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
Friday, October 22, 2010
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
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