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Weekly Mortgage Wrap Up For October 28, 2011

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End of Week UpdateYesterday, mortgage rates rose on news of a solution to the debt issues affecting the Eurozone. Also affected were the Stock and Bond Markets with the Dow surging 339 points.

Today, data was released for September’s Personal Income and Outlays report, Employment Cost Index (ECI) and University of Michigan’s Index of Consumer Sentiment for October.

The Personal Income and Outlays disappointed (this is good for mortgage rates) with a 0.1% rise in income and a 0.6% increase in spending. This means that consumers had less money available to spend than previously thought.

The 3rd Quarter Employment Cost Index (ECI) showed an increase of 0.3%, much smaller than expected, which means that employers’ costs for wages and benefits are not rising as quickly as expected (this is generally not good for mortgage rates).

Finally, the University of Michigan’s Index of Consumer Sentiment for October announced a revised reading of 60.9 that was above the 58.0 that was expected. This is positive news for the economy, but does not help in keeping mortgage rates at their current low levels.

What Economic Date Might Affect Mortgage Rates Next Week?

Next week the market will be watching the release of data for Chicago PMI on Monday; ISM Manufacturing Index and Construction Spending on Tuesday; ADP Employment report and Chairman speech on Wednesday; Jobless Claims on Thursday and Employment Situation data on Friday.

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Home Affordable Refinance Program (HARP) Program Updated

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New HARP Changes AnnouncedEarlier this week, President Obama met with homeowners in Las Vegas and announced new HARP changes that will help “underwater” borrowers refinance their mortgages at the more competitive rates that are available today.

The FHFA (Federal Housing Finance Authority) announced these changes as well and have also provided a list of FAQ’s at the end of their press release to help answer common questions you may have regarding the changes.

New HARP Program Enhancements:

  • Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
  • Removing the current 125 percent LTV ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac;
  • Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac;
  • Eliminating the need for a new property appraisal where there is a reliable AVM (automated valuation model) estimate provided by the Enterprises; and
  • Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to the Enterprises on or before May 31, 2009.

Not Sure If You Have a Fannie Mae or Freddie Mac Eligible Loan?

Fortunately there are some simple to use resources if you are not sure what type of loan you have. To check to see if you have a Freddie Mac loan, click here. To check to see if you have a Fannie Mae loan, click here.

Mortgage Market Update for October 26, 2011

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Mortgage Market MovingGreece, Greece, Greece

The market is closely watching and waiting for a resolution to the Greek debt default drama playing out in Europe. This headache for the markets, in addition to the continued fears about the United States’ economic health, have played key roles in pushing US mortgages rates to historic record lows over the past weeks. While no resolution was reached today as talks deadlock into Thursday, a “broad agreement” was reached.

Expect mortgage rates to move up if and when a resolution is reached. Have questions about how to lock in the current historically low rates? Call us, we can help.

Durable Goods, New Construction and GDP, Oh My!

Data for September’s Durable Goods Orders was released today at 8:30 AM ET. This data showed a 0.8% decrease with forecasts of expecting a 1.0% drop. Data for sales of newly constructed homes rose 5.7% last month. While this data was better than expected, it does not carry enough weight to seriously impact mortgage rates.

Tomorrow will see GDP and unemployment numbers released. The GDP or 3rd Quarter Gross Domestic Product will help market watchers understand the how growth is occurring in the market. GDP is a very important benchmark measurement of economic growth as it represents the goods and services produced in the US.

Time To Lock Your Rate?

Any significant data that is released relating to the health of the US economy or the debt crisis in Europe has the potential to move mortgage rates away from their current near record lows to significantly higher levels. The only way to insure you get today’s low rates is to lock in your rate now. Not sure what program is the best for your situation or how a rate lock works? We can help you understand what options are the best for your unique situation.

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Mortgage Outlook For Week of October 24, 2011

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Mortgage Rate Deadline Looming?Last week was fairly stable as mortgage rates leveled off a bit after weeks of slowly moving off of all time record lows. This week will see the market watching the data data that is being released for the Consumer Confidence Index, Case Shiller Index, New Home Sales and Pending Home Sales Index. Positive news from any of these events cold lead to mortgage rates going higher.

Mortgage Rates: Reality Check

The US saw mortgage rates hit all time historical lows last month. Rates were pressured down by a unique combination of concern about the health of the US economy and concern about the health of banking in Europe with Greece being the epicenter of worry. In the past weeks the United States has released data that was positive in relation to spending and jobs, which means that investor concern about the health of the United States economy may be lessening. Additionally, there is the possibility of a successful resolution for some of the issues facing Europe.

If the two dominant concerns weighing on the market become less of a concern to investors, money will flow from bonds (where investors put money in time of volatility or concern) into equities, with the end result that mortgage rates will increase. We’re not talking about increasing gently as they have in the past five or so weeks, we’re talking about huge increases that will make the rates of today seem like a thing of yesteryear. In other words, we may never see mortgage rates where they are currently for a very, very long time.

Economic Calendar for Week of October 24, 2011

  • Monday – Richard Fisher & William Dudley of the Fed speak
  • Tuesday – Consumer Confidence, S&P Case-Schiller
  • Wednesday – Durable Goods Orders, New Home Sales
  • Thursday – GDP, Jobless Claims, Pending Home Sales Index
  • Friday – Personal Income & Outlays, Consumer Sentiment

What Mortgage Program Is Right For You?

Since we are near all time record lows for mortgage rates and there is a distinct possibility of never being at the current lows ever again as there are signs of improvement in the US economy, now is the time to get your ducks in a row regarding your mortgage. If you are not sure of the best program for your needs or concerned about getting your rate locked before rates move up, we can help. Call us to find out how.

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Higher Conforming and FHA Loan Limits May Increase

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Higher Loan LimitsSome good news for homeowners as the Senate voted yesterday to approve a measure that would restore the high balance conforming loan limit to $729,750 in high cost areas. The amendment was added to a spending bill by Senator Robert Menendez and was approved 60-31 in the Senate.

If the larger spending bill is approved, the bill will be in the hands of the House where they will vote on it. The amendment extends higher loan limits through 2013.

Higher loan limits have been extended several times. After expiring on October 1st, high loan limits for Fannie Mae, Freddie Mac, or FHA loans is $625,500.

Higher Loan Limits History

As part of the economic stimulus package in 2008, temporary higher loan limits were enacted to help homeowners in high-cost areas that were unable to get loans FHA loans and conforming loans they needed and were unable to get regardless of their payment history, credit and income. Homeowners in areas such San Francisco, New York and Los Angeles routinely faced higher priced homes, which meant they were required to bring in substantially larger down payments when purchasing their home. These higher loan limits expired on October 1st.

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Mortgage Update for October 20th, 2011

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Market Data UpdateThe Federal Reserve issues the Beige Book, which is a snapshot or summary of business conditions in each of the Fed’s 12 regional bank districts, eight times a year. Since each district may contain different types of economic activity in various industries, each district lends its own unique feedback to the Beige Book.

The Fed released the latest Beige Book data on Wednesday, painting a mixed economic picture, showing slow growth with an economy activity that expanded slightly in September. More importantly, the data suggested the US has not slipped back into a recession as some have feared.

NAR Data Shows Decrease in Home Sales

The National Association of Realtors released data today showing that home sales dropped 3 percent last month to a seasonally adjusted annual rate of 4.91 million homes. Economists say that keeping this number below 6 million is consistent with a healthy housing market. The data also showed that first-time buyers accounted for 32 percent of all sales and that homes at risk of foreclosure decreased to 30 percent of sales, from 31 percent in August.

Lead Economic Indicators Released

The Conference Board posted September’s Leading Economic Indicators (LEI) data this morning. The LEI rose 0.2%, which is a prediction of modest economic growth over the next several months. The market was expecting to see a 0.3% increase, so this release gave us weaker than forecast results.

Mortgage Rate Lock Update

The past few weeks have been a mix of volatility with an upward trend off of the all time lows reached just a few weeks ago. While rates have stabilized over the past day or so, we are still at near record lows. Since rates have much more potential upside then downside, now may be a great time to lock in your rate if you are on the sidelines. Not sure what loan is right for you or whether or not you should lock? We can help with a free consultation, so that you know with certainty what options you have and what makes the most sense for your goals and current financial situation.

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Mortgage Outlook for the Week of October 17, 2011

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Ben Bernanke SpeaksWe’ve seen mortgage rates trend upward over the past two weeks coming off of all time historical lows. This has been fueled by a more clear and positive outlook for preventing Greece from defaulting and an increase in investor funds back into equities. This turn away from bonds is responsible for pushing most indices such as DOW and S&P 500 higher from the the levels of a few weeks ago, which has had a negative effect on mortgage rates.

This week the market will be watching data being released for the Consumer Price Index, Jobless Claims and Existing Home Sales. These events may cause movement of mortgage rates if the data is significantly better or worse than expectations.

Events Affecting Mortgage Rates Today

Earlier today, the Producer Price Index rose .8%, the biggest increase since Spring, a gain that was twice what the market expected. The market also watched Ben Bernanke’s words carefully as he spoke from a Boston Fed Meeting this afternoon. During his speech, Bernanke expressed that he believed the steps the Fed took during the crisis were successful. Bernanke also stated that he believed Fed’s transparency about its interest rate policy helped keep market calm.

Economic Calendar for Week of October 17, 2011

  • Monday – Industrial Production
  • Tuesday – Producer Price Index, Redbook, Housing Market Index, Bernanke Speaks
  • Wednesday – Consumer Price Index, Housing Starts
  • Thursday – Jobless Claims, Existing Home Sales, Philadelphia Fed Survey

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Fed Minutes: Uncertainty About Growth and Inflation

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Fed MinutesThe FED (Federal Open Market Committee) released its minutes for the September meeting today. The market has noted that several FED members considered future bond purchases and suggested the market might require it, a signal of the weakness they may be seeing in the US Economy. There were also signs of disagreement among members about how to support the economy moving forward.

The minutes indicate that the FED plans on keeping short term interest rates low through 2013 and confirmed current market outlooks regarding the weakness of the US Economy.

 From the Fed Minutes from September 20-21, 2011:

The information on economic activity received since the June FOMC meeting was weaker than the staff had anticipated, and the projection for real GDP growth in the second half of 2011 and in 2012 was marked down notably. Moreover, the lower estimates of real GDP in recent years that were contained in the annual revisions to the NIPA led the staff to lower its estimate of potential GDP growth, both during recent years and over the forecast period, and to mark down further the staff forecast.

The staff continued to expect some rebound in economic activity in the near term as the Japan-related supply chain disruptions in the motor vehicle sector eased. More generally, the staff still projected real GDP to accelerate gradually over the next year and a half, supported by accommodative monetary policy, improved credit availability, and a pickup in consumer and business sentiment. However, the increase in real GDP was projected to be sufficient to reduce slack in the labor market only slowly, and the unemployment rate was expected to remain elevated at the end of 2012.

Mortgage Rates Moving Forward: Lock Now?

We are coming off of lifetime record lows, which leaves an incredible amount of upside for rates to moves. The problem is that once rates move up, they will do so quicker than you can lock. If you are not interested in gambling, now is the time to lock in near record low mortgage rates.

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Remaining in Control While Selling Your Home

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Be in Control When Selling Your HomeWhen selling your home, there are many things that can cause stress that are out of your control. As a seller, you cannot control the market, the number of offers placed on your home, or how many other houses are for sale in your area. With so much out of your control, it becomes of utmost importance that you tip the scale in your favor by taking control of the things you can.

Controlling Your Home Sale

To control your sale, approach the following with care:

  • Selecting Your Agent – When choosing your agent, don’t make a hasty decision. After all, this is the person that can truly dictate the success of your sale. They will have an influence upon foot traffic, marketing, and the pricing of your home. You need a qualified professional to advice you throughout the process so it leads to a positive outcome.
  • Preparing Your Home for Sale – Insure that your home present itself well by cleaning up your yard, and decluttering your home in the very least. If there are obvious home repair jobs needed, complete the inexpensive ones that act as red flags. You do not want these things to tell buyers you take no pride in your home, or they may expect even bigger problems they can’t see. Your agent can also give you feedback on what areas of your home need attention.
  • Your Expectations on Price – The market controls what your house will realistically sell for. You can control how open-minded you will be about the process. Be willing to bend (but not break) as having a random figure in mind will not be beneficial if it is not realistic to the market you are in. What you purchased your home for or what homes sold for a year ago play no role in what your home may be worth today. If you’ve chosen a qualified agent, they can give you up to date market data on what your home is worth and what you should ask for it.

There are a number of factors in a home sale that are left up to chance – don’t be a passive observer as you work to sell your home – take control over the things you can control!

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Mortgage Outlook for the Week of October 10th, 2011

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Mortgage Outlook for Week of October 10th, 2011While the bond / stock markets are closed today in observance of Columbus Day today (re-opening tomorrow), this week will bring three economic reports that are of interest to the mortgage market along with the minutes from the last FOMC meeting and two important Treasury auctions.

New Data Released This Week

On 2:00 PM ET Wednesday afternoon the Fed will releases the minutes from their last FOMC meeting. These minutes have the potential to move the market depending on their content. If the minutes are perceived to be positive, mortgage rates could move upward, if the minutes are perceived to be negative, mortgage rates have the potential to move lower.

On Thursday morning the Trade Balance report for august will be released, followed by the and Retail Sales data and Consumer Sentiment on Friday.

There are also two Treasury auctions this week, 10-year Note sales will be held Wednesday and 30-year Bonds will be sold Thursday.

Economic Calendar for Week of October 10th, 2011

  • Monday – US Holiday: Observance of Columbus Day
  • Tuesday – none
  • Wednesday – FOMC Minutes released
  • Thursday – Jobless Claims, International Trade, Treasury Budget
  • Friday – Retail Sales, Consumer Sentiment

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