a to-do list in your head is not just a recipe for forgetting all you have to do, it’s a stress generator. (30 minutes)

Free your hands. Holding a phone in the crook of your neck limits your ability to do much else. Handle calls while cooking, cleaning, and driving with a headset. (30 minutes)

Call them all. Instead of making three or four calls to different people on the same action item, make a conference call. FreeConfereneCall.com is both free and reliable–and even gives you your own line. (20 minutes)

Techno Freeze. Identify your most productive time during the day then turn off tech that distracts you. Setting aside email and phone for that period can easily double or triple your productivity. Turn off your TV early and save an average of 2.6 hours a day–11 days a year–according to the Bureau of Labor Statistics. (90 minutes)

Waffle check. Every minute you spend deciding what to do, buy, or wear is time you could use elsewhere. Knowing how much your time is worth per hour can help you avoid indecision. For example, “shopping around” for two hours to save $10 on shipping only makes sense if your time is worth $4 an hour. (30 minutes)

econ-calendar-20130722

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.

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

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

Mortgage Success Source, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated. Mortgage Success Source, LLC does not grant to you a license to any content, features or materials in this email. You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.

Mortgage Market Weekly Update – July 15, 2013

In This Issue

Last Week in Review: The Fed meeting minutes were released, and wholesale inflation is heating up.

Forecast for the Week: Look for important inflation, housing and manufacturing news. Plus, earnings season continues.

View: More and more people are listening to podcasts. Find out how they can help your business with the easy tips below.

Last Week in Review

“And I kept on looking for a sign.” Climax Blues Band. The markets were certainly looking for a sign from the Fed meeting minutes that were released last week, regarding when the Fed may begin tapering its Bond purchase program known as Quantitative Easing. Read on to learn what the Fed revealed, and other key news from last week.

state-unemployment_2013-07-15The minutes from the Fed’s June meeting of the Federal Open Market Committee showed that the Fed’s Bond purchases will be contingent on how the U.S. economy does. Some members said further labor market improvement is needed, while several said a reduction in purchases would soon be warranted.

In terms of the labor market, regional and state unemployment rates were little changed in May. Twenty-five states had unemployment rate decreases, seventeen states had increases, and eight states and the District of Columbia had no change. And while the Jobs Report for June looked strong on the surface, when you dig into the report a lot of the jobs created were for low-paying jobs and part-time help. In addition, for the 18-29 year age group, the Unemployment Rate is a staggering 16.1 percent.

[Read more…]

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 – Jun 17, 2013

In This Issue

Last Week in Review: Volatility continued in the markets among some good economic news.

Forecast for the Week: All eyes will be on the upcoming Fed meeting. Plus key housing, inflation and manufacturing reports will be released.

View: Facebook can be a great tool for your business–unless you make the below mistakes.

Last Week in Review

“I don’t know where we’re going, but we’re on our way!” That quote from a Little Rascals episode can certainly apply to the markets of late, as uncertainty has Stocks and Bonds moving in various directions. Read on to learn what happened last week, and how home loan rates were impacted.

retail-sales-2013-06-17There was some good news for the labor sector as Weekly Initial Jobless Claims fell in the latest week to 334,000. This was below expectations and the lowest level since early May. The 4-week moving average, which evens out any seasonal abnormalities, also fell. In addition, consumers opened their wallets in May as Retail Sales rose at the fastest pace in three months, led by demand for groceries, autos and building materials.

Over in housing news, RealtyTrac reported that foreclosures rose by 2 percent in May from April. However, it’s important to note that foreclosures have fallen 28 percent from May 2012. And there was some really good news for our economy: Standard & Poor’s, one of the big three credit-rating agencies, raised the credit outlook for the U.S. from negative to stable. [Read more…]

Mortgage Market Weekly Update – Jun 10, 2013

In This Issue

Last Week in Review: The Jobs Report for May was released, plus more good news in the housing sector.

Forecast for the Week: Look for Retail Sales, Consumer Sentiment and inflation data at the end of the week.

View: Be smart about using your smart phone with the important tips below.

Last Week in Review

“You ain’t a beauty, but hey you’re alright.” Those lyrics from the Bruce Springsteen song Thunder Road are a good description for the May Jobs Report. Read on to learn why.

may-job-creations_2013-06-07On Friday, the Labor Department reported that 175,000 new jobs were created in May, above the 159,000 expected, while the unemployment rate rose to 7.6 percent from 7.5 percent. The increase in the unemployment rate was due to more job seekers entering the labor force.

