Interest Rates
The Unbelievable Phenom
Since 2005, interest rates have been below the historical 7% good rate. Except for the past 9, going on 10 years, a 7% rate was always the rate to buy a home. Many times rates have be 8-10% with periods in the 14-18% range.
Thus, interest are an absolute Phenom to buyers and sellers. Last two weeks, as shared in Jim's MMG Weekly below, interest rates have been below 4% for a well financed buyers. Yet even a buyer with "a lesser financial profile" would still see a rate just over 4%.
No doubt the economy's slow recovery and the stock market recent stock fluctuations has kept investors in the safe haven of government and other bonds. Jim again explains the indirect but effective relations between these two factors.
Yet, if you are still sitting on the sideline wondering if it is a good time to move, you have to be wondering when with this ride end.
Sure if you miss this rate and buy when rates have "zoomed up" to 5%, you will still have an interest rate rarely seen(except for the past 9-10 years and back in the 50s).
Keep up with this blog and you will know when the trend is turning!
But do you really want to wait??
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Provided to you Exclusively by Jim Belote
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For the week of Oct 27, 2014 | Vol. 12, Issue 43
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582 Lynnhaven Parkway, Suite 300
Virginia Beach, VA 23452
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 In This Issue...
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Last Week in Review: Home loan rates remain near 18-month lows, while housing reports showed mixed news for the sector.
Forecast for the Week: Look for key reports on housing, consumer attitudes, U.S. economic growth, inflation and more. Plus, a big Fed meeting is ahead.
View: Check out the secret to being more valuable at your job, revitalizing your career, or getting paid more.
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Last Week in Review
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It's been said that "opportunity comes knocking." And that's certainly the case for people looking to purchase or refinance a home, as home loan rates remain near 18-month lows.
In recent weeks, investors have moved into the safe haven of the Bond markets for several reasons, including weak economic data here at home, concerns about Ebola, and economic and geopolitical uncertainty overseas. This has helped Mortgage Bonds reach 18-month highs, and since home loan rates are tied to Mortgage Bonds, rates have reached 18-month lows.
In addition, Stocks have been volatile due to the upcoming end of the Fed's Bond-buying program. The Fed has been slowly tapering its purchases throughout the year, and every indication is that the Fed will completely end the program at its meeting on October 28 to 29. The key takeaway is that Stocks performed terribly after the first and second rounds of the Fed's Bond-buying program ended. If Stocks worsen, Mortgage Bonds and home loan rates could continue to improve.
In other news, key housing reports showed mixed results for the sector. September Existing Home Sales reached its highest pace of the year, showing gains in all major regions except for the Midwest. September New Home Sales also reached a six-year high. However, New Home Sales for August, which were originally reported at 504,000, were revised to 466,000. Sales in June and July were also revised lower.
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.
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Forecast for the Week
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A packed economic calendar is in store this week. Plus, the Fed meeting could cause volatility in the markets.
- Housing news kicks off the week with Pending Home Sales on Monday, followed by the S&P/Case Shiller Home Price Indexon Tuesday.
- Durable Goods Orders will also be released on Tuesday.
- We'll get a read on how consumers are feeling with Consumer Confidence on Tuesday and the Consumer Sentiment Index on Friday.
- Thursday's reports feature Weekly Initial Jobless Claims and the first reading on Q3 Gross Domestic Product.
- Friday brings Personal Income, Personal Spending, Personal Consumption Expenditures (inflation index), theEmployment Cost Index, and Chicago PMI (a regional manufacturing report).
In addition, the Fed's next two-day meeting of the Federal Open Market Committee begins Tuesday, with the Monetary Policy Statement being released on Wednesday. Investors will be watching closely to see if the Fed fully tapers its ongoing Bond-buying program. This announcement has the potential to create volatility in the markets.
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 remain near 18-month highs, helping home loan rates reach 18-month lows. I'll continue to monitor them closely.
Chart: Fannie Mae 3.5% Mortgage Bond (Friday Oct 24, 2014)
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The Mortgage Market Guide View...
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3 Steps to Becoming an Expert
Peter Economy, management expert and co-author of the bestselling book, "Managing for Dummies," says the secret to being more valuable at your job, revitalizing your career, or getting paid more is simple—become an expert. He recommends the following three steps to get there:
Step 1. Understand what you're interested in. What you already know can put you within short reach of being an expert in your field (if you aren't one already). This is the least time-intensive route. But if what you're already doing no longer interests you, you must find something inspiring enough to make learning feel effortless.
Step 2. Focus on one thing at a time. Learn too many things at once and you'll be overwhelmed and probably fail. Don't move on to the next subject of your expertise until you feel comfortable with the one you're working on now.
Step 3. Practice makes perfect. There's no such thing as an overnight expert. Be willing to invest the time for:
- Studying. Reading, taking courses, attending training or seminars, watching videos, hiring a mentor, and learning from other experts are all great avenues.
- Applying. Getting practical experience will help you go deeper, work out the kinks, and fully explore your field of expertise.
- Presenting. Documenting your findings with a journal or blog will help you understand even more facets of your expertise. If at all possible, write or speak about your trials and resolutions, teaching others about your journey.
Please feel free to pass these tips along to your team, clients and colleagues.
Source: Inc.com
Economic Calendar for the Week of October 27 - October 31
Date
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Economic Report
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For
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Estimate
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Actual
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Prior
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Impact
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Mon. October 27
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10:00
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Pending Home Sales
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Sep
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NA
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-1.0%
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Moderate
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Tue. October 28
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08:30
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Durable Goods Orders
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Sep
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NA
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-18.4%
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Moderate
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Tue. October 28
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09:00
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S&P/Case-Shiller Home Price Index
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Aug
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NA
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6.7%
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Moderate
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Tue. October 28
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10:00
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Consumer Confidence
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Oct
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NA
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86.0
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Moderate
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Wed. October 29
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02:00
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FOMC Meeting
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Oct
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NA
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0.25%
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HIGH
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Thu. October 30
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08:30
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GDP Chain Deflator
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Q3
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NA
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2.1%
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Moderate
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Thu. October 30
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08:30
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Gross Domestic Product (GDP)
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Q3
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NA
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4.6%
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Moderate
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Thu. October 30
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08:30
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Jobless Claims (Initial)
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10/25
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NA
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283K
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Moderate
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Fri. October 31
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09:45
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Chicago PMI
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Oct
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NA
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60.5
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HIGH
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Fri. October 31
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10:00
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Consumer Sentiment Index (UoM)
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Oct
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NA
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86.4
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Moderate
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Fri. October 31
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08:30
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Personal Income
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Sep
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NA
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0.3%
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Moderate
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Fri. October 31
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08:30
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Personal Spending
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Sep
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NA
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0.5%
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Moderate
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Fri. October 31
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08:30
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Personal Consumption Expenditures and Core PCE
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Sep
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NA
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0.1%
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HIGH
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Fri. October 31
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