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!

HUD (thankfully) Changes Position on Reverse Mortgage Widows/ers

The Department of Housing and Urban Development Office recently changed its position on how it handles widows or widowers in the event their spouse passes and they were not previously listed as mortgagees on the original loan.  I did not do a lot of these, but this is still great news for those that recently lost a loved one and were facing losing their property on account of HUD's short-sightedness.  Read more here (via NYT)

Weekend Market Update 01/14

Here is some market info that you could share with your potential buyers going into the weekend.  I am going to try to do this every week, either by print or a video blog of some sort, but am still trying to work out some ideas.  Let me know what you think and if there is any info you would like me to add to the below.
Current Rates:

Based on a $300,000 SFR purchase with 20% down ($240K loan amount), 740+ credit scores and fully documentable income and assets, and charging 0 points, rates going into this weekend are as follows:

30 yr fixed:          4.75% (APR of 4.816)

15 yr fixed:          4.25% (APR of 4.364)

5/1 ARM:             3.75% (APR of 3.322)

Market Summary

The bond Market is closed on Monday due to Martin Luther King Day, and in prepping to head into a 3 day weekend it looks like the market got absolutely HAMMERED this afternoon.  For the week, we lost 12 bps, meaning a rate that cost 1 point on Monday would cost 1.12 points on Friday.

The advisors are recommending we take a “locked” stance with all our borrowers, so if you have some clients in negotiations hopefully the sellers can pull it together quickly and we can get them locked in on Tuesday.

Products Available!

On Monday I brought up our Jumbo products with only 10% down, and today I wanted to start a series about our low down payment options for First Time Homebuyers.

The most common product we have been using of late for those with a minimal downpayment is the plain old FHA 30 yr fixed.  Here are some important bullet points to keep in mind if you have a client that is thinking about FHA:

-          Required down payment is 3.5% of the sales price, which can be gifted from a family member

-          Seller can pay up to 6% towards closing costs (HUD announced last year they wanted to drop it to 3%, but haven’t moved on that yet)

-          Minimum Credit score for most cases is 640.  Some lenders will go lower than that with a possible increased down payment / rate and much longer turn time

-          Mortgage Express has its own FHA underwriter in-house that can answer any questions you might have!

As always, I am available all weekend so please feel free to call me with any questions!