We should all be grateful that this week is a holiday week. Because of the holidays, trading has been very light and the barrage of negative economic news hitting the wires this week has had little impact on the markets.
On a high note, the stock market is set to finish the year at the highest point we have seen in 2 years. Without question corporate profit are growing and this is a major driver of the stock market rise. Many companies have figured out how to do more with less which ultimately improves company's bottom line profits. (Investors love that - however the millions of unemployed hate it)
As much as I would love to finish 2010 with nothing but optimism and positive words, the economic data this week is not making that easy for me to do.
The housing data as well as housing projections released this week all point to another challenging year in real estate ahead of us. If you have been watching the news, you will see that housing is once again taking center stage.
Housing inventory is up 50% from the same time last year. Shadow inventory, which is made up of all the properties owned by banks but not yet released into the market for sale, is increasing rapidly due to rising foreclosures. Foreclosures are expected to set a new record in 2011.
Between shadow inventory, increasing foreclosures, rising mortgage rates, talk is resuming about how housing may be heading for what is being called a double dip. With this week's release of the Case-Shiller Home Value Index showing home prices unexpectedly dropping 1.3% in October, many are fearful that home prices may decline another 5% to 7% in 2011. Only time will tell if homebuyers believe this and remain on the sidelines. The one bright spot in housing is the rise of 3.5% in Pending Home Sales.
When you add high unemployment that is showing no signs of improvement, higher gas prices, and declining consumer sentiment, the stage is set for more challenges ahead of us. Oh yeah, don't forget about the east coast blizzard that is going to impact post Christmas sales. Despite everything I just wrote, I remain very optimistic and I want to tell you why.
MY WORDS OF WISDOM: No matter what happens this year, it will not be worse than anything we have experienced in the last 2 years. The challenges in the economy are not new so we are now better prepared to deal with them mentally. Time and time again we have shown our resilience in the way we always manage to adapt to what happens. The key to persevering is to avoid stacking up all the negative news. Take each piece of news separately and ask yourself, "How does this impact me?" You will find that most of the news does not impact you at all. Just make sure you don't let the media suck you into the world of negativity because that is what they want to do. Remember -for every challenge that exists, an equal or greater opportunity for you to succeed is always right next to it. You must remain committed to finding opportunities and acting on them.
Reports due out for the first week of 2011 are:
• Monday January 3rd - ISM Manufacturing Index & Construction Spending
• Tuesday January 4th - FOMC Minutes
• Wednesday January 5th - ADP Employment Report & MBA Mortgage Applications
• Thursday January 6th - First Time Jobless Claims
• Friday January 7th - Employment Situation
Your Mortgage Consultant,
JJ Mack
916-517-1800
Thursday, December 30, 2010
Friday, December 17, 2010
Mortgage Market Update - 12/17/2010
As promised, this week had no shortage of economic reports, and I am happy to say, that for the most part, they are almost all pointing to better times ahead. Is this just a momentary holiday present for the country or is it for real? Who knows, 2011 will ultimately tell us the answer but I am hopeful it is a trend.
The holiday season started out with a bang with retail sales reporting a much stronger gain than anticipated. Retail sales rose .8% in November following an upwardly revised 1.7% for October. Consumers are spending more money and there definitely seems to be more optimism and excitement about shopping.
Inflation on the wholesale level is starting to increase however it is still very much a non-threat to significant inflation in the coming months. Wholesale prices increased .8% however the Consumer Price Index, which measures inflation on the retail level, only rose.1%. This disparity between wholesale and retail continues to demonstrate that consumers are not willing to pay higher prices for goods.
The Federal Open Market Committee, to no one's surprise, did not increase interest rates. Additionally they reiterated that it will be some time before any rates are raised since the economy still continues to be very sluggish. The FOMC went on to specify that retail sales, although showing signs of improvement, are still remaining very sluggish overall. Housing also continues to remain a drag on the economy in that foreclosures are still very high and that overall housing data is still showing sales are anemic.
Speaking of housing, the Mortgage Bankers Association reported that purchase applications for the prior week dropped 5% and refinance applications declined .7%. These drops do not even reflect the more recent increase in interest rates that took place this week which leads many to believe that the numbers will continue to decline in next week's report.
Housing Starts rose a better than expected 3.9%. Housing over all is still very weak however the trends as of late seems to be indicating that housing may be rebounding. It is important to realize that any improvement in housing can have a positive impact on the psychology of the potential buyers in the market. If buyers perceive that the market has hit bottom, they are more likely to act. Additional urgency to purchase may also be stimulated by the recent increases in interest rates. 6 weeks ago the 30 year fixed rate was hovering around 4%. As of yesterday the same loan program is a full point higher at 5%.
It was reported this week that foreclosures in the 3rd quarter of 2010 declined by 21%. Before we all jump for joy you must understand that the 3rd quarter is when the scandal of inappropriate foreclosure signings was discovered. During this period of time many of the nation's largest lenders placed a moratorium on foreclosures which is the cause of the massive 21% drop. Lenders are now back in full swing of the foreclosure process so undoubtedly we will see the foreclosure numbers jump at the next quarterly report.
First time jobless claims declined slightly continuing the recent trend for the last 4 weeks. Overall unemployment seems to be stabilizing however the private sector is still showing much resistance to hiring new employees.
It has been nice the last few weeks to be able to report more and more about positive signs in the economy. We certainly have a long way to go, however remember the old adage, "How do you climb a mountain...one step at a time".
Reports due out for the holiday week are:
• Wednesday December 22nd - MBA Mortgage Applications, GDP and Existing Home Sales
• Thursday December 23rd - First Time Jobless Claims, Consumer Sentiment and New Home Sales
Your Mortgage Consultant,
JJ Mack
916-517-1800
The holiday season started out with a bang with retail sales reporting a much stronger gain than anticipated. Retail sales rose .8% in November following an upwardly revised 1.7% for October. Consumers are spending more money and there definitely seems to be more optimism and excitement about shopping.
Inflation on the wholesale level is starting to increase however it is still very much a non-threat to significant inflation in the coming months. Wholesale prices increased .8% however the Consumer Price Index, which measures inflation on the retail level, only rose.1%. This disparity between wholesale and retail continues to demonstrate that consumers are not willing to pay higher prices for goods.
The Federal Open Market Committee, to no one's surprise, did not increase interest rates. Additionally they reiterated that it will be some time before any rates are raised since the economy still continues to be very sluggish. The FOMC went on to specify that retail sales, although showing signs of improvement, are still remaining very sluggish overall. Housing also continues to remain a drag on the economy in that foreclosures are still very high and that overall housing data is still showing sales are anemic.
Speaking of housing, the Mortgage Bankers Association reported that purchase applications for the prior week dropped 5% and refinance applications declined .7%. These drops do not even reflect the more recent increase in interest rates that took place this week which leads many to believe that the numbers will continue to decline in next week's report.
Housing Starts rose a better than expected 3.9%. Housing over all is still very weak however the trends as of late seems to be indicating that housing may be rebounding. It is important to realize that any improvement in housing can have a positive impact on the psychology of the potential buyers in the market. If buyers perceive that the market has hit bottom, they are more likely to act. Additional urgency to purchase may also be stimulated by the recent increases in interest rates. 6 weeks ago the 30 year fixed rate was hovering around 4%. As of yesterday the same loan program is a full point higher at 5%.
It was reported this week that foreclosures in the 3rd quarter of 2010 declined by 21%. Before we all jump for joy you must understand that the 3rd quarter is when the scandal of inappropriate foreclosure signings was discovered. During this period of time many of the nation's largest lenders placed a moratorium on foreclosures which is the cause of the massive 21% drop. Lenders are now back in full swing of the foreclosure process so undoubtedly we will see the foreclosure numbers jump at the next quarterly report.
First time jobless claims declined slightly continuing the recent trend for the last 4 weeks. Overall unemployment seems to be stabilizing however the private sector is still showing much resistance to hiring new employees.
It has been nice the last few weeks to be able to report more and more about positive signs in the economy. We certainly have a long way to go, however remember the old adage, "How do you climb a mountain...one step at a time".
Reports due out for the holiday week are:
• Wednesday December 22nd - MBA Mortgage Applications, GDP and Existing Home Sales
• Thursday December 23rd - First Time Jobless Claims, Consumer Sentiment and New Home Sales
Your Mortgage Consultant,
JJ Mack
916-517-1800
Friday, December 3, 2010
Mortgage Market Update - 12/3/2010
With the holidays fast approaching, one would have thought that the economic reports delivered this week were an early present to the nation. Many of the reports came in stronger than expected and the feeling of recovery was all throughout the air. Then came the jobs report on Friday...
Today it was reported that the national unemployment rate increased from 9.6% up to 9.8%. Experts were virtually unanimous in the expectation that unemployment would remain the same or decline slightly. (So much for being an expert) - The initial reaction by the stock market was less than expected. Typically when unemployment increases, the stock market panics and will sell off in droves causing the indexes to drop dramatically. As of the writing of this report, the stock market is flat which means the significant gains seen this week should remain and that the unemployment report is not being considered a major concern, at least for stock investors.
Despite unemployment increasing, there was other news this week that has given us reason to cheer that the recovery is truly taking hold. Is it possible that we can sustain a recovery without housing playing a major role? Normally my answer would be "no", however, the stock market, retail sales and manufacturing seem to be ignoring housing based upon the reports released this week.
Consumer Confidence continues to increase indicating that more and more Americans are feeling better about the future of the economy. Although jobs continue to remain on many people minds, overall the public is beginning to believe that the economy is on the right path to recovery. Although we all know we are not out of the woods yet, the feeling that we are finally headed in the right direction does seem to exist.
Manufacturing once again showed significant growth. Production is increasing at a healthy rate and movement from production to shipping is also showing signs of growth. Simply put, more goods are being moved to the markets and consumers are purchasing them.
Sales reports from Black Friday show that consumers spent on average 6.2% more this year than last year. Although everyone is looking for a bargain, there certainly was no lack of people hitting the stores on Friday and the internet on Cyber Monday driving sales to the highest level we have seen in years.
Purchase applications for the past week rose 1.1% which is a positive sign that people are taking advantage of low house prices despite the fact that mortgage rates have been rising. The report of increased unemployment does threaten to derail purchases if people become even more fearful of losing their job based upon today's report.
The Case-Shiller Home Value Index indicated that home prices dropped nationally for the 3rd straight month. The drop of .7% from September to October was considerably more than expected. The continued decline of housing prices may also force more potential homebuyers to the sidelines waiting to see just how low prices will go.
What should be considered good news is that the National Association of Realtors reported that Pending Home Sales jumped 10.4%. As much as I am optimistic about this significant increase, I am tempering my enthusiasm only because I don't know if pending homes sales jumped because of more transaction, or did it jump because closing real estate transactions is taking longer than it has ever taken before creating a backlog?
Next week stands to be a quiet week regarding economic reports:
• Wednesday December 8th - MBA Mortgage Applications, 10 Year Note Auction
• Thursday December 9th - First Time Jobless Claims
• Friday December 10th - Consumer Sentiment
Your Mortgage Consultant,
JJ Mack
916-517-1800
Today it was reported that the national unemployment rate increased from 9.6% up to 9.8%. Experts were virtually unanimous in the expectation that unemployment would remain the same or decline slightly. (So much for being an expert) - The initial reaction by the stock market was less than expected. Typically when unemployment increases, the stock market panics and will sell off in droves causing the indexes to drop dramatically. As of the writing of this report, the stock market is flat which means the significant gains seen this week should remain and that the unemployment report is not being considered a major concern, at least for stock investors.
Despite unemployment increasing, there was other news this week that has given us reason to cheer that the recovery is truly taking hold. Is it possible that we can sustain a recovery without housing playing a major role? Normally my answer would be "no", however, the stock market, retail sales and manufacturing seem to be ignoring housing based upon the reports released this week.
Consumer Confidence continues to increase indicating that more and more Americans are feeling better about the future of the economy. Although jobs continue to remain on many people minds, overall the public is beginning to believe that the economy is on the right path to recovery. Although we all know we are not out of the woods yet, the feeling that we are finally headed in the right direction does seem to exist.
Manufacturing once again showed significant growth. Production is increasing at a healthy rate and movement from production to shipping is also showing signs of growth. Simply put, more goods are being moved to the markets and consumers are purchasing them.
Sales reports from Black Friday show that consumers spent on average 6.2% more this year than last year. Although everyone is looking for a bargain, there certainly was no lack of people hitting the stores on Friday and the internet on Cyber Monday driving sales to the highest level we have seen in years.
Purchase applications for the past week rose 1.1% which is a positive sign that people are taking advantage of low house prices despite the fact that mortgage rates have been rising. The report of increased unemployment does threaten to derail purchases if people become even more fearful of losing their job based upon today's report.
The Case-Shiller Home Value Index indicated that home prices dropped nationally for the 3rd straight month. The drop of .7% from September to October was considerably more than expected. The continued decline of housing prices may also force more potential homebuyers to the sidelines waiting to see just how low prices will go.
What should be considered good news is that the National Association of Realtors reported that Pending Home Sales jumped 10.4%. As much as I am optimistic about this significant increase, I am tempering my enthusiasm only because I don't know if pending homes sales jumped because of more transaction, or did it jump because closing real estate transactions is taking longer than it has ever taken before creating a backlog?
Next week stands to be a quiet week regarding economic reports:
• Wednesday December 8th - MBA Mortgage Applications, 10 Year Note Auction
• Thursday December 9th - First Time Jobless Claims
• Friday December 10th - Consumer Sentiment
Your Mortgage Consultant,
JJ Mack
916-517-1800
Friday, November 5, 2010
Mortgage Market Update - 11/5/2010
This week was certainly exciting for any economic data junkie. From housing, to employment, to an election, we had enough economic data and events to make your head spin.
Unless you have been living under a rock, you know that the House of Representatives is going to be under the control of the Republicans starting in 2011. What does this mean for the economy, housing and government?
The reality is that we are most likely facing government gridlock when it comes to legislative changes moving forward. Now that the Senate is controlled by the Democrats and the Republicans control the House, passing laws will be much more difficult.
The Democrats pushed through virtually any piece of legislation they wanted in the first 2 years of the Obama presidency because of the power of controlling the House and Senate. Despite the objections of many Republican officials, two major bills were passed. (Excuse me, rammed down the throats of the American public) The Wall Street Reform Bill and the Healthcare Reform Bill. (Lots of bad blood was created between the parties over this)
Although elected officials, all the way up to the president, have pledged to get both sides of the aisle working together, the odds on that happening are slim to none. The Republicans have stated their #1 goal is to repeal the Healthcare Reform Bill. Since the Republicans are focused on getting rid of the flagship piece of legislation that the Democrats passed, how can there be a meeting of the minds?
The other big news of the week was the Fed's announcement on the launch of a new round of stimulus to bolster the economy. This new initiative is being called "QE2" which stands for "Quantitative Easing Round 2". The markets reacted very favorably to this announcement with the stock market rallying almost 200 points. The focus of QE2 is to decrease the cost of borrowing by driving interest rates lower.
On to the market news:
• The ISM Manufacturing Index and the Non -Manufacturing Index both showed improvement. We are starting to see an improving trend in spending on both manufacturing and services which is a sign of economic growth.
• Unemployment remains at 9.6% nationally. The positive sign in the report is that the private sector added 151,000 last month which is hopefully an indicator that small and medium sizes businesses are doing better. The big concern regarding employment is that 2 million unemployed are set to lose their benefits in December unless Congress votes to extend them.
• Mortgage applications for purchases increased slightly last week increasing 1.4%. Refinance applications declined 6.4%.
• It was announced that homeownership is at the lowest point in the last decade. (I guess foreclosures and tight credit may have something to do with that)
• Pending Homes Sales unexpectedly declined 1.8% in September. This is just another indication that the housing crisis is going to take quite some time to mend.
Next week will be quiet as there are only a few significant reports due out plus a national holiday:
• Wednesday November 10th - Jobless Claims and MBA Applications
• Thursday November 11th - Market are closed for Veterans Day
• Friday November 12th - Consumer Sentiment
Your Mortgage Consultant,
JJ Mack
916-517-1800
Unless you have been living under a rock, you know that the House of Representatives is going to be under the control of the Republicans starting in 2011. What does this mean for the economy, housing and government?
The reality is that we are most likely facing government gridlock when it comes to legislative changes moving forward. Now that the Senate is controlled by the Democrats and the Republicans control the House, passing laws will be much more difficult.
The Democrats pushed through virtually any piece of legislation they wanted in the first 2 years of the Obama presidency because of the power of controlling the House and Senate. Despite the objections of many Republican officials, two major bills were passed. (Excuse me, rammed down the throats of the American public) The Wall Street Reform Bill and the Healthcare Reform Bill. (Lots of bad blood was created between the parties over this)
Although elected officials, all the way up to the president, have pledged to get both sides of the aisle working together, the odds on that happening are slim to none. The Republicans have stated their #1 goal is to repeal the Healthcare Reform Bill. Since the Republicans are focused on getting rid of the flagship piece of legislation that the Democrats passed, how can there be a meeting of the minds?
The other big news of the week was the Fed's announcement on the launch of a new round of stimulus to bolster the economy. This new initiative is being called "QE2" which stands for "Quantitative Easing Round 2". The markets reacted very favorably to this announcement with the stock market rallying almost 200 points. The focus of QE2 is to decrease the cost of borrowing by driving interest rates lower.
On to the market news:
• The ISM Manufacturing Index and the Non -Manufacturing Index both showed improvement. We are starting to see an improving trend in spending on both manufacturing and services which is a sign of economic growth.
• Unemployment remains at 9.6% nationally. The positive sign in the report is that the private sector added 151,000 last month which is hopefully an indicator that small and medium sizes businesses are doing better. The big concern regarding employment is that 2 million unemployed are set to lose their benefits in December unless Congress votes to extend them.
• Mortgage applications for purchases increased slightly last week increasing 1.4%. Refinance applications declined 6.4%.
• It was announced that homeownership is at the lowest point in the last decade. (I guess foreclosures and tight credit may have something to do with that)
• Pending Homes Sales unexpectedly declined 1.8% in September. This is just another indication that the housing crisis is going to take quite some time to mend.
