Stock Market Willies and Real Estate

Real Estate

in an

Upset Stock Market

The stock market has almost been in a free fall in the past week.  It is kind of like it doesn't like the improving real estate sales and upbeat retail sales and related Consumer Confidence.  Normally these factors will push the market higher as all indicate the economy is on the upswing.

Unfortunately, the great fuel prices we are enjoying has investors skiddish about the global economy.  It makes no sense to the rational investor:  high supplies with slight lower demand(due to increase energy efficiency or alternative fuels??) will always depress the price of anything.

The U.S. is pumping more oil than it ever did.  OPEC and other suppliers like Russia are finding that the flush of oil in the market is depressing prices and their economy.  Yet rather than tap the supply as has happened in other periods, OPEC and others are continuing to pump oil, hoping to outlast the low prices and not lose market share.   

It is almost like every one is waiting for someone to blink!!! It will happen and someone will cut off the supply so prices recover! Oh and then there is the concern that the Fed will raise interest rates.

We will yell when the price pops to $3.65 a gallon again.  But we really shouldn't.  We should simply enjoy the low prices at the pump and know the economy is going on fine.

And as Jim Belote notes in his newsletter, interest rates stay near historical lows on mortgages.  Thus, no time like the present to

make a move!!   One never knows with these economy fluctuation if the rates will not get caught up in the "hysteria" and take a bounce up.

Provided to you Exclusively by Jim Belote   For the week of Dec 15, 2014 | Vol. 12, Issue 50

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: Consumer sentiment and retails sales are on the rise, while oil and wholesale inflation are moving lower. What about home loan rates? Forecast for the Week: The last Fed meeting of the year is ahead, plus news on housing, inflation and manufacturing. View: Start 2015 right with these great tips for developing your personal brand.

Last Week in Review

"Up, up and away." Consumer sentiment and retail sales may have soared higher, but both wholesale inflation and oil prices are on the decline. What does all of this mean for the markets and home loan rates? Read on for the breakdown. Consumer sentiment surged to 93.8 in December, reaching the highest level since January 2007 and the recent recession. In line with that sentiment, consumers also opened their wallets in November, spending money on goods ranging from cars to clothing as the holiday shopping season got underway. Retail Sales rose by 0.7 percent in November, which was the fastest rate in eight months. One thing helping both consumer sentiment and retail sales of late is the continued decline in prices at the pump. In fact, the International Energy Agency recently cut its outlook for global oil demand growth in 2015. The markets have been especially volatile in recent weeks, and this news only added to the volatility. Despite the choppy trading in both Stocks and Bonds, home loan rates (which are tied to Mortgage Bonds) remain near historic lows. Also of note, thanks to the decline in oil, the November Producer Price Index showed that inflation declined at the wholesale level. This is Bond-friendly news, since inflation reduces the value of fixed investments like Bonds, meaning this is also good news for home loan rates. 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

Look for key reports on housing, manufacturing and inflation. Plus, the Fed meets.         Monday's Empire State Index and Thursday's Philadelphia Fed Index will be the last major reports from the manufacturing sector in 2014.   In housing news, look for the National Association of Home Builders Housing Market Index on Monday, followed by Housing Starts and Building Permits for November on Tuesday.  On Wednesday, we'll get a read on inflation with the Consumer Price Index.  As usual, Weekly Initial Jobless Claims will be delivered on Thursday.  In addition, the last Federal Open Market Committee meeting of 2014 begins on Tuesday, ending Wednesday with the monetary policy statement being released at 2:00 p.m. EST. Stay tuned, as market volatility is always possible when the Fed meets! 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 markets have been volatile of late but home loan rates are still hovering near historic lows.   Chart: Fannie Mae 3.5% Mortgage Bond (Friday Dec 12, 2014)

The Mortgage Market Guide View...

