We seem to be in uncertain times:
The Negative
* Stock Market continues to be unsteady
* Crazy bonuses for Banks that had a wonderful year while many still are unemployed.
* Congress can't decide if we need healthcare reformed..really..or agreed to simply talk about it with all
our best interests at heart.
* Oil prices are in the $70/barrell range but our fuel price remain high.
* New Home starts(builder and banks confidence?) are down.
* Toyota, a reputable line of automobiles, suddenly can stop and are recalling 100,000s of cars.
* Wicked Winter Weather threatened citrus fruits and like in Florida and shut down major metro area
in Northeast(perhaps you are still digging out!)
* Haiti gets clobbered by a earthquake causing dire straights for an entire population of poor people.
The Positive
* Banks are beginning to loan again..if your credit shines
* New rules for Short Sales that will aid Sellers and Buyers and streamline the process have been
approved and will go into effect in April.
* Toyoto has finally admitted it goofed and working hards to make amends.
* Interest Rates stay in 5% rates for home mortgages
* $8,000 Tax Credit awaits 1st time Home Buyers
* $6,500 Tax Credit awaits Repeat Buyers that have been lived in and owned their present home for
five of last 8 years.
* Foreclosures have moderated(for the time being)
* Home Sales have increased in Hampton Roads and in many other markets each month since May 2009
(January broke the streak but it is normally a weak month as the holidays distract home buyers).
* America's generous response to Haiti Relief efforts
* New Orleans victory in the Super Bowl(even if a Colts fan): A game well played that was won by a
team representing a city that really needed to win one!
So what to make of it all?? It will really depend on a few factors, such as:
* Are You an Optimist or a Pessimist?
* Do you need to retire within 5 years or are retired now?
* Do you invest in real estate or are you looking to buy a new home?
* Are you employed?
* Do you have health care?
* Do you want to share with the world what you have?
As your answers could be different from mine or a million other people, only you can determine if this is a great time to stay in the stock market, complain about gas prices and those darn Congressman or to buy an investment property or your new home.
So how do you see it???
Tuesday, February 9, 2010
Saturday, January 2, 2010
Listen to the Pros--Rates Won't Be Low Much Longer
With the start of 2010, many wonder if the debacle of 2008-2009 is behind us. Is the Economy really on the road to recovery. If you are like me, I am always looking for insight from the people in the know.
Frequently, we must listen to many sources to have the proper picture. As a Realtor, I am privy to insights that I wish to pass on to ensure you make the best decisions for your family. Susan Haynes sent me this very helpful Summary and I share it with you! If you need a great mortgage officer, you can contact Susan via email at susan.a.haynes@bankofamerica.com.
The "bold" sections are mine as they point out what others are saying that the low 5% rates won't be here forever. So the time to act is NOW!
Weekly Economic Summary--January 1, 2010
For the week of December 21-25th, probably the most important bit of news to report is that the 10-year Treasury security note yield climbed from 3.548% at the beginning of the week to 3.748% two days later and, according to Bloomberg.com, ended the week at 3.80%. Why is it rising so rapidly? The first reason is that the markets are currently in a very positive mood about the near-term future of the economy. Manufacturing seems to be turning up along with employment numbers and consumer confidence. Personal income is growing slightly. The numbers continue to please investors, and the stock market has finally gotten into the spirit of the higher numbers again. A better future for the stock market and the overall economy generally means that interest rates begin to rise, as the stimulus of lower rates gives way to the foot-gently-on-the-brakes of higher rates. Though analysts assure us daily that inflation won’t begin a serious rise for many months, there is still a consensus that an improving economy will cause the Federal Reserve to cease its support of lower interest rates, and perhaps even raise the fed funds rate well before it was recently expected to. The second reason that 10-year note rates are rising so convincingly is closely related to the first. As interest rates climb, existing Treasury notes providing lower yields to their investors become less valuable. Those investors, therefore, very often raise rates further by selling off their Treasury securities when they become convinced that the interest rate trend is turning and that their holdings are about to lose value. We have noted a narrowing spread between the 10-year note and the 30-year average mortgage rate, suggesting that mortgage rates may be about to rise. Even more significant is the spread between 2-year notes and 10-year notes, which makes up what is called the “yield curve.” A year ago, that spread was 1.27%. Now, though, the spread has widened very significantly to 2.81%. (Before the recession, the yield inverted rather prophetically, with short-term rates lower than long-term rates, a condition that sometimes precedes an economic downturn.) So far, the two spreads have accurately predicted, along with other factors, rising interest rates. The situation, therefore, is well worth watching carefully.
Frequently, we must listen to many sources to have the proper picture. As a Realtor, I am privy to insights that I wish to pass on to ensure you make the best decisions for your family. Susan Haynes sent me this very helpful Summary and I share it with you! If you need a great mortgage officer, you can contact Susan via email at susan.a.haynes@bankofamerica.com.
The "bold" sections are mine as they point out what others are saying that the low 5% rates won't be here forever. So the time to act is NOW!
Weekly Economic Summary--January 1, 2010
For the week of December 21-25th, probably the most important bit of news to report is that the 10-year Treasury security note yield climbed from 3.548% at the beginning of the week to 3.748% two days later and, according to Bloomberg.com, ended the week at 3.80%. Why is it rising so rapidly? The first reason is that the markets are currently in a very positive mood about the near-term future of the economy. Manufacturing seems to be turning up along with employment numbers and consumer confidence. Personal income is growing slightly. The numbers continue to please investors, and the stock market has finally gotten into the spirit of the higher numbers again. A better future for the stock market and the overall economy generally means that interest rates begin to rise, as the stimulus of lower rates gives way to the foot-gently-on-the-brakes of higher rates. Though analysts assure us daily that inflation won’t begin a serious rise for many months, there is still a consensus that an improving economy will cause the Federal Reserve to cease its support of lower interest rates, and perhaps even raise the fed funds rate well before it was recently expected to. The second reason that 10-year note rates are rising so convincingly is closely related to the first. As interest rates climb, existing Treasury notes providing lower yields to their investors become less valuable. Those investors, therefore, very often raise rates further by selling off their Treasury securities when they become convinced that the interest rate trend is turning and that their holdings are about to lose value. We have noted a narrowing spread between the 10-year note and the 30-year average mortgage rate, suggesting that mortgage rates may be about to rise. Even more significant is the spread between 2-year notes and 10-year notes, which makes up what is called the “yield curve.” A year ago, that spread was 1.27%. Now, though, the spread has widened very significantly to 2.81%. (Before the recession, the yield inverted rather prophetically, with short-term rates lower than long-term rates, a condition that sometimes precedes an economic downturn.) So far, the two spreads have accurately predicted, along with other factors, rising interest rates. The situation, therefore, is well worth watching carefully.
Tuesday, November 17, 2009
Military Extended $8000 Tax Credit
Great NEWS for our Brave Military!!!! Pass the work to any and all of our valient military personnel that you know!!
Vets Get More Time for Home Tax Credit
McClatchy-Tribune Regional News, By Andy Smith
November 11, 2009 Federal legislation extending the popular homebuyers tax credit has something extra for members of the armed forces serving overseas -- more time. Under the bill, signed into law by President Obama on Friday, the income-tax credit of up to $8,000 for first-time homebuyers was extended from its former deadline of Nov. 30. The new law says homebuyers will be eligible for the tax credit if they sign a binding sales agreement before May 1, and close on the purchase before July 1, 2010. But for members of the military on active duty outside the United States for at least 90 days -- between Jan. 1, 2009 and April 30, 2010 -- the tax break will remain in effect for an additional year.