Next week will be quiet as there are only a few significant reports due out plus a national holiday:
• Wednesday November 10th - Jobless Claims and MBA Applications
• Thursday November 11th - Market are closed for Veterans Day
• Friday November 12th - Consumer Sentiment
Your Mortgage Consultant,
JJ Mack
916-517-1800
Friday, October 22, 2010
Mortgage Market Update - 10/22/2010
Last week I wrote that the Fed policy makers had come out publicly in stating that there was not a consensus on what actions they should take to stimulate the economy. This past week's economic data as well as next week's should provide Fed policy makers with more than enough information to make a definitive decision on what to do.
The economic reports this past week continue to demonstrate that the economy is going nowhere. You will notice that I didn't even say "going nowhere fast", I just said "going nowhere". With every bit of positive news that an investor or consumer can grab on to, there is another piece of negative news sitting right behind it to quell any momentum that could be gained. The stock market this week is a perfect illustration.
This week in the stock market we saw some significant drops and rallies based upon daily economic reports. By the time the smoke cleared, we are almost exactly back to where we started the week. On Monday the DOW started the week at 11,137. After hitting highs of 11,205 and lows of 10,925, the market ended trading on Thursday at 11,135, exactly 2 points lower than where the week started. Friday no economic reports are due out so trading should be quiet.
The National Association of Home Builders monthly survey on the future of housing showed an unexpected increase. The survey which measures the feelings about the economy and housing as a whole showed a gain for the first time since the spring, which was the end of the 2nd round of housing stimulus.
Housing Starts also showed a surprise increase for the month of September with single family construction leading the way. Housing Starts increased .3% which piggy backs on the prior months 10% increase. Additionally, Housing Starts are up 4.1% from a year ago. On the opposite side of the coin, the future for new construction remains in question as new building permit filings declined 5.6%.
Mortgage rates remain at historic lows however once again we see that even the slightest increase in rates can have a dramatic impact on both purchase and refinance applications. Mortgage rates last week increased just over 1/8% and the market saw a drop in purchase applications of 6.7% and refinance apps declined 11.2%. It is my opinion, for what it is worth, that if next week we experience additional declines in the housing sector, the government will be compelled to act on executing another round of stimulus sooner than later.
First time initial jobless claims declined 23,000 last week. The markets showed virtually no reaction to this report as it seems that unless there is significant movement in the numbers, the market just looks at this as weekly variations with no real direction for un-employment.
As announced earlier this week, Bank of American and some of the other major lenders are resuming their foreclosure proceedings in many states. There are still many hurdles that the banks will need to clear in the courts regarding foreclosures so the story is not coming to a close. Although the banks insist that they have not made errors in who they have removed from homes, judges and regulators are quite skeptical about what the banks are stating. Let's face it, the banks have a history of not telling the truth.
Relevant economic news on tap for next week:
• Monday October 25th - Existing Home Sales
• Tuesday October 26th - S&P Case-Shiller Home Value Index & Consumer Confidence
• Wednesday October 27th - MBA Mortgage Applications, Durable Goods Orders & New Home Sales
• Thursday October 28th - First Time Weekly Jobless Claims
Friday October 29th - GDP & Consumer Sentiment
Your Mortgage Consultant,
JJ Mack
The economic reports this past week continue to demonstrate that the economy is going nowhere. You will notice that I didn't even say "going nowhere fast", I just said "going nowhere". With every bit of positive news that an investor or consumer can grab on to, there is another piece of negative news sitting right behind it to quell any momentum that could be gained. The stock market this week is a perfect illustration.
This week in the stock market we saw some significant drops and rallies based upon daily economic reports. By the time the smoke cleared, we are almost exactly back to where we started the week. On Monday the DOW started the week at 11,137. After hitting highs of 11,205 and lows of 10,925, the market ended trading on Thursday at 11,135, exactly 2 points lower than where the week started. Friday no economic reports are due out so trading should be quiet.
The National Association of Home Builders monthly survey on the future of housing showed an unexpected increase. The survey which measures the feelings about the economy and housing as a whole showed a gain for the first time since the spring, which was the end of the 2nd round of housing stimulus.
Housing Starts also showed a surprise increase for the month of September with single family construction leading the way. Housing Starts increased .3% which piggy backs on the prior months 10% increase. Additionally, Housing Starts are up 4.1% from a year ago. On the opposite side of the coin, the future for new construction remains in question as new building permit filings declined 5.6%.
Mortgage rates remain at historic lows however once again we see that even the slightest increase in rates can have a dramatic impact on both purchase and refinance applications. Mortgage rates last week increased just over 1/8% and the market saw a drop in purchase applications of 6.7% and refinance apps declined 11.2%. It is my opinion, for what it is worth, that if next week we experience additional declines in the housing sector, the government will be compelled to act on executing another round of stimulus sooner than later.
First time initial jobless claims declined 23,000 last week. The markets showed virtually no reaction to this report as it seems that unless there is significant movement in the numbers, the market just looks at this as weekly variations with no real direction for un-employment.
As announced earlier this week, Bank of American and some of the other major lenders are resuming their foreclosure proceedings in many states. There are still many hurdles that the banks will need to clear in the courts regarding foreclosures so the story is not coming to a close. Although the banks insist that they have not made errors in who they have removed from homes, judges and regulators are quite skeptical about what the banks are stating. Let's face it, the banks have a history of not telling the truth.
Relevant economic news on tap for next week:
• Monday October 25th - Existing Home Sales
• Tuesday October 26th - S&P Case-Shiller Home Value Index & Consumer Confidence
• Wednesday October 27th - MBA Mortgage Applications, Durable Goods Orders & New Home Sales
• Thursday October 28th - First Time Weekly Jobless Claims
Friday October 29th - GDP & Consumer Sentiment
Your Mortgage Consultant,
JJ Mack
Friday, October 15, 2010
Mortgage Market Update - 10/15/2010
The members of the Federal Open Market Committee, for the first time in a long time, have come out publicly in disagreement on what the next step for helping the ailing economy should be. The FOMC Meeting minutes clearly show that there is disagreement on how the next phase of government stimulus / quantitative easing should be implemented. Some members feel that more data needs to be accumulated before action is taken while others are saying that action needs to be taken sooner than later. Regardless it appears highly likely that some type of action will be taken by the November elections. (Can't imagine why that might occur, can you?)
Mortgage rates are hitting record lows and with the prospect of more government stimulus, the expectation is that rates will fall even further. As of last week the national average for the 30 year fixed rate was 4.21%. Mortgage applications for last week saw a surprising decline of 8.5% fir purchase applications. No real explanation has been offered as to the cause of the slowdown however some people speculate that the barrage of news regarding the suspensions of foreclosures may have pushed buyers to the sidelines. Additionally, some transactions that were started were also halted due to the foreclosure filing mess. Refinance applications are going strong as they represent 83% of all mortgage applications for the past week.
Economic reports outside of housing continue to show no real direction for the economy. The positive news reported this week was that inflation on the wholesale and retail levels are not a concern at all. On the flip side however is that talk is starting to surface that the level of inflation is becoming almost to low which can be an indication that we may enter a deflationary economy.
On the surface some may say, "Hey if prices are going to drop, that is great news for me". However what happens in a deflationary economy is that if consumers recognize that prices are falling, then they will start to keep their money in their wallets and wait for lower prices. If people start to hold off on purchases, then the whole recession cycle starts all over again.
Before anyone reading this begins to panic, it is important for you to know that last month retail sales came in higher than expected. So at least for right now, consumers are spending money and that concerns about deflation, at least on the consumer level does not exist.
Employment still continues to be a drag on the economy. First time jobless claims came in higher than expected and actually rose by 13,000 from the previous week. This is the first increase in jobless claims in a month. Continuing jobless claims continue to drop and some government officials are trying to leverage this news for political gain. The truth of the matter is that the only reason why continuing jobless claims are declining is because more and more people are dropping off the unemployment rolls as their benefits run out and that no more extensions are available.
One of the ironic reports this week is Consumer Sentiment. This report came in worse than expected and showed that people are becoming more concerned about the future of the economy. The irony is in that Retail Sales continue to improve which is not what one would expect to occur if people are not optimistic.
Relevant economic news on tap for next week:
• Monday July 18th - Industrial Production & Housing Market Index
• Tuesday July 19th - Housing Starts
• Wednesday October 20th - MBA Mortgage Applications
• Thursday October 21st - First Time Weekly Jobless Claims
Your Mortgage Consultant,
JJ Mack
916-517-1800
Mortgage rates are hitting record lows and with the prospect of more government stimulus, the expectation is that rates will fall even further. As of last week the national average for the 30 year fixed rate was 4.21%. Mortgage applications for last week saw a surprising decline of 8.5% fir purchase applications. No real explanation has been offered as to the cause of the slowdown however some people speculate that the barrage of news regarding the suspensions of foreclosures may have pushed buyers to the sidelines. Additionally, some transactions that were started were also halted due to the foreclosure filing mess. Refinance applications are going strong as they represent 83% of all mortgage applications for the past week.
Economic reports outside of housing continue to show no real direction for the economy. The positive news reported this week was that inflation on the wholesale and retail levels are not a concern at all. On the flip side however is that talk is starting to surface that the level of inflation is becoming almost to low which can be an indication that we may enter a deflationary economy.
On the surface some may say, "Hey if prices are going to drop, that is great news for me". However what happens in a deflationary economy is that if consumers recognize that prices are falling, then they will start to keep their money in their wallets and wait for lower prices. If people start to hold off on purchases, then the whole recession cycle starts all over again.
Before anyone reading this begins to panic, it is important for you to know that last month retail sales came in higher than expected. So at least for right now, consumers are spending money and that concerns about deflation, at least on the consumer level does not exist.
Employment still continues to be a drag on the economy. First time jobless claims came in higher than expected and actually rose by 13,000 from the previous week. This is the first increase in jobless claims in a month. Continuing jobless claims continue to drop and some government officials are trying to leverage this news for political gain. The truth of the matter is that the only reason why continuing jobless claims are declining is because more and more people are dropping off the unemployment rolls as their benefits run out and that no more extensions are available.
One of the ironic reports this week is Consumer Sentiment. This report came in worse than expected and showed that people are becoming more concerned about the future of the economy. The irony is in that Retail Sales continue to improve which is not what one would expect to occur if people are not optimistic.
Relevant economic news on tap for next week:
• Monday July 18th - Industrial Production & Housing Market Index
• Tuesday July 19th - Housing Starts
• Wednesday October 20th - MBA Mortgage Applications
• Thursday October 21st - First Time Weekly Jobless Claims
Your Mortgage Consultant,
JJ Mack
916-517-1800
Friday, October 8, 2010
Weekend Mortgage Update - 10/08/2010
Could it be that housing is finally becoming more stable and predictable? - The latest data suggests that finally the worst of the nation's housing woes are behind us. Before we start the party, I am not suggesting that foreclosures are coming to an end or even that mortgage delinquencies are declining.
The latest reports on housing are continuing the trend that post stimulus housing activity is finally increasing consistently. Pending Home Sales were revised for August showing an increase of 8% from July. September's pending sales were up as well by 4.5% continuing the trend of modest gains in activity.
The Mortgage Bankers Association reported that purchase applications for last week rose 9.3% which is the largest increase we have seen since the tax credit expired earlier this year. Refinance applications dipped 2.5% however it is expected that this number will turn around with mortgage rates once again returning to the lowest point on record. As of last week the 30 year fixed rate was down to 4.25%.
The stock market coming off the best month of the year in September seems to be continuing its upward trend. Many other areas of the economy are still showing weakness however investors seem to like prospects for the future, at least for now.
Jobless claims overall have been dropping for the last 4 weeks. This week's first time jobless claims dropped 11,000 to 445,000. This report was better than expected. Remember, just 4 weeks ago we were experiencing first time claims in excess of 500,000.
National unemployment increased to 9.6%. Although this increase suggests further problems with employment, one needs to look into the numbers to see that things are not as bad as they seem. Overall payrolls dropped by 95,000, however much of the drop is contributed to census workers and other government employees. The private sector added to their payrolls by 64,000 which is the 9th straight month of private sector employment increases.
The ISM Non Manufacturing Index showed continuing improvement which is an important indication for second-half economic growth. The stock market reacted positively to this report driving the market higher by almost 250 points on Wednesday and Thursday.
Same store sales rose 2.8% which was more than expected. It is apparent that consumers are once again starting to spend money. The lagging question that remains is that if consumers are spending, why aren't companies hiring?
The answer to this question is simply that since companies have raised expectations of employee performance, these stores are able to sell more with less staff.
The anomaly that exists is that with all of the positive economic data coming out, why are mortgage rates continuing to fall?
It appears that although for the moment we see trends of economic improvement, many consumers and businesses continue to be weary of the future. We have seen in the past consistent economic improvement only to have it turn on a dime and reverse itself. This uncertainty lends itself to the investor behavior that bond investing is still the place to be. It is also important to understand that although the stock market has been rising, overall volume has been down which investors have the ability to cause large swings in the market averages.
Economic reports due out next week are:
• Wednesday October 13th - MBA Mortgage Applications and 10 YR Note Auction
• Thursday October 14th - Weekly Jobless Claims and Producer Price Index
• Friday October 15th - Consumer Price Index, Retail Sales and Consumer Sentiment
Your Mortgage Consultant,
JJ Mack
916-517-1800
The latest reports on housing are continuing the trend that post stimulus housing activity is finally increasing consistently. Pending Home Sales were revised for August showing an increase of 8% from July. September's pending sales were up as well by 4.5% continuing the trend of modest gains in activity.
The Mortgage Bankers Association reported that purchase applications for last week rose 9.3% which is the largest increase we have seen since the tax credit expired earlier this year. Refinance applications dipped 2.5% however it is expected that this number will turn around with mortgage rates once again returning to the lowest point on record. As of last week the 30 year fixed rate was down to 4.25%.
The stock market coming off the best month of the year in September seems to be continuing its upward trend. Many other areas of the economy are still showing weakness however investors seem to like prospects for the future, at least for now.
Jobless claims overall have been dropping for the last 4 weeks. This week's first time jobless claims dropped 11,000 to 445,000. This report was better than expected. Remember, just 4 weeks ago we were experiencing first time claims in excess of 500,000.
National unemployment increased to 9.6%. Although this increase suggests further problems with employment, one needs to look into the numbers to see that things are not as bad as they seem. Overall payrolls dropped by 95,000, however much of the drop is contributed to census workers and other government employees. The private sector added to their payrolls by 64,000 which is the 9th straight month of private sector employment increases.
The ISM Non Manufacturing Index showed continuing improvement which is an important indication for second-half economic growth. The stock market reacted positively to this report driving the market higher by almost 250 points on Wednesday and Thursday.
Same store sales rose 2.8% which was more than expected. It is apparent that consumers are once again starting to spend money. The lagging question that remains is that if consumers are spending, why aren't companies hiring?
The answer to this question is simply that since companies have raised expectations of employee performance, these stores are able to sell more with less staff.
The anomaly that exists is that with all of the positive economic data coming out, why are mortgage rates continuing to fall?
It appears that although for the moment we see trends of economic improvement, many consumers and businesses continue to be weary of the future. We have seen in the past consistent economic improvement only to have it turn on a dime and reverse itself. This uncertainty lends itself to the investor behavior that bond investing is still the place to be. It is also important to understand that although the stock market has been rising, overall volume has been down which investors have the ability to cause large swings in the market averages.
Economic reports due out next week are:
• Wednesday October 13th - MBA Mortgage Applications and 10 YR Note Auction
• Thursday October 14th - Weekly Jobless Claims and Producer Price Index
• Friday October 15th - Consumer Price Index, Retail Sales and Consumer Sentiment
Your Mortgage Consultant,
JJ Mack
916-517-1800
Friday, October 1, 2010
Weekend Mortgage Update 10/01/2010
Have you ever been in a place in your life where you feel like you are taking two steps forward, and then two steps back? That is where the economy is right now. There is no other way to explain it.
It seems that every week the economic data points to us going nowhere fast. We get some positive news, and then negative news. For the most part, the news reports and data just continue to reinforce that the economy is very weak and that we are just chugging along ever so slowly with no real direction.
Day to day the stock and bond markets will react to economic data simply because traders and investors look to make a quick buck on the fluctuations in the markets. However if you plot the last 3 months, 6 months, even the whole year of economic news and data, we are not far from where we started the year. At least we are not going backwards right?
This week the S&P Case-Shiller Home Value Index showed a slight increase in home values for the 4th straight month. Before you go out and celebrate, the increase was .8% which is basically unchanged in my book. Additionally, home values are down .9% from the same time last year. Sum it up, the housing market is flat.
The Mortgage Bankers Association reported that purchase applications rose 2.4% and refinance applications dropped 1.6%. Purchases represented 19% of total applications and refinancing was 81%.
Mortgage rates have dropped back to just above the record lows set earlier in the year. Rates this low would normally stimulate a buying frenzy however concerns over unemployment continue to keep prospective purchasers on the sidelines.
Other data reported this week:.
• Consumer Confidence dropped to the lowest point since the start of the year.
• GDP increased slightly which is a positive indicator. However the overall number for Gross Domestic Production still remains at an anemic level.
• Jobless claims continued their slow decline. Just over 450,000 people filed first time claims last week which is certainly better than the 500,000 we had seen just a few weeks ago.
• Construction Spending dropped 1.0% in July. The prognosis for August is that we will see improvement.
• The ISM Manufacturing Index shows an increase manufacturing which is a positive economic sign.
• Consumer Spending rose more than forecast reinforcing the Fed's statement that the economy will continue to grow at a "modest" pace. (I still don't know what "modest" means)
• The Consumer Sentiment report for mid September indicates that feelings about the future of the economy are not very optimistic in the near term. However we have seen in the past that this can change quickly.
What's up with GMAC and JP Morgan Chase? In the last week both companies announced that they are suspending foreclosures in over 20 states. The reason, potential technical mistakes in the filings. Lawyers for homeowners are seizing the opportunity and petitioning courts in record numbers to have the initial foreclosure filings thrown out. This means that these companies could have to start all over with their filings.