Build Your Personal Brand Heading into a new year is the perfect time to think about your personal brand and what you want to be known for. Get to Know Yourself First Define the core values that guide your priorities and actions. These could be personal, like balance, family, financial stability or health. Core values are also professional, like accountability, dependability, expertise or innovation. Make a list and pick your top five. Next, think about your talents and what you enjoy. Think about your expertise. Also identify what you are passionate about. Once you have your lists, group related items together to find commonalities. For example, you may have identified expertise and professional development as your core values. Your personal brand could be that you are the go-to trainer in your field. If your top values included family, education and accountability, and you are a good leader, your personal brand could be an advocate for quality education. Understanding what you want to be known for—and building your brand around that—allows you to focus your energy on activities that are meaningful to you. Promote Your Brand There are a number of steps you can take to promote your brand. Get involved in civic or professional organizations that allow you to demonstrate and further build your brand. Take on leadership roles in these organizations. Give presentations in your community or through your associations to reinforce the expertise behind your brand. Blog or submit op-ed pieces to the local newspaper or trade publications. Make sure your website bio, LinkedIn profile and resume highlight key attributes, certifications and experiences that reinforce your brand. And finally, network. Please feel free to pass these great tips along to your team, clients and colleagues! Source: Inc.com Economic Calendar for the Week of December 15 - December 19 Date ET Economic Report For Estimate Actual Prior Impact Mon. December 15 08:30 Empire State Index Dec NA 10.2 HIGH Mon. December 15 10:00 Housing Market Index Nov NA 58 Moderate Tue. December 16 08:30 Housing Starts Nov NA 1009K Moderate Tue. December 16 08:30 Building Permits Nov NA 1080K Moderate Wed. December 17 08:30 Consumer Price Index (CPI) Nov NA 0.0% HIGH Wed. December 17 08:30 Core Consumer Price Index (CPI) Nov NA 0.2% HIGH Wed. December 17 02:00 FOMC Meeting Dec NA 0.25% HIGH Thu. December 18 08:30 Jobless Claims (Initial) 12/13 NA 294K Moderate Thu. December 18 10:00 Philadelphia Fed Index Dec NA 40.8 HIGH

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.

Mortgage Weekly Update

Great Read!!!

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: The labor market showed signs of improvement while the harsh winter continued to impact housing. Forecast for the Week: The Jobs Report for March will be important to dissect, plus several key manufacturing reports will be released. View: Check out these simple secrets to a better business mind.

Last Week in Review

"The world is but a perpetual see-saw." Michel de Montaigne. Last week, the news saw its fair share of ups and downs as economic reports were mixed. Read on for the details and what they mean for home loan rates. The housing market continued to battle the harsh weather across much of the nation, as New Home Sales declined to a five-month low in February, coming in at 440,000. Pending Home Sales also declined in February while the Case Shiller 20-city Home Price Index rose 13.2 percent annually in January. This was down from the 13.4 percent in December and lower than expected. It will be important to see if the housing market improves as the weather warms around the country. In labor market news, weekly Initial Jobless Claims fell to a four-month low of 311,000. In addition, the four-week moving average of claims, which irons out seasonal abnormalities, declined to 317,750–the lowest level since September. The drop in claims signals an improving labor market, but we'll have to see next week's Jobs Report for March for further confirmation. Consumer Confidence rose to 82.3 in March, well above both expectations and the reading in February. This was the highest level since January 2008. Americans surveyed were more positive on future job prospects. It is important to note that March’s Consumer Sentiment Index, which provides a similar reading, fell to its lowest level since November. What does this mean for home loan rates? Beginning in April, the Fed will purchase $30 billion in Treasuries and $25 billion in Mortgage Bonds (the type of Bonds on which home loan rates are based) to help stimulate the economy and housing market. This is down from the original $85 billion per month that the Fed had been purchasing. With the final reading for fourth quarter 2013 Gross Domestic Product coming in at 2.6 percent, well below the third quarter reading, the Fed will be closely watching upcoming reports as it evaluates the timing of further tapering. These decisions will continue to impact our economy and home loan rates as we move ahead this year. 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 big news of the week is the Jobs Report for March that will be released on Friday. Manufacturing data from Chicago PMI and the ISM Index will be released on Monday and Tuesday, respectively. In labor market news, the ADP Employment Report will be delivered on Wednesday, followed by weekly Initial Jobless Claims on Thursday. Also on Thursday, look for the ISM Services Index, which is a national non-manufacturing index. That leads us to Friday's Non-farm Payrolls and the Unemployment Rate, which will be closely dissected by both Wall Street and the Federal Reserve. 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 were able to improve last week, aided in part by weak housing news. Home loan rates remain attractive and I’ll be watching their movement closely. Chart: Fannie Mae 4.0% Mortgage Bond (Friday Mar 28, 2014)

