Mortgage Rates Dip

  Hard to believe....but downturn in stock market and bonds pushed home loan rates down. I know many, including me, saw all the news and the logic of rates rising.  But for now, you can get a 4% mortgage loan.

So buy or refinance NOW!  

I don't honestly believe these rates will last long!

Provided to you Exclusively by Jim Belote   For the week of May 12, 2014 | Vol. 12, Issue 19

Jim Belote Branch Manager, MBA Union Mortgage Group Phone: (757) 395-LOAN Fax: (757) 351-6471 E-Mail: jim@jimbelote.com 582 Lynnhaven Parkway, Suite 300 Virginia Beach, VA 23452

In This Issue...

Last Week in Review: Home loan rates reached their best levels of 2014. Find out why! Forecast for the Week: A busy week is ahead, with important reports on housing, inflation and manufacturing. View: Here's an easy explanation for why bad economic news can be good for home loan rates.

Last Week in Review

"I knew the record would stand until it was broken." Yogi Berra. Last week, Mortgage Bonds hit their highest levels in 2014, helping home loan rates reach some of their lowest levels this year. Read on for details. One of the main reasons Bonds and home loan rates have benefitted of late is due to a safe haven trade. What does this mean? When there is uncertainty in the world, like the current situation with Russia and the Ukraine, investors often move their money out of Stocks and into less risky assets like Bonds. This includes Mortgage Bonds, the type of Bond on which home loan rates are based. As tensions have escalated overseas in recent weeks, our Bond markets have benefitted—and as Mortgage Bonds improve, so do home loan rates. Another factor helping Bonds right now is the old trading scenario, "sell in May and go away." Stock prices have been declining, helping Mortgage Bonds improve. For even more details on the dynamic between Stocks and Bonds, see the View article below. In housing news, research firm CoreLogic reported that home prices, including distressed sales, rose by 11.13 percent from March 2013 to March 2014. In addition, prices were up 1.4 percent from February to March. The 11.13 percent year-over-year increase is down from the 11.81percent registered in the year ended in February. Given the tighter credit standards and limited inventory that exists in many parts of the country, it seems likely that the big home price gains seen in 2014 will not be sustained. This will be important to watch as we move further ahead this year, as the strength of the housing recovery is a key factor of our economic recovery overall. The bottom line is that now remains a great time to consider a home purchase or refinance. Home loan rates remain attractive compared to historical levels, and they're at the best levels seen this year. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week

After last week's quiet economic calendar, this week brings key reports across a wide spectrum of the economy. Economic reports begin on Tuesday with Retail Sales, which will give us a read on consumer spending for April. Look for a double dose of inflation data, with the wholesale-measuring Producer Price Index on Wednesday and the Consumer Price Index on Thursday. Also on Thursday, weekly Initial Jobless Claims will be delivered as usual. Two key manufacturing reports are on tap for Thursday, with May's readings of the Empire State Index and Philadelphia Fed Index. Thursday brings housing news as well via the National Association of Home Builder's Housing Market Index. More housing news follows Friday with Housing Starts and Building Permits. Ending the week, the Consumer Sentiment Index will also be reported Friday. 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, Bonds and home loan rates reached some of their best levels this year. I'll be watching closely to see if this trend continues. Chart: Fannie Mae 4.0% Mortgage Bond (Friday May 09, 2014)

The Mortgage Market Guide View...

Why Bad News Can Be Good for Home Loan Rates It's counterintuitive that negative economic news can actually be good for home loan rates, but there's a pretty simple explanation, and once you "get it" it makes perfect sense. First, remember that big money managers in search of higher returns avoid holding onto cash by investing in both Stocks and Bonds. Second, despite what the financial media often reports, home loan rates are based on the performance of Mortgage Backed Securities—a type of Bond. Putting these two facts together, it begins to make sense that when the economy is "on fire" and economic reports are on the uptrend, investors tend to put more money into Stocks. That's because Stocks offer higher returns, even though they are generally more risky. However, in order to put money into Stocks, investors must remove some of their money from less-risky Bonds. The result is a decreased demand in Bonds causing Bond prices to worsen, and therefore home loan rates to go higher. On the other hand, when the economy is sluggish and economic reports are negative, money managers tend to take money out of higher-risk Stocks and move it into less-volatile Bonds. As demand for Bonds increase, Bond pricing improves and home loan rates go down. While it may seem odd that home loan rates improve when economic news is sluggish, it actually makes sense when you look at the bigger picture! Feel free to pass this info along to your team, clients and colleagues. If you have any questions about how economic news is impacting home loan rates right now, please call or email any time. Economic Calendar for the Week of May 12 - May 16 Date ET Economic Report For Estimate Actual Prior Impact Tue. May 13 08:30 Retail Sales Apr NA 1.2% HIGH Tue. May 13 08:30 Retail Sales ex-auto Apr NA 0.7% HIGH Wed. May 14 08:30 Producer Price Index (PPI) Apr NA 0.5% Moderate Wed. May 14 08:30 Core Producer Price Index (PPI) Apr NA 0.2% Moderate Thu. May 15 10:00 Philadelphia Fed Index May NA 16.6 HIGH Thu. May 15 08:30 Empire State Index May NA 1.3 Moderate Thu. May 15 08:30 Core Consumer Price Index (CPI) Apr NA 0.2% HIGH Thu. May 15 08:30 Consumer Price Index (CPI) Apr NA 0.2% HIGH Thu. May 15 08:30 Jobless Claims (Initial) 5/10 NA 319K Moderate Thu. May 15 10:00 Housing Market Index May NA 47 Moderate Fri. May 16 08:30 Housing Starts Apr NA 946K Moderate Fri. May 16 08:30 Building Permits Apr NA 990K Moderate Fri. May 16 10:00 Consumer Sentiment Index (UoM) May NA 84.1 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. 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 If you prefer to send your removal request by mail the address is:

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)

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. Reprinted 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.