The Jobs Report also showed that the Labor Force Participation Rate (LFPR) ticked up to 63.4 percent from the thirty-five year low of 63.3 percent. The LFPR calculation is quite simple. If you are 16 years old and not in the military, then you either have a job or you don’t. The ratio of people “participating” or working is then compared to the total population. [Read more…]

Mortgage Market Weekly Update – April 8, 2013

In  This Issue

  • Last Week in Review: Important jobs data for March was released. How did home loan rates respond?
  • Forecast for the Week: Several key reports will be released during the second half of the week. Plus on Wednesday, look for the minutes from the Federal Open Market Committee meeting in March.
  • View: “KISS” complexity in your business goodbye with these great tips.

Last Week in Review

march-job-creation_2013-04-08“Don’t believe the hype.” Unfortunately, the lyrics from Public Enemy’s hit song came true last week when the official Jobs Report for March was released. Read on for details, and what they mean for home loan rates.On Friday, the Labor Department reported that 88,000 jobs were created in March–less than half the 192,000 expected. This was the lowest monthly job creations number since June 2012, and could be the beginning of a slowdown in the labor market this spring. There was one small positive note, however, as the number of job creations for January and February were revised higher by 61,000.

The Unemployment Rate fell to 7.6 percent, which is the lowest level since December 2008. While this sounds like good news, the decrease can be partly attributed to the fact that 500,000 people left the workforce. As a result, the Labor Force Participation Rate (LFPR) fell to 63.3 percent: its lowest level since 1979. Remember: the LFPR calculation is quite simple. If you are 16 years old and not in the military, then you either have a job or you don’t. The ratio of people “participating” or working is then compared to the total population.

The Jobs Report wasn’t the only poor economic report released last week. The ISM Manufacturing Index was below expectations, ADP private jobs data was less than expected, planned job cuts were up 30 percent from last year, and the employment component within the ISM Services Index fell.

What does this mean for home loan rates? Remember that weak economic news often causes investors to move their money out of Stocks and into safer investments like Bonds. This includes Mortgage Bonds, to which home loan rates are tied. And last week’s string of poor economic reports, coupled with the tensions in North Korea and the debt woes in Europe, helped Bonds and home loan rates reach some of their best levels this year.

The bottom line is that home loan rates remain near historic lows, making now 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 second half of the week heats up with several important reports.

  • Weekly Initial Jobless Claims will be released on Thursday. Last week’s report showed that initial claims surged by 28,000 to 385,000, the highest number since November and well above expectations.
  • On Friday, we’ll get a sense of consumer spending with the Retail Sales Report for March and a sense of how consumers are feeling with the Consumer Sentiment Index.
  • Also on Friday, the Producer Price Index will show us March’s inflation reading at the wholesale level.

In addition, the minutes from the March meeting of the Federal Open Market Committee will be released on Wednesday. Traders will be looking at this closely, especially regarding any mention of the Fed’s Bond purchase program known as Quantitative Easing.

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 improved last week after weak economic data was released and tensions increased with North Korea. I’ll continue to monitor their movement closely.

Chart: Fannie Mae 3.0% Mortgage Bond (Friday Apr 05, 2013)

mortgage-bond-surge_2013-04-08

The Mortgage Market Guide View…

KISS the Chef
How Doing Too Much Can Kill Your Business

Kitchen Nightmares, featuring Scottish chef Gordon Ramsay, was a long running hit show in Britain well before FOX brought it to Americans in 2007. The show presents a critical lesson for business owners and professionals everywhere: don’t let things get too complicated.From the elaborate menus to strange customer service habits, the “broken” restaurants featured on the show persist, day after day, to slowly choke out the ability to do what they are supposed to–fulfill the need of customers efficiently and consistently. It’s a lesson well worth listening to, especially from Gordon Ramsay. He is recipient of 15 Michelin Stars and no stranger to success, but he’s also admitted losing a few of his own restaurants to mismanagement and over-extension.

Kitchen Nightmares makes the viewer keenly feel the validity of the “KISS principle”. KISS is an acronym for “Keep it simple stupid” and it was coined by U.S. Navy engineers in 1960 to stress the importance of building aircraft that could be repaired on the battlefield by a regular mechanic using only basic tools. Essentially, the KISS principle states that most systems work better when they are simple rather than complex.

Here are a few ideas on how to keep things simple in your business:

Identify the need you fulfill. Whether you sell homes or financial services you are fulfilling a need for your clients that has nothing to do with real estate or stocks and bonds–try to think of the psychological need you fulfill.

Build your plan to serve that need. You may have the ability to offer other services that don’t serve the core need of your market, but avoid the temptation to use them if possible. The likelihood of confusing your prospects and customers is too high to justify the value you think you’re creating.

Don’t get too elaborate with systems. Especially the ones that impact customer service. While every business should have processes for everything, the more common sense they are the better. If yours are intuitive and easy to perform for both staff and clients, they are going to be win-win.

Stay focused. If you’re in business to sell houses or do financial planning, don’t extend your brand to include staging or insurance–or anything else you can think of that might dilute your ability to perform the core need.

Feel free to pass this along to clients and colleagues who might benefit from these tips!

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