Market Update 09/12-09/16

Here is this week's market update.  Rates are still VERY low, so it could be a great time to consider a refinance.  Some hot points first:

• Many lenders are capping the adjustments that can be made on any given rate.  That means the spread between owner occupied and investment properties is MUCH smaller.  This gives a great opportunity to fix a low rate for your rental
• Low or no equity in your home?  Might not be a problem!  We can still potentially lend up to 125% of your home's value if your loan is backed by Fannie Mae or Freddie Mac
• I can still close quickly, so if you or someone you know is buying a home and the lender hasn't offered a free float down in the past 2 weeks, give me a call!

Without further ado:

Market Comment
Mortgage bond prices were near unchanged last week, which kept mortgage interest rates relatively steady overall. Rates started off on a bad note the first portion of the week as equities rallied on news of a White House proposal to spend $300 to $400 billion for job creation. Fortunately the weekly jobless claims data Thursday came in higher than expected which reversed the earlier rate spikes. Stocks struggled Friday with some 100 points swings. Despite the volatility, mortgage bonds ended the week near unchanged.
The Treasury auctions this week will be watched carefully. If foreign demand falters rates could come under pressure. The inflation data Wednesday and Thursday may result in mortgage interest rate volatility.
LOOKING AHEAD

Economic Indicator	Release Date & Time	Consensus Estimate	Analysis
2-year Treasury Note Auction	Monday, Sept. 12, 1:15 pm, et	None	Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
10-year Treasury Note Auction	Tuesday, Sept. 13, 1:15 pm, et	None	Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Producer Price Index	Wednesday, Sept. 14, 8:30 am, et	Up 0.4%, Core up 0.2%	Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates.
Retail Sales	Wednesday, Sept. 14, 8:30 am, et	Up 0.3%	Important. A measure of consumer demand. Weakness may lead to lower mortgage rates.
30-year Treasury Bond Auction	Wednesday, Sept. 14, 1:15 pm, et	None	Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims	Thursday, Sept. 15, 8:30 am, et	410k	Important. An indication of employment. Higher claims may result in lower rates.
Consumer Price Index	Thursday, Sept. 15, 8:30 am, et	Up 0.5%, Core up 0.2%	Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates.
Industrial Production	Thursday, Sept. 15, 9:15 am, et	Up 0.5%	Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates.
Capacity Utilization	Thursday, Sept. 15, 9:15 am, et	77.5%	Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates.
Philadelphia Fed Survey	Thursday, Sept. 15, 10:00 am, et	4.0	Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment	Friday, Sept. 16, 10:00 am, et	52	Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

Data

The abundance of fundamental data this week provides a good opportunity for mortgages to improve.  If the data shows weakness in the economy with little or no inflationary pressures then it is possible for mortgage bonds to rally.  However, if the data shows that the economy is rebounding any significant signs of inflation, mortgage bonds may fall pushing mortgage interest rates higher.


Feel free to call me with any questions!

Market Update for 9/6-9/9

Sorry it has been so long since I posted one of these, will try to do a better job of it in the future...

Market Comment
Mortgage bond prices rose last week, which pushed mortgage interest rates lower. Rates started off on a bad note the first portion of the week as equities rallied on hopes of additional Fed stimulus spending and stronger than expected data. Factory orders rose 2.4%, considerably higher than the expected 1.9% increase. Stocks took a roller coaster ride surging and falling hundreds of points throughout the week. The payrolls component of the employment report Friday disappointed estimates and helped rates improve significantly on the week. Despite the extreme volatility, mortgage bonds ended the week better by about 1/2 of a discount point.
The bond market is closed Monday for Labor Day. Trading may be volatile Tuesday following the extended holiday weekend. Equities will continue to factor into trading with the light data this week.
LOOKING AHEAD

Economic Indicator	Release Date & Time	Consensus Estimate	Analysis
Labor Day	Monday, Sept. 5		Important. May result in market volatility Tuesday following the extended holiday weekend.
Fed "Beige Book"	Wednesday, Sept. 7,  2:00 pm, et	None	Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates.
Weekly Jobless Claims	Thursday, Sept. 8, 8:30 am, et	405k	Important. An indication of employment. Higher claims may result in lower rates.
Trade Data	Thursday, Sept. 8, 8:30 am, et	$53b	Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
Consumer Credit	Thursday, Sept. 8, 3:00 pm, et	$15.5b	Low importance. A significantly larger than expected increase may lead to lower mortgage interest rates.

Mortgage Professionals

Obtaining a mortgage is often a confusing task that can also lead to frustration. The reason for the confusion is due to the fact that mortgage financing is complex. The good news is that this complexity provides consumers with options and choices best suited to fit their needs.

Everyone’s financial position is unique. Some people have large cash reserves that can be used for down payments while others want to get into a home with little or no money down. Credit ratings vary from person to person. In addition, future plans vary. Some people plan on staying in their home for the rest of their lives while others only plan on staying for a few years.

These facts alone make comparing your mortgage to your neighbor’s based on rate alone a flawed endeavor, yet many people attempt to do so. Admittedly, everyone wants a good deal. Keep in mind that comparing rates is just one component of the entire mortgage. Other variables include the term, down payment requirements, income qualifications, credit ratings, reserve requirements, current debt, prepaid points, and many more.

A mortgage professional is able to take all of these variables that are unique to each individual and help a person obtain the mortgage loan that works best for their situation. The service they provide is time consuming and complex. However, the rewards of dealing with a professional carry forward throughout a borrower’s life. Making wise financial decisions today helps to pave the way for a safe and secure future.

Mortgage interest rates currently remain historically favorable. There is much uncertainty about the future of the economy. If the economy recovers and inflation emerges mortgage interest rates may head higher. Taking advantage of mortgage interest rates at these levels is a sure thing. A cautious approach to lock decisions is necessary to protect against the possibility of a future increase in mortgage interest rates.