Economic reports due out next week are:
• Monday October 4th - Pending Home Sales
• Wednesday October 6th - MBA Mortgage Applications and ADP Employment Report
• Thursday October 7th - Weekly Jobless Claims
• Friday October 8th - Employment Situation
Your Mortgage Consultant,
JJ Mack
916-517-1800
It seems that every week the economic data points to us going nowhere fast. We get some positive news, and then negative news. For the most part, the news reports and data just continue to reinforce that the economy is very weak and that we are just chugging along ever so slowly with no real direction.
Day to day the stock and bond markets will react to economic data simply because traders and investors look to make a quick buck on the fluctuations in the markets. However if you plot the last 3 months, 6 months, even the whole year of economic news and data, we are not far from where we started the year. At least we are not going backwards right?
This week the S&P Case-Shiller Home Value Index showed a slight increase in home values for the 4th straight month. Before you go out and celebrate, the increase was .8% which is basically unchanged in my book. Additionally, home values are down .9% from the same time last year. Sum it up, the housing market is flat.
The Mortgage Bankers Association reported that purchase applications rose 2.4% and refinance applications dropped 1.6%. Purchases represented 19% of total applications and refinancing was 81%.
Mortgage rates have dropped back to just above the record lows set earlier in the year. Rates this low would normally stimulate a buying frenzy however concerns over unemployment continue to keep prospective purchasers on the sidelines.
Other data reported this week:.
• Consumer Confidence dropped to the lowest point since the start of the year.
• GDP increased slightly which is a positive indicator. However the overall number for Gross Domestic Production still remains at an anemic level.
• Jobless claims continued their slow decline. Just over 450,000 people filed first time claims last week which is certainly better than the 500,000 we had seen just a few weeks ago.
• Construction Spending dropped 1.0% in July. The prognosis for August is that we will see improvement.
• The ISM Manufacturing Index shows an increase manufacturing which is a positive economic sign.
• Consumer Spending rose more than forecast reinforcing the Fed's statement that the economy will continue to grow at a "modest" pace. (I still don't know what "modest" means)
• The Consumer Sentiment report for mid September indicates that feelings about the future of the economy are not very optimistic in the near term. However we have seen in the past that this can change quickly.
What's up with GMAC and JP Morgan Chase? In the last week both companies announced that they are suspending foreclosures in over 20 states. The reason, potential technical mistakes in the filings. Lawyers for homeowners are seizing the opportunity and petitioning courts in record numbers to have the initial foreclosure filings thrown out. This means that these companies could have to start all over with their filings.
Economic reports due out next week are:
• Monday October 4th - Pending Home Sales
• Wednesday October 6th - MBA Mortgage Applications and ADP Employment Report
• Thursday October 7th - Weekly Jobless Claims
• Friday October 8th - Employment Situation
Your Mortgage Consultant,
JJ Mack
916-517-1800
Friday, September 17, 2010
Mortgage Market Update - 9/17/2010
I think the majority of the economic analysts and market prognosticators (sorry this is a big word for me) need to jump on a plane and head straight to Las Vegas. For the first time in as long as I can remember, almost every single economic forecast for the week was nailed on the head.
For many months you have been reading from me how I wonder where these economists and analysts get their weekly predictions from since week after week, they are not only way off the mark, some of them are in another world. Well... this week I take my hat off to them. (Next week will tell if this was a fluke, or maybe these experts have started finally asking people that actually know about the markets what is happening)
Although there was quite a bit of economic news this week, since the reports came in close to expectations, market movement was somewhat subdued. The economic reports this week have confirmed that the economy is indeed recovering. Although the recovery is very slow, this week's reports coupled with last week, have many believing, finally, that a recovery is taking hold.
• Retail Sales came in slightly higher than expected showing that consumers are spending money, not crazy money, but none the less, people are returning to the stores.
• Industrial Production rose .2% in August which was in line with expectations. Although the increase was less than previous months, that is being attributed to the changeover of the production plants in the automotive industry for the launch of the 2011 model year.
• Weekly Jobless Claims dropped once again giving life to the notion that companies are becoming more stable. We still have a long way to go with unemployment however the continuous weekly drops are very refreshing to see.
• The Producer Price Index was up slightly higher than expected. Experts were predicting a rise of .3%, however the report showed an increase of .4%. This slightly higher report did not impact markets because the numbers continue to indicate that inflation on the wholesale level is still very much under control.
With the continuing trend of stable economic reports, interest rates for mortgages are continuing to rise slowly. Over the last month we have seen mortgage rates increase and that is now starting to impact mortgage applications negatively.
The MBA reported that mortgage applications for refinances and purchases both dropped once again. Although mortgage rates are still incredibly, if not ridiculously low, every time there is an increase in rates, regardless of how small, we see mortgage volume drop. Last week purchase applications dropped .4% and refinance applications decreased by a larger than expected 10.8%.
Let's call next week "Housing Week". In addition to all of the regular economic news due out, next week we are going to be hearing a lot about housing. Be prepared in that if the trend of housing continues to improve, mortgage rates will jump. Also keep in mind that in recent months, the experts have been far off on most of their predictions and that can lead to strong reactions to any reports that come in that are not in line with expectations.
• Monday September 20th - Housing Market Index
• Tuesday September 21st - Housing Starts and FOMC Meeting Announcement
• Wednesday September 22nd - MBA Mortgage Applications, FHFA Housing Price Index
• Thursday September 23rd - Weekly Jobless Claims & Existing Home Sales
• Friday September 24th - New Home Sales and Durable Goods Orders
Your Mortgage Consultant,
JJ Mack
916-517-1800
For many months you have been reading from me how I wonder where these economists and analysts get their weekly predictions from since week after week, they are not only way off the mark, some of them are in another world. Well... this week I take my hat off to them. (Next week will tell if this was a fluke, or maybe these experts have started finally asking people that actually know about the markets what is happening)
Although there was quite a bit of economic news this week, since the reports came in close to expectations, market movement was somewhat subdued. The economic reports this week have confirmed that the economy is indeed recovering. Although the recovery is very slow, this week's reports coupled with last week, have many believing, finally, that a recovery is taking hold.
• Retail Sales came in slightly higher than expected showing that consumers are spending money, not crazy money, but none the less, people are returning to the stores.
• Industrial Production rose .2% in August which was in line with expectations. Although the increase was less than previous months, that is being attributed to the changeover of the production plants in the automotive industry for the launch of the 2011 model year.
• Weekly Jobless Claims dropped once again giving life to the notion that companies are becoming more stable. We still have a long way to go with unemployment however the continuous weekly drops are very refreshing to see.
• The Producer Price Index was up slightly higher than expected. Experts were predicting a rise of .3%, however the report showed an increase of .4%. This slightly higher report did not impact markets because the numbers continue to indicate that inflation on the wholesale level is still very much under control.
With the continuing trend of stable economic reports, interest rates for mortgages are continuing to rise slowly. Over the last month we have seen mortgage rates increase and that is now starting to impact mortgage applications negatively.
The MBA reported that mortgage applications for refinances and purchases both dropped once again. Although mortgage rates are still incredibly, if not ridiculously low, every time there is an increase in rates, regardless of how small, we see mortgage volume drop. Last week purchase applications dropped .4% and refinance applications decreased by a larger than expected 10.8%.
Let's call next week "Housing Week". In addition to all of the regular economic news due out, next week we are going to be hearing a lot about housing. Be prepared in that if the trend of housing continues to improve, mortgage rates will jump. Also keep in mind that in recent months, the experts have been far off on most of their predictions and that can lead to strong reactions to any reports that come in that are not in line with expectations.
• Monday September 20th - Housing Market Index
• Tuesday September 21st - Housing Starts and FOMC Meeting Announcement
• Wednesday September 22nd - MBA Mortgage Applications, FHFA Housing Price Index
• Thursday September 23rd - Weekly Jobless Claims & Existing Home Sales
• Friday September 24th - New Home Sales and Durable Goods Orders
Your Mortgage Consultant,
JJ Mack
916-517-1800
Friday, September 10, 2010
Weekend Mortgage Update - 09/10/2010
The positive news on the economy is gaining momentum. Adding on to last week's up beat reports, this week continued to show that the economy is slowly recovering and is headed in the right direction. As mentioned in last week's Warrior Weekender, there were not many economic reports due out this week, however the reports we received were positive in nature and indicate that for now, the economy is moving towards recovery.
The positive housing report was one of the key areas that has many experts and analysts breathing a small sigh of relief. The Mortgage Bankers Association reported that the home purchase index rose 6.3% from the prior week. Home purchases are now at the highest point since May and this month's rise represents the 3rd consecutive increase in purchase activity. Many people are keeping their fingers and toes crossed that this may be the beginning of a slow but steady recovery in housing that the economy needs desperately.
Weekly jobless claims dropped by a more than expected 27,000 from the prior week. This week's claims are the lowest since July and this is also the 3rd straight week of decline in first time filers. The weekly moving average also held steady.
The only down side to the improvement in the economy is that with improvement comes a rise mortgage interest rates. We have already seen since the end of August that the 10YR Treasury Security has risen more than a 1/4%. Although treasuries and mortgage rates do not move hand in hand, the 10YR movement is certainly an indicator of rate direction. Mortgage rates have begun to rise off of their lowest point and as long as positive economic data keeps being reported, rates will continue to edge upward.
The biggest question relating to rising mortgage rates is will the increase slow purchases once again, or will buyers realize that the lowest rates are behind and rush to take action on purchasing now? Only time will tell how buyers and the markets interpret the future of mortgage rates.
It was announced this week that almost half of the home purchasers that made a claim on the tax credit will have to refund the credit back to the IRS. Thus far 1.8 Million homebuyers have claimed the tax credit and early indications is that many people have incorrectly claimed the credit. The confusion comes with that the rules for the tax credit changed from 2008 to 2009.
In 2008 the tax credit was not really a tax credit. The reality is that the credit was an interest free loan to homebuyers. In 2009 when the government extended the tax credit, they changed the program from an interest free loan to an actual tax payer refund.
What has happened is that many of the tax filers did not know the difference and claimed the refund in 2008. As I write this newsletter, the IRS is scouring through every tax return with a credit trying to determine which credit the homebuyer was eligible for. Once this is complete, the IRS will begin to notify the credit filers that they owe the IRS money. (We all know this is not going to go over well with homebuyers)
This week there will be a lot more economic news coming out which can impact the markets. Let us keep our fingers crossed that the trend of good economic news will continue.
• Tuesday September 14th - Retail Sales
• Wednesday September 15th - MBA Mortgage Applications
• Wednesday September 15th - Industrial Production
• Thursday September 16th - Weekly Jobless Claims & Producer Price Index
• Friday September 17th - Consumer Price Index & Consumer Sentiment
Your Mortgage Consultant,
JJ Mack
916-517-1800
The positive housing report was one of the key areas that has many experts and analysts breathing a small sigh of relief. The Mortgage Bankers Association reported that the home purchase index rose 6.3% from the prior week. Home purchases are now at the highest point since May and this month's rise represents the 3rd consecutive increase in purchase activity. Many people are keeping their fingers and toes crossed that this may be the beginning of a slow but steady recovery in housing that the economy needs desperately.
Weekly jobless claims dropped by a more than expected 27,000 from the prior week. This week's claims are the lowest since July and this is also the 3rd straight week of decline in first time filers. The weekly moving average also held steady.
The only down side to the improvement in the economy is that with improvement comes a rise mortgage interest rates. We have already seen since the end of August that the 10YR Treasury Security has risen more than a 1/4%. Although treasuries and mortgage rates do not move hand in hand, the 10YR movement is certainly an indicator of rate direction. Mortgage rates have begun to rise off of their lowest point and as long as positive economic data keeps being reported, rates will continue to edge upward.
The biggest question relating to rising mortgage rates is will the increase slow purchases once again, or will buyers realize that the lowest rates are behind and rush to take action on purchasing now? Only time will tell how buyers and the markets interpret the future of mortgage rates.
It was announced this week that almost half of the home purchasers that made a claim on the tax credit will have to refund the credit back to the IRS. Thus far 1.8 Million homebuyers have claimed the tax credit and early indications is that many people have incorrectly claimed the credit. The confusion comes with that the rules for the tax credit changed from 2008 to 2009.
In 2008 the tax credit was not really a tax credit. The reality is that the credit was an interest free loan to homebuyers. In 2009 when the government extended the tax credit, they changed the program from an interest free loan to an actual tax payer refund.
What has happened is that many of the tax filers did not know the difference and claimed the refund in 2008. As I write this newsletter, the IRS is scouring through every tax return with a credit trying to determine which credit the homebuyer was eligible for. Once this is complete, the IRS will begin to notify the credit filers that they owe the IRS money. (We all know this is not going to go over well with homebuyers)
This week there will be a lot more economic news coming out which can impact the markets. Let us keep our fingers crossed that the trend of good economic news will continue.
• Tuesday September 14th - Retail Sales
• Wednesday September 15th - MBA Mortgage Applications
• Wednesday September 15th - Industrial Production
• Thursday September 16th - Weekly Jobless Claims & Producer Price Index
• Friday September 17th - Consumer Price Index & Consumer Sentiment
Your Mortgage Consultant,
JJ Mack
916-517-1800
Friday, September 3, 2010
Weekend Mortgage Market Update - 9/3/2010
What a difference a week makes. Where the economic news last week was primarily negative, this week we have seen a reversal of fortune. From positive reports on housing to the improving employment picture, things are looking up ever so slightly. We are still far from out of the woods however this week's positive reports and market movement brings a welcome sigh of relief.
The stock market rebounded nicely from last week's drop. As of this report the stock market is in positive territory and is expected to finish the week approximately 300 points higher than where it started. The main contributor to the stock market increase is the broad based positive economic news.
The S&P Case Shiller Housing Value Index showed an increase in values of 1.0%. This increase follows the previous month's rise of 1.3%. The housing market still has many challenges to overcome from increasing mortgage delinquencies, to increasing foreclosures. However, home values are stabilized despite the lackluster demand for housing.
The Pending Home Sales Index also rebounded this month with an increase of 5.2%. The increase in pending homes sales occurred in virtually every major region of the U.S. After months of post stimulus declining home sales, this increase was welcome news to the housing markets.
Additionally, mortgage applications for home purchases rose for the 3rd consecutive week. The increase of 1.8% is hoped to be part of a continuing trend. Record low interest rates are believed to be the main reason for the increase in housing purchases. 80% of all mortgage applications today are estimated to be for refinances which still indicates that although housing demand is increasing, we are far off from having a healthy purchase real estate market.
In Other News:
• First Time Jobless Claims declined from the previous week. This is the 3rd consecutive week of declines however the claim numbers are still very high.
• National Unemployment rose .1% up to 9.6%. Much of the increase is attributed to government layoffs primarily related to census workers. The private sector increased hiring slightly which hopefully indicates that private entities are starting to be a little more comfortable with the economy and hiring.
• Consumer Confidence also came in higher than expected. Overall consumers are feeling a little bit more at ease with the economy however the job market continues to remain the #1 concern.
• The Manufacturing Index ticked up in the prior month which was related to the increases in manufacturing orders earlier in the year.
As you can see, this week was filled with primarily positive news which had broad based positive impact on the markets. The only downer is that mortgage Interest rates increased about .25% - .375%. Good economic news is often bad for the demand of purchasing government securities which when demand drops, rates ultimately rise. Mortgage rates are still very low and are expected to remain low for some time.
Next week there is limited economic news however the demand for the 10YR Note Auction will certainly have an impact on the direction of mortgage rates.
• Wednesday September 8th - MBA Mortgage Applications and 10 YR Note Auction
• Thursday September 9th - Weekly Jobless Claims
Your Mortgage Consultant,
JJ Mack
916-517-1800
The stock market rebounded nicely from last week's drop. As of this report the stock market is in positive territory and is expected to finish the week approximately 300 points higher than where it started. The main contributor to the stock market increase is the broad based positive economic news.
The S&P Case Shiller Housing Value Index showed an increase in values of 1.0%. This increase follows the previous month's rise of 1.3%. The housing market still has many challenges to overcome from increasing mortgage delinquencies, to increasing foreclosures. However, home values are stabilized despite the lackluster demand for housing.
The Pending Home Sales Index also rebounded this month with an increase of 5.2%. The increase in pending homes sales occurred in virtually every major region of the U.S. After months of post stimulus declining home sales, this increase was welcome news to the housing markets.
Additionally, mortgage applications for home purchases rose for the 3rd consecutive week. The increase of 1.8% is hoped to be part of a continuing trend. Record low interest rates are believed to be the main reason for the increase in housing purchases. 80% of all mortgage applications today are estimated to be for refinances which still indicates that although housing demand is increasing, we are far off from having a healthy purchase real estate market.
In Other News:
• First Time Jobless Claims declined from the previous week. This is the 3rd consecutive week of declines however the claim numbers are still very high.
• National Unemployment rose .1% up to 9.6%. Much of the increase is attributed to government layoffs primarily related to census workers. The private sector increased hiring slightly which hopefully indicates that private entities are starting to be a little more comfortable with the economy and hiring.
• Consumer Confidence also came in higher than expected. Overall consumers are feeling a little bit more at ease with the economy however the job market continues to remain the #1 concern.
• The Manufacturing Index ticked up in the prior month which was related to the increases in manufacturing orders earlier in the year.
As you can see, this week was filled with primarily positive news which had broad based positive impact on the markets. The only downer is that mortgage Interest rates increased about .25% - .375%. Good economic news is often bad for the demand of purchasing government securities which when demand drops, rates ultimately rise. Mortgage rates are still very low and are expected to remain low for some time.
Next week there is limited economic news however the demand for the 10YR Note Auction will certainly have an impact on the direction of mortgage rates.