Lt. Col. Bruce Fletcher, public affairs officer for the Rhode Island National Guard, said the new law could benefit up to 1,000 members of the Guard. "It's a great idea," he said. Staff Sgt. Joseph Bouchard, a member of the Guard who served in Iraq from July 2007 to July 2008, said he already used the first-time homebuyers tax credit when he bought a house in Cranston in October. Bouchard said he has friends who served more recently in Iraq or Afghanistan -- including some who are still there -- who are considering buying houses, and will now have an extra year to take advantage of the tax credit. "I have a friend who returned in July from Iraq, and he's thinking of buying a house ... he's going to be very excited about this," Bouchard said. Military personnel must still meet the underlying provisions of the law, which offers a tax credit of up to $8,000 for first-time homebuyers, defined as someone who had not owned a home in the previous three years. The new bill also provides a tax credit of up to $6,500 for repeat buyers who have lived in the same house for at least five of the past eight years. The tax credit cannot be used for houses costing more than $800,000.
Ron Phipps, owner of Phipps Realty in Warwick and vice president of the National Association of Realtors, said the association was strongly supportive of extending the deadline for military personnel serving overseas. Phipps said it's a matter of simple fairness -- members of the armed forces posted abroad are hardly in a position to look for houses, and shouldn't be placed at a disadvantage when it comes to receiving a tax credit. "It's an acknowledgement that our armed forces are acting in the best interests of this country, and shouldn't be penalized for their service," he said. Phipps said a good number of troops overseas could qualify as first-time homebuyers when they return. Mortgage News Daily, a news service that reports on the mortgage industry, estimates that 350,000 American military personnel could be affected by the bill. Joseph Cerrito, state commander of the Veterans of Foreign Wars, said the tax credit extension for veterans overseas is a good idea, but he would like to see the benefit expanded even further to include military serving overseas though December 2010.
The economy is turning around and will soon begin to push on interest rates. So if you are in the military or not, now is a great time to buy your first home or simply to move to the home that meets the family/your present situation.
Vets Get More Time for Home Tax Credit
McClatchy-Tribune Regional News, By Andy Smith
November 11, 2009 Federal legislation extending the popular homebuyers tax credit has something extra for members of the armed forces serving overseas -- more time. Under the bill, signed into law by President Obama on Friday, the income-tax credit of up to $8,000 for first-time homebuyers was extended from its former deadline of Nov. 30. The new law says homebuyers will be eligible for the tax credit if they sign a binding sales agreement before May 1, and close on the purchase before July 1, 2010. But for members of the military on active duty outside the United States for at least 90 days -- between Jan. 1, 2009 and April 30, 2010 -- the tax break will remain in effect for an additional year.
Lt. Col. Bruce Fletcher, public affairs officer for the Rhode Island National Guard, said the new law could benefit up to 1,000 members of the Guard. "It's a great idea," he said. Staff Sgt. Joseph Bouchard, a member of the Guard who served in Iraq from July 2007 to July 2008, said he already used the first-time homebuyers tax credit when he bought a house in Cranston in October. Bouchard said he has friends who served more recently in Iraq or Afghanistan -- including some who are still there -- who are considering buying houses, and will now have an extra year to take advantage of the tax credit. "I have a friend who returned in July from Iraq, and he's thinking of buying a house ... he's going to be very excited about this," Bouchard said. Military personnel must still meet the underlying provisions of the law, which offers a tax credit of up to $8,000 for first-time homebuyers, defined as someone who had not owned a home in the previous three years. The new bill also provides a tax credit of up to $6,500 for repeat buyers who have lived in the same house for at least five of the past eight years. The tax credit cannot be used for houses costing more than $800,000.
Ron Phipps, owner of Phipps Realty in Warwick and vice president of the National Association of Realtors, said the association was strongly supportive of extending the deadline for military personnel serving overseas. Phipps said it's a matter of simple fairness -- members of the armed forces posted abroad are hardly in a position to look for houses, and shouldn't be placed at a disadvantage when it comes to receiving a tax credit. "It's an acknowledgement that our armed forces are acting in the best interests of this country, and shouldn't be penalized for their service," he said. Phipps said a good number of troops overseas could qualify as first-time homebuyers when they return. Mortgage News Daily, a news service that reports on the mortgage industry, estimates that 350,000 American military personnel could be affected by the bill. Joseph Cerrito, state commander of the Veterans of Foreign Wars, said the tax credit extension for veterans overseas is a good idea, but he would like to see the benefit expanded even further to include military serving overseas though December 2010.
The economy is turning around and will soon begin to push on interest rates. So if you are in the military or not, now is a great time to buy your first home or simply to move to the home that meets the family/your present situation.
Monday, November 9, 2009
Update on HomeBuyers Credit..You will want to read11
What a great beginning of the week!!!!
Weather is going to be interesting in the Gulf Coast area over the next few days and pretty nice in the remainder of the country.
Don't know how you felt about the expiring $8000 incentive for first time buyers. But as you may or may not have heard, it has been extended until April 30th. In addition, homeowners owning a home for 5 years(with some stipulations) can get a $6500 tax credit. Thus, if you thought about moving the Obama administration is doing its best to make it economically justified. With interest rates still at 5% or lower, you have a decision to make.
Yet, to give you a total rundown on the new initiative and the financial market, I have attached information provide by a great mortgage officer, Jim Belote.
Keeping you updated on the market! For the week of
November 9, 2009
MARKET RECAPWe can finally stop talking about the federal homebuyer credit extension and start living it. This go around, the credit has not only been extended, it has been improved. First-time homebuyers – anyone who hasn't owned a home in the past three years – will still get up to $8,000 to apply against their federal tax liability, but buyers who have owned their current homes at least five years will also be eligible for tax credits of up to $6,500. To qualify, buyers must sign a purchase agreement no later than April 30, 2010 and close by June 30.Just as important, if not more so, the extension also raises income ceilings. The new version has the credit phasing out for individuals with incomes above $125,000 and for joint filers with incomes above $225,000. The phase-out increase means the new credit will be applicable to higher-priced homes (though the purchase price can't exceed $800,000); thus, stimulating sales in more expensive categories.The Federal Reserve's stance on interest rates was another home-buying positive. On Wednesday, the Fed stated that it will maintain the federal funds rate – the rate banks lend to each other – near zero for “an extended period” and specified for the first time that policy will stay unchanged as long as inflation expectations are stable and unemployment fails to decline. The fed funds rate is an important benchmark for other lending rates, so the Fed's pronouncement bodes well for borrowers seeking a mortgage loan.Of course, a job trumps tax considerations and lending rates in any borrowing or purchasing decision. Unfortunately, the trend on job creation remains down. The unemployment rate rose again in October, due to employers shedding another 190,000 jobs. The unemployment rate now stands at 10.2%, the highest it has been in 26 years.The news on the employment front is discouraging, to be sure, though recent payroll data reflect some improvement. The rate of job cuts has lessened dramatically when you consider that 741,000 jobs were shed in January alone. It's also worth noting that new claims for unemployment benefits decreased by 20,000 to 512,000 in the week ended October 31, the lowest level since January 3. And if you happen to be the-cup-is-half-full type, you can take additional solace in knowing employment figures are lagging, not leading, indicators.
Economic IndicatorRelease Date and TimeConsensus EstimateAnalysisMortgage Applications Thurs, Nov. 12,7:00 am, etNone Important. Activity should pick up on lower rates and extension of the federal homebuyer's tax credit. International Trade(September) Fri, Nov. 13,8:30 am, et $31.5 Billion (Deficit) Moderately Important. The deficit is expanding (modestly) on higher oil prices. Import Prices(October)Fri, Nov. 13,8:30 am, et0.5% (Increase) Important. Recent increases are posing evidence that the weak dollar is increasing inflation pressures . Consumer Sentiment(November)Fri, Nov. 13,10:00 am, et72 Index Moderately Important. Sentiment generally mirrors the latest news, which has been trending positively.
