Tuesday, August 5, 2014

MMG Weekly--So why did the Market Dive last week

As usual a very good update on general market and impact on home sales and interest rates.

But one has to try and reconcile the much improve 2nd quarter results versus stock market losing all of July progress in a day.

Yet, we don't have to lose too much sleep over the disparity as this week may give us more information.

A key note in this piece is about the continued low, "I am struggling to stay above 4%" rates.   Lower house payments are never bad.

Provided to you Exclusively by Jim Belote  
For the week of Aug 04, 2014 | Vol. 12, Issue 31
Jim Belote
Jim Belote
Branch Manager, MBA
Union Mortgage Group
Phone: (757) 395-LOAN
Fax: (757) 351-6471
E-Mail: jim@jimbelote.com
Union Mortgage Group
582 Lynnhaven Parkway, Suite 300
Virginia Beach, VA 23452
In This Issue...
Last Week in Review: The Jobs Report for July met expectations, and so did the Fed's taper announcement. But there was one big surprise—find out more.

Forecast for the Week: The economic calendar is quiet, but earnings season continues. Will the news boost Stocks, or will it benefit Bonds and home loan rates?

View: These four simple tips can improve your writing and make sure your marketing pieces and emails make a great first impression.
Last Week in Review
Surprise! Surprise! While the Jobs Report for July didn't feature any major surprises, the second quarter Gross Domestic Product reading sure did. Here's what you need to know.
The Labor Department reported that 209,000 new jobs were added in July, while the numbers for May and June were revised higher by 15,000. Through the first seven months of 2014, job creations have averaged 230,000 jobs per month, enough for the U.S. economy to continue to grow. While the Unemployment Rate ticked up a hair to 6.2 percent, overall this was a decent report and a good sign for the labor markets.

Also, as expected, the Fed announced that it will taper its big Bond-buying program by $10 billion total. This means that the Fed will now purchase $10 billion in Mortgage Bonds and $15 billion in Treasury Securities each month. The Fed has been steadily tapering these purchases throughout the year. As we head into the fall, it will be important to see how further tapering may impact Mortgage Bonds—and therefore home loan rates, which are tied to Mortgage Bonds.

There weren't any major surprises in the housing sector, as the Case Shiller Home Price Index rose by 9.3 percent in May on an annualized basis, the slowest pace in more than a year. From April to May, there was a 0.3 percent decline, the first monthly drop since January 2012. Price gains continue to move down to more normal levels after the big gains seen in 2013. 

That leads us to the big surprise of the week. The first reading of second quarter Gross Domestic Product (GDP) surged by 4 percent, well above the -2.1 percent final reading for the first quarter. This is significant because GDP is the broadest measure of economic activity, and at first glance it's a great sign for our economy. However, it's important to note that this is the first of three readings and it is based on data that is incomplete or subject to further revisions by the Bureau of Economic Analysis. We will have to see what future reports bring as the second half of the year continues.

The bottom line is that home loan rates remain near some of their best levels of the year and now is a great time to consider a home purchase or refinance. Let me know if I can answer any questions at all for you or your clients.
Forecast for the Week
After last week's jam-packed calendar, this week's economic report schedule is on the light side.
  • On Tuesday, the ISM Services Index for July will be released.
  • Jump to Thursday with the usual suspect, Weekly Initial Jobless Claims, which continue to hover near pre-recession levels.
  • On Friday, look for Productivity for the second quarter.
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, the volatility continued last week due to news here at home and the uncertainty in several regions overseas. Home loan rates remain attractive and I will continue to monitor them closely.
Chart: Fannie Mae 4.0% Mortgage Bond (Friday Aug 01, 2014)
Japanese Candlestick Chart

The Mortgage Market Guide View...
4 Tips to Help You Become a Better Business Writer

First impressions are always crucial, especially when reaching out to potential new clients and referral partners. And in business, first impressions are often formed sight unseen through writing. That's why avoiding poor grammar, clichés and "business speak" in your writing is critical.

Here are four tips that can help improve your writing, to ensure you make a great impression with clients and colleagues:

Keep it simple! Long, run-on sentences can be confusing, while the ability to simplify the complex can actually be seen as a sign of intelligence and leadership. Click here to enable both Outlook and Microsoft Word to apply the Flesch-Kincaid Grade Level and Reading Ease filters to all your documents.

Check for any spam issues. Besides ensuring your email gets to the intended recipient, spam checker tools help improve your writing by eliminating marketing and sales jargon such as "opportunity," "free" and "winning."

Avoid clichés and dry as dust expressions. People may think they are tried and true, but they can also make you sound unimaginative.

Don't forget to proofread—and there's an app for that! While grammar and style errors may seem like small issues, they give the impression that you don't pay attention to important details. Always proofread your materials, and ask a trusted colleague to review them for a second opinion. In addition, the Hemingway App identifies grammar and style errors—often better than most word processors—and helps you avoid awkward sentence constructions and overly-used words or expressions.

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

Economic Calendar for the Week of August 04 - August 08
Economic Report
Tue. August 05
ISM Services Index

Thu. August 07
Jobless Claims (Initial)

Fri. August 08


The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.

As your mortgage professional, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.

In the unlikely event that you no longer wish to receive these valuable market updates, please USE THIS LINK or email: jim@jimbelote.com

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Jim Belote
Union Mortgage Group
582 Lynnhaven Parkway, Suite 300
Virginia Beach, VA 23452
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