• Wednesday September 8th - MBA Mortgage Applications and 10 YR Note Auction
• Thursday September 9th - Weekly Jobless Claims
Your Mortgage Consultant,
JJ Mack
916-517-1800
Sunday, August 29, 2010
Mortgage Market Update - 08/29/2010
I want to start off this week's newsletter with the positive news and events that exist so I can build momentum when we move into the discussion of the negative news. (Remember, I am just the messenger)
Positive News for the week:
• First time jobless claims dropped 31,000 from the prior week. The 473,000 first time claims is still high however we will gladly accept any improvement.
• Mortgage rates are still incredibly low with the national average of a 30 year fixed mortgage at 4.55%
• Durable goods orders increased by .3%. There is still broad based weakness in manufacturing however the increase from last month is an improvement from the prior declines we have been experiencing.
• GDP grew at a rate of 1.6% for the 2nd quarter which, although down from the first quarter, it still is showing that country is experiencing at least some type of economic growth.
Negative News for the Week: (Buckle up for this)
• Existing home sales dropped 27.2% from the prior month and they are down 25.2% from a year ago.
• New home sales dropped 12.4% from a month ago. The median home price dropped .6% to $204,000 which is the lowest point since 2003. (Normally I would say that the drop in the median price would increase home affordability. However with the never ending tightening of lending guidelines, home affordability is not increasing because a borrower's ability to qualify is decreasing at a faster pace)
• Mortgage applications rose .6% with refinances leading the way. The good news in this report is that consumers are applying for mortgages however the purchase market remains virtually stifled. 82% of mortgage applications taken were for refinances which is a clear indicator that people are not jumping into the housing purchase market.
• The stock market took a beating this week. As of the time of this report the DOW is sitting below the 10,000 mark and the talk of double dip recession is heating more and more each day.
Commentary:
Although the majority of the news over the past few weeks has been primarily negative, my fears about the future have gone away. The reason I say this is because time and time again we have demonstrated as a country, what first is uncomfortable and abnormal, we eventually learn to accept as reality.
We have been in this recession for quite some time and we are starting to accept the fact that we are not coming out of this anytime soon. This is our reality for the foreseeable future and we need to accept it and plan accordingly. The world is not coming to an end, it is just a different world and we as a country are adapting to it. We will continue to thrive and prosper we just have expect that it will take longer. There is money and opportunity whenever there are challenges and adversity. It is up to you to take advantage of what is happening.
Next week is going to be a busy news week with many market impacting reports:
• Tuesday August 31st - S&P Case-Shiller Home Value Index & Consumer Confidence
• Wednesday September 1st - MBA Applications, ISM Manufacturing Index, Construction Spending
• Thursday September 2nd - Weekly Jobless Claims and Pending Home Sales
• Friday September 3rd - Employment Situation
Your Mortgage Consultant,
JJ Mack
916-517-1800
Positive News for the week:
• First time jobless claims dropped 31,000 from the prior week. The 473,000 first time claims is still high however we will gladly accept any improvement.
• Mortgage rates are still incredibly low with the national average of a 30 year fixed mortgage at 4.55%
• Durable goods orders increased by .3%. There is still broad based weakness in manufacturing however the increase from last month is an improvement from the prior declines we have been experiencing.
• GDP grew at a rate of 1.6% for the 2nd quarter which, although down from the first quarter, it still is showing that country is experiencing at least some type of economic growth.
Negative News for the Week: (Buckle up for this)
• Existing home sales dropped 27.2% from the prior month and they are down 25.2% from a year ago.
• New home sales dropped 12.4% from a month ago. The median home price dropped .6% to $204,000 which is the lowest point since 2003. (Normally I would say that the drop in the median price would increase home affordability. However with the never ending tightening of lending guidelines, home affordability is not increasing because a borrower's ability to qualify is decreasing at a faster pace)
• Mortgage applications rose .6% with refinances leading the way. The good news in this report is that consumers are applying for mortgages however the purchase market remains virtually stifled. 82% of mortgage applications taken were for refinances which is a clear indicator that people are not jumping into the housing purchase market.
• The stock market took a beating this week. As of the time of this report the DOW is sitting below the 10,000 mark and the talk of double dip recession is heating more and more each day.
Commentary:
Although the majority of the news over the past few weeks has been primarily negative, my fears about the future have gone away. The reason I say this is because time and time again we have demonstrated as a country, what first is uncomfortable and abnormal, we eventually learn to accept as reality.
We have been in this recession for quite some time and we are starting to accept the fact that we are not coming out of this anytime soon. This is our reality for the foreseeable future and we need to accept it and plan accordingly. The world is not coming to an end, it is just a different world and we as a country are adapting to it. We will continue to thrive and prosper we just have expect that it will take longer. There is money and opportunity whenever there are challenges and adversity. It is up to you to take advantage of what is happening.
Next week is going to be a busy news week with many market impacting reports:
• Tuesday August 31st - S&P Case-Shiller Home Value Index & Consumer Confidence
• Wednesday September 1st - MBA Applications, ISM Manufacturing Index, Construction Spending
• Thursday September 2nd - Weekly Jobless Claims and Pending Home Sales
• Friday September 3rd - Employment Situation
Your Mortgage Consultant,
JJ Mack
916-517-1800
Friday, August 20, 2010
Mortgage Weekend Update - 08/20/2010
Unfortunately the only real positive news being reported these days is that corporate profits overall are up across the U.S. Because of all of the cost cutting measures that big corporations have been taking for the last 2 to 3 years, companies have been able to increase returns for stockholders and increase profits.
Outside of corporate profits, I am sorry to say that the majority of economic news is not where we would like to see it. The first half of the week we saw the stock market rising nicely based upon corporate profits and the fact that many of these same companies have been able to sock away lots of cash for a rainy day. Overall sales have not been increasing which is the driving force to a recovery however investors are focused on profits more than on sales right now.
Thursday the stock market did an about face dropping 144 points as weekly first time jobless claims were reported much higher than expected. The 500,000 claims reported are the highest we have seen since November of 2009. Additionally, the 4 week moving average, which has been rising as well, hit the highest number since December.
Companies, especially in the private sector, are not hiring as fear of a faltering recovery is taking hold. More and more people are believing that once again the economy is heading in the wrong direction and that recovery is much further away than originally anticipated.
The housing market has not been fairing much better these days. The Housing Market Index reported a 3rd monthly decline as builders see tight credit, lousy appraisals and distressed properties as a hindrance to selling new construction.
On a positive note, Housing Starts increased 1.7 in July which was a nice respite from June's 8.7% decline. Multifamily construction was the key to leading the index higher. Single family construction continues to struggle as that part of the index declined by 4.2%.
Fortunately mortgage rates continue to remain at record lows. The Mortgage Bankers Association reported that applications for mortgage are rising. Refinancing is the driving force in the application increase. Refinances currently represent 81% of all applications. Applications for home purchases continue to falter as they dropped 3.4% from the prior week despite the record low interest rates. The bottom line is that with the unemployment picture remaining very unstable, consumers are afraid to make a commitment to purchasing a new home.
Industrial Production increased 1%, which was higher than expected, showing that there is at least some positive activity in the manufacturing sector. Additionally, the Producer Price Index increased .2% which was in line with expectations. The PPI was driven higher primarily by an increase in food prices on the wholesale level. However, last week's report on CPI showed that the increases in prices on the wholesale lever are not being passed on to consumers.
Economic reports due out next week are:
• Tuesday August 24th - Existing Home Sales
• Wednesday August 25th - MBA Applications
• Thursday August 26th - Weekly Jobless Claims
• Friday August 27th - Consumer Sentiment and GDP
Your Mortgage Consultant,
JJ Mack
916-517-1800
Outside of corporate profits, I am sorry to say that the majority of economic news is not where we would like to see it. The first half of the week we saw the stock market rising nicely based upon corporate profits and the fact that many of these same companies have been able to sock away lots of cash for a rainy day. Overall sales have not been increasing which is the driving force to a recovery however investors are focused on profits more than on sales right now.
Thursday the stock market did an about face dropping 144 points as weekly first time jobless claims were reported much higher than expected. The 500,000 claims reported are the highest we have seen since November of 2009. Additionally, the 4 week moving average, which has been rising as well, hit the highest number since December.
Companies, especially in the private sector, are not hiring as fear of a faltering recovery is taking hold. More and more people are believing that once again the economy is heading in the wrong direction and that recovery is much further away than originally anticipated.
The housing market has not been fairing much better these days. The Housing Market Index reported a 3rd monthly decline as builders see tight credit, lousy appraisals and distressed properties as a hindrance to selling new construction.
On a positive note, Housing Starts increased 1.7 in July which was a nice respite from June's 8.7% decline. Multifamily construction was the key to leading the index higher. Single family construction continues to struggle as that part of the index declined by 4.2%.
Fortunately mortgage rates continue to remain at record lows. The Mortgage Bankers Association reported that applications for mortgage are rising. Refinancing is the driving force in the application increase. Refinances currently represent 81% of all applications. Applications for home purchases continue to falter as they dropped 3.4% from the prior week despite the record low interest rates. The bottom line is that with the unemployment picture remaining very unstable, consumers are afraid to make a commitment to purchasing a new home.
Industrial Production increased 1%, which was higher than expected, showing that there is at least some positive activity in the manufacturing sector. Additionally, the Producer Price Index increased .2% which was in line with expectations. The PPI was driven higher primarily by an increase in food prices on the wholesale level. However, last week's report on CPI showed that the increases in prices on the wholesale lever are not being passed on to consumers.
Economic reports due out next week are:
• Tuesday August 24th - Existing Home Sales
• Wednesday August 25th - MBA Applications
• Thursday August 26th - Weekly Jobless Claims
• Friday August 27th - Consumer Sentiment and GDP
Your Mortgage Consultant,
JJ Mack
916-517-1800
Friday, July 30, 2010
Weekend Mortgage Market Update - 07/30/2010
I am very excited today! I finally get to write something positive about housing. It has been a while but today I will relish the opportunity to deliver some good news.
It appears, at least for now, the free fall in house prices has ended. The Case-Shiller Housing Value Index rose 1.2% showing that stability to house prices in major cities across the U.S. is taking hold.
In even more positive housing news, New Home Sales rebounded 23.6% from May's previous drop of 36.7%. It seems that the tax credit hangover is starting to dissipate and we are on a slow road to rebuilding a normal housing market. (I'm not exactly sure what "normal" is, or what it will be in the future, however it feels good for the moment to be able to use the word "normal")
Housing inventory dropped from 9.6 months down to 7.6%. This significant drop is a welcome sign, however, and it is a big however, let us not be naïve. We all know the banks are sitting with over 3 million properties that they have not placed on the market. So in reality the supply is more like 5 years however we know the banks are going to drip these properties out for sale in order to keep house prices stable.
In other areas of the economy, news was not quite as optimistic. Consumer Confidence continues to erode due to the job market. Finding jobs is very difficult for the unemployed and the number of people that are part of the on-going claims is rising again. Keep in mind that on-going claims is rising and there are more people falling off the unemployment rolls so in fact the job market is really worse than the numbers indicate.
Corporate profits this week showed many companies are increasing their bottom line which is the foundation for future economic growth and the recovery of the jobs market. I have said it before, and I will say it again, although profits are increasing, until sales increase, which is still not happening, we will not see a huge change in the unemployment picture. The good news is that stronger bottom lines mean the government will be able to stay on the sidelines in regard to bailing out companies again.
Mortgage applications for purchase transactions declined 4.4% for the prior week and refinance apps declined 5.9%. These numbers are not anything to be concerned about in that for the most part, the decline represents the typical mid-summer real estate slow down.
Jobless claims dropped slightly less than expected but none the less they dropped. (Do I have to keep writing about Jobless Claims because the market is not paying attention to them right now so why should I?)
Economic reports due out next week are:
• Monday August 2nd - Construction Spending
• Tuesday August 3rd - Pending Home Sales
• Wednesday August 4th - MBA Purchase Applications
• Thursday August 5th - Weekly Jobless Claims
• Friday August 6th - Employment Situation
Your Mortgage Professional,
JJ Mack
916-517-1800
It appears, at least for now, the free fall in house prices has ended. The Case-Shiller Housing Value Index rose 1.2% showing that stability to house prices in major cities across the U.S. is taking hold.
In even more positive housing news, New Home Sales rebounded 23.6% from May's previous drop of 36.7%. It seems that the tax credit hangover is starting to dissipate and we are on a slow road to rebuilding a normal housing market. (I'm not exactly sure what "normal" is, or what it will be in the future, however it feels good for the moment to be able to use the word "normal")
Housing inventory dropped from 9.6 months down to 7.6%. This significant drop is a welcome sign, however, and it is a big however, let us not be naïve. We all know the banks are sitting with over 3 million properties that they have not placed on the market. So in reality the supply is more like 5 years however we know the banks are going to drip these properties out for sale in order to keep house prices stable.
In other areas of the economy, news was not quite as optimistic. Consumer Confidence continues to erode due to the job market. Finding jobs is very difficult for the unemployed and the number of people that are part of the on-going claims is rising again. Keep in mind that on-going claims is rising and there are more people falling off the unemployment rolls so in fact the job market is really worse than the numbers indicate.
Corporate profits this week showed many companies are increasing their bottom line which is the foundation for future economic growth and the recovery of the jobs market. I have said it before, and I will say it again, although profits are increasing, until sales increase, which is still not happening, we will not see a huge change in the unemployment picture. The good news is that stronger bottom lines mean the government will be able to stay on the sidelines in regard to bailing out companies again.
Mortgage applications for purchase transactions declined 4.4% for the prior week and refinance apps declined 5.9%. These numbers are not anything to be concerned about in that for the most part, the decline represents the typical mid-summer real estate slow down.
Jobless claims dropped slightly less than expected but none the less they dropped. (Do I have to keep writing about Jobless Claims because the market is not paying attention to them right now so why should I?)
Economic reports due out next week are:
• Monday August 2nd - Construction Spending
• Tuesday August 3rd - Pending Home Sales
• Wednesday August 4th - MBA Purchase Applications
• Thursday August 5th - Weekly Jobless Claims
• Friday August 6th - Employment Situation
Your Mortgage Professional,
JJ Mack
916-517-1800
Friday, July 23, 2010
Weekend Mortgage Market Update - 07/23/2010
Rather than write this report every week, I think I am just going to send out a one page picture of an arrow pointing either up, down or sideways. That by itself will give you a clear indication as to the direction of the economy. Please expect to see an arrow pointing sideways for the near future. A flat economy has been the name of the game for pretty much the entire year thus far.
The economic reports this week once again indicate we are going nowhere fast. The stock market continues to have its good days and bad days moving on any drop of news so investors can take a gamble to lock in profits for a day. It seems more like the stock market is all day traders than anyone believing in long term investments.
In regard to housing, let's start off with the "not so good", and then give you the optimistic side of housing. (Yes there is an optimistic side).
The Housing Market Index which dropped to the lowest point since April is an opinion of housing conditions released by the National Association of Home Builders. Although the index dropped sharply, you must remember it is only an opinion and not based upon any statistical data.
The Housing Starts report was a mixed message. New construction for homes dropped sharply however there was a very healthy increase for new building permits reported. Could this be a sign that builders see the 4th quarter being more productive? (I hope so)
Mortgage applications for refinances and purchases jumped as expected. Record low mortgage rates have been driving the last group of holdouts to finally submit applications to lower their rates. Purchase applications also rose 3.4% showing that the there are signs of life in the purchase market. We all know record low rates are the driving force behind the increase in applications. Given the last couple of months of declining purchases, any positive report should be embraced and personally I am excited about any increase no matter how large or small. Mortgage rates are expected to remain very low for the coming months.
Existing Home Sales also fell for the month however not as much as anticipated. The drop of 5.1% was not a market mover and the increase of inventory from 8.3 months to 8.9 was not a big surprise. The big positive side to the report is that median home prices rose 5.2% which some people are saying may indicate we have hit the bottom as far as home values. (I personally think it is crazy to make that prediction based upon one report however, any positive news in values can cause fence sitters to jump back in to the market.)
Jobless claims dropped more than expected. As stated last week, the jobless claims are not playing a major role in the movement of the markets. Until we begin to see a declining trend, you can expect the coming weeks and month to be up and down once again reinforcing my desire to just place an arrow pointing sideways on this report.
Economic reports due out next week are:
• Monday July 26th - New Home Sales
• Tuesday July 27th - Case-Shiller House Price Index & Consumer Confidence
• Wednesday July 28th - MBA Purchase Applications & Durable Goods Orders
• Thursday July 29th - Weekly Jobless Claims, GDP and Consumer Sentiment
Your Mortgage Professional,
JJ Mack
916-517-1800
The economic reports this week once again indicate we are going nowhere fast. The stock market continues to have its good days and bad days moving on any drop of news so investors can take a gamble to lock in profits for a day. It seems more like the stock market is all day traders than anyone believing in long term investments.
In regard to housing, let's start off with the "not so good", and then give you the optimistic side of housing. (Yes there is an optimistic side).
The Housing Market Index which dropped to the lowest point since April is an opinion of housing conditions released by the National Association of Home Builders. Although the index dropped sharply, you must remember it is only an opinion and not based upon any statistical data.
The Housing Starts report was a mixed message. New construction for homes dropped sharply however there was a very healthy increase for new building permits reported. Could this be a sign that builders see the 4th quarter being more productive? (I hope so)
Mortgage applications for refinances and purchases jumped as expected. Record low mortgage rates have been driving the last group of holdouts to finally submit applications to lower their rates. Purchase applications also rose 3.4% showing that the there are signs of life in the purchase market. We all know record low rates are the driving force behind the increase in applications. Given the last couple of months of declining purchases, any positive report should be embraced and personally I am excited about any increase no matter how large or small. Mortgage rates are expected to remain very low for the coming months.
Existing Home Sales also fell for the month however not as much as anticipated. The drop of 5.1% was not a market mover and the increase of inventory from 8.3 months to 8.9 was not a big surprise. The big positive side to the report is that median home prices rose 5.2% which some people are saying may indicate we have hit the bottom as far as home values. (I personally think it is crazy to make that prediction based upon one report however, any positive news in values can cause fence sitters to jump back in to the market.)