Continued Affordability....At Least for the Time Being Should we backpedal on our expectation for mortgage rates to rise, given the Federal Reserve's desire to keep lending rates low? For the immediate future, yes, though we still doubt they will go much lower. After all, there is a risk to lending, so investors demand a minimum return on their investment, and we think rates are at or close to that minimum return. Longer term (three months out), we remain convinced of the prospect for higher inflation: Gold is trading near $1,100 an ounce, hard commodity prices have surged, oil prices have doubled in the past seven months, and the spread between the 10-year Treasury note and the TIPs (a variable-rate Treasury security) has narrowed.We have to admit, though, that the window for borrowers to act has likely widened, but that doesn't mean potential homebuyers should play the mortgage-rate waiting game. We can't forget the other half of the equation – home prices, which should get a boost from the homebuyer credit extension. Moreover, these credits are chasing a dwindling supply of homes. According to data compiled by Web-based real estate brokerage ZipRealty, listings of single-family homes and condominiums declined an average 2.8% across 27 major metropolitan markets in October. ZipRealty also noted that national inventory has declined month-over-month for 16 straight months to the point where there are now 28% fewer homes for sale than there were in October 2008.In short, the stars remain aligned for refinancers and homebuyers to act today, but we don't expect them to stay aligned far into tomorrow.
Weather is going to be interesting in the Gulf Coast area over the next few days and pretty nice in the remainder of the country.
Don't know how you felt about the expiring $8000 incentive for first time buyers. But as you may or may not have heard, it has been extended until April 30th. In addition, homeowners owning a home for 5 years(with some stipulations) can get a $6500 tax credit. Thus, if you thought about moving the Obama administration is doing its best to make it economically justified. With interest rates still at 5% or lower, you have a decision to make.
Yet, to give you a total rundown on the new initiative and the financial market, I have attached information provide by a great mortgage officer, Jim Belote.
Keeping you updated on the market! For the week of
November 9, 2009
MARKET RECAPWe can finally stop talking about the federal homebuyer credit extension and start living it. This go around, the credit has not only been extended, it has been improved. First-time homebuyers – anyone who hasn't owned a home in the past three years – will still get up to $8,000 to apply against their federal tax liability, but buyers who have owned their current homes at least five years will also be eligible for tax credits of up to $6,500. To qualify, buyers must sign a purchase agreement no later than April 30, 2010 and close by June 30.Just as important, if not more so, the extension also raises income ceilings. The new version has the credit phasing out for individuals with incomes above $125,000 and for joint filers with incomes above $225,000. The phase-out increase means the new credit will be applicable to higher-priced homes (though the purchase price can't exceed $800,000); thus, stimulating sales in more expensive categories.The Federal Reserve's stance on interest rates was another home-buying positive. On Wednesday, the Fed stated that it will maintain the federal funds rate – the rate banks lend to each other – near zero for “an extended period” and specified for the first time that policy will stay unchanged as long as inflation expectations are stable and unemployment fails to decline. The fed funds rate is an important benchmark for other lending rates, so the Fed's pronouncement bodes well for borrowers seeking a mortgage loan.Of course, a job trumps tax considerations and lending rates in any borrowing or purchasing decision. Unfortunately, the trend on job creation remains down. The unemployment rate rose again in October, due to employers shedding another 190,000 jobs. The unemployment rate now stands at 10.2%, the highest it has been in 26 years.The news on the employment front is discouraging, to be sure, though recent payroll data reflect some improvement. The rate of job cuts has lessened dramatically when you consider that 741,000 jobs were shed in January alone. It's also worth noting that new claims for unemployment benefits decreased by 20,000 to 512,000 in the week ended October 31, the lowest level since January 3. And if you happen to be the-cup-is-half-full type, you can take additional solace in knowing employment figures are lagging, not leading, indicators.
Economic IndicatorRelease Date and TimeConsensus EstimateAnalysisMortgage Applications Thurs, Nov. 12,7:00 am, etNone Important. Activity should pick up on lower rates and extension of the federal homebuyer's tax credit. International Trade(September) Fri, Nov. 13,8:30 am, et $31.5 Billion (Deficit) Moderately Important. The deficit is expanding (modestly) on higher oil prices. Import Prices(October)Fri, Nov. 13,8:30 am, et0.5% (Increase) Important. Recent increases are posing evidence that the weak dollar is increasing inflation pressures . Consumer Sentiment(November)Fri, Nov. 13,10:00 am, et72 Index Moderately Important. Sentiment generally mirrors the latest news, which has been trending positively.
Continued Affordability....At Least for the Time Being Should we backpedal on our expectation for mortgage rates to rise, given the Federal Reserve's desire to keep lending rates low? For the immediate future, yes, though we still doubt they will go much lower. After all, there is a risk to lending, so investors demand a minimum return on their investment, and we think rates are at or close to that minimum return. Longer term (three months out), we remain convinced of the prospect for higher inflation: Gold is trading near $1,100 an ounce, hard commodity prices have surged, oil prices have doubled in the past seven months, and the spread between the 10-year Treasury note and the TIPs (a variable-rate Treasury security) has narrowed.We have to admit, though, that the window for borrowers to act has likely widened, but that doesn't mean potential homebuyers should play the mortgage-rate waiting game. We can't forget the other half of the equation – home prices, which should get a boost from the homebuyer credit extension. Moreover, these credits are chasing a dwindling supply of homes. According to data compiled by Web-based real estate brokerage ZipRealty, listings of single-family homes and condominiums declined an average 2.8% across 27 major metropolitan markets in October. ZipRealty also noted that national inventory has declined month-over-month for 16 straight months to the point where there are now 28% fewer homes for sale than there were in October 2008.In short, the stars remain aligned for refinancers and homebuyers to act today, but we don't expect them to stay aligned far into tomorrow.
Monday, August 31, 2009
Chesapeake-Hampton Roads is Doin Great
Yes!!!! You are right...no blogs in weeks....very busy weeks. If you think the Hampton Roads market is dead in the water, I can tell you differently. My listings are selling and
the buyers are active. In my case, I have struggled to take even a day off since June!
Yet, don't think it is just me even though I was the top agent for the company in July. I am not sure how much you are watching the press on the real estate market. Yet, the news is definitely more positive than negative.
Mortgage Rates are still at 5% or so. The $8000 1st time credit has really brought the buyers out. That along with the Good Morning America story a week ago or so about Virginia Beach(ala Hampton Roads) is the top real estate market according to Zillow due to the military!
The only negative seems to be the national jobs report. Yet as you may know, we are seeing very little change in our unemployment...not to say there are issues but we are still in the 5% range...nowhere near the 9%+ national number.
Thus, if you are thinking you must sell or you want to stop renting(or get that bigger home), the clock is ticking. These 5% rates can't stay here forever and the $8000 1st Time Credit is set to expire on Nov. 30th. So act now!
If you have questions about any part of this blog, please give me a call! (757) 580-6546.
the buyers are active. In my case, I have struggled to take even a day off since June!
Yet, don't think it is just me even though I was the top agent for the company in July. I am not sure how much you are watching the press on the real estate market. Yet, the news is definitely more positive than negative.
Mortgage Rates are still at 5% or so. The $8000 1st time credit has really brought the buyers out. That along with the Good Morning America story a week ago or so about Virginia Beach(ala Hampton Roads) is the top real estate market according to Zillow due to the military!
The only negative seems to be the national jobs report. Yet as you may know, we are seeing very little change in our unemployment...not to say there are issues but we are still in the 5% range...nowhere near the 9%+ national number.
Thus, if you are thinking you must sell or you want to stop renting(or get that bigger home), the clock is ticking. These 5% rates can't stay here forever and the $8000 1st Time Credit is set to expire on Nov. 30th. So act now!
If you have questions about any part of this blog, please give me a call! (757) 580-6546.
Thursday, May 28, 2009
Mortgages Rates on Rise....Buy NOW!!!
Time to Get off the Fence!!!
