Mortgage Market Weekly – Update August 10, 2015

In This Issue…

Last Week in Review: July’s Jobs Report showed continued signs of improvement.

Forecast for the Week: Thursday’s Retail Sales report will be the closely watched release on a light economic calendar.

View: Wrap up your summer with a reading list to boost morale and motivate you to take on the rest of the year.

Last Week in Review

“Working 9 to 5. What a way to make a living.” Dolly Parton. A heavy economic calendar culminated the week with July’s Jobs Report singing of work for many Americans. The housing market showed strong gains as well.

housing-price-index_2015-06-22Employers added 215,000 new jobs in July, while the figures for May and June were revised higher by a total of 13,000 jobs. Retail, health care and leisure led the pack with job opportunities. The unemployment rate held on to its seven-year low, which is also good news. While the average workweek increased, growth rate of wages remains at the lowest levels on record.

Home prices jumped in June. Research firm CoreLogic reported that home prices rose 6.5 percent, marking the 40th consecutive month of year-over-year gains. While prices are still down from the peak in April 2006, they are expected to continue to rise. CoreLogic cited pent-up demand, affordability and a more robust labor market for the gains.

Data continues to show that the job market, housing sector and economy overall are improving, even though inflation remains below the Fed’s 2 percent target. The big question now is whether or not our economy has improved enough for the Federal Reserve to begin raising its benchmark Fed Funds Rate (the rate banks use to lend each other money overnight). September’s Federal Open Market Committee meeting provides the next opportunity to see what the Fed will do.

For now, home loan rates remain near historic lows. Let me know if I can answer any questions at all about the mortgage market, housing or home loan rates for you or your clients.

Forecast for the Week

This week’s economic calendar is light, though the second half of the week features several key reports.

  • Tuesday kicks off with data from second quarter Productivity.
  • Jump ahead to Thursday with weekly Initial Jobless Claims and the closely watched Retail Sales report.
  • On Friday, the Consumer Sentiment and the Producer Price Indexes will be released.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, 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 are 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 improved throughout the latter part of July. Home loan rates remain near historic lows.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Aug 07, 2015):

mtgbonds_2015-08-02

The Mortgage Market Guide View…

Summer of Success Reading List

If you’re looking for a few great titles to wrap up your summer reading, look no further than these top picks from Amazon’s Best Seller list! These great reads will boost your morale and motivate you to take on the rest of the year.

Getting to Yes with Yourself (and Other Worthy Opponents) is the highly anticipated follow up to “Getting to Yes: Negotiation Agreement Without Giving In.” Harvard University professor and negotiation expert William Ury addresses one of the most common obstacles to achieving goals: negative self-talk.

StrengthsFinder 2.0 asks if you have the opportunity to do what you do best every day. For many, natural talents go untapped. Instead, people devote more time to fixing perceived shortcomings than to developing and using strengths. This book reveals how to change the pattern.

The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing shares the secrets of the most popular organization consultant in Tokyo. Disorganization contributes to problems in both business and life. But author Marie Kondo (whose consultancy has a three-month waiting list) promises if you organize your home or office just once—and do it properly—you’ll never have to do it again, and you’ll see positive results.

The Achievement Habit: Stop Wishing, Start Doing, and Take Command of Your Life written by the co-founder of Stanford’s d.School, Bernard Roth, shares thinking insights gained from solving large-scale design projects. Gain confidence, overcome obstacles that keep you from your potential, and learn to think more creatively from one of the masters of applied creative thought.

As always, feel free to pass these helpful tips along to your team, your clients and colleagues!

econ-cal-2015-08-08_0-48-45

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.

Don Parsons
Commerce Home Mortgage – NMLS 2105
450 Newport Center Drive Suite 480
Newport Beach, CA 92660
2130 Main Street Suite 260
Huntington Beach, CA 92648

Mortgage Market Weekly – Update Mar 9, 2015

In This Issue…

Last Week in Review: February’s Jobs Report was better than expected, while home price gains are at sustainable levels.

