Real Estate Market Rolls

Impressive...that is all I can say.

Jim Belote recaps information that I, and perhaps you have seen, from various news outlets in the past week or so. 

A quick read to know that Mortgage Deduction is safe as well as the relief given to home owners going through a short sale or foreclosure.  As Jim notes, this will keep the market improving by removing a costly tax burden to people in these tough situations.

You have to like the news on Phoenix and Las Vegas as well as national 5%+ home value increase.  Yet, note the continued warning on interest rate pressures.  This is bound to be a topic of many reports in the next few months.

Keeping you updated on the market! For the week of  January 7, 2012 MARKET RECAP It appears Congress and the president have finally reached a compromise on the “fiscal cliff” – the agglomeration of tax increases and spending cuts that were set to take effect in January 2013. The good news is the housing and mortgage markets survived unscathed. The Mortgage Forgiveness Debt Relief Act remains in force for another year. This means forgiven mortgage debt will remain untaxed. Without this extension, short sales, foreclosures, and loan modifications would have become encumbered with a tax burden. This would have been a serious blow to the recovery. These basic market-clearing mechanisms were vital to the housing recovery in 2012, and will continue to help the recovery along in 2013. The mortgage interest deduction also remains intact, which means mortgage financing remains a very good low-cost deal. It also means mortgage financing remains a savvy leveraging strategy for purchasing an asset (residential real estate) that is rising in value; thus providing a means to increase returns on invested capital. In other words, the housing recovery is here to stay, and the latest round of price data supports this conclusion. Trulia reports that asking-price gains accelerated throughout the past year. In the first quarter of 2012, national home prices increased 0.8% quarter over quarter; by the fourth quarter, the pace had increased to 2.3%. Year over year, national home prices were up 5.1%. Fueling the home-price acceleration was the former left-for-dead Phoenix market, which staged a remarkable resurrection that continues to this day. Home prices in Phoenix were up 25% for the year. We've frequently written that falling prices will eventually produce more buyer interest, which, in turn, will lead to an eventual recovery. Phoenix is proof this economic maxim works. Las Vegas also proves the maxim. It seems like it has taken an eternity, but the Las Vegas housing market is on the mend. Home prices in Las Vegas were up 10% year over year in December, building on a price-recovery trend that begin in the second half of 2012. We noted early in 2012 that a recovery in the Las Vegas housing market would likely mean the recovery had become a country-wide phenomenon. This appears the case today. Home prices around the country remain on the rise, and it's appearing more likely that mortgage rates will be rising too. Over the past couple weeks, rates have been inching higher. What's more, events in the debt market point to even higher rates. We are speaking specifically of the 10-year U.S. Treasury note – a benchmark for the mortgage-backed security market and the 30-year fixed-rate mortgage. The yield on the 10-year Treasury has moved considerably higher over the past month. In fact, the yield on the 10-year Treasury today is approaching its highest point in nearly four months. The trend in the 10-year Treasury yield is worth following, because if the job market and economy continue to improve (as we expect), then you can be sure that the yield on the 10-year Treasury note will continue to rise. Should this occur, mortgage lending rates are sure to follow.   Economic  Indicator Release  Date and Time Consensus  Estimate Analysis Consumer Credit (November) Tues., Jan. 8, 3:00 pm, ET $15 Billion (Increase) Important. Rising credit use reflects rising consumer confidence. Mortgage Applications Wed., Jan. 9, 7:00 am, ET None Important. Applications are expected to regain pace after the holiday-season lull. International Trade (November) Fri., Jan 11, 8:30 am, ET $40.2 Billion (Deficit) Moderately Important. Lower energy prices are reducing the current account deficit. Import Prices (December) Fri., Jan 11, 8:30 am, ET No Change Important Prices. Import prices continue to help hold inflation in check.   No Such Thing as a Perfect Market   No sooner had news on the “fiscal cliff” reached the market when frets and worries turned to the debt ceiling. The federal government hit its legal borrowing limit of $16.4 trillion this past week. Now pundits and professional worriers are fretting over what implications this impasse will have on financial markets and the economy. No need to fret or worry, because perfection is impossible. Markets will always be encumbered with uncertainty. To wait for perfection is to wait in perpetuity and to never act. In fact, the best time to act is when the outlook appears most dire and sentiment is decidedly negative. That's when the best values appear. We saw that in the residential real estate market in 2011 and early 2012. Many people who bought a home then are already sitting on a tidy gain today. We still see value, just not as much of it. Low mortgage lending rates have been an extenuating factor, but we believe if borrowers (and refinanciers) wait much longer the value of that factor will fall should rates rise. The point we can't emphasis enough is not to wait for perfection, because perfection doesn't (and never will) exist.     If you wish to unsubscribe, click on the link below and send the email. If this message was forwarded to you, please reply to the sender. Click Here To Unsubscribe EQUAL HOUSING LENDER

FED does it again

A very interesting "Mortgage Matters.." this week from Jim Belote.
The FED is pumping in even more money(millions) into purchasing treasury notes and mortgage backed securities with newly printed money.  Yes, newly printed money...making your dollars worth less..possibly, as noted below, pushing inflation higher.  I have to be honest the noted 2% inflation planned for next year pushed 2.5% due to FED action is nothing to lose sleep over.  BUT the long term affect of 'loose money' policy can be steep devaluation of dollar(translated:  INFLATION).

You will note below that the FED's effort was to reduce mortgage rates to continue the housing recovering.  Yet bonds yeilds went up rather than down thus not helping lower mortgage rates.  Though not tied directly tied to these bonds, mortgage rates do track along bond yields due to investor interest in both.

