Monday, February 17, 2014

A Wonderful Development: Lower interest rates


Interest Rates Moving Lower?


No doubt that lower interest rates would set an improving housing market on fire.  Jim Belote's Mortgage Market Weekly
notes weaker retail sales and jobless claims results and the related impact on bond markets.  

Do not expect mortgage rates to keep going lower.  Rather pay attention to what Jim notes about the inverse relationship between bond rates and mortgage rates in the middle of the article.  If I were you, I would focus on the
overall trend rather than what could very well be a transitory change.

Think of it this way:  Millions of Americans could not make it to retailers or to restaurants or any where for the past
three to four weeks(remember Atlanta on Ice??). Thus Retail Sales lagged which spooks the market which is
seen in our 401Ks, Mortgage Rates and even sell offs of companies not even related to Retail Sales or Housing 
industry.

SUMMARY:  DO NOT WAIT FOR LOWER RATES!

If you desire or need to move, act now! It isn't the time to sit on the sidelines.





"The important thing in this world is not so much where we stand, as in what direction we are moving." Oliver Wendell Holmes. With several disappointing economic reports of late, the question remains whether our economy is moving in the right direction.
There was a disappointing read on January's retail sales, as they fell by 0.4 percent versus the 0.0 percent expected. This was the second straight monthly decline and retailers cited the harsh January weather as the reason.

There was also some disappointing news in the labor market, as weekly Initial Jobless Claims rose by 8,000 in the latest week to 339,000. In addition, the four-week average, which irons out seasonal abnormalities, also increased. The labor market has been muddling along for the past two months, especially given December's and January's weaker than expected job creations.

There was some good news on the housing front, as RealtyTac reported that January marked the fortieth consecutive month where U.S. foreclosure activity declined on an annual basis. Filings are down 18 percent from January 2013 to January 2014, but the annual decline of 18 percent was the smallest annual decline since September 2012.

What does this mean for home loan rates? 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. If economic reports continue to be weak, the Fed will have to decide whether it will continue to taper its Bond purchases. This will surely have an impact on the markets and home loan rates in the weeks and months to come.

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 markets are closed Monday for the Presidents Day holiday. The rest of the week will be busy, with key housing, inflation, and manufacturing news.
  • Manufacturing data from the Empire State Index on Tuesday and the Philadelphia Fed Index on Thursday will give investors a look at two of the major regions in the nation.
  • Housing dominates the week with the National Association of Home Builders Housing Market Index on Tuesday,Housing Starts and Building Permits on Wednesday, and Existing Home Sales on Friday.
  • We'll get a read on inflation with the wholesale-measuring Producer Price Index on Wednesday, followed by the Consumer Price Index on Thursday.
  • Also on Thursday, Weekly Initial Jobless Claims will be reported as usual.
In addition, the minutes from the January 28-29 Federal Open Market Committee meeting will be released on Wednesday, and this could provide some volatility this week. Investors will be looking for additional information about tapering when the minutes are released. Will the minutes hint toward ending the Fed's Bond purchase program sooner rather than later?

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, it was a volatile week for Bonds, but home loan rates are still attractive. I'll be watching the markets closely for all the latest developments.
Chart: Fannie Mae 4.0% Mortgage Bond (Friday Feb 14, 2014)
Japanese Candlestick Chart


The Mortgage Market Guide View...
Beware of a New One-Ring Cell Phone Scam
If you answer or return a call from a number you don't recognize, you might be hit with fraudulent fees.
By Cameron Huddleston, Kiplinger.com

The next time you miss a call and don't recognize the number on your caller ID, don't return the call because it could be a scam.

Scammers are using auto-dialers to call cell-phone numbers nationwide, let the phone ring once and then hang up, according to the Better Business Bureau and Federal Trade Commission. Those who call back are connected to a paid international adult entertainment service, chat line or other premium service that charges a $19.95 international call fee and per-minute fees that are $9 or more, according to the BBB.

These "one-ring" scam calls appear to come from within the U.S. but typically originate from the Caribbean, according to the FTC. Area codes on the calls are frequently 268, 284, 473, 664, 649, 767, 809, 829, 849 and 876.

Both the BBB and FTC are urging consumers not to answer or return calls from numbers they don't recognize to avoid becoming victims of this one-ring scam. The agencies also recommend checking your mobile phone bill carefully and alerting your carrier if you see any unauthorized charges. The sooner you catch and report fraud, the better your chances of having the charges removed, according to the BBB. If you're unable to resolve the issue with your carrier, file a complaint with the Federal Trade Commission and Federal Communications Commission.
Kiplinger LogoReprinted with permission. All Contents ©2014 The Kiplinger Washington Editors. Kiplinger.com.
Economic Calendar for the Week of February 17 - February 21
Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Tue. February 18
08:30
Empire State Index
Feb
NA

12.5
HIGH
Tue. February 18
10:00
Housing Market Index
Feb
NA

56
Moderate
Wed. February 19
03:00
FOMC Minutes




Low
Wed. February 19
08:00
Core Producer Price Index (PPI)
Jan
NA

0.3%
Low
Wed. February 19
08:30
Producer Price Index (PPI)
Jan
NA

0.45
Moderate
Wed. February 19
08:30
Building Permits
Jan
NA

986K
Moderate
Wed. February 19
08:30
Housing Starts
Jan
NA

999K
Moderate
Thu. February 20
08:30
Jobless Claims (Initial)
2/15
NA

339K
Moderate
Thu. February 20
08:30
Consumer Price Index (CPI)
Jan
NA

0.3%
HIGH
Thu. February 20
08:30
Core Consumer Price Index (CPI)
Jan
NA

0.1%
HIGH
Thu. February 20
10:00
Philadelphia Fed Index
Feb
NA

9.4
HIGH
Fri. February 21
10:00
Existing Home Sales
Jan
NA

4.87M
Moderate

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.

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