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
Friday, September 17, 2010
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
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