The Mortgage Market Guide View...

3 Secrets to a Better Business Mind It's commonly held that intelligence is set from birth, meaning there's no way to "boost" brainpower. But many studies prove the opposite. A combination of lifestyle adjustments and mental exercises can not only increase intelligence, but also improve general brain health. The following tips can help boost mental activity and increase your intelligence…all of which helps your business! 1. Keep Memorizing. There is no shortage of contemporary studies that show a powerful correlation between a strong working memory and overall intelligence. A good memory has also been shown to slow down mental aging. Start small by memorizing your to-do list or daily schedule, then step it up a notch and memorize scripts that can help you during meetings with clients. If you want to take it to another level, try learning a new language and use it to expand business contacts in your community. 2. Mix it up. Do you have the exact same routine every single day? Falling into rigid patterns promotes mental passivity, or the opposite of stimulation. So, try mixing things up a bit. Challenge yourself by participating in new activities. Join a softball league, a reading club, or even a theater group, which are not only fun but also great ways to expand your connections in your community. At the very least, play around with your daily schedule. The point is that too much regimen can dull the senses. 3. Exercise. In his book Spark: The Revolutionary New Science of Exercise and the Brain, author John J. Ratey, M.D., says if you want clear thinking, stress reduction, relief from depression, and more confidence in yourself, you only have to do one thing: exercise. All of which is sure to result in a better bottom line for your business, too! Start implementing these easy tips today–your brain and your business will benefit. Economic Calendar for the Week of March 31 - April 04 Date ET Economic Report For Estimate Actual Prior Impact Mon. March 31 09:45 Chicago PMI Mar NA 59.8 HIGH Tue. April 01 10:00 ISM Index Mar NA 53.2 HIGH Wed. April 02 08:15 ADP National Employment Report Mar NA 139K HIGH Thu. April 03 08:30 Jobless Claims (Initial) 3/29 NA NA Moderate Thu. April 03 10:00 ISM Services Index Mar NA 51.6 Moderate Fri. April 04 08:30 Non-farm Payrolls Mar NA 175K HIGH Fri. April 04 08:30 Unemployment Rate Mar NA 6.7% HIGH Fri. April 04 08:30 Hourly Earnings Mar NA 0.4% HIGH Fri. April 04 08:30 Average Work Week Mar NA 34.2 HIGH

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: Jim Belote Union Mortgage Group 582 Lynnhaven Parkway, Suite 300 Virginia Beach, VA 23452 Vantage Production, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated.   Vantage Production, LLC does not grant to you a license to any content, features or materials in this email.   You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.

WHERE IS THE MORTGAGE INTEREST DEDUCTION IN FISCAL CLIFF TALKS?

Mortgage Deduction on Fed Taxes   With a desire to keep you in the loop on the impact of the Financial Cliff' s impact on your pocket book and even your ability to afford a home, I have looked for more information to post here. Al Clark's Home Action Newsletter had this poignant article on the impact of eliminating or downsizing the Mortgage Interest Deduction.  You will note that it saves lots of money for many families and probably the discussion will cause even more home buyers to take the deduction(amazingly,some were never told about it...or they would be taking the tax savings! We can't fault, though, the discussions around eliminating the deduction for those making over $500,000.  But that second home, if not tied to income, would hurt the "average" citizen looking to invest in rental properties for a cash income stream.  I am sure a few of you would hate to have that happen. Read and let me know if you believe this must be protected. If not a fan of keeping the deduction, why not? WHERE IS THE MORTGAGE INTEREST DEDUCTION IN ALL OF THIS?