We have had wonderful 5% and lower rates for sometime but the market is ticking up!!!
See the note from a good mortgage officer I know, David Katz. He just sent this so you are
on top of the news!!!
David's own words:
Everyone: Interest rates have risen dramatically over the last two days. Current interest rates are now 5.50% for both conventional and government loans. The increase in rates is due to the investment market believing the Federal Government can no longer support the artificially low interest rates we have had over the past two – three months without creating inflation.
Following is an article from the Wall Street Journal that details this belief. Please call me if you have any questions. Rise in Rates Jolts Markets Wall Street Journal, By Liz RappaportMay 28, 2009Treasury yields and mortgage rates surged Wednesday to their highest levels since November, dealing a blow to the Federal Reserve's efforts to stimulate the economy by keeping borrowing costs low.The gap between yields on two-year Treasury notes and 10-year notes, known as the yield curve, widened to 2.75 percentage points, its highest ever. Stocks also slipped as investors worried that the higher Treasury yield could jack up market interest rates, damping economic recovery. The Dow Jones Industrial Average dropped 173.47 points, erasing nearly all of Tuesday's 193-point gain, closing at 8300.02.The Fed has made low mortgage rates a priority in its strategy to stem the U.S. recession. To achieve that, the central bank has been buying mortgage-backed securities and Treasurys. Through programs announced since last fall, it has bought more than $460 billion of mortgage-backed securities and more than $125 billion of Treasury bonds.But the winds turned against the Fed in recent days, as investors worry the government's approach could lead to inflation. The government will sell nearly $2 trillion in U.S. Treasury bonds this year to fund its stimulus programs, and investors worry there won't be enough demand for it. Slack demand would send bond prices down and push up the government's cost of raising money."The market is looking at the over $1 trillion deficit and how we'll finance it and concluding it is too big to finance without Fed assistance. But Fed assistance is causing inflation worries," says James Bianco, president of Bianco Research. "We're caught in a vicious cycle."Likewise, signs of a recovery in the U.S. and across the globe have prompted investors to move out of the relative safety of the Treasury market and into securities that may yield more, such as corporate bonds, stocks and even emerging-market debt. While that's overall good news for the U.S., it makes it harder for the Fed to help reinvigorate the battered housing market, seen as a linchpin of any recovery.With higher interest rates on the horizon, investors have been moving out of longer-term Treasury bonds and into shorter-term debt to avoid the risk of rising rates. The 10-year Treasury bond yield rose Wednesday to 3.695%, reaching an intraday high of 3.732%, up from 3.491% Tuesday night. Its yield has been rising steadily over the past two weeks from 3.103% in mid-May.Treasury traders have expected the U.S. central bank to intervene to keep the 10-year Treasury bond yield at 3.5%. But the Fed has not been so exact in its purchases."The market has built an expectation that the Fed will step in and buy more Treasurys and expand its program to support the markets," says Christian Cooper, interest-rate strategist at RBC Capital Markets. "With that failing to materialize, investors are exiting."Higher interest rates, in turn, make existing mortgage-backed securities less attractive, because newer securities would be filled with loans that pay more interest. Once Treasury yields solidly surpassed 3.5%, investors sold nearly $10 billion worth of bonds backed by mortgage loans, analysts estimate.The yield on mortgage-backed securities over comparable Treasury bonds widened Wednesday to 1.59 percentage points, from 1.38 percentage points Tuesday, according to FTN Financial. That's the market's biggest sell-off since November.The average 30-year mortgage rate jumped Wednesday to 5.29% from 5.03% the previous day, according to HSH Associates, a mortgage-data publishing firm. That's the most dramatic swing since March 19, after the Fed announced its plans to buy more mortgage-backed securities and U.S. Treasury bonds."The perception prior to this month was that the Fed controlled the mortgage rates," says Stuart Spodek, co-head of U.S. fixed income for BlackRock Inc. But in recent weeks, the market has lost that sense. "The market is looking to see what the Fed does in response."Wednesday's rise in rates may put pressure on the Fed to increase its planned purchases of Treasurys beyond the $300 billion already earmarked, analysts said. At the late April meeting of the Fed's Open Market Committee, the central bankers considered raising the amount but held off. Some analysts and traders said the Fed may need to address the market's reactions before its next June 24 FOMC meeting.On Wednesday, the Federal Reserve Bank of New York announced its latest round of Treasury purchases, which include fewer purchases than in the prior two weeks. In the first two weeks of June, the Fed will buy Treasurys four times. In the last full two weeks of May it bought five times, the Fed said.To be sure, a 10-year interest rate at 3.7% is not historically high, and a steep yield curve can be seen as a sign of strength in the economy. It suggests that investors believe prices will rise, and they are willing to sell out of ultrasafe Treasury bonds and buy riskier debt. A steeper yield curve is also good for banks, because it allows them to borrow in the short term at lower interest rates and lend at higher rates for longer periods.But rising yields also make the government's rescue efforts more expensive. The government could have to borrow more to finance bailouts, and the Fed itself could lose money on the mortgage-backed securities and Treasurys it has already bought. The Fed has said it may buy as much as $1.25 trillion of mortgage securities.Wednesday morning, before the market sold off, the Treasury held a record $35 billion sale of five-year notes. The offer was met with relatively strong demand from foreign and domestic investors alike, traders said."We've seen very good reception for Treasury issuance," said Marcus Huie, Treasurys strategist for Deutsche Bank AG. "The market is testing the Fed to hold the current yield levels."The record purchases by the Fed and a general sense that the global economy is finding a bottom has also weighed on the dollar, which had been seen as a safe-harbor currency during the financial storm. Concerns about the U.S.'s long-term fiscal health have weakened the dollar since the U.K.'s triple-A credit rating was put on a Standard & Poor's watch list last Thursday.While the dollar strengthened Wednesday against the euro, its broader trajectory in recent weeks has been downward.Moody's Investors Service affirmed the U.S.'s triple-A rating on Wednesday, despite "significant deterioration in the U.S. government's debt position," according to a company statement. Moody's identified the dollar's underlying strengths. "The global role of the U.S. currency also contributes to the ability of the economy and government finances to rebound," said Moody's Vice President Steven Hess
We have had wonderful 5% and lower rates for sometime but the market is ticking up!!!
See the note from a good mortgage officer I know, David Katz. He just sent this so you are
on top of the news!!!
David's own words:
Everyone: Interest rates have risen dramatically over the last two days. Current interest rates are now 5.50% for both conventional and government loans. The increase in rates is due to the investment market believing the Federal Government can no longer support the artificially low interest rates we have had over the past two – three months without creating inflation.