Forecast for the Week: Look for news on wholesale inflation, consumer sentiment and retail sales.

View: Spring clean your office space with these easy tips. [Read more…]

Mortgage Market Weekly – Update Jan 19, 2015

In This Issue…

Last Week in Review: Retail sales plummeted, inflation remains tame, and home loan rates are hovering near record lows.Forecast for the Week: It’s a holiday-shortened week, with housing reports dominating the headlines.View: These five podcasts are great tools to help you succeed this year.
Last Week in Review 
Shop or drop. Fewer people than expected opened their wallets in December, as the latest Retail Sales numbers declined. But with home loan rates hovering near historic lows, not all of last week’s headlines were disappointing. Retail Sales plunged by 0.9 percent in December, the biggest decline in nearly a year as lower gas prices didn’t have the desired impact on consumer spending during the busy shopping season. November’s numbers were also revised lower. This news was a bit of a surprise, and not the best sign for our overall economic recovery. But one number doesn’t make a trend, so this will be an important report to watch in the coming months.On the inflation front, inflation at the wholesale level remained tamed in December while the Consumer Price Index showed its smallest gain in five years, mainly due to plunging oil prices. We are beginning to see disinflationary pressures, which is a slower rate of inflation over a shorter time period. While low inflation is Bond-friendly news (and also good for home loan rates, since they are tied to Mortgage Bonds), outright deflation is a sustained fall in prices. That is something we do not want to see because deflation also brings increased unemployment. Inflation is another key item to monitor as we move ahead into 2015.

Also of note, the World Bank cut its forecast for global growth, warning that the world economy remains overly reliant on the “single engine” of the U.S. recovery. If negative news from overseas continues, we could see safe haven trading into our Bond market, helping Mortgage Bonds and home loan rates in the process.

The bottom line is that home loan rates remain near historic lows, 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.

[Read more…]

Mortgage Market Weekly – Update Jan 12, 2015

This Issue…

Last Week in Review: The labor sector continues to improve, while home price gains are stabilizing at more normal levels.Forecast for the Week: Look for key reports on inflation, manufacturing and retail sales.

View: Navigate tax time with ease thanks to the overview below.

Last Week in Review

Take this job and love it. That’s exactly what more people are doing these days, as job growth in 2014 was the strongest in fifteen years and our economy continues to improve.corelogic-home-price-index-2015-01-12 The December Jobs Report showed that 252,000 jobs were created, a touch above expectations. In addition, upward revisions to October and November added another 50,000-plus jobs to what was originally reported for those months. Employers added 2.95 million new jobs in 2014, with an average of 246,000 per month, above the 194,000 per month average in 2013.

Another positive in the report is that the Unemployment Rate came in at 5.6 percent. The head scratcher was a -0.2 percent hourly earnings figure. Hourly earnings are not growing and that is keeping inflation persistently low. One positive about low inflation is that it should benefit Bonds for the foreseeable future, as high or growing inflation can cause fixed assets like Bonds to worsen. Since home loan rates are tied to Mortgage Bonds, low inflation should also help keep home loan rates low for now.

In housing news, CoreLogic reported that its Home Price Index, including distressed sales, rose by 5.5 percent annually in November. After a near 12 percent annual increase back in January 2014, prices have been decelerating, but have stabilized to a more normal 5 to 6 percent growth rate for the last four months.

The bottom line is that home loan rates remain near historic lows, 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.

[Read more…]

Mortgage Market Weekly – Update Sep 15, 2014

In This Issue…

Last Week in Review: Despite some positive economic reports late in the week, the markets grew volatile ahead of the upcoming Fed meeting.

Forecast for the Week: The Fed meets, plus key reports on inflation, manufacturing and housing.

View: Finding new clients can be easy with these four tips.

