In This Issue...

Last Week in Review: Good economic news, signs of inflation, and news from Greece all had an impact on Bonds and home loan rates.

Forecast for the Week: A holiday-shortened week is ahead, and the economic calendar will be light.

View: Drive a car for work? Be sure you’re using the latest mileage rates.  

Last Week In Review...

A tale of three stories. That's a great way to describe last week's news, as a string of positive economic reports, news out of Greece, and hints that inflation is heating up all worked together to impact Bonds and home loan rates. Here are the details!

A breakfast buffet of better than expected economic data hit the wires last week. In the housing arena, Housing Starts came in better than expected, while both the New York Empire State Index and the Philadelphia Fed Index reported positive manufacturing news. There was also decent labor market news, as Weekly Initial Jobless Claims fell by 13,000 in the latest week to 348,000 - the lowest level since March 2008! Meanwhile, Retail Sales rose in January by 0.4%, the largest gain since October.

 

Remember, strong economic news often cause money to flow out of Bonds and into Stocks, as investors hope to take advantage of gains. That's partly what caused Bonds (including Mortgage Bonds, to which home loan rates are tied) to worsen late last week.

Also weighing on Bonds and home loan rates was the news that inflation is heating up. Despite the Fed's claim that inflation is moderating, the Core Consumer Price Index (CPI), which strips out volatile food and energy, rose to its highest levels since October 2008. Meanwhile, as you can see in the chart, the wholesale measuring Core Producer Price Index (PPI) rose double the expectations of 0.2%, coming in at 0.4%. Any hints of inflation can serve to spook Bond investors - causing both Bonds and home loan rates to worsen - as inflation can reduce the value of fixed investments like Bonds. This is one story to keep a close eye on in the weeks ahead.

The drama in Greece is another key story to monitor, as it also impacted Bonds and home loan rates last week. Greece sent the markets into the weekend with assuring messages that a deal for them to avoid default is close, and this sense of optimism weighed on Bonds and home loan rates. Our Bonds and home loan rates have benefitted from all the uncertainty in Greece, as investors have seen our Bond Market as a safe haven for their money. Time will tell whether this uncertainty and safe haven trading will continue.

The bottom line is that now is a great time to purchase or refinance, as home loan rates remain near historic lows. Let me know if I can answer any questions at all for you or your clients.

In This Issue...

Last Week in Review: The Jobs Report for January is in - and the news was good!

Forecast for the Week: Stocks and Bonds will be battling over investing dollars as only two economic reports are scheduled.

View: President Obama has proposed a new plan to help homeowners refinance. Check out the details below.  

Last Week In Review...

It's been said that no news is good news. But last week, the Jobs Report brought some good news for the labor market. Read on for the details...and what they mean for home loan rates.

The headline Jobs Report showed 243,000 jobs created, which was much better than expected. Meanwhile, a whopping 257,000 private jobs were created, also much higher than expected. Upward revisions to November and December added another 60,000 jobs to what was previously reported for those months. And adding to the euphoria was a 0.2% decline in the Unemployment Rate, bringing it to 8.3%...the lowest since February 2009.

 

Despite all this good news, the report did show a pretty sharp decline in the labor participation rate from 64% to 63.7%. We really need to have more people "participating," or working to help pay down our debt. Understandably, the demographics of baby boomers retiring does account for some of the decline. But is it the entire 0.3%? And the U-6 Unemployment Rate (which counts all persons marginally attached to the labor force, including those who are employed part-time but would prefer full-time) remains at a lofty 15.1%, with that figure dropping just 0.1% for the month.

And there was other good news to note last week as well: The Commerce Department reported that Personal Incomes rose in December by 0.5%, above expectations and well above the 0.1% reported in November. This marked the largest increase in nine months!

So what does all of this mean for the housing market and home loan rates?

While Bonds and home loan rates did worsen on the good Jobs Report news (remember good economic news often causes money to flow out of Bonds and into Stocks, as investor try to take advantage of gains), home loan rates remain near historic best levels. In addition, the problems in Europe remain…and as uncertainty reemerges, US Bonds (including Mortgage Bonds, to which home loan rates are tied) will benefit.

The takeaway from all of last week's news is that the pace of improvement in the labor market is choppy and muddled at best. But the trend is improving over time, and this is welcome news for the struggling housing market because as people feel more secure in their jobs, they are more willing to consider making major purchases like a home.

The bottom line is that now is a great time to purchase or refinance. Let me know if I can answer any questions at all for you or your clients.

In This Issue...

Last Week in Review: The Fed met and a “Gross” Domestic Product was reported.

Forecast for the Week: A busy week is ahead, with important news on inflation, manufacturing, and the job market.

View: Ever wondered what the world was really like when you were born? There’s a fun way to find out.  

Last Week In Review...

If at first you don't succeed, try, try again. Last week, that popular idiom could have applied to the Gross Domestic Product (GDP) Report. Read on to learn why...and how all the week's news impacted Bonds and home loan rates.

The Advanced GDP reading - or first of three readings - for the 4th Quarter of 2011 came in at 2.8%, a bit below expectations of 3.2%. This number will be revised two more times, but if the final GDP remains at 2.8%...then the overall GDP for 2011 would be a scanty 1.57%. That is certainly a "Gross" Domestic Product, when you consider that the government has underwritten more than half of that economic growth with the Payroll Tax benefit.

 

Also in the news last week, the Fed's Policy Statement after its regularly scheduled Federal Open Market Committee meeting was pretty much the same story as recent Statements, including stable long-term inflation expectations, a tepid economic recovery, and fragile job market. But there was one big exception to their norm. The Policy Statement said there will be "exceptionally low levels for the Federal Funds Rate at least through late 2014." This is a huge change from the previous statements of "low rates until mid-2013."

On the surface, extending the zero interest policy until 2015 tells us the Fed thinks the economy will just be slogging along, and accommodative monetary policy will be required to keep the economy growing at least at a modest pace. One could argue that recent economic data is better of late and that all this loose monetary policy is unnecessary. But the Fed has spoken, and as the old adage goes: "Don't fight the Fed."

In news out of Europe, yields in European Bonds have come down…and by quite a bit. This sparked some optimism that Europe's Long-term Refinance Operation (LTRO) has helped alleviate some pressure in the peripheral countries in the Eurozone, like Spain and Italy. So what's the takeaway? In honor of the upcoming Super Bowl, here's a football analogy: think of the LTRO as a super punt or "kick of the can" down the road. Europe needs to play a serious offensive line by creating a tighter fiscal union, implementing austerity measures, and developing growth strategies to help pay down the enormous debt.

The bottom line is that Bonds and home loan rates remain at historic best levels, which means now is still a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.

In This Issue...

Last Week in Review: Rumors were swirling out of Europe, while inflation news was swirling here at home.

Forecast for the Week: The second half of the week heats up with news on the housing market and the state of the economy. Plus, the Fed meets.

View: A fee increase is coming that will impact home loan rates. Be sure to read the details below. 

Last Week In Review...

It's almost all Greek to me. Last week, more news from Greece hit the wires, as did several pieces of inflation news here at home. Read on to learn what happened, and what the impact was on home loan rates.

First, it's important to remember that back in October, a deal called for Bondholders to "accept" a 50% haircut on the face value of the Greek debt. Last week, rumors about this amount were swirling, saying that Greece is close to a deal that would entail a 68% haircut on the face value of their debt. And if that's not concern enough, a larger issue remains.

 

After the proposed austerity measures, wage cuts, and tax increases are instituted, will Greece - not to mention Italy, Portugal, and other struggling economies - be able to "grow" their way out of debt? Given that the World Bank lowered its 2012 global growth forecast to 2.5% from last summer's estimate of 3.6%, the odds sure seem tough. This is an important story to watch as the year unfolds.

Here at home, inflation was in the news twice last week...and the results were mixed. On Wednesday, the wholesale inflation measuring Core Producer Price Index (PPI) came in hot, elevating the year-over-year Core PPI rate to a lofty 3%...the highest since April 2009. Meanwhile, Thursday's Core Consumer Price Index (CPI) was inline with expectations and tame overall, though it is worth noting that the 2.2% Core CPI year-over-year reading is near the upper end of the Fed's tolerance level.

Remember, inflation is the archenemy of Bonds and home loan rates, like Kryptonite to Superman. That's because inflation erodes the value of the fixed return provided by a Bond, which causes home loan rates to rise. It will be interesting to see what - if anything - the Fed says about inflation after it's regularly scheduled meeting of the Federal Open Market Committee this week...as any talk or sign of inflation can move the markets and impact rates.

Even with all the news last week, it's still a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.

In This Issue...

Last Week in Review: Consumers are feeling good, but how good was last week's news?

Forecast for the Week: It's a holiday shortened week, but the economic calendar is full. News on manufacturing, inflation, and housing is ahead.

View: Wondering what the housing trends for 2012 will be? Check out 11 trends we saw in 2011. 

Last Week In Review...

"Happy days are here again." Milton Ager and Jack Yellen. And while it seems that consumers are certainly feeling happier, not everything that happened last week was cause for song.

There was good news last Friday, as the first look at Consumer Sentiment for January came in at 74.0, which is the highest level since May 2011. However, there was also news last week that the holiday shopping season may not have been as robust as previously thought.

Retail Sales in December rose by a meager 0.1% from 0.4% in November, and when stripping out autos, sales actually fell 0.2%. Why did this happen? It seems that steep holiday discounting held down the value of goods sold, so sales were big, but only because of the heavy discounting.

The news out of Europe last week also wasn't too happy. German Chancellor Angela Merkel and International Monetary Fund Managing Director Christine Lagarde met to discuss and finalize the debt restructuring deal for Greece. Back in October, a deal called for Bondholders to "accept" a 50% haircut on the face value of the Greek debt - but as creditors and authorities have started to forge a final deal, the actual haircut back to investors is looking quite likely to be larger than 50%. This is simply because worsening financial conditions in the Greek economy make paying the debt back with "just" a 50% haircut highly unlikely...maybe impossible. What's more, the next reasonable question to consider is will Ireland, Portugal and even Italy ask for a similar haircut or deal on what may be unsustainable debt in their countries?

The happy news is that these problems are finally being addressed to make things better in the future. And in the short term, the uncertainty should keep money flowing into the relative safe haven of the US Dollar and US Bonds - including Mortgage Bonds, to which home loan rates are tied. In addition, Mortgage Bonds continue to be supported by the Fed's purchases, which are also helping to keep home loan rates at record low levels.

All of this means that now continues to remain a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.

In This Issue...

Despite what the Mayan calendar may say, the world probably won't come to an end in 2012. But like 2011, this coming year may bring some significant challenges here in the US...and around the world. Here are just a few important topics to keep an eye on in the new year:

• Working for a Living – The labor market made modest improvements in 2011…but what should you expect in 2012? Here’s the answer!
• Home Sweet Home – The housing market is still uncertain, but here’s something to celebrate!
• What to Watch – Inflation is extremely influential. Read the article below to discover what to watch in 2012.
• Q&A: The Bottom Line? – What’s the bottom line for 2012? The answer may surprise you!

Best wishes to you and yours in the coming year. If you have any questions or would like to discuss your unique situation, call or email today. And please forward this newsletter to friends, family members and coworkers who may find the information helpful.

In This Issue...

Last Week in Review: Several reports brought good news to the Markets, plus there was news on inflation.

Forecast for the Week: The Bond Markets may be closing early Friday, but there will be plenty of reports on the housing market, inflation, and the state of the economy

View: Want to give a gift that keeps on giving? Check out this great idea below.

Last Week In Review...

"Whistle while you work." Snow White. That's something more people have been able to do lately, as Initial Jobless Claims have now fallen below 400,000 - a level that historically is associated with an improving job market - for five out of the last six weeks. And that wasn't the only bit of good news the markets saw last week. Read on for details.

Not only was last week's Initial Jobless Claims reading of 366,000 the lowest level since May of 2008, there was a double dose of good news in the manufacturing sector, as both the Philadelphia Fed Index and the Empire State Index were both well above expectations. Normally, good economic news causes money to move out of Bonds and into Stocks as investors like to take advantage of gains...and this would typically hurt home loan rates, as they are tied to Mortgage Bonds.

However, the continued uncertainty out of Europe helped keep Bonds and home loan rates on an improving trend, as the US Dollar and US Bonds (including Mortgage Bonds, which home loan rates are based on) are benefiting from safe haven buying. Ultimately, Europe needs to provide a large financial backstop for their banks and sovereign debt in order to fix their problems longer-term. Until this happens, uncertainty should benefit the US Dollar and US Bonds, and keep home loan rates relatively low.

One factor that we can't ignore, though, is inflation. Despite the Fed stating again last week that inflation is moderating, core consumer level inflation has continued to inch higher every month. Also, last week's Producer Price Index showed that inflation at the wholesale level was slightly higher in November. Remember, inflation is the arch enemy of Bonds and home loan rates, because if inflation rises, investors in Bonds demand a higher yield to offset the lost buying power inflation imposes on a fixed payment. And as home loan rates are tied to Mortgage Bonds, this would mean home loan rates move higher.

The bottom line is that while the uncertainty out of Europe should continue to help Bonds and home loan rates, both inflation and continued good economic reports here in the US could temper these improvements. With home loan rates still near historic lows, now remains a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.

Wishing You the Best!

I hope you enjoyed a wonderful Thanksgiving weekend with friends and family. I know that I certainly have much to be thankful for, including many wonderful clients and friends like you.

In addition, I sincerely hope you've been enjoying your complimentary subscription to the Mortgage Market Guide Weekly. Your next full issue will arrive "hot off the press" next week. In the meantime, please enjoy the holiday article below.

The Mortgage Market Guide Weekly is the industry's leading publication of this type, and I'm pleased to provide this valuable resource to you. If you feel that any of your clients, friends, family members or associates would benefit from keeping up-to-date on market and economic trends with this easy-to-read format, please let me know, and I will be happy to add them free of charge.

Best wishes to you.

In This Issue...

“Not what they seem?” - Things aren't always what they seem. Sometimes they're a pleasant surprise, and other times they have unintended consequences that we didn't consider. The articles below focus on just some of those situations, from good economic news…to foods that are misunderstood:

• Good News Travels Fast – But it also moves money in a way that impacts home loan rates…find out how!
• Foods That Fool You – The truth about these foods may surprise you.
• Q&A: Inflation? – Find out what's really going on with inflation and what it means.

If you have any questions or would like to discuss your unique situation, call or email today. And please forward this newsletter to friends, family members and coworkers who may find the information helpful.

In This Issue...

Last Week in Review: The Fed made headlines, plus inflation is heating up!

Forecast for the Week: Some key reports on housing, plus the Fed’s favorite gauge of inflation and news from Europe could move the markets.

View: Ever feel like you ramble when you leave voicemails? Check out these tips for surefire ways to leave effective messages.

Last Week In Review...

When the Fed talks, people listen. And last week, the Fed made headlines when Fed Governor Daniel Tarullo called for the Fed to engage in another round of Mortgage Bond purchases…or in other words, another round of Quantitative Easing (QE3). Read on to find out what this could mean for the housing market and home loan rates.

In order to really have an impact on housing, the Fed would have to announce something significant to get people to buy a home. Why? Because even now, with rates at historically low levels and incredible affordability levels, the sales pace in housing is tepid, due to structural problems in the labor market, which the Fed can't fix. 

In fact, there is a lot to consider before the Fed starts expanding their balance sheet, and the biggest concern is rising inflation. Contrary to what the Fed has said about it moderating, year-over-year inflation is on the rise. The headline Producer Price Index (PPI) rose by a whopping 0.8% in the month of September, elevating year-over-year wholesale prices by a hot 6.9%. Meanwhile, the Consumer Price Index (CPI) for September rose by 0.3%, and while this was inline with estimates it pushed the year-over-year number to 3.9%. This is significant because the year-over-year figure was just 1.6% in January.

Remember, inflation is the arch enemy of Bonds and home loan rates. The concept is very simple: If inflation rises, investors in Bonds demand a higher yield to offset the lost buying power inflation imposes on a fixed payment. And as home loan rates are tied to Mortgage Bonds, this would mean home loan rates move higher.

And let’s not forget the ongoing drama out of Europe. French and German leaders will hold two summits in the span of four days to come up with a resolution to the European debt crisis. Whichever way this news goes could have a real effect on the markets, including Bonds and home loan rates. 

With all the news to come this week, it’s still important to remember that now remains a great time to purchase or refinance a home, as home loan rates are still near historic lows. Let me know if I can answer any questions at all for you or your clients.