Following is an article from the Wall Street Journal that details this belief. Please call me if you have any questions. Rise in Rates Jolts Markets Wall Street Journal, By Liz RappaportMay 28, 2009Treasury yields and mortgage rates surged Wednesday to their highest levels since November, dealing a blow to the Federal Reserve's efforts to stimulate the economy by keeping borrowing costs low.The gap between yields on two-year Treasury notes and 10-year notes, known as the yield curve, widened to 2.75 percentage points, its highest ever. Stocks also slipped as investors worried that the higher Treasury yield could jack up market interest rates, damping economic recovery. The Dow Jones Industrial Average dropped 173.47 points, erasing nearly all of Tuesday's 193-point gain, closing at 8300.02.The Fed has made low mortgage rates a priority in its strategy to stem the U.S. recession. To achieve that, the central bank has been buying mortgage-backed securities and Treasurys. Through programs announced since last fall, it has bought more than $460 billion of mortgage-backed securities and more than $125 billion of Treasury bonds.But the winds turned against the Fed in recent days, as investors worry the government's approach could lead to inflation. The government will sell nearly $2 trillion in U.S. Treasury bonds this year to fund its stimulus programs, and investors worry there won't be enough demand for it. Slack demand would send bond prices down and push up the government's cost of raising money."The market is looking at the over $1 trillion deficit and how we'll finance it and concluding it is too big to finance without Fed assistance. But Fed assistance is causing inflation worries," says James Bianco, president of Bianco Research. "We're caught in a vicious cycle."Likewise, signs of a recovery in the U.S. and across the globe have prompted investors to move out of the relative safety of the Treasury market and into securities that may yield more, such as corporate bonds, stocks and even emerging-market debt. While that's overall good news for the U.S., it makes it harder for the Fed to help reinvigorate the battered housing market, seen as a linchpin of any recovery.With higher interest rates on the horizon, investors have been moving out of longer-term Treasury bonds and into shorter-term debt to avoid the risk of rising rates. The 10-year Treasury bond yield rose Wednesday to 3.695%, reaching an intraday high of 3.732%, up from 3.491% Tuesday night. Its yield has been rising steadily over the past two weeks from 3.103% in mid-May.Treasury traders have expected the U.S. central bank to intervene to keep the 10-year Treasury bond yield at 3.5%. But the Fed has not been so exact in its purchases."The market has built an expectation that the Fed will step in and buy more Treasurys and expand its program to support the markets," says Christian Cooper, interest-rate strategist at RBC Capital Markets. "With that failing to materialize, investors are exiting."Higher interest rates, in turn, make existing mortgage-backed securities less attractive, because newer securities would be filled with loans that pay more interest. Once Treasury yields solidly surpassed 3.5%, investors sold nearly $10 billion worth of bonds backed by mortgage loans, analysts estimate.The yield on mortgage-backed securities over comparable Treasury bonds widened Wednesday to 1.59 percentage points, from 1.38 percentage points Tuesday, according to FTN Financial. That's the market's biggest sell-off since November.The average 30-year mortgage rate jumped Wednesday to 5.29% from 5.03% the previous day, according to HSH Associates, a mortgage-data publishing firm. That's the most dramatic swing since March 19, after the Fed announced its plans to buy more mortgage-backed securities and U.S. Treasury bonds."The perception prior to this month was that the Fed controlled the mortgage rates," says Stuart Spodek, co-head of U.S. fixed income for BlackRock Inc. But in recent weeks, the market has lost that sense. "The market is looking to see what the Fed does in response."Wednesday's rise in rates may put pressure on the Fed to increase its planned purchases of Treasurys beyond the $300 billion already earmarked, analysts said. At the late April meeting of the Fed's Open Market Committee, the central bankers considered raising the amount but held off. Some analysts and traders said the Fed may need to address the market's reactions before its next June 24 FOMC meeting.On Wednesday, the Federal Reserve Bank of New York announced its latest round of Treasury purchases, which include fewer purchases than in the prior two weeks. In the first two weeks of June, the Fed will buy Treasurys four times. In the last full two weeks of May it bought five times, the Fed said.To be sure, a 10-year interest rate at 3.7% is not historically high, and a steep yield curve can be seen as a sign of strength in the economy. It suggests that investors believe prices will rise, and they are willing to sell out of ultrasafe Treasury bonds and buy riskier debt. A steeper yield curve is also good for banks, because it allows them to borrow in the short term at lower interest rates and lend at higher rates for longer periods.But rising yields also make the government's rescue efforts more expensive. The government could have to borrow more to finance bailouts, and the Fed itself could lose money on the mortgage-backed securities and Treasurys it has already bought. The Fed has said it may buy as much as $1.25 trillion of mortgage securities.Wednesday morning, before the market sold off, the Treasury held a record $35 billion sale of five-year notes. The offer was met with relatively strong demand from foreign and domestic investors alike, traders said."We've seen very good reception for Treasury issuance," said Marcus Huie, Treasurys strategist for Deutsche Bank AG. "The market is testing the Fed to hold the current yield levels."The record purchases by the Fed and a general sense that the global economy is finding a bottom has also weighed on the dollar, which had been seen as a safe-harbor currency during the financial storm. Concerns about the U.S.'s long-term fiscal health have weakened the dollar since the U.K.'s triple-A credit rating was put on a Standard & Poor's watch list last Thursday.While the dollar strengthened Wednesday against the euro, its broader trajectory in recent weeks has been downward.Moody's Investors Service affirmed the U.S.'s triple-A rating on Wednesday, despite "significant deterioration in the U.S. government's debt position," according to a company statement. Moody's identified the dollar's underlying strengths. "The global role of the U.S. currency also contributes to the ability of the economy and government finances to rebound," said Moody's Vice President Steven Hess
Saturday, May 9, 2009
Brighter Days Ahead
Not Only is the Sun Shining!!
Thankfully the rain has let up in some of the most rainy areas of the country and those ravaged by storms. If only California could get more rain and take out the fire!!!
I hope that you already caught the update on the sun shining on the economy also!
USA Today reported what many of us in Real Estate know....more home are getting multiple offers and/or getting contracts more quickly. Yes, in areas like California, it is due to prices being down 39% . But in strong areas like Hampton Roads(Virginia Beach, Chesapeake, Norfolk, Portsmouth, Newport News, Hampton, Suffolk and Smithfield), the improved "news reports" are the driving force. Consumer confidence is rising as the 5% mortgage rates and $8000 1st Time Home Buyer Tax Credit is talked up by the likes of Suzy Orman, Oprah and so many more.
The reduction in job losses, though still very tough on those losing their position, has given a bounce to the Stock Market, a leading indicator, that better days are ahead.
Historically, the Stock Market, Housing Market and Labor Market are linked as we all will spend money we have rather than that we don't have...or won't have as the job is gone.
Thus, don't sit on the sidelines and let a great housing market slip by. IF you have a solid job and have that downpayment, nows the time to lock in a 5% and lower rates that will save you money for years to come!!
Looking for Brighter Days Ahead!!!
Thankfully the rain has let up in some of the most rainy areas of the country and those ravaged by storms. If only California could get more rain and take out the fire!!!
I hope that you already caught the update on the sun shining on the economy also!
USA Today reported what many of us in Real Estate know....more home are getting multiple offers and/or getting contracts more quickly. Yes, in areas like California, it is due to prices being down 39% . But in strong areas like Hampton Roads(Virginia Beach, Chesapeake, Norfolk, Portsmouth, Newport News, Hampton, Suffolk and Smithfield), the improved "news reports" are the driving force. Consumer confidence is rising as the 5% mortgage rates and $8000 1st Time Home Buyer Tax Credit is talked up by the likes of Suzy Orman, Oprah and so many more.
The reduction in job losses, though still very tough on those losing their position, has given a bounce to the Stock Market, a leading indicator, that better days are ahead.
Historically, the Stock Market, Housing Market and Labor Market are linked as we all will spend money we have rather than that we don't have...or won't have as the job is gone.
Thus, don't sit on the sidelines and let a great housing market slip by. IF you have a solid job and have that downpayment, nows the time to lock in a 5% and lower rates that will save you money for years to come!!
Looking for Brighter Days Ahead!!!
Monday, April 20, 2009
Don't Miss Home Buyers Seminar
Time is Drawing Short!!!
With all the dynamic news in the press and now getting to the general public regarding the top reasons to buy a home now:
1. Great Inventory at all Price Ranges
2. Very Competitive Home Prices
3. 1st Time Home Buyers Tax Credit--$8000
4. 5% and below Interest Rates....Best Rates Ever
Based on these great factors, home buyers are really hitting the market to find a new home.
With this in mind, a Home Buyers Seminar designed to explain the Tax Credit, the steps to buying a home, how to be pre-approved by and to find a quality Mortgage Lender and related topics is planned for April 30th.
Reply to this Blog, email me at bcerny@roseandwomble.com or call me at 757 580-6546 to register.
Registration ends: April 27th.
Don't miss out!!!!!