Jobless claims dropped more than expected. As stated last week, the jobless claims are not playing a major role in the movement of the markets. Until we begin to see a declining trend, you can expect the coming weeks and month to be up and down once again reinforcing my desire to just place an arrow pointing sideways on this report.
Economic reports due out next week are:
• Monday July 26th - New Home Sales
• Tuesday July 27th - Case-Shiller House Price Index & Consumer Confidence
• Wednesday July 28th - MBA Purchase Applications & Durable Goods Orders
• Thursday July 29th - Weekly Jobless Claims, GDP and Consumer Sentiment
Your Mortgage Professional,
JJ Mack
916-517-1800
Friday, July 16, 2010
Weekend Mortgage Update - 07/16/2010
As I have promised in the past, my goal is to balance economic optimism with the reality of what is happening in the markets. This is no easy task as the pace of the recovery continues to slow.
Because of the amount of news reported this week, I am providing it to you in bullet point format for easier reading and digestion.
• Mortgage rates rose earlier in the week, only to do a complete reversal in the second half and once again return to record lows. The Mortgage Bankers Association reported this week that despite amazingly low rates, mortgage applications for home purchases declined 3.1%. Even refinance applications dropped 2.9%.
• Retail Sales dropped .5% however inside the numbers it is showing that consumers are spending more money on personal items such as cell phones, HDtv's, clothing, etc...
• The Producer Price Index and the Consumer Price Index both are showing clear signs that inflation is not an issue or concern on the wholesale or retail level.
• Jobless Claim reporting seems to be a non factor in impacting the markets as many people have realized that these weekly reports are not indicative of what is really happening in the employment sector. Initial jobless claims dropped a significant 29,000 which was nice to see. Continued unemployment is where the numbers are not representative of reality as the number of people falling off the unemployment rolls is growing and they are no longer being counted in any of the statistics
• Corporate profits reported significant increases in many sectors. Although sales have not increased which means that profits increased due to cost cutting measures, the fact that company profits are growing is a very good sign and the necessary first step before companies resume hiring.
• The stock market is targeted to finish modestly higher for the week based upon the better than expected profit reports.
As far as analysts predicting the future of the economy, it is clear that the so called experts don't have a clue as to where we are headed. I actually find it entertaining to watch because recent history has shown us that over the last 24 months, the so called experts have not even been close in their predictions. (Weren't mortgage rates so supposed to 6% by now?)
The bottom line, don't try to predict the future and don't listen to anyone that says they know where the market and economy is headed. The key to survival and thriving is to adapt quickly to any changes in the market and economy and remain committed to persevering. Do not bet the farm on any forecast or prediction because odds are, it will be far from what actually happens
Buckle up, The Wall Street Reform Bill is about to be signed. Enter the new age of Socialism!
Economic reports due out next week are:
• Monday July 19th - Housing Market Index
• Tuesday July 20th - Housing Starts
• Wednesday July 21st - MBA Purchase Applications
• Thursday July 22nd - Existing Home Sales & Weekly Jobless Claims
Your Mortgage Professional,
JJ Mack
916-517-1800
Because of the amount of news reported this week, I am providing it to you in bullet point format for easier reading and digestion.
• Mortgage rates rose earlier in the week, only to do a complete reversal in the second half and once again return to record lows. The Mortgage Bankers Association reported this week that despite amazingly low rates, mortgage applications for home purchases declined 3.1%. Even refinance applications dropped 2.9%.
• Retail Sales dropped .5% however inside the numbers it is showing that consumers are spending more money on personal items such as cell phones, HDtv's, clothing, etc...
• The Producer Price Index and the Consumer Price Index both are showing clear signs that inflation is not an issue or concern on the wholesale or retail level.
• Jobless Claim reporting seems to be a non factor in impacting the markets as many people have realized that these weekly reports are not indicative of what is really happening in the employment sector. Initial jobless claims dropped a significant 29,000 which was nice to see. Continued unemployment is where the numbers are not representative of reality as the number of people falling off the unemployment rolls is growing and they are no longer being counted in any of the statistics
• Corporate profits reported significant increases in many sectors. Although sales have not increased which means that profits increased due to cost cutting measures, the fact that company profits are growing is a very good sign and the necessary first step before companies resume hiring.
• The stock market is targeted to finish modestly higher for the week based upon the better than expected profit reports.
As far as analysts predicting the future of the economy, it is clear that the so called experts don't have a clue as to where we are headed. I actually find it entertaining to watch because recent history has shown us that over the last 24 months, the so called experts have not even been close in their predictions. (Weren't mortgage rates so supposed to 6% by now?)
The bottom line, don't try to predict the future and don't listen to anyone that says they know where the market and economy is headed. The key to survival and thriving is to adapt quickly to any changes in the market and economy and remain committed to persevering. Do not bet the farm on any forecast or prediction because odds are, it will be far from what actually happens
Buckle up, The Wall Street Reform Bill is about to be signed. Enter the new age of Socialism!
Economic reports due out next week are:
• Monday July 19th - Housing Market Index
• Tuesday July 20th - Housing Starts
• Wednesday July 21st - MBA Purchase Applications
• Thursday July 22nd - Existing Home Sales & Weekly Jobless Claims
Your Mortgage Professional,
JJ Mack
916-517-1800
Friday, July 9, 2010
Weekend Mortgage Update - 07/09/2010
When you combine the light trading in the stock market with very little market impacting data being released, it was nice to have a non volatile trading week. As indicated in last week's Weekender, this week there were only two significant U.S. economic reports so the usual market hysteria was kept to a minimum.
This week the stock market experience significant gains and once again climbed above the 10,000 mark. Besides the lack of market moving news, the other reason for the gains is the low trading volume. Historically this week has one of the lowest trading volumes of the year. When low trading volume exists, it is possible to have larger moves in the various stock market indices due to the fact that any large trade can have can carry more weight in the movement of the Dow, Nasdaq and S&P.
The Mortgage Bankers Association reported that despite some of the lowest mortgage rates on record, purchase applications continued to drop, however the slide has dramatically slowed down. Purchase applications dropped a small 2.0% which hopefully indicates that purchasing volume is stabilizing. However, we will have to wait and see the application reports in the coming weeks to truly determine the direction of housing.
The MBA also reported a 9.2% jump in refinance applications which continues to indicate that there are many homeowners that have still not taken advantage of all of the previous refinance booms over the last few years.
First time jobless claims were reported to have dropped by 21,000. The stock market loved this news and rallied to a 120 point rise on the Dow Jones Industrial Average.
For the most part, news on the European debt crisis seems to indicate that concern is easing and that Europe is getting it under control. In recent weeks and months, the European debt crisis has been keeping traders on edge making U.S. Treasuries the investment of choice.
Next week the treasury is auctioning off 10YR notes and depending on the demand, that can have an impact on mortgage rates either up or down.
After a restful week of little economic news, next week plans to deliver a slew of economic reports. Buckle Up, it could get bumpy again.
Lebron James decided on going to Miami, lets watch to see how many people now sell their recently acquired MSG stock in hopes of it rocketing up if he came to NY.
Reports due out next week are:
• Tuesday July 13th - 10 Yr Treasury Note Auction
• Wednesday July 14th - MBA Purchase Applications
• Wednesday July 14th - Retail Sales
• Thursday July 15th - Producer Price Index
• Thursday July 15th - Industrial Production
• Thursday July 15th - Weekly Jobless Claims
• Friday July 16th - Consumer Price Index
• Wednesday July 7th - MBA Purchase Applications
• Thursday July 8th - Weekly Jobless Claims
This week the stock market experience significant gains and once again climbed above the 10,000 mark. Besides the lack of market moving news, the other reason for the gains is the low trading volume. Historically this week has one of the lowest trading volumes of the year. When low trading volume exists, it is possible to have larger moves in the various stock market indices due to the fact that any large trade can have can carry more weight in the movement of the Dow, Nasdaq and S&P.
The Mortgage Bankers Association reported that despite some of the lowest mortgage rates on record, purchase applications continued to drop, however the slide has dramatically slowed down. Purchase applications dropped a small 2.0% which hopefully indicates that purchasing volume is stabilizing. However, we will have to wait and see the application reports in the coming weeks to truly determine the direction of housing.
The MBA also reported a 9.2% jump in refinance applications which continues to indicate that there are many homeowners that have still not taken advantage of all of the previous refinance booms over the last few years.
First time jobless claims were reported to have dropped by 21,000. The stock market loved this news and rallied to a 120 point rise on the Dow Jones Industrial Average.
For the most part, news on the European debt crisis seems to indicate that concern is easing and that Europe is getting it under control. In recent weeks and months, the European debt crisis has been keeping traders on edge making U.S. Treasuries the investment of choice.
Next week the treasury is auctioning off 10YR notes and depending on the demand, that can have an impact on mortgage rates either up or down.
After a restful week of little economic news, next week plans to deliver a slew of economic reports. Buckle Up, it could get bumpy again.
Lebron James decided on going to Miami, lets watch to see how many people now sell their recently acquired MSG stock in hopes of it rocketing up if he came to NY.
Reports due out next week are:
• Tuesday July 13th - 10 Yr Treasury Note Auction
• Wednesday July 14th - MBA Purchase Applications
• Wednesday July 14th - Retail Sales
• Thursday July 15th - Producer Price Index
• Thursday July 15th - Industrial Production
• Thursday July 15th - Weekly Jobless Claims
• Friday July 16th - Consumer Price Index
• Wednesday July 7th - MBA Purchase Applications
• Thursday July 8th - Weekly Jobless Claims
Tuesday, July 6, 2010
Mortgage Market Update - July 6
Unfortunately due to the second week of primarily negative economic reports and data, it is not easy to find many good things to write about as much as I am trying - sorry!
The talk of a double dip recession has been increasing due to increasing trend of negative economic reports hitting the market. It is becoming clear to many people that we are further from a recovery than most of us had hoped.
Housing received a reprieve this week when the Senate and House finally agreed to push forward the independent bill of extending the tax credit until September 30th. The credit extension is only for homebuyers that were in contract by the required April 30th deadline.
The Case-Shiller Home Values Index rose in the months of April by .7% which goes along with the increased activity of home purchases that was reported during the same month. On the opposite side of the spectrum, pending home sales fell off a cliff in the month of May with the National Association of Realtors reporting as 30% drop.
The Mortgage Bankers Association reported that last week purchase applications dropped 3.3%. On the bright side, refinance applications jumped 12.6% with the lowest interest rates on record available to homeowners, 4.67% and 4.06% for a 30 and 15 year fixed rate respectively.
Other significant news reports for the week are:
• The stock market continues to take a beating on concerns about the economic recovery as well as the weakness in overseas economies.
• ADP reported job growth of 13,000 which was is an improvement however far below the projected 61,000.
• Consumer confidence dropped considerably slowing purchases in housing and auto sales.
• ISM Manufacturing Index and construction spending both declined slightly however these declines are not alarming.
• The House finally voted to extend unemployment benefits for those whose benefits were to expire on June 30th. The Senate is expected to pass the measure in about 2 weeks when they return from summer vacation.
• The employment situation reported on Friday showed that the national unemployment rate dropped from 9.7% to 9.5% indicating that the employment sector is still recovering at a very slow pace.
Despite all of the negative news, I still remain optimistic for housing. With record low interest rates and no sign of them increasing, housing is becoming even more affordable and demand will increase.
Fortunately, there are very few significant reports scheduled for next week which will hopefully lead us to a less volatile week in the markets. News on tap for next week is:
• Wednesday July 7th - MBA Purchase Applications
• Thursday July 8th - Weekly Jobless Claims
The talk of a double dip recession has been increasing due to increasing trend of negative economic reports hitting the market. It is becoming clear to many people that we are further from a recovery than most of us had hoped.
Housing received a reprieve this week when the Senate and House finally agreed to push forward the independent bill of extending the tax credit until September 30th. The credit extension is only for homebuyers that were in contract by the required April 30th deadline.
The Case-Shiller Home Values Index rose in the months of April by .7% which goes along with the increased activity of home purchases that was reported during the same month. On the opposite side of the spectrum, pending home sales fell off a cliff in the month of May with the National Association of Realtors reporting as 30% drop.
The Mortgage Bankers Association reported that last week purchase applications dropped 3.3%. On the bright side, refinance applications jumped 12.6% with the lowest interest rates on record available to homeowners, 4.67% and 4.06% for a 30 and 15 year fixed rate respectively.
Other significant news reports for the week are:
• The stock market continues to take a beating on concerns about the economic recovery as well as the weakness in overseas economies.
• ADP reported job growth of 13,000 which was is an improvement however far below the projected 61,000.
• Consumer confidence dropped considerably slowing purchases in housing and auto sales.
• ISM Manufacturing Index and construction spending both declined slightly however these declines are not alarming.
• The House finally voted to extend unemployment benefits for those whose benefits were to expire on June 30th. The Senate is expected to pass the measure in about 2 weeks when they return from summer vacation.
• The employment situation reported on Friday showed that the national unemployment rate dropped from 9.7% to 9.5% indicating that the employment sector is still recovering at a very slow pace.
Despite all of the negative news, I still remain optimistic for housing. With record low interest rates and no sign of them increasing, housing is becoming even more affordable and demand will increase.
Fortunately, there are very few significant reports scheduled for next week which will hopefully lead us to a less volatile week in the markets. News on tap for next week is:
• Wednesday July 7th - MBA Purchase Applications
• Thursday July 8th - Weekly Jobless Claims
Friday, June 25, 2010
Mortgage Markey Weekend Update - 06/25/2010
Well the week was a data junkies dream. We had tons of economic reports come out, and in the end, mortgage rates continued to decline. The stock market had about a 350 point drop in total for the week as of the writing of this report however the main reason is for concern in Europe.
It has been a while, but I feel today it is necessary for me to put my sarcasm hat on and report the week's happenings strictly for entertainment purposes. If I take the reports to seriously I may go postal. (I will have to go beyond a one page report - sorry). I just need to vent about the nonsense that is being reported by the government. Please understand nothing I write is a political statement, it is strictly about government nonsense and their belief that we are dumb enough to fall for their propoganda.)
As you may already know, The Wall Street Reform Bill is a done deal. The President is expected to sign it into law by July 4th. Exactly when everything will take effect, is uncertain. However what is for sure is that this legislation is one of the most powerful and largest changes to laws and controls ever executed by the government. I believe the Constitution, The Bill of Rights and The Declaration of Independence are still more powerful. However I believe Barney Franks wants to change that also. As far as our rights in business, if you work in the financial industry, bottom line is that you don't have many of them anymore with this reform bill.
I was speaking with a friend yesterday and we discussed the definitions of Democracy, Socialism and Communism.
• Democracy: Freedom of choice and the opportunity for the people of the country to be able to engage in making decisions on their own with minimal government intervention.
• Socialism: You still have the right to choose, however your choices must adhere to government rules that eliminate virtually every choice except for those the government wants you to make.
• Communism: You are not allowed to think for yourself or choose.
The Wall Street Reform Bill now places the business sector of the country somewhere between Socialism and Communism. Depending on which industry you look at, your view may vary. Buckle up my friends, the cost of doing business in this country has just been increased significantly and our liberties of freedom of choice in business are being taken away.
Ok I'm done - now on to the main report:
The housing news reported this week was dismal however not unexpected. I have been writing for weeks about the end of the tax credit and how it will impact May housing numbers. Well here they are:
• New Homes Sales Plunge 33% (largest drop ever measured since 1963)
• Existing Home Sales Drop 2%. Over 30% of these homes sold are foreclosures and shorts sales.
• March and April's New Home Sales Report was revised downward by 108,000 units making those months much worse than reported previously. Remember, the tax credit was active during that period of time which is now increasing concerns about housing.
• Single family home starts drop 17%
• MBA Purchase Applications dropped 1.2% and Refinances dropped 7.3%.
• Housing supply inventory increased from 5.8 months in April to 8.5 months in May (This does not includes the 3,650,000 homes that the nation's major banks are currently holding off the market to stabilize values. In case you think I made a mistake with the zero's, I wrote 3 million six hundred and fifty thousand homes not being sold by the banks)
As positively natured a person I am, I truly don't enjoy writing about all of the bad news - I really don't. However, I am a little bit disgusted in how are government is perpetuating so many lies to us about the state of the economy just so they can say we are not going to have a double dip recession. Actually they are right, we are not going to have a double dip because the first recession never ended!
The FOMC stated that economy is "proceeding". (What does that mean?)
Of course the economy is "proceeding"! - As long as there IS an economy, it has to "proceed"! - I failed economics in college but even I know an economy has to proceed.
Sorry I digressed - The FOMC has continued to keep interest rates at or near zero with no expectation of when they will need to raise them. Inflation continues to be a non-factor so the concern for rate increases does not exist.
Jobless claims dropped 19,000 last week, however the previous weeks jobless claims were revised upward by 4,000. Overall first time jobless claims remain somewhat stable with only a slight rise in the 4 week moving average.
What is supposed to be good news is that 45,000 people came off of the unemployment rolls last week. The only question that nobody in government will answer is did they get jobs? - or did they give up on finding a job - or are they no longer eligible for unemployment?
GET THIS - The Obama Administration stated that they are responsible for the 45.9% increase in national corporate profits that took place over the last 12 months. Wow- I thought that firing employees and cutting expenses is what increased profits during this period of time. I say that because unless sales increase, which they haven't, the only way for corporate profits to increase is by cutting costs. Like I said earlier, I failed economics in college but.... Am I missing something?
The great news for the week is that mortgage rates are at the lowest point on record. 30 year fixed rates are in the 4's and I am cautiously optimistic that this will increase activity in home buying and refinances. The government is currently considering extending the tax credit however that has not been decided as of yet.
Once again I apologize for the tone of this newsletter. It is not like me to do this, however I now feel cleansed and I can go and enjoy my weekend knowing that I have bestowed my frustration on my loyal readers.