Still the best time to buy a home with home prices trending up and rates still low....don't miss out.  2013 could be a barnburner!

Keeping you updated on the market! For the week of  December 17, 2012 MARKET RECAP Housing has been subdued the past couple weeks and will likely remain subdued through the remainder of the year. The good news is what's been reported on housing has been mostly positive. The trend continues this week. The Mortgage Bankers Association reports that purchase applications continue to trend higher, rising 1.0% in the December 7 week. This marks the fifth-consecutive volume increase and is a positive indicator for home sales as we head into the new year. News on the mortgage market has picked up where housing has left off. Federal Reserve Chairman Ben Bernanke announced on Wednesday that the Fed will not only continue purchasing $40 billion in mortgage-backed securities (MBSs) each month, it will also purchase an additional $45 billion in long-term U.S. Treasury securities. Both securities will be pay for with newly minted money. The Fed's goal is to lower already low mortgage lending rates. The theory is that even lower lending rates will accelerate the housing recovery, thus accelerating the economic recovery. An accelerating economic recovery, in turn, will spur additional job growth. For this reason, the Fed said it will continue to keep interest rates low until the unemployment rate drops to 6.5%. (The unemployment rate is currently 7.7%.) The Fed's strategy, which creates higher demand for MBSs and U.S. Treasury securities, helps hold mortgage lending rates low. The relationship is inverse: when demand rises for these securities, their price rises and their yield falls. The graph below illustrates the relationship between a $1,000 10-year note with an initial coupon payment of 6%, which means the note pays $60 in interest annually. When the market rate falls after the note is issued, the note's price rises. A higher price produces a yield that calibrates the lower market rate of interest with the coupon rate. Mortgage lending rates are tethered to yields on MBSs, which are tethered to U.S. Treasury security yields. In short, by purchasing both Treasury securities and MBSs, the Fed helps keep mortgage lending rates low. That said, a strange thing happened after the Fed announced it wanted to lower mortgage lending rates even further: The yield on the 10-year Treasury note actually increased (and has been increasing since last week). The 10-year note is a benchmark for the 30-year fixed-rate mortgage. So what's going on? The Fed isn't the only player in the mortgage market; the Fed isn't omnipotent. Outside market forces are also an important variable. The risk of price inflation rises with the Fed pumping more money into the financial system. In fact, the Fed itself raised its annual price-inflation target to 2.5% from 2.0%. If price inflation rises, mortgage lending rates will be pressured to follow. The point we want to emphasis is not to take for granted that mortgage lending rates will fall meaningfully lower. The Fed is implementing a strategy, not offering a guarantee.   Economic  Indicator Release  Date and Time Consensus  Estimate Analysis Home Builders' Index (December) Tues., Dec. 18, 10:00 am, ET 45 Index Important. Housing will become a more important variable in economic growth for 2013. Mortgage Applications Wed., Dec. 19, 7:00 am, ET None Important. Purchase applications continue to gain momentum and point to strong sales entering 2013. Housing Starts (November) Wed., Dec. 19, 8:30 am, ET 900,000 (Annualized) Important. Housing is gaining momentum, which is good news for job creation. Gross Domestic Product (3rd Quarter 2012) Thurs., Dec. 20, 8:30 am, ET 2.8% (Annualized Growth) Important. Growth is expected to be revised higher, but recent indicators point to lower 4 th quarter growth. Existing Home Sales (November) Thurs., Dec. 20, 10:00 am, ET 4.9 Million (Annualized) Important.Sales are trending higher despite supply issues in many local markets.   The Risk of Unintended Consequences We are obviously the beneficiaries of the Federal Reserve's push for lower mortgage lending rates, but its unprecedented foray into mortgage lending isn't without risk. The Fed's debt purchases have ballooned its balance sheet to $2.87 trillion in debt assets from $869 billion a few years ago. Because of the Fed's commitment to purchase $85 billion in additional debt each month, its balance sheet will expand to $4 trillion by the end of 2013. The Fed's expanded balance sheet is cause for concern. The larger the balance sheet, the riskier the Fed's exit strategy becomes. The prospect of rising interest rates means the Fed risks significant losses (because of the inverse relationship we discuss above). What's more, should the Fed attempt to wind down its portfolio of debt too rapidly, it will roil the Treasury and mortgage-debt markets, thus sending mortgage lending rates higher. We want to reiterate what we've been reiterating for the past few months: Housing prices are on the rise, while mortgage lending rates remain near historical lows. Housing prices will continue to rise, but there is no guarantee mortgage rates will continue to fall. In short, the benefits of waiting to borrow and buy simply aren't commensurate with the risk of waiting.

Fed Continues to Keep Rates Low

The Fed Is Our Friend!!!

Yes...I noted it in red as we continue to see the Federal Goverment bleed a bit to boost the housing market.  Recent announcements have indicated the Fed will buy mortgage backed securities.

This announcement caused a bump in the stock market and should send buyers scurrying into the housing market.  Investors saw this move as the Government's commitment to jump start the economy...or at least not let the housing market take it down.

Those macro-economic issues are not as important in the immediate present to the home buyer.  Rather the interest rates holding below 5%.....we are seeing mortgages on given days locking at 4% to 4.5%...truth be told, 4.5% has been more common than not presently.

But how long will the rates hold???   We have been asking that question for over 12 months.

If you are a Buyer, you best lock and load before the Fed stops(or can't buy) mortgage backed securites!! 

Go get your 4% rate today!!!