The Fiscal Cliff has one of the most cherished tax breaks for many homeowners "on the table." Since 1933, homeowners have been able to deduct interest paid on their mortgages as well as some other home-related borrowing from their income.  This longstanding tax break encourages and supports home ownership. For families with middle and below-average incomes, the deduction helps too; this includes 65% of families who claim the mortgage interest deduction earn less than $100,000 per year. In addition, American homeowners already pay 80 percent to 90 percent of U.S. federal income tax. Roughly 40% of all homeowners rely on the deduction. The USA TODAY has published very helpful facts on the issue, state by state. On The Table Interest deduction is a very popular issue in every conversation held in Washington concerning the Fiscal Cliff. While no one in authority is calling for outright elimination right now, several options are being offered to deal with the $80-90 billion tax break. If the tax break was eliminated entirely, it would raise over $98 billion in 2013, according to estimates by the congressional Joint Committee on Taxation. Currently being discussed is a type of limit or cap on how much households can deduct based on their income group. There are feasible ways to increase tax revenue by aiming at high-income earners. For example, the interest deduction based on owning a second home could be ended. Also, the maximum mortgage debt eligible for the interest rate deduction ? now at $1 million - could be reduced. The most popular amount discussed for a remedy is $500,000. In its proposed budget, the Obama administration plans to focus on high-income taxpayers,  those earning more than $250,000. The administration wants to cap all deductions at 28 percent for this group. Currently, a high-earning household deducting $20,000 in interest payments (at a 35% tax rate) would receive $7,000 in tax savings. The Obama budget would cap that rate at 28 percent. In the end, that $20,000 of interest payments would result in a smaller tax break of $5,600. The Treasury Department proposes that over the next 10 years, a 28 percent cap would raise $584 billion. The Fears Many housing economists and industry trade groups offer that now is not the time to mess with home ownership incentives. The depressed real estate market is making a steady comeback with home values rising in almost every market. US home prices recorded the biggest jump in 6 years this past October. The National Association of Realtors is mobilizing its membership with a theme of "Do No Harm To Housing." Their rationale for supporting home ownership incentives can be thoroughly examined with the "Home ownership Q and A" on House Logic Next Steps- Get Your Views Across Before The Decisions Are Made....Click Act Now! Right now, there is no legislation specifically dealing with the interest deduction. Legislators want to hear from you on this issue so your feedback as a constituent is invaluable to them. We have set up a unique widget that lets you assert your opinions and (at the same time) view how others feel about the decisions being made, pro or con.  As the talk heats up in Washington the next few days we will keep you updated with alerts.

Whttp://www.usatoday.com/story/news/politics/2012/12/04/fiscal-cliff-mortgage-deduction/1737611/Tell Bryan Cerny What You Think

After reading, Jim's Mortgage Matters below, you might think
my key observation that we again are hearing about how the fiscal cliff will really hit our pocket book.  Yet, this has gotten to be well stated(just hope they get it resolved).

Yet the message to be noted is:

In short, we don't see mortgage financing becoming meaningfully cheaper, even though rates have eased a few basis points each week for the past month. In fact, mortgages could become more expensive in 2013.

This statement comes after a lengthy dialogue on housing market and controls on mortgage financing.  Though the housing market improves monthly, it may not be long that mortgage rates will begin to make "housing more expensive".  Yet,  I don't expect that to dampen the pent up demand for homes that has formed over the past six years of caution among home buyers and sellers.

But again, the fiscal cliff's resulting higher taxes could no doubt take the "marginal" buyer out of the market due to tighter finances.

Thoughts????  What are your plans in 2013?