News on tap for next week:
• Tuesday June 29th - Case-Shiller Housing Value Index
• Tuesday June 29th - Consumer Confidence
• Wednesday June 30th - MBA Purchase Applications, ADP Employment Report
• Thursday July 1st - Pending Home Sale, Weekly Jobless Claims
Your Mortgage Professional,
JJ Mack
916-517-1800
It has been a while, but I feel today it is necessary for me to put my sarcasm hat on and report the week's happenings strictly for entertainment purposes. If I take the reports to seriously I may go postal. (I will have to go beyond a one page report - sorry). I just need to vent about the nonsense that is being reported by the government. Please understand nothing I write is a political statement, it is strictly about government nonsense and their belief that we are dumb enough to fall for their propoganda.)
As you may already know, The Wall Street Reform Bill is a done deal. The President is expected to sign it into law by July 4th. Exactly when everything will take effect, is uncertain. However what is for sure is that this legislation is one of the most powerful and largest changes to laws and controls ever executed by the government. I believe the Constitution, The Bill of Rights and The Declaration of Independence are still more powerful. However I believe Barney Franks wants to change that also. As far as our rights in business, if you work in the financial industry, bottom line is that you don't have many of them anymore with this reform bill.
I was speaking with a friend yesterday and we discussed the definitions of Democracy, Socialism and Communism.
• Democracy: Freedom of choice and the opportunity for the people of the country to be able to engage in making decisions on their own with minimal government intervention.
• Socialism: You still have the right to choose, however your choices must adhere to government rules that eliminate virtually every choice except for those the government wants you to make.
• Communism: You are not allowed to think for yourself or choose.
The Wall Street Reform Bill now places the business sector of the country somewhere between Socialism and Communism. Depending on which industry you look at, your view may vary. Buckle up my friends, the cost of doing business in this country has just been increased significantly and our liberties of freedom of choice in business are being taken away.
Ok I'm done - now on to the main report:
The housing news reported this week was dismal however not unexpected. I have been writing for weeks about the end of the tax credit and how it will impact May housing numbers. Well here they are:
• New Homes Sales Plunge 33% (largest drop ever measured since 1963)
• Existing Home Sales Drop 2%. Over 30% of these homes sold are foreclosures and shorts sales.
• March and April's New Home Sales Report was revised downward by 108,000 units making those months much worse than reported previously. Remember, the tax credit was active during that period of time which is now increasing concerns about housing.
• Single family home starts drop 17%
• MBA Purchase Applications dropped 1.2% and Refinances dropped 7.3%.
• Housing supply inventory increased from 5.8 months in April to 8.5 months in May (This does not includes the 3,650,000 homes that the nation's major banks are currently holding off the market to stabilize values. In case you think I made a mistake with the zero's, I wrote 3 million six hundred and fifty thousand homes not being sold by the banks)
As positively natured a person I am, I truly don't enjoy writing about all of the bad news - I really don't. However, I am a little bit disgusted in how are government is perpetuating so many lies to us about the state of the economy just so they can say we are not going to have a double dip recession. Actually they are right, we are not going to have a double dip because the first recession never ended!
The FOMC stated that economy is "proceeding". (What does that mean?)
Of course the economy is "proceeding"! - As long as there IS an economy, it has to "proceed"! - I failed economics in college but even I know an economy has to proceed.
Sorry I digressed - The FOMC has continued to keep interest rates at or near zero with no expectation of when they will need to raise them. Inflation continues to be a non-factor so the concern for rate increases does not exist.
Jobless claims dropped 19,000 last week, however the previous weeks jobless claims were revised upward by 4,000. Overall first time jobless claims remain somewhat stable with only a slight rise in the 4 week moving average.
What is supposed to be good news is that 45,000 people came off of the unemployment rolls last week. The only question that nobody in government will answer is did they get jobs? - or did they give up on finding a job - or are they no longer eligible for unemployment?
GET THIS - The Obama Administration stated that they are responsible for the 45.9% increase in national corporate profits that took place over the last 12 months. Wow- I thought that firing employees and cutting expenses is what increased profits during this period of time. I say that because unless sales increase, which they haven't, the only way for corporate profits to increase is by cutting costs. Like I said earlier, I failed economics in college but.... Am I missing something?
The great news for the week is that mortgage rates are at the lowest point on record. 30 year fixed rates are in the 4's and I am cautiously optimistic that this will increase activity in home buying and refinances. The government is currently considering extending the tax credit however that has not been decided as of yet.
Once again I apologize for the tone of this newsletter. It is not like me to do this, however I now feel cleansed and I can go and enjoy my weekend knowing that I have bestowed my frustration on my loyal readers.
News on tap for next week:
• Tuesday June 29th - Case-Shiller Housing Value Index
• Tuesday June 29th - Consumer Confidence
• Wednesday June 30th - MBA Purchase Applications, ADP Employment Report
• Thursday July 1st - Pending Home Sale, Weekly Jobless Claims
Your Mortgage Professional,
JJ Mack
916-517-1800
Friday, June 18, 2010
Weekend Mortgage Update - 06/18/2010
For anyone that is a market news junkie, you certainly got your fix this week. It has been quite some time since we have experienced a week with this much news and information on housing and the economy.
Housing Starts dropped 10% as home builders are showing caution as the tax credit expiration has seemed to place a damper on home purchase demand. The Mortgage Bankers Association reported for the first time in 6 weeks that home purchase applications have increased. Additionally, it was also reported that refinance applications jumped 21%.
The Senate and House have each passed a new amendment which would extend the time to take advantage of the tax credit. The current expiration occurs on June 30th. The current amendment is being reconciled between both branches of government and it is expected to be passed. The extension as proposed will extend the time home buyers have to close for an additional 3 months.
It was announced this week that an estimated 65 - 75% of all homeowners who have received loan modifications under the governments Home Affordable Modification Program will most likely default despite having lower mortgage payments. The main culprit causing the trend of high defaults is that many homeowners receiving modifications continue to have high balances on their other consumer debt with little or no reserves of cash in the bank.
The FBI announced a major crackdown on mortgage fraud. The FBI's program to fight mortgage fraud, called Operation Stolen Dreams, is in full swing with over 3000 investigations taking place nationwide. Already over 485 people have been netted in the operation. The driving force behind the FBI crackdown is that despite the lending industry tightening guidelines and underwriting criteria, studies have shown a significant increase in mortgage fraud from 2008 to 2009.
In other real estate news, the former CEO of failed lending institution Taylor Bean Whittaker was arrested this week while working out at his gym. He has been charged with defrauding the government and investors out of 1.5 billion dollars through the sale and transfer of bad mortgage loans.
Fannie Mae and Freddie Mac have both been delisted from the New York Stock Exchange due to their share prices continuing to remain valued below a $1. This does not impact the daily operations of these organizations.
The Consumer Price Index and Producer Price Index released this week continue to show that inflation is not an issue right now despite all of the government stimulus and low rates. Consumers have slowed spending on discretionary items once again due to uncertainty in the job market and economy. Jobless claims came in higher than expected this past week as well.
News on tap for next week:
• Tuesday June 22nd - Existing Home Sales
• Wednesday June 23rd - MBA Purchase Applications, New Home Sales, FOMC Meeting
• Thursday June 24th - Jobless Claims and Durable Good Orders
• Friday June 25th - Consumer Sentiment and GDP
Your Mortgage Consultant,
JJ Mack
916-517-1800
Housing Starts dropped 10% as home builders are showing caution as the tax credit expiration has seemed to place a damper on home purchase demand. The Mortgage Bankers Association reported for the first time in 6 weeks that home purchase applications have increased. Additionally, it was also reported that refinance applications jumped 21%.
The Senate and House have each passed a new amendment which would extend the time to take advantage of the tax credit. The current expiration occurs on June 30th. The current amendment is being reconciled between both branches of government and it is expected to be passed. The extension as proposed will extend the time home buyers have to close for an additional 3 months.
It was announced this week that an estimated 65 - 75% of all homeowners who have received loan modifications under the governments Home Affordable Modification Program will most likely default despite having lower mortgage payments. The main culprit causing the trend of high defaults is that many homeowners receiving modifications continue to have high balances on their other consumer debt with little or no reserves of cash in the bank.
The FBI announced a major crackdown on mortgage fraud. The FBI's program to fight mortgage fraud, called Operation Stolen Dreams, is in full swing with over 3000 investigations taking place nationwide. Already over 485 people have been netted in the operation. The driving force behind the FBI crackdown is that despite the lending industry tightening guidelines and underwriting criteria, studies have shown a significant increase in mortgage fraud from 2008 to 2009.
In other real estate news, the former CEO of failed lending institution Taylor Bean Whittaker was arrested this week while working out at his gym. He has been charged with defrauding the government and investors out of 1.5 billion dollars through the sale and transfer of bad mortgage loans.
Fannie Mae and Freddie Mac have both been delisted from the New York Stock Exchange due to their share prices continuing to remain valued below a $1. This does not impact the daily operations of these organizations.
The Consumer Price Index and Producer Price Index released this week continue to show that inflation is not an issue right now despite all of the government stimulus and low rates. Consumers have slowed spending on discretionary items once again due to uncertainty in the job market and economy. Jobless claims came in higher than expected this past week as well.
News on tap for next week:
• Tuesday June 22nd - Existing Home Sales
• Wednesday June 23rd - MBA Purchase Applications, New Home Sales, FOMC Meeting
• Thursday June 24th - Jobless Claims and Durable Good Orders
• Friday June 25th - Consumer Sentiment and GDP
Your Mortgage Consultant,
JJ Mack
916-517-1800
Monday, June 14, 2010
Mortgage Market Weekend Update - 06/14/2010
The stock market rebounded nicely from its early week low's due to the strengthening Euro which has been beaten down over the last few weeks. The European debt crisis has been the primary reason for the devaluation of the currency and now that it seems like some stability is coming to the region, the Euro is gaining ground against the dollar.
Overall mortgage rates rose slightly for the week however nothing significant. The Mortgage Bankers Association reported that purchase applications dropped for the 4th straight week. This past week they fell 5.7% and overall in the last 4 weeks they are down 35%. Without question the expiration of the tax credit is having a major impact on housing.
Additionally, the MBA reported that refinance transactions have also dropped slightly despite interest rates being very low. Without a question, uncertainty in the economy and housing are continuing to slow home buyers, and even homeowners from taking action on financing for their current home.
It was reported on Thursday of this week that the number of foreclosure filings has dropped 3%. However what is very disturbing news is that the banks have significantly increased their repossessions of properties. In May, a new record was set for bank repossessions at 93,777.
The 10YR Treasury auction this week had modest demand. Given the uncertainty in the stock market, many are still investing in the safe haven of government securities.
In other news, Ben Bernake spoke a few times this week and has indicated that inflation continues to remain a non-issue and that he expects the Fed to keep rates the same possibly through 2012. However if inflation does begin to rear its ugly head anytime before, the Fed will certainly act to keep it under control by raising interest rates.
New filers for unemployment rose for the 4th straight week which once again exceeded analyst expectations. The perceived good news in the employment report is that continuing unemployment claims dropped a very large 225,000. The big question that remains is "are employers starting to hire, or is the drop related to many people becoming no longer eligible for benefits and they are being dropped from the calculations?" (I have my own opinion but I will let you draw your own conclusion about this)
Retail Sales unexpectedly dropped 1.2% in May, signaling consumers are focusing on boosting savings as the employment picture slowed and the stock market has been falling. Most of the economists surveyed expected a rise of .2%. Many experts believe that retail sales growth will be minimal in the coming months as signs of recovery are slower than anticipated.
News on tap for next week:
• Wednesday June 16th - Mortgage Bankers Association Purchase Applications
• Wednesday June 16th - Housing Starts, Industrial Production, Producer Price Index
• Thursday June 17th - Jobless Claims and Consumer Price Index
• Friday June 18th - Quadruple Witching Day which may lead to tremendous market volatility
Your Mortgage Consultant,
JJ Mack
916-517-1800
Overall mortgage rates rose slightly for the week however nothing significant. The Mortgage Bankers Association reported that purchase applications dropped for the 4th straight week. This past week they fell 5.7% and overall in the last 4 weeks they are down 35%. Without question the expiration of the tax credit is having a major impact on housing.
Additionally, the MBA reported that refinance transactions have also dropped slightly despite interest rates being very low. Without a question, uncertainty in the economy and housing are continuing to slow home buyers, and even homeowners from taking action on financing for their current home.
It was reported on Thursday of this week that the number of foreclosure filings has dropped 3%. However what is very disturbing news is that the banks have significantly increased their repossessions of properties. In May, a new record was set for bank repossessions at 93,777.
The 10YR Treasury auction this week had modest demand. Given the uncertainty in the stock market, many are still investing in the safe haven of government securities.
In other news, Ben Bernake spoke a few times this week and has indicated that inflation continues to remain a non-issue and that he expects the Fed to keep rates the same possibly through 2012. However if inflation does begin to rear its ugly head anytime before, the Fed will certainly act to keep it under control by raising interest rates.
New filers for unemployment rose for the 4th straight week which once again exceeded analyst expectations. The perceived good news in the employment report is that continuing unemployment claims dropped a very large 225,000. The big question that remains is "are employers starting to hire, or is the drop related to many people becoming no longer eligible for benefits and they are being dropped from the calculations?" (I have my own opinion but I will let you draw your own conclusion about this)
Retail Sales unexpectedly dropped 1.2% in May, signaling consumers are focusing on boosting savings as the employment picture slowed and the stock market has been falling. Most of the economists surveyed expected a rise of .2%. Many experts believe that retail sales growth will be minimal in the coming months as signs of recovery are slower than anticipated.
News on tap for next week:
• Wednesday June 16th - Mortgage Bankers Association Purchase Applications
• Wednesday June 16th - Housing Starts, Industrial Production, Producer Price Index
• Thursday June 17th - Jobless Claims and Consumer Price Index
• Friday June 18th - Quadruple Witching Day which may lead to tremendous market volatility
Your Mortgage Consultant,
JJ Mack
916-517-1800
Friday, June 11, 2010
Possible Tax Credit Extension?
NEW YORK (CNNMoney.com) -- First-time homebuyers looking to land an $8,000 federal income tax credit may have a little more time to close on their purchases if a Senate amendment unveiled Thursday makes it into law.
As it stands now, homebuyers must have signed contracts by April 30 and must close the deal by June 30. They could be eligible for an $8,000 tax credit if they are first-time buyers or a $6,500 credit if they owned and lived in their previous home for five of the last eight years.
The closing deadline, however, could be pushed back to Sept. 30 under an amendment offered by Senate Majority Leader Harry Reid, D-Nev., Sen. Johnny Isakson, R-Ga., and Sen. Chris Dodd, D-Conn. The senators said they want to make sure banks have time to process the transactions -- especially short-sales, which is a more involved process.
"By extending the transaction deadline, we can ensure that everyone taking advantage of this credit can complete the purchase of their new home, Reid said.
It remains to be seen, however, whether the amendment will go anywhere. It's part of a controversial jobs and tax bill that may be radically changed before the Senate approves it. Lawmakers are not scheduled to vote on the bill until next week at the earliest.
As it stands now, homebuyers must have signed contracts by April 30 and must close the deal by June 30. They could be eligible for an $8,000 tax credit if they are first-time buyers or a $6,500 credit if they owned and lived in their previous home for five of the last eight years.
The closing deadline, however, could be pushed back to Sept. 30 under an amendment offered by Senate Majority Leader Harry Reid, D-Nev., Sen. Johnny Isakson, R-Ga., and Sen. Chris Dodd, D-Conn. The senators said they want to make sure banks have time to process the transactions -- especially short-sales, which is a more involved process.
"By extending the transaction deadline, we can ensure that everyone taking advantage of this credit can complete the purchase of their new home, Reid said.
It remains to be seen, however, whether the amendment will go anywhere. It's part of a controversial jobs and tax bill that may be radically changed before the Senate approves it. Lawmakers are not scheduled to vote on the bill until next week at the earliest.
Friday, June 4, 2010
Mortgage Market Weekend Update - 06/04/2010
The week has been a reprieve from the crazy roller coaster ride we have been experiencing over the last month or so. The reality is that movement in the stock market of 100 to 200 points in a day, or a few hours for that matter, is now being seen as somewhat common place. (It is amazing what used to be crazy, is now the new normal)
Overall the economic news this past week has been quite positive in nature. Construction spending rose 2.7% in April from the previous month. What is especially optimistic about this increase is that the rise was driven primarily by investment in building single family residential properties.
Additionally, pending home sales in April rose another 6% from the 7.1% increase in March. The mad run for people to purchase prior to the tax credit expiration on April 30th seems to be the driving force behind the large increases. As always, not to be negative, we need to see what the numbers will be like for May. Many experts are predicting that we will see a reversal of the upward trend however that is to be expected.
Despite mortgage rates remaining below 5%, the Mortgage Bankers Association reported that purchase loan applications have declined for the 4th straight month. (Can anyone say "tax credit expiration"?)
Unemployment continues to remain an issue despite the fact that the national unemployment rate dropped from 9.9% to 9.7%. Although the drop is positive, the reality is that the bulk of the job additions for the month were related to the temporary hiring of 411,000 Census workers.
Outside of employment, there is economic news to be optimistic about that continues to point to slow and gradual growth of the economy. The increase in the ISM Manufacturing Index shows that employment and production in the manufacturing sector continues to grow at a healthy pace. In addition, factory orders continue to grow as well for both durable and non-durable goods orders at a strong rate showing that consumers and businesses are slowly starting to spend.
Economic news and activity next week has the potential to impact mortgage rates significantly. The 10YR Treasury Note Auction on Wednesday will shed light if investors are still seeking the quality and security of government treasuries, or if the appetite for stocks is returning - stay tuned!
News on tap for next week:
• Wednesday June 9th - Mortgage Bankers Association Purchase Applications
• Wednesday June 9th - 10 Year Note Auction
• Thursday June 10th - Jobless Claims
• Friday June 11th - Retail Sales
• Friday June 11th - Consumer Sentiment
Your Mortgage Consultant,
JJ Mack
916-517-1800
Overall the economic news this past week has been quite positive in nature. Construction spending rose 2.7% in April from the previous month. What is especially optimistic about this increase is that the rise was driven primarily by investment in building single family residential properties.