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 applies to the markets of late, as uncertainty ahead of the upcoming Fed meeting has caused volatile movements for both Stocks and Bonds. Read on to learn how home loan rates were impacted. [Read more…]

Mortgage Market Weekly Update – February 7, 2014

job-creations_2014-02-07When it comes to recent Jobs Reports, what has been tough is being good every month, as both January’s and December’s numbers were disappointments. January’s Jobs Report can best be described as lackluster, as employers added just 113,000 new workers. This was well below expectations of 175,000 new jobs. In addition, the number of job creations for December was raised just a paltry 1,000, bringing December’s total to 75,000. November was revised higher to 274,000.

The Unemployment Rate did fall to 6.6 percent, from 6.7 percent. However, this is not necessarily a good metric of labor market health, as the more important Labor Force Participation Rate (LFPR) remains at 63 percent, a 35-year low. The LFPR measures the proportion of working-age Americans who have a job or are looking for one, and it should be moving higher in a recovery.

Also of note, productivity in the fourth quarter of 2013 rose by 3.2 percent, with both the third and fourth quarters the highest since the second half of 2009. Employers are squeezing more out of current workers and may not be on the hunt for new employees given the economic landscape, which is another negative for the labor market. In housing news, research firm CoreLogic reported that home prices, including distressed sales, rose by 11 percent in December 2013 compared to December 2012. December marked the 22nd consecutive year-over-year gain in home prices nationally. However, from November to December, prices fell by 0.1 percent.

What does this mean for home loan rates? Mortgage Bonds and home loan rates have seen some improvement of late, due to some weak economic reports, while Stocks have suffered as a result. But a big question remains as we move ahead in 2014: If economic reports continue to be weak, will the Fed continue to taper its Bond purchases? Remember that the Fed is now purchasing $35 billion in Treasuries and $30 billion in Mortgage Bonds (the type of Bonds on which home loan rates are based) to help stimulate the economy and housing market. This figure is down from the $85 billion in Bonds and Treasuries the Fed had been purchasing last year. The timing of further tapering is sure to impact Stocks, Bonds and home loan rates throughout the year, and it is a key story to monitor.

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

The economic report calendar is light this week, with reports not beginning until Thursday.

  • Weekly Initial Jobless Claims will be released as usual on Thursday. Claims have been stuck in a tight range the past four weeks.
  • Also on Thursday, look for January’s Retail Sales data.
  • The last report this week will be the preliminary reading on February Consumer Sentiment.

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 and home loan rates improved after the weak Jobs Report for January was released. I’ll be watching the news closely this week to see if these improvements continue.

Chart: Fannie Mae 4.0% Mortgage Bond (Friday Feb 07, 2014)

jan2014--bonds-chart

The Mortgage Market Guide View…

Mileage Rates for 2014 If you drive a car, truck or van for work, you’ll want to make sure you know standard mileage rates the Internal Revenue Service (IRS) has set for 2014.

These mileage rates are used to calculate deductible costs for driving an automobile for business, charitable, medical and moving purposes. So when it comes to filing your taxes this year, you’ll need these numbers!

New for 2014

As of January 1, 2014, the standard mileage rates are as follows:

  • Businesses = 56 cents per mile driven
  • Medical or moving = 23.5 cents per mile driven
  • Charitable organizations = 14 cents per mile driven

You’ll notice that the rates for business, medical and moving expenses decreased one-half cent from the 2013 rates.

Make Sure You Qualify

Before you calculate your deduction, make sure you qualify. The IRS reminds taxpayers that they cannot use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

Additional Option

Although the IRS provides the standard mileage rate for ease and convenience, you’re not required to use it. If you prefer, you can calculate the actual costs of using your vehicle instead of using the standard mileage rates.

Remember, if you have questions or concerns, talk to a tax consultant or accountant to discuss your options and unique situation. Please feel free to pass these tips along to your team, clients, and colleagues.

Economic Calendar for the Week of February 10 – February 14

econ-calendar-20140210

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: don@donparsons.com

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

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

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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 – 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…]