Sunday, April 19, 2009
Market Update---Trends and Key Reports
With the help of a great mortgage officer, Jim Belote, I have this information to share on trends and data that will impact the overall market and home sales specificially. Find Jim's contact information below!!!
Keeping you updated on the market!
For the week of
April 20, 2009
MARKET RECAP
The latest economic releases indicate the economy remains a mixed bag of nuts. Fortunately, the good stuff – the cashews, almonds, and hazelnuts – are accounting for more of the bag. For instance, banks continue to earn their way out of the mess they got themselves into in 2007 and 2008. JP Morgan Chase, Goldman Sachs and Citigroup all posted stout earnings last week, indicating that last year's financial crisis may turn out to be more of an inconvenience from this point forward as the banks continue to successfully clean house.
Cleaning house is an apropos term. Most of the major banks, along with Freddie Mac and Fannie Mae, say they have increased foreclosure activity in recent weeks, lifting internal moratoriums that temporarily halted the process. The recent change in attitude is one reason the number of foreclosures jumped 175,200 last month, according to Foreclosures.com.
The news on the foreclosure front isn't as dire as you might think. The foreclosure problem was always there. You could say that everyone had been whistling past the graveyard for the past few months. Now, it appears that banks have the confidence and financial wherewithal to address the issue head on. The good news is that the sooner the issue is addressed, the sooner it can be resolved.
Mortgage rates are still low, and fueling a bit of a refinance boom as such. Depending on FICO score, income, debt-to-equity ratio, and down payment, a 30-year fixed-rate mortgage can easily be had for under 5 percent – a bottom from a historical perspective. What's more, recent data on consumer prices suggest rates should remain low, at least for the near future, given that inflation is currently a non-factor. Keep in mind though, the Federal Reserve has been flooding the market with money over the past six months, which will eventually stimulate inflation, and therefore stimulate rate increases.
Economic IndicatorRelease Date and Time Consensus
Estimate Analysis Leading Indicators(March) Mon, April 20,8:30 am, et, 0.2%(Decrease)
Moderately Important.
The indicators are pointing to an economic upturn.
State Street Investor Confidence Index(April)Tues, April 21,8:30 am, et 73 Index
Important.
Recent index increases are reflective of greater risk acceptance among investors.
Mortgage Applications Wed, April 22,7:00 am, et None
Important.
Low rates continue to fuel a refinancing boom.
Existing Home Sales(March) Thurs, April 23,10:00 am, et 4.67Million(Annualized)
Important.
The recent sales numbers are suggesting the market has bottomed.
Durable Goods Orders(March) Fri, April 24,8:30 am, et 1.5% (Increase)
Important.
Increased buyer incentives are stimulating big-ticket sales.
New Home Sales(March) Fri, April 24,10:00 am, et 340,000 (Annualized)
Important.
New home sales have likely bottomed, but show few signs of improving anytime soon.
Focus on the Long-Term--- When times are tough, the first course of action is to cut back spending on personal and business expenses. In short, we are reacting to a distinction between risk and uncertainty, first noted by economist Frank Knight. Risk, according to Knight, describes a situation where you have a sense of the range and likelihood of possible outcomes. Uncertainty, in contrast, describes a situation where it’s unclear what might happen, let alone how likely the possible outcomes are. Uncertainty is always a part of business, but in a recession it dominates everything else; no one’s sure how long the downturn will last or whether we’ll go back to the way things were.
Uncertainty overwhelms the economy with a sense of “short-termism.” We lose the ability to see the forest through the trees. Short-term considerations trump long-term potential, so we cut back on investment, advertising, and overall business activity. But there’s a trade-off for doing so: numerous studies have shown that businesspeople who keep spending and keep working to build their business do significantly better when the economy recovers than those who made deep cuts during the downturn.
Today, most people are far more worried about sinking the boat than about missing it, and that creates opportunities for those of us who are far more concerned about missing it.
Thanks, Jim, for a great information!!!
Jim Beloite, 757 395-Loan , Union Mortgage
1206 Laskin Road, Suite 250, Virginia Beach, VA 23451
Keeping you updated on the market!
For the week of
April 20, 2009
MARKET RECAP
The latest economic releases indicate the economy remains a mixed bag of nuts. Fortunately, the good stuff – the cashews, almonds, and hazelnuts – are accounting for more of the bag. For instance, banks continue to earn their way out of the mess they got themselves into in 2007 and 2008. JP Morgan Chase, Goldman Sachs and Citigroup all posted stout earnings last week, indicating that last year's financial crisis may turn out to be more of an inconvenience from this point forward as the banks continue to successfully clean house.
Cleaning house is an apropos term. Most of the major banks, along with Freddie Mac and Fannie Mae, say they have increased foreclosure activity in recent weeks, lifting internal moratoriums that temporarily halted the process. The recent change in attitude is one reason the number of foreclosures jumped 175,200 last month, according to Foreclosures.com.
The news on the foreclosure front isn't as dire as you might think. The foreclosure problem was always there. You could say that everyone had been whistling past the graveyard for the past few months. Now, it appears that banks have the confidence and financial wherewithal to address the issue head on. The good news is that the sooner the issue is addressed, the sooner it can be resolved.
Mortgage rates are still low, and fueling a bit of a refinance boom as such. Depending on FICO score, income, debt-to-equity ratio, and down payment, a 30-year fixed-rate mortgage can easily be had for under 5 percent – a bottom from a historical perspective. What's more, recent data on consumer prices suggest rates should remain low, at least for the near future, given that inflation is currently a non-factor. Keep in mind though, the Federal Reserve has been flooding the market with money over the past six months, which will eventually stimulate inflation, and therefore stimulate rate increases.
Economic IndicatorRelease Date and Time Consensus
Estimate Analysis Leading Indicators(March) Mon, April 20,8:30 am, et, 0.2%(Decrease)
Moderately Important.
The indicators are pointing to an economic upturn.
State Street Investor Confidence Index(April)Tues, April 21,8:30 am, et 73 Index
Important.
Recent index increases are reflective of greater risk acceptance among investors.
Mortgage Applications Wed, April 22,7:00 am, et None
Important.
Low rates continue to fuel a refinancing boom.
Existing Home Sales(March) Thurs, April 23,10:00 am, et 4.67Million(Annualized)
Important.
The recent sales numbers are suggesting the market has bottomed.
Durable Goods Orders(March) Fri, April 24,8:30 am, et 1.5% (Increase)
Important.
Increased buyer incentives are stimulating big-ticket sales.
New Home Sales(March) Fri, April 24,10:00 am, et 340,000 (Annualized)
Important.
New home sales have likely bottomed, but show few signs of improving anytime soon.
Focus on the Long-Term--- When times are tough, the first course of action is to cut back spending on personal and business expenses. In short, we are reacting to a distinction between risk and uncertainty, first noted by economist Frank Knight. Risk, according to Knight, describes a situation where you have a sense of the range and likelihood of possible outcomes. Uncertainty, in contrast, describes a situation where it’s unclear what might happen, let alone how likely the possible outcomes are. Uncertainty is always a part of business, but in a recession it dominates everything else; no one’s sure how long the downturn will last or whether we’ll go back to the way things were.
Uncertainty overwhelms the economy with a sense of “short-termism.” We lose the ability to see the forest through the trees. Short-term considerations trump long-term potential, so we cut back on investment, advertising, and overall business activity. But there’s a trade-off for doing so: numerous studies have shown that businesspeople who keep spending and keep working to build their business do significantly better when the economy recovers than those who made deep cuts during the downturn.
Today, most people are far more worried about sinking the boat than about missing it, and that creates opportunities for those of us who are far more concerned about missing it.
Thanks, Jim, for a great information!!!
Jim Beloite, 757 395-Loan , Union Mortgage
1206 Laskin Road, Suite 250, Virginia Beach, VA 23451
Saturday, April 18, 2009
What Are Short-Sales
Today's topic is one of great confusion. It it has only gotten more confusing in the past few weeks since the latest Stimulus Package was passed.