Additionally, pending home sales in April rose another 6% from the 7.1% increase in March. The mad run for people to purchase prior to the tax credit expiration on April 30th seems to be the driving force behind the large increases. As always, not to be negative, we need to see what the numbers will be like for May. Many experts are predicting that we will see a reversal of the upward trend however that is to be expected.
Despite mortgage rates remaining below 5%, the Mortgage Bankers Association reported that purchase loan applications have declined for the 4th straight month. (Can anyone say "tax credit expiration"?)
Unemployment continues to remain an issue despite the fact that the national unemployment rate dropped from 9.9% to 9.7%. Although the drop is positive, the reality is that the bulk of the job additions for the month were related to the temporary hiring of 411,000 Census workers.
Outside of employment, there is economic news to be optimistic about that continues to point to slow and gradual growth of the economy. The increase in the ISM Manufacturing Index shows that employment and production in the manufacturing sector continues to grow at a healthy pace. In addition, factory orders continue to grow as well for both durable and non-durable goods orders at a strong rate showing that consumers and businesses are slowly starting to spend.
Economic news and activity next week has the potential to impact mortgage rates significantly. The 10YR Treasury Note Auction on Wednesday will shed light if investors are still seeking the quality and security of government treasuries, or if the appetite for stocks is returning - stay tuned!
News on tap for next week:
• Wednesday June 9th - Mortgage Bankers Association Purchase Applications
• Wednesday June 9th - 10 Year Note Auction
• Thursday June 10th - Jobless Claims
• Friday June 11th - Retail Sales
• Friday June 11th - Consumer Sentiment
Your Mortgage Consultant,
JJ Mack
916-517-1800
Saturday, May 29, 2010
Mortgage Market Weekend Update - 05/29/2010
We all knew the bond market rally had to come to an end. The rapid decline in the 10 Year Treasury heading toward the 3.00% mark came to a screeching halt this week. Given the amount of economic data that was released this week, we should not be surprised.
After hitting a low of 3.18% on May 25th, the 10 Year Treasury closed out the month of May at 3.31%. The rapid drop in the treasury yield was due mainly to concerns over the European debt crisis which fueled a flight to quality for investors.
Despite many concerns that remain over international debt, positive news in housing fueled some of the rebound of the 10 YR Treasury this week.
The one question that remains is that although mortgage rates are not tied directly to the movement of the 10YR treasury, many experts were surprised that the drop in mortgage rates did not mirror the drop in the 10YR more closely.
Existing home sales jumped 7.6% which exceeded analyst's expectations. As we all know, the tax credit stimulus plan is assumed to have played a major role in the larger than expected increase. Housing inventories also jumped dramatically by 11.5% to a supply of 8.4 months. The existence of the heavy supply of homes combined with the absence of any housing stimulus, point to the risk of price erosion in the months ahead.
In other housing news, the Case-Shiller House Value Index showed that overall home prices have remained flat for the month of March. It is expected that in April the prices should rise given the consumer's rush to lock in their home purchase prior to the expiration of the 2nd round of economic housing stimulus. Predictions for home prices beyond April are uncertain.
New Home Sales surged 14.5% beating analyst's expectations. In addition, new housing inventory also dropped to a 42 year low which shows that the area of new construction housing is showing signs of rapid recovery. Granted that we have seen major declines in the amount of new construction spending since the start of the recession, the current trend indicates the lure of purchasing new construction is rebounding faster than the existing home market.
In other news, the stock market roller coaster ride continues. After the free fall earlier this week, the stock market regained some of the losses and closed out the week above the 10K mark.
GDP and Jobless claims showed gradual and steady improvement. Although neither number is earth shattering, none the less, they are both showing that the economy is improving at a very gradual pace.
Consumer confidence as well as consumer sentiment both are showing that the American public is feeling better about the economy as well. In addition, many Americans seem to feel that the job market will improve dramatically in about 6 months.
Economic news on tap for next week:
• Tuesday June 1st - Manufacturers Index
• Wednesday June 2nd - Pending Home Sales
• Thursday June 3rd - Jobless Claims
• Friday June 4th - Employment Situation
Have a good weekend,
JJ Mack
916-517-1800 x300
jj@granitefundinggrp.com
After hitting a low of 3.18% on May 25th, the 10 Year Treasury closed out the month of May at 3.31%. The rapid drop in the treasury yield was due mainly to concerns over the European debt crisis which fueled a flight to quality for investors.
Despite many concerns that remain over international debt, positive news in housing fueled some of the rebound of the 10 YR Treasury this week.
The one question that remains is that although mortgage rates are not tied directly to the movement of the 10YR treasury, many experts were surprised that the drop in mortgage rates did not mirror the drop in the 10YR more closely.
Existing home sales jumped 7.6% which exceeded analyst's expectations. As we all know, the tax credit stimulus plan is assumed to have played a major role in the larger than expected increase. Housing inventories also jumped dramatically by 11.5% to a supply of 8.4 months. The existence of the heavy supply of homes combined with the absence of any housing stimulus, point to the risk of price erosion in the months ahead.
In other housing news, the Case-Shiller House Value Index showed that overall home prices have remained flat for the month of March. It is expected that in April the prices should rise given the consumer's rush to lock in their home purchase prior to the expiration of the 2nd round of economic housing stimulus. Predictions for home prices beyond April are uncertain.
New Home Sales surged 14.5% beating analyst's expectations. In addition, new housing inventory also dropped to a 42 year low which shows that the area of new construction housing is showing signs of rapid recovery. Granted that we have seen major declines in the amount of new construction spending since the start of the recession, the current trend indicates the lure of purchasing new construction is rebounding faster than the existing home market.
In other news, the stock market roller coaster ride continues. After the free fall earlier this week, the stock market regained some of the losses and closed out the week above the 10K mark.
GDP and Jobless claims showed gradual and steady improvement. Although neither number is earth shattering, none the less, they are both showing that the economy is improving at a very gradual pace.
Consumer confidence as well as consumer sentiment both are showing that the American public is feeling better about the economy as well. In addition, many Americans seem to feel that the job market will improve dramatically in about 6 months.
Economic news on tap for next week:
• Tuesday June 1st - Manufacturers Index
• Wednesday June 2nd - Pending Home Sales
• Thursday June 3rd - Jobless Claims
• Friday June 4th - Employment Situation
Have a good weekend,
JJ Mack
916-517-1800 x300
jj@granitefundinggrp.com
Friday, May 21, 2010
Weekend Mortgage Markey Update - 05/21/2010
The stock market blood bath has been the mortgage industry reprieve. Mortgage rates have been declining rapidly due to the tremendous inflow of investors leaving the market and moving their money into the safe haven of government treasuries.
The concern over the European debt crisis has investors very skittish about remaining in the stock market. Since we are in a world that is so intertwined in business, there is not a single country that can stand on their own if another country or region faces economic challenges.
Only time will tell if the decline in rates will stimulate purchasers to take action. Additionally, in a normal market with a rate decline like this, refinances would increase substantially. However, millions of eligible borrowers have already taken advantage of the previous low rates so nobody is sure how big the pool of remaining homeowners is who can still qualify to refinance.
Housing starts came in higher than expected. Builders are cautiously moving ahead with construction and are showing a willingness to begin building more homes. Many builders still remain concerned about how the termination of the tax credit will impact housing purchases. Unfortunately, we will not really know the answer to this question for at least another 30 days.
One of the driving factors in the mortgage rate decline is that the Producer Price Index and the Consumer Price Index both indicate that inflation is well under control. Both indexes unexpectedly declined in the last month. The bulk of the decline was driven by the decrease in energy costs. (I don't know about you, but I have not seen the decline in energy prices reflected at the gas pump. However, don't worry, in the next quarter the oil companies will show record profits once again and then Congress will call them up to Capitol Hill and slap them on the wrist for not passing any savings on to the consumers. We have seen this before and we will see it again)
Jobless claims came in unexpectedly higher this past week. In addition, last week's numbers were revised up by 2000 which indicates that new claims of unemployment are still a concern. On the bright side of the unemployment front, continuing jobless claims have been declining slowly and gradually. The big question is: "Is the decline due to people getting jobs, or because people are falling off of the unemployment rolls because they are no longer eligible to receive benefits?
After a fairly quiet week of economic reports, next week stands to be the exact opposite. A number of important housing reports are coming out as well as the consumers view on how the economy is doing. Normally I would say that these reports could have a major impact on rates and the stock market however given how everything in the U.S. markets has been primarily been driven by the concerns over Europe, it is hard to guess as to what impact the U.S. reports will have on the markets.
Economic reports on tap for next week are:
• Monday May 24th - Existing Home Sales
• Tuesday May 25th - Case-Shiller Home Value Index & Consumer Confidence
• Wednesday May 26th - New Home Sales
• Thursday May 27th - GDP & Jobless Claims
• Friday May 28th - Consumer Sentiment
Your Mortgage Professional,
JJ Mack
916-517-1800 x300
The concern over the European debt crisis has investors very skittish about remaining in the stock market. Since we are in a world that is so intertwined in business, there is not a single country that can stand on their own if another country or region faces economic challenges.
Only time will tell if the decline in rates will stimulate purchasers to take action. Additionally, in a normal market with a rate decline like this, refinances would increase substantially. However, millions of eligible borrowers have already taken advantage of the previous low rates so nobody is sure how big the pool of remaining homeowners is who can still qualify to refinance.
Housing starts came in higher than expected. Builders are cautiously moving ahead with construction and are showing a willingness to begin building more homes. Many builders still remain concerned about how the termination of the tax credit will impact housing purchases. Unfortunately, we will not really know the answer to this question for at least another 30 days.
One of the driving factors in the mortgage rate decline is that the Producer Price Index and the Consumer Price Index both indicate that inflation is well under control. Both indexes unexpectedly declined in the last month. The bulk of the decline was driven by the decrease in energy costs. (I don't know about you, but I have not seen the decline in energy prices reflected at the gas pump. However, don't worry, in the next quarter the oil companies will show record profits once again and then Congress will call them up to Capitol Hill and slap them on the wrist for not passing any savings on to the consumers. We have seen this before and we will see it again)
Jobless claims came in unexpectedly higher this past week. In addition, last week's numbers were revised up by 2000 which indicates that new claims of unemployment are still a concern. On the bright side of the unemployment front, continuing jobless claims have been declining slowly and gradually. The big question is: "Is the decline due to people getting jobs, or because people are falling off of the unemployment rolls because they are no longer eligible to receive benefits?
After a fairly quiet week of economic reports, next week stands to be the exact opposite. A number of important housing reports are coming out as well as the consumers view on how the economy is doing. Normally I would say that these reports could have a major impact on rates and the stock market however given how everything in the U.S. markets has been primarily been driven by the concerns over Europe, it is hard to guess as to what impact the U.S. reports will have on the markets.
Economic reports on tap for next week are:
• Monday May 24th - Existing Home Sales
• Tuesday May 25th - Case-Shiller Home Value Index & Consumer Confidence
• Wednesday May 26th - New Home Sales
• Thursday May 27th - GDP & Jobless Claims
• Friday May 28th - Consumer Sentiment
Your Mortgage Professional,
JJ Mack
916-517-1800 x300
Friday, May 14, 2010
My Mortgage Weekend Update - 05/14/2010
Rates are Falling - YIPPEE!!! - For months experts speculated that when the government exited the mortgage backed securities re-purchase program in March, mortgage rates would rise from ½ to 1%. Well the experts were clueless. (To be honest with you, I thought rates were going to rise as well, shows what I know right?)
It appears that global uncertainty, especially in Europe, is keeping demand for U.S. Treasuries high. Until there is a clear picture on exactly how the European debt crisis will play out, it seems that the U.S. Treasuries is the place that investors want to keep their money. The stock market this week has been taking it on the chin badly in that many investors are fleeing the stock market for the safe haven of government treasuries.
Mortgage rates have dropped for four straight weeks and the average for a 30 year fixed rate loan is now 4.95%. The big question is now that the tax credit has ended, are the lower mortgage rates enough to keep demand for housing strong.
New actions on foreclosures seem to be hitting a plateau. Finally there may be some light at the end of the tunnel in which the number of foreclosure actions seems to no longer be increasing. However, the number of bank repossessions has hit a new high and the odds of that continuing for the coming months remains likely.
The amount of inventory of bank owned properties continues to grow rapidly. For better or worse, the banks are very slow to release these properties for sale in the market as to not create an oversupply of housing inventory which would result in driving down house values rapidly. It is expected that the banks will continue this slow drip of properties for sale to keep housing prices somewhat stable.
Despite problems in Europe, many other areas of the U.S. economy are showing steady signs of improvement. Retail Sales continue to increase month over month as well as the demand for high ticket luxury items is rebounding as well. (I guess somebody is spending money)
Industrial Production is increasing rapidly. Although most of the increase is for the purchase of manufacturing equipment, the increase in spending points to the fact that many manufacturers are gearing up for an expected increase in consumer spending later this year.
Jobless claims continue to show small signs of improvement. Once again this week there was a slight drop in new unemployment claims. Although it is good news to see claims falling, concern remains that the number of existing unemployed is increasing. This rising trend shows that companies are still very slow to hire new staff.
Economic reports on tap for next week are:
• Tuesday May 18th - Housing Starts
• Tuesday May 18th - Producer Price Index
• Wednesday May 19th - Consumer Price Index
• Thursday May 20th - Jobless Claims
Your Mortgage Professional for life,
JJ Mack
Granite Funding Group
916-517-1800 x300
It appears that global uncertainty, especially in Europe, is keeping demand for U.S. Treasuries high. Until there is a clear picture on exactly how the European debt crisis will play out, it seems that the U.S. Treasuries is the place that investors want to keep their money. The stock market this week has been taking it on the chin badly in that many investors are fleeing the stock market for the safe haven of government treasuries.
Mortgage rates have dropped for four straight weeks and the average for a 30 year fixed rate loan is now 4.95%. The big question is now that the tax credit has ended, are the lower mortgage rates enough to keep demand for housing strong.
New actions on foreclosures seem to be hitting a plateau. Finally there may be some light at the end of the tunnel in which the number of foreclosure actions seems to no longer be increasing. However, the number of bank repossessions has hit a new high and the odds of that continuing for the coming months remains likely.
The amount of inventory of bank owned properties continues to grow rapidly. For better or worse, the banks are very slow to release these properties for sale in the market as to not create an oversupply of housing inventory which would result in driving down house values rapidly. It is expected that the banks will continue this slow drip of properties for sale to keep housing prices somewhat stable.
Despite problems in Europe, many other areas of the U.S. economy are showing steady signs of improvement. Retail Sales continue to increase month over month as well as the demand for high ticket luxury items is rebounding as well. (I guess somebody is spending money)
Industrial Production is increasing rapidly. Although most of the increase is for the purchase of manufacturing equipment, the increase in spending points to the fact that many manufacturers are gearing up for an expected increase in consumer spending later this year.
Jobless claims continue to show small signs of improvement. Once again this week there was a slight drop in new unemployment claims. Although it is good news to see claims falling, concern remains that the number of existing unemployed is increasing. This rising trend shows that companies are still very slow to hire new staff.
Economic reports on tap for next week are:
• Tuesday May 18th - Housing Starts
• Tuesday May 18th - Producer Price Index
• Wednesday May 19th - Consumer Price Index
• Thursday May 20th - Jobless Claims
Your Mortgage Professional for life,
JJ Mack
Granite Funding Group
916-517-1800 x300
Friday, April 30, 2010
Mortgage Weekend Update - 04/30/2010
Ok let the housing speculation begin! As everyone knows, the homebuyer tax credit expires at midnight tonight. In some parts of the country we have seen buyers racing to get contracts signed prior to the expiration. However in other parts of the U.S. we have seen only modest increases in purchases. I personally have met a number of prospective home buyers that have stated that "they are not going to make a rush decision on purchasing just to get the tax credit". These sentiments seem to be a lot more popular than many media outlets have been reporting.
I was hopeful that I could once again be writing about positive news in the housing market for a second consecutive week. However, my plans have been somewhat derailed. The Case-Shiller Housing Value Index dropped by .9% showing that housing values are not rebounding at all.
Traditionally in the spring, house values tend to rise based upon increased demand. What we have been witnessing is that values are not rising due to the fact that a high percentage of homes being purchased are either foreclosures or distressed sales. The pattern of declining prices has many worried that foreclosures and distressed sales are likely to increase as homeowners continue to see their equity deteriorate resulting in what is now being called "strategic defaults".
The one bright spot on housing is that mortgage rates are continuing to remain low despite the government's withdrawal from the mortgage backed security re-purchase program that ended in March. Many experts were predicting rising interest rates starting in April and that fortunately has not materialized. Demand for government bonds remains strong which is part of the reason that rates are remaining low. Another catalyst to rates staying low is that in a 9-1 vote, the Federal Open Market Committee announced the intention to keep interest rates low for an extended period of time.
Thankfully other sectors of the economy are showing continued signs of promise and improvement. The stock market has been showing small increases as of late and has rebounded to rise back over the 11,000 mark. Additionally, initial jobless claims have been dropping slightly for the last two weeks as well.
A major area of concern in the stock market is that many investors are becoming increasingly concerned over the Goldman Sachs investigation. The government announced on Friday that the Goldman Sachs investigation may be turned into a criminal probe.
Promising reports on GDP, manufacturing and consumer sentiment all came in strong showing signs that many areas of the economy are improving. As said earlier, housing continues to remain a drag on the economy however we are fortunate to see that overall, the health of the economy is improving slowly.
Economic reports on tap for next week are:
• Monday May 3rd - Construction Spending
• Tuesday May 4th - Pending Home Sales
• Thursday May 6th - Jobless Claims
• Friday May 7th - Employment Situation
Your Mortgage Professional,
JJ Mack
916-517-1800 x300
I was hopeful that I could once again be writing about positive news in the housing market for a second consecutive week. However, my plans have been somewhat derailed. The Case-Shiller Housing Value Index dropped by .9% showing that housing values are not rebounding at all.
Traditionally in the spring, house values tend to rise based upon increased demand. What we have been witnessing is that values are not rising due to the fact that a high percentage of homes being purchased are either foreclosures or distressed sales. The pattern of declining prices has many worried that foreclosures and distressed sales are likely to increase as homeowners continue to see their equity deteriorate resulting in what is now being called "strategic defaults".