Keeping you updated on the market! For the week of  December 10, 2012 MARKET RECAP New-home sales inspired some recent consternation after it was reported that both volume and prices declined in October. A few commentators opined that one month could turn into two, and possibly more. Color us skeptical; new-home sales remain far below their historical pace, while pricing remains robust in many local markets. And when looking at the aggregate national trend, pricing for both new and existing homes is decidedly up. On pricing, CoreLogic's latest data show prices, which include distressed properties, rose 6.3% year over year in October. This marks the largest increase since June 2006 and the eighth-consecutive year-over-year increase in 2012. Arizona was the standout market in CoreLogic's data, with prices rising 21.3% year over year. But guess which market is catching up? Nevada, where prices are up 12.4%. When prices were continually dropping in Nevada ( Las Vegas, in particular), we continually mentioned that it was a matter of time before they would reach a point where markets would clear and prices would rise. When Las Vegas finally showed signs of recovery, we also posited that the real estate recovery would likely have become a country-wide phenomenon. This appears the case today. The housing market is trending positively, to state the obvious, and it would likely trend even better if we could get more financing to more buyers. Mortgage purchase applications have been trending higher in recent weeks, but they still have a lot of room for improvement. Unfortunately, we are still mired in a risk-averse lending market. That said, we are seeing a pick up in private participation. In the private-label residential mortgage-backed security (RMBS) market, issuance is up to $6 billion this year. That's not much, but it's more than double the $2.8 billion issued last year. Looking to next year, the market is expected to expand to $15 billion. Discussing RMBSs might seem like delving into the arcane, but RMBSs matter because they're an indicator of private investor interest in the mortgage market. We've stated many times that more participation in mortgage lending is better than less participation. But more participation means mortgages could get more expensive. In order to contract Fannie Mae's and Freddie Mac's presence in the mortgage market, as well as encourage the return of private capital investment, the FHFA aims to increase G-fees by 30 to 50 basis points to match recent private-label execution. In short, we don't see mortgage financing becoming meaningfully cheaper, even though rates have eased a few basis points each week for the past month. In fact, mortgages could become more expensive in 2013.   Economic  Indicator Release  Date and Time Consensus  Estimate Analysis Mortgage Applications Wed., Dec. 12, 7:00 am, ET None Important. The trend in purchase applications suggests underlying strength for home sales. Import Prices (November) Wed., Dec. 12, 8:30 am, ET 0.3% (Decrease) Moderately Important. A slightly stronger dollar reflects lower import prices and lower inflation. Retail Sales (November) Thurs., Dec. 13, 8:30 am, ET 0.2%  (Increase) Moderately Important. Sales are tacking higher with the economy. Consumer Price Index (November) Fri., Dec. 14, 8:30 am, ET All Goods: 0.3% (Decrease) Core: 0.2% (Increase) Important. Consumer prices remain non-inflationary, which means no increase in interest rates any time soon.   The Rise of Uncertainty More than a few housing-market observers are concerned the fiscal cliff – the impending array of tax increases and spending cuts due January 1 – could derail the housing recovery. These concerns aren't unfounded. If nothing is done between now and the end of the year, income tax rates will rise, and not just for the rich. The lowest marginal income tax rate, at 10%, will increase 50%, to 15%. Everyone in every tax bracket will have fewer dollars to spend and invest. Tightened personal budgets could force many marginal home buyers out of the market. The greater concern, at least from an immediate perspective, is the expiration of the Mortgage Debt Relief Act of 2007. The act allows borrowers to exclude certain canceled debt on their principal residence as income. If the act isn't extended, many short sellers could be hit with a big tax bill for forgiven debt. This would be a serious impediment to the short-sale market, which has contributed mightily to the housing recovery. The good news is that it appears likely the Mortgage Debt Relief Act will be extended. The bad news is that we continue to barrel toward the fiscal cliff, with no resolution in sight. The remaining weeks heading into January will be interesting, to say the least, and could be very impacting on the housing and mortgage markets.