By definition, a "short sale" is caused by a seller need to sell a home for less than he/she owes on the mortgage. Sounds pretty cut and dry. Yet it isn't.
GROUP 1: If you would be looking to sell and you are aware that you can't get what you paid for the house, you are a rare "short sale" and may not be defined as a short sale to boot. To be a short sale, you must owe more than the house is worth and not have the assets/job necessary to continue to make house payments. Yet, the key party in this definition will be the bank or mortgage servicer that is receiving your mortgage payments.
Group 2: The reason they will be a determining factor of this process is another group of possible "short sales" that the bank and the government(more later) aren't willing to help. These are the home owners that used the house to take two trips to Tahiti, buy two SUVs and 3 carat diamond with the "equity of their house" only to find out the "equity" has vaporized. Though being a Realtor, I can't say no one with this type of situation will be termed a "short sale"(Foreclosure would be more likely), but as I understand it, they will have great difficulty to get a bank or the government support for the bank to help with the loan.
Thus Group 1 must provide bank statements, credit card statements, past income filings and the like to a bank if seeking to modify their loan or to establish the need to sell short. The bank want to ensure the seller A) doesn't have the assest and job to continue to pay the mortgage or B) hasn't spent money "foolishly" allowing the house to be the "bank", thus spending their way into the crisis.
On top of it, due to the latest stimulus package, the Federal Govt has established a process to ensure that borrowers that are behind(but not due to excessive life style) can modify the loan to help a homeowner stay in their house or sell it short within in specific guidelines. As these guidelines vary among the various loan types, there isn't space here to discuss each program. Yet know that an "approved" short sale has involved detailed information from the seller to the bank describing the hardship causing the sale and why it should be defined as a short sale, the financial detail noted above and an appraisal for an "as is" sale to determine the selling price for the home.
Thus the Short Sale isn't mysterious!! It just has a lot of twist and turns that make any seller or buyer want to consult a Realtor to help them throught this ardous process.
Question???
By definition, a "short sale" is caused by a seller need to sell a home for less than he/she owes on the mortgage. Sounds pretty cut and dry. Yet it isn't.
GROUP 1: If you would be looking to sell and you are aware that you can't get what you paid for the house, you are a rare "short sale" and may not be defined as a short sale to boot. To be a short sale, you must owe more than the house is worth and not have the assets/job necessary to continue to make house payments. Yet, the key party in this definition will be the bank or mortgage servicer that is receiving your mortgage payments.
Group 2: The reason they will be a determining factor of this process is another group of possible "short sales" that the bank and the government(more later) aren't willing to help. These are the home owners that used the house to take two trips to Tahiti, buy two SUVs and 3 carat diamond with the "equity of their house" only to find out the "equity" has vaporized. Though being a Realtor, I can't say no one with this type of situation will be termed a "short sale"(Foreclosure would be more likely), but as I understand it, they will have great difficulty to get a bank or the government support for the bank to help with the loan.
Thus Group 1 must provide bank statements, credit card statements, past income filings and the like to a bank if seeking to modify their loan or to establish the need to sell short. The bank want to ensure the seller A) doesn't have the assest and job to continue to pay the mortgage or B) hasn't spent money "foolishly" allowing the house to be the "bank", thus spending their way into the crisis.
On top of it, due to the latest stimulus package, the Federal Govt has established a process to ensure that borrowers that are behind(but not due to excessive life style) can modify the loan to help a homeowner stay in their house or sell it short within in specific guidelines. As these guidelines vary among the various loan types, there isn't space here to discuss each program. Yet know that an "approved" short sale has involved detailed information from the seller to the bank describing the hardship causing the sale and why it should be defined as a short sale, the financial detail noted above and an appraisal for an "as is" sale to determine the selling price for the home.
Thus the Short Sale isn't mysterious!! It just has a lot of twist and turns that make any seller or buyer want to consult a Realtor to help them throught this ardous process.
Question???
Monday, April 13, 2009
Ever Too Busy To Post???
Somedays are just like that, aren't they?
Though I will always stay busy with Real Estate and work to keep you all up to date on the market action or simply to answer questions.
Yet, with Real Estate, I am also active with Crown Financial, a wonderful ministry that help individuals and families, get out of debt and on firm financial footing. With the economy as it is, you might imagine that I have have been busy with this as well as my commitment to Christian work at my church.
But that all being said, you can come back soon and find a new post!!!
Many of you need your questions answered or just a bit of help. Thus, see you soon!
Though I will always stay busy with Real Estate and work to keep you all up to date on the market action or simply to answer questions.
Yet, with Real Estate, I am also active with Crown Financial, a wonderful ministry that help individuals and families, get out of debt and on firm financial footing. With the economy as it is, you might imagine that I have have been busy with this as well as my commitment to Christian work at my church.
But that all being said, you can come back soon and find a new post!!!
Many of you need your questions answered or just a bit of help. Thus, see you soon!
Tuesday, September 16, 2008
What is the Latest View on Mortgages??
How quickly the Financial Markets continue to change???
Below is a recap of the market from a great mortgage guy, Jim Belote, just sent early today. Though Jim stays on top of what is happening, his review doesn't note the Lehman Brothers' Chapter 11 filing or Bank of America's purchase of Merrill Lynch.
You will note that even with all this news, mortgage rates continue to drop due to the Fed's taking over Freddie Mac and Fannie Mae. If you were on the fence to buy and have decent credit, it is time to make while rates are low.
If on the contrary, you are content where you live and don't plan any move for 5 years or more, don't loose sleep over the 500 pt. market correction. We have been gyrating greatly so anyone want to take a bet that the market doesn't go back up 500 or more points today as all the bargain hunters buy Bank of America, Wachovia and other dividend providing financial stocks that got slammed yesterday? Sure, I can't say were the money will be made but there will be money made!!!
Here are Jim's thoughts!
Keeping you updated
on the market!
For the week of
September 15, 2008
MARKET RECAP
Sometimes sacrifices must be made, though that sentiment is of little comfort when you are the one being sacrificed. Take shareholders in government-sponsored entities (GSEs) Fannie Mae and Freddie Mac, for instance. They saw their equity sacrificed after both entities were taken over by the federal government last week.
The effects of the takeover were immediately salubrious – for the mortgage market. Rates tanked after the announced takeover. Bankrate.com's latest survey showed that the 30-year fixed-rate mortgage fell 40 basis points to 6.15%, the 15-year fixed-rate mortgage fell 28 basis points to 5.81%, and the 5/1 adjustable-rate mortgage fell 21 basis points to 6.08%.
So why the sudden rate drop? The takeover means that the Treasury Department is promising to buy mortgage-backed securities issued by the aforementioned GSEs. This promise assures private investors in mortgage-backed securities of repayment of both principal and interest, which is why mortgage rates dropped so precipitously. In essence, the government assumed the roll of buyer of last resort. This guaranteed demand provides a floor for mortgage-backed securities prices. That floor, in turn, elevated prices, and when mortgage-backed securities prices rise, yields fall.
It remains to be seen whether the mortgage market's windfall will eventually blow over to the housing market, which is certainly due a small windfall of its own. Pending home sales remain flat, with the pending home sales index holding at 86.5. NAR Chief Economists Lawrence Yun says, rather discouragingly, that “even with the direct intervention in the secondary mortgage market, it is unclear if we will go back to sound normal underwriting criteria, or if it will remain overly stringent.”
Let's root for normal underwriting criteria.
Economic IndicatorRelease Date and TimeConsensus EstimateAnalysis
Industrial Production (August) Mon, Sept 15,9:15am, et 0.3% (Decrease) Moderately Important. Production has been weakening over the past two months, suggesting business isn't immune to the economic slowdown.
Consumer Price Index(August) Tues, Sept 16,8:30 am, et All Goods:
No Change Core: 0.2% (Increase)Very Important. Falling consumer prices often translate to falling credit prices.
Housing Market Index(September) Tues, Sept 16,1:00 pm, et 16 Index Important. Sentiment remains sour and continues to hold at multi-year lows.
Federal Reserve FOMC Interest Rate Announcement Tues, Sept 16,2:15 pm, et
2.0% Federal Funds Rate Very Important. The Fed is expected to hold short-term rates, but pressure is building to raise them.
Mortgage Applications Wed, Sept 17,7:00 am, et None Important. Applications surged on the recent drop in mortgage rates.
Housing Starts(August) Wed, Sept 17,8:30 am, et 955,000 (Annualized)Important. Starts are expected to continue along the downward trend, though the rate of descent is slowing.
Leading Indicators(August) Thurs, Sept 18,8:30 am, et 0.2% (Decrease) Moderately Important. Indicators are expected to confirm what we already know: The economy remains sluggish.
Winners and Losers
Not everyone associated with Fannie Mae's and Freddie Mac's capital structure was sacrificed last week. The U.K. Telegraph reported that the Treasury Department's move to place Fannie and Freddie into conservatorship netted PIMCO, a bond investing outfit, an immediate $1.7 billion profit. What's more, PIMCO wasn't the lone winner. Nomura Asset Management, T. Rowe Price Group Inc., RiverSource Institutional Advisors and FAF Advisors also netted a tidy profit, having bought nearly $1 trillion in both agencies' debt this past July.
Perhaps a similar replay will unfold this week. Lehman Brothers Holdings, another financial firm buried under low-quality subprime mortgage paper, is actively shopping itself to potential buyers, aided by both the U.S. Treasury and Federal Reserve, meaning the U.S. Government is orchestrating its second major bailout in as many weeks. Goldman Sachs and Bank of America are the current front-runners in the Lehman stakes. Regardless of who eventually wins, Lehman shareholders are sure to receive the short-end of the stick, while certain Lehman bondholders could find themselves receiving the long-end.
A Lehman bailout won't have the same mortgage market impact as the Fannie Mae and Freddie Mac bailouts, but it will affirm the notion that government can, and does, game winners and losers. Let's just hope the government's willingness to be the financial sector's savior will help the mortgage and housing markets remain long-term winners. It will be reassuring to know that the current machinations will benefit more than just your well-connected bond trader.
So read widely, invest wisely and know that real estate remains a great investment for long term wealth(see the Realtor Ads...they are true).
Questions???
Below is a recap of the market from a great mortgage guy, Jim Belote, just sent early today. Though Jim stays on top of what is happening, his review doesn't note the Lehman Brothers' Chapter 11 filing or Bank of America's purchase of Merrill Lynch.
You will note that even with all this news, mortgage rates continue to drop due to the Fed's taking over Freddie Mac and Fannie Mae. If you were on the fence to buy and have decent credit, it is time to make while rates are low.
If on the contrary, you are content where you live and don't plan any move for 5 years or more, don't loose sleep over the 500 pt. market correction. We have been gyrating greatly so anyone want to take a bet that the market doesn't go back up 500 or more points today as all the bargain hunters buy Bank of America, Wachovia and other dividend providing financial stocks that got slammed yesterday? Sure, I can't say were the money will be made but there will be money made!!!
Here are Jim's thoughts!
Keeping you updated
on the market!
For the week of
September 15, 2008
MARKET RECAP
Sometimes sacrifices must be made, though that sentiment is of little comfort when you are the one being sacrificed. Take shareholders in government-sponsored entities (GSEs) Fannie Mae and Freddie Mac, for instance. They saw their equity sacrificed after both entities were taken over by the federal government last week.
The effects of the takeover were immediately salubrious – for the mortgage market. Rates tanked after the announced takeover. Bankrate.com's latest survey showed that the 30-year fixed-rate mortgage fell 40 basis points to 6.15%, the 15-year fixed-rate mortgage fell 28 basis points to 5.81%, and the 5/1 adjustable-rate mortgage fell 21 basis points to 6.08%.
So why the sudden rate drop? The takeover means that the Treasury Department is promising to buy mortgage-backed securities issued by the aforementioned GSEs. This promise assures private investors in mortgage-backed securities of repayment of both principal and interest, which is why mortgage rates dropped so precipitously. In essence, the government assumed the roll of buyer of last resort. This guaranteed demand provides a floor for mortgage-backed securities prices. That floor, in turn, elevated prices, and when mortgage-backed securities prices rise, yields fall.
It remains to be seen whether the mortgage market's windfall will eventually blow over to the housing market, which is certainly due a small windfall of its own. Pending home sales remain flat, with the pending home sales index holding at 86.5. NAR Chief Economists Lawrence Yun says, rather discouragingly, that “even with the direct intervention in the secondary mortgage market, it is unclear if we will go back to sound normal underwriting criteria, or if it will remain overly stringent.”
Let's root for normal underwriting criteria.
Economic IndicatorRelease Date and TimeConsensus EstimateAnalysis
Industrial Production (August) Mon, Sept 15,9:15am, et 0.3% (Decrease) Moderately Important. Production has been weakening over the past two months, suggesting business isn't immune to the economic slowdown.
Consumer Price Index(August) Tues, Sept 16,8:30 am, et All Goods:
No Change Core: 0.2% (Increase)Very Important. Falling consumer prices often translate to falling credit prices.
Housing Market Index(September) Tues, Sept 16,1:00 pm, et 16 Index Important. Sentiment remains sour and continues to hold at multi-year lows.
Federal Reserve FOMC Interest Rate Announcement Tues, Sept 16,2:15 pm, et
2.0% Federal Funds Rate Very Important. The Fed is expected to hold short-term rates, but pressure is building to raise them.
Mortgage Applications Wed, Sept 17,7:00 am, et None Important. Applications surged on the recent drop in mortgage rates.
Housing Starts(August) Wed, Sept 17,8:30 am, et 955,000 (Annualized)Important. Starts are expected to continue along the downward trend, though the rate of descent is slowing.
Leading Indicators(August) Thurs, Sept 18,8:30 am, et 0.2% (Decrease) Moderately Important. Indicators are expected to confirm what we already know: The economy remains sluggish.
Winners and Losers
Not everyone associated with Fannie Mae's and Freddie Mac's capital structure was sacrificed last week. The U.K. Telegraph reported that the Treasury Department's move to place Fannie and Freddie into conservatorship netted PIMCO, a bond investing outfit, an immediate $1.7 billion profit. What's more, PIMCO wasn't the lone winner. Nomura Asset Management, T. Rowe Price Group Inc., RiverSource Institutional Advisors and FAF Advisors also netted a tidy profit, having bought nearly $1 trillion in both agencies' debt this past July.
Perhaps a similar replay will unfold this week. Lehman Brothers Holdings, another financial firm buried under low-quality subprime mortgage paper, is actively shopping itself to potential buyers, aided by both the U.S. Treasury and Federal Reserve, meaning the U.S. Government is orchestrating its second major bailout in as many weeks. Goldman Sachs and Bank of America are the current front-runners in the Lehman stakes. Regardless of who eventually wins, Lehman shareholders are sure to receive the short-end of the stick, while certain Lehman bondholders could find themselves receiving the long-end.
A Lehman bailout won't have the same mortgage market impact as the Fannie Mae and Freddie Mac bailouts, but it will affirm the notion that government can, and does, game winners and losers. Let's just hope the government's willingness to be the financial sector's savior will help the mortgage and housing markets remain long-term winners. It will be reassuring to know that the current machinations will benefit more than just your well-connected bond trader.
So read widely, invest wisely and know that real estate remains a great investment for long term wealth(see the Realtor Ads...they are true).
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