The one bright spot on housing is that mortgage rates are continuing to remain low despite the government's withdrawal from the mortgage backed security re-purchase program that ended in March. Many experts were predicting rising interest rates starting in April and that fortunately has not materialized. Demand for government bonds remains strong which is part of the reason that rates are remaining low. Another catalyst to rates staying low is that in a 9-1 vote, the Federal Open Market Committee announced the intention to keep interest rates low for an extended period of time.
Thankfully other sectors of the economy are showing continued signs of promise and improvement. The stock market has been showing small increases as of late and has rebounded to rise back over the 11,000 mark. Additionally, initial jobless claims have been dropping slightly for the last two weeks as well.
A major area of concern in the stock market is that many investors are becoming increasingly concerned over the Goldman Sachs investigation. The government announced on Friday that the Goldman Sachs investigation may be turned into a criminal probe.
Promising reports on GDP, manufacturing and consumer sentiment all came in strong showing signs that many areas of the economy are improving. As said earlier, housing continues to remain a drag on the economy however we are fortunate to see that overall, the health of the economy is improving slowly.
Economic reports on tap for next week are:
• Monday May 3rd - Construction Spending
• Tuesday May 4th - Pending Home Sales
• Thursday May 6th - Jobless Claims
• Friday May 7th - Employment Situation
Your Mortgage Professional,
JJ Mack
916-517-1800 x300
Monday, April 26, 2010
Weekend Update - 04/26/2010
Finally a week that I don't have to search for something good to say about housing or the economy as there was plenty of good news to go around. The housing market reported data that is the strongest we have seen in quite some time.
The report of a 6.8% increase in existing home sales shocked the market as the expectation was for a slight decline. After weeks of commentary that the homebuyer tax credit had lost its steam, it appears that the surprise increase in existing home sales was directly attributed to the soon to occur tax credit expiration on April 30th. After months of pondering whether they should purchase or not, it appears that buyers are making a mad dash to take advantage of the tax credit before it is gone forever. It is very clear that the government has no intention of extending the credit for a second time.
In more great housing news, new home sales reported an increase of 26.9% from the prior month. This report is the strongest we have seen since July of 2009. The hope is that this rising trend will continue however nobody will know exactly what role the tax credit is playing in these better than expected numbers until the reports for May are released..
The housing reports are certainly providing long overdue optimism for the real estate market. Time will tell whether the increases are a true reflection of an improving market, or simply an aberration based upon the tax credit expiration. Regardless of the reason, I am personally very excited about the real estate reports and I am optimistic about the future even though challenges to the market still remain.
Mortgage rates were very stable this week in the absence of any significant economic news. Despite the positive housing news on Thursday and Friday, mortgage rates did not react with any major movement. Concerns about the Greek debt crisis are weighing on the minds of many investors as evidenced by their recent purchase of U.S. treasuries which has been part of the reason that mortgage rates have remained low.
The stock market has continued its rally and no let up is in sight. In this past week we experienced 5 straight days of increases of the Dow Jones Industrial Average.
Next week will be a moderate week for news. Many of the reports are expected to show stability and not have any major impact on the markets.
• Tuesday April 27th - Case-Shiller Home Value Index
• Tuesday April 27th - Consumer Confidence
• Wednesday April 28th - FOMC Announcement
• Thursday April 29th - Jobless Claims
• Friday April 30th - Consumer Confidence
Your Mortgage Expert,
JJ Mack
916-517-1800 x300
The report of a 6.8% increase in existing home sales shocked the market as the expectation was for a slight decline. After weeks of commentary that the homebuyer tax credit had lost its steam, it appears that the surprise increase in existing home sales was directly attributed to the soon to occur tax credit expiration on April 30th. After months of pondering whether they should purchase or not, it appears that buyers are making a mad dash to take advantage of the tax credit before it is gone forever. It is very clear that the government has no intention of extending the credit for a second time.
In more great housing news, new home sales reported an increase of 26.9% from the prior month. This report is the strongest we have seen since July of 2009. The hope is that this rising trend will continue however nobody will know exactly what role the tax credit is playing in these better than expected numbers until the reports for May are released..
The housing reports are certainly providing long overdue optimism for the real estate market. Time will tell whether the increases are a true reflection of an improving market, or simply an aberration based upon the tax credit expiration. Regardless of the reason, I am personally very excited about the real estate reports and I am optimistic about the future even though challenges to the market still remain.
Mortgage rates were very stable this week in the absence of any significant economic news. Despite the positive housing news on Thursday and Friday, mortgage rates did not react with any major movement. Concerns about the Greek debt crisis are weighing on the minds of many investors as evidenced by their recent purchase of U.S. treasuries which has been part of the reason that mortgage rates have remained low.
The stock market has continued its rally and no let up is in sight. In this past week we experienced 5 straight days of increases of the Dow Jones Industrial Average.
Next week will be a moderate week for news. Many of the reports are expected to show stability and not have any major impact on the markets.
• Tuesday April 27th - Case-Shiller Home Value Index
• Tuesday April 27th - Consumer Confidence
• Wednesday April 28th - FOMC Announcement
• Thursday April 29th - Jobless Claims
• Friday April 30th - Consumer Confidence
Your Mortgage Expert,
JJ Mack
916-517-1800 x300
Friday, April 16, 2010
Weekend Update - 04/16/2010
This week the housing market received a mixed bag of both positive and negative reports (this is nothing new). On the positive side as we break down the reports below we can see that there are certainly signs of economic improvement. On the negative side evidence still remains that we are far from being out of the woods and reminders continue to appear of just how fragile the economy still is.
In a welcome surprise, housing starts jumped 1.6% from February as builders increased filings for new construction permits. This increase beat forecasts and was welcome considering the decline reported in the prior month.
Foreclosure reporting this week was mixed in that actual home repossessions by banks dropped for the first time in four years. On the flip side of the coin, unfortunately in the first quarter of 2010 foreclosure filings rose 7%. Additionally, foreclosure filings were reported 16% higher than for the same period in 2009.
At long last there is some positive news coming from the Obama administration's loan modification program. Month after month there are an increasing number of homeowners being moved from trial modifications into permanent ones. The process of obtaining a modification still remains challenging however the banks are certainly showing signs of being able move the process faster than ever before.
In other economic news, the mixed reports of recovery continue to come out.
• Retail sales increased by a more than expected 1.6% where as the consensus was that the increase would be 1.3%. Slowly consumers are opening their wallets and making purchases that go beyond bare necessities.
• Industrial production rose .1%. An increase of .8% was anticipated however any increase is still welcome.
• Fed Chairman Bernake announced that the economy continues to recover at a very slow pace and the government expects to keep interest rates low for some time and that no increase is forecast at the present time.
• The 10YR Treasury security has dropped back to 3.81% from a high of 4.00% and mortgage rates have also declined from their recent highs as well. Demand for treasuries remains strong as continued concern over Greece's debt crisis is keeping downward pressure on bond yields.
• Consumer prices increased 2.3% which was driven up primarily by rising energy costs. When you factor out the energy prices, the core CPI rose only.1% once again showing that inflation is not an issue at the present time.
Next week will be for the most part a quieter week however important housing data will be released on Thursday and Friday:
• Thursday April 22nd - Producer Price Index, Existing Home Sales and Jobless Claims
• Friday April 23rd - New Home Sales
Your Mortgage Professional,
JJ Mack
916-517-1800
916-390-2463
In a welcome surprise, housing starts jumped 1.6% from February as builders increased filings for new construction permits. This increase beat forecasts and was welcome considering the decline reported in the prior month.
Foreclosure reporting this week was mixed in that actual home repossessions by banks dropped for the first time in four years. On the flip side of the coin, unfortunately in the first quarter of 2010 foreclosure filings rose 7%. Additionally, foreclosure filings were reported 16% higher than for the same period in 2009.
At long last there is some positive news coming from the Obama administration's loan modification program. Month after month there are an increasing number of homeowners being moved from trial modifications into permanent ones. The process of obtaining a modification still remains challenging however the banks are certainly showing signs of being able move the process faster than ever before.
In other economic news, the mixed reports of recovery continue to come out.
• Retail sales increased by a more than expected 1.6% where as the consensus was that the increase would be 1.3%. Slowly consumers are opening their wallets and making purchases that go beyond bare necessities.
• Industrial production rose .1%. An increase of .8% was anticipated however any increase is still welcome.
• Fed Chairman Bernake announced that the economy continues to recover at a very slow pace and the government expects to keep interest rates low for some time and that no increase is forecast at the present time.
• The 10YR Treasury security has dropped back to 3.81% from a high of 4.00% and mortgage rates have also declined from their recent highs as well. Demand for treasuries remains strong as continued concern over Greece's debt crisis is keeping downward pressure on bond yields.
• Consumer prices increased 2.3% which was driven up primarily by rising energy costs. When you factor out the energy prices, the core CPI rose only.1% once again showing that inflation is not an issue at the present time.
Next week will be for the most part a quieter week however important housing data will be released on Thursday and Friday:
• Thursday April 22nd - Producer Price Index, Existing Home Sales and Jobless Claims
• Friday April 23rd - New Home Sales
Your Mortgage Professional,
JJ Mack
916-517-1800
916-390-2463
Friday, April 9, 2010
Mortgage Update - 04/09/2010
In a week absent of much major economic news, we certainly have had more than enough reporting on the return of Tiger Woods to entertain us. I'm sorry but can someone please explain to me how what Tiger does every second of his life impacts my ability to earn a living? (Sorry I just had to vent for a moment) - Now let's move on to less important things like the markets, interest rates and the state of the economy.
Before I go any further, let me apologize in advance for any sarcasm you may see in this weeks report. I am coming to the realization that there are no experts in the prediction of the economy and my report below will prove that.
Pending Home Sales reported in the month of February increased 8.2%. Experts were expecting a decline of 1%. (Between me and you, I am wondering what information the experts use to make their predictions. I think almost anyone in the real estate or mortgage business could have told them that there was an increase in contract signings in February from January, but somehow the experts were predicting a decline.)
"Hey housing experts, try asking those of us in the business and you will be far more accurate in your predictions."
The rapid increase of mortgage rates running from last week into this week has subsided for the moment. Last week's better than expected economic reports were the driving force behind the increases. This week's economic reports have once again renewed concerns over the pace of the recovery and the global economy. The major reports contributing to the reversal in optimism are:
• Concerns over the stability of the Greek economy have the dollar rising in value and pushing investors toward the purchase of U.S. securities driving down bond yields..
• Jobless claims unexpectedly rose this week renewing concerns about employment.
• The 10YR treasury auction had much greater demand than expected driving bond yields lower.
In regard to the treasury auction, the concern has been that once the Fed stopped their bond re-purchase program, investors would demand higher yields driving up interest rates. Although it started out like that last week, the focus now seems to have turned back to the fact that the economy is still not very strong and the safety of U.S. treasuries is where institutional investors want to invest their money.
Ben Bernake also released a statement on the economy which was interpreted as the government still predicting economic growth and recovery to remain slow for quite some time. Additionally, housing continues to remain a big concern and a drag on the recovery as well.
Next week may be a very volatile week in the markets in that unlike this week which was quiet, next week a number of significant reports are being released. (Buckle up it could get rough)
• Wednesday April 14th - Consumer Price Index and Retail Sales Reports
• Thursday April 15th - Weekly Jobless Claims, Industrial Production and the Housing Market Index
• Friday April 16th - Housing Starts and Consumer Sentiment
Your Mortgage Consultant
JJ Mack
916-517-1800 x300
Before I go any further, let me apologize in advance for any sarcasm you may see in this weeks report. I am coming to the realization that there are no experts in the prediction of the economy and my report below will prove that.
Pending Home Sales reported in the month of February increased 8.2%. Experts were expecting a decline of 1%. (Between me and you, I am wondering what information the experts use to make their predictions. I think almost anyone in the real estate or mortgage business could have told them that there was an increase in contract signings in February from January, but somehow the experts were predicting a decline.)
"Hey housing experts, try asking those of us in the business and you will be far more accurate in your predictions."
The rapid increase of mortgage rates running from last week into this week has subsided for the moment. Last week's better than expected economic reports were the driving force behind the increases. This week's economic reports have once again renewed concerns over the pace of the recovery and the global economy. The major reports contributing to the reversal in optimism are:
• Concerns over the stability of the Greek economy have the dollar rising in value and pushing investors toward the purchase of U.S. securities driving down bond yields..
• Jobless claims unexpectedly rose this week renewing concerns about employment.
• The 10YR treasury auction had much greater demand than expected driving bond yields lower.
In regard to the treasury auction, the concern has been that once the Fed stopped their bond re-purchase program, investors would demand higher yields driving up interest rates. Although it started out like that last week, the focus now seems to have turned back to the fact that the economy is still not very strong and the safety of U.S. treasuries is where institutional investors want to invest their money.
Ben Bernake also released a statement on the economy which was interpreted as the government still predicting economic growth and recovery to remain slow for quite some time. Additionally, housing continues to remain a big concern and a drag on the recovery as well.
Next week may be a very volatile week in the markets in that unlike this week which was quiet, next week a number of significant reports are being released. (Buckle up it could get rough)
• Wednesday April 14th - Consumer Price Index and Retail Sales Reports
• Thursday April 15th - Weekly Jobless Claims, Industrial Production and the Housing Market Index
• Friday April 16th - Housing Starts and Consumer Sentiment
Your Mortgage Consultant
JJ Mack
916-517-1800 x300
Sunday, April 4, 2010
Weekend Update - 04/04/2010
This week's economic data has shown a rising trend in the stock market, manufacturing and consumer confidence. As we have all witnessed, the stock market is hitting a new 18 month high and does not seem to be relenting on continuing to climb. The manufacturing index and consumer confidence have been showing small signs of steady improvement as well.
The questionable side of this week's economic report seems to be mostly real estate related. Depending on how you want to interpret the The Case-Shiller Housing Value Index report you can draw a conclusion that the news is either positive, or negative.
I consider myself reasonably astute in understanding the markets and economic reports, however I am at a loss with this latest report. For this reason I pasted the commentary from Bloomberg.com below so you can draw your own conclusion regarding house values.
From Bloomberg.com
Case-Shiller points to continued gains for home prices in January, gains that may be accelerating given more recent data on new and existing homes. Case-Shiller's adjusted reading for its composite 10 index shows a solid 0.4 percent gain in the month, the second straight 0.4 percent gain. The 20 index shows a second straight 0.3 percent gain. Note that home prices swing lower in the light demand months of the winter, a factor to keep in mind when looking at the unadjusted rates. Unadjusted data, which the news wires run prominently, show a third straight 0.2 percent monthly decline for the 10 index and a very deep 0.4 percent decline for the 20 index.
So, what do you think? Is it Positive or Negative? (I couldn't figure it out myself however when I drink a beer, or a few of them this weekend, I will revisit the report. Although by then it won't matter because it will be considered old news.)
Regardless of your interpretation of the above Bloomberg.com report, more and more concern is being expressed over the future of housing values. With the combination of the tax credit expiration only 30 days away, along with the end of the government's bond re-purchase program, housing is expected to be impacted. The end of the tax credit is expected to drive down already hurting housing demand. Additionally, if mortgage rates rise as is predicted, then that will be a double whammy impacting the housing market.
As much as the odds on housing being negatively affected in the coming months due to the above circumstances, the reality is that it will be more perception than financial. The reason is that lower house prices with higher interest rates have little impact on housing affordability as long as the changes are not extreme. Although a housing decline will not be favorable news to any existing homeowners, the news of lower housing prices will most likely bring more buyers into the market even if interest rates rise half to one percent.
Economic data to be released next week:
• Monday April 5th - Pending Home Sales
• Wednesday April 7th - 10 YR Note Auction
• Thursday April 8th - Weekly Jobless Claims
Your Mortgage Consultant,
JJ Mack
916-517-1800
916-390-2463
The questionable side of this week's economic report seems to be mostly real estate related. Depending on how you want to interpret the The Case-Shiller Housing Value Index report you can draw a conclusion that the news is either positive, or negative.
I consider myself reasonably astute in understanding the markets and economic reports, however I am at a loss with this latest report. For this reason I pasted the commentary from Bloomberg.com below so you can draw your own conclusion regarding house values.
From Bloomberg.com
Case-Shiller points to continued gains for home prices in January, gains that may be accelerating given more recent data on new and existing homes. Case-Shiller's adjusted reading for its composite 10 index shows a solid 0.4 percent gain in the month, the second straight 0.4 percent gain. The 20 index shows a second straight 0.3 percent gain. Note that home prices swing lower in the light demand months of the winter, a factor to keep in mind when looking at the unadjusted rates. Unadjusted data, which the news wires run prominently, show a third straight 0.2 percent monthly decline for the 10 index and a very deep 0.4 percent decline for the 20 index.
So, what do you think? Is it Positive or Negative? (I couldn't figure it out myself however when I drink a beer, or a few of them this weekend, I will revisit the report. Although by then it won't matter because it will be considered old news.)
Regardless of your interpretation of the above Bloomberg.com report, more and more concern is being expressed over the future of housing values. With the combination of the tax credit expiration only 30 days away, along with the end of the government's bond re-purchase program, housing is expected to be impacted. The end of the tax credit is expected to drive down already hurting housing demand. Additionally, if mortgage rates rise as is predicted, then that will be a double whammy impacting the housing market.
As much as the odds on housing being negatively affected in the coming months due to the above circumstances, the reality is that it will be more perception than financial. The reason is that lower house prices with higher interest rates have little impact on housing affordability as long as the changes are not extreme. Although a housing decline will not be favorable news to any existing homeowners, the news of lower housing prices will most likely bring more buyers into the market even if interest rates rise half to one percent.
Economic data to be released next week:
• Monday April 5th - Pending Home Sales
• Wednesday April 7th - 10 YR Note Auction
• Thursday April 8th - Weekly Jobless Claims
Your Mortgage Consultant,
JJ Mack
916-517-1800
916-390-2463
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