Mixed Week for Mortgage Markets

This week’s economic news was mixed for mortgage markets. A speech from Fed Chief Bernanke pushed mortgage rates lower early in the week, but weak results in the Treasury auctions caused them to turn higher again later in the week. In the end, mortgage rates finished with little net change from last week.

Despite a stronger than expected November Employment report released on Friday, December 4, Bernanke came out on Monday and repeated the Fed’s plans to maintain the fed funds rate at extremely low levels for an extended period of time. According to Bernanke, the Fed still expects the labor market to improve very slowly, so they are reluctant to remove monetary stimulus by raising rates. Fed officials believe that inflation will remain low for the next couple of years, meaning that there is little short-term pressure to raise rates.

Based on the results of this week’s Treasury auctions, investors appear to agree with the Fed that there is little risk of higher inflation in the short-term, as demand was stronger than average for the 3-yr auction. Investors are far more worried about the risks of inflation in the longer-term, however, and the demand for the 10-yr and 30-yr auctions was very disappointing. The Treasury was forced to offer higher than expected yields to persuade investors to purchase the longer-term securities. Increasing yields reflect concern that the current deficit spending and monetary stimulus needed to help the economy recover will lead to higher inflation down the road. Since investments in mortgages have long-term time horizons as well, inflation expectations have a similar influence on mortgage rates.

Rates as of 1 P.M. PST with 30 Day Locks

Conforming 30 Year Fixed Rates Ended the Week at 4.500% with an APR of 4.678%

Conforming Jumbo 30 Year Fixed Rates Ended the Week at 4.75% with an APR of 4.862%

Also Notable:

• Continuing Jobless Claims fell to the lowest level since February
• The net worth of US households rose 5% during the third quarter
• Oil prices fell to $70 per barrel from recent prices above $80 per barrel
• The Fed purchased $16 billion in agency MBS during the week ending 12/9

Week Ahead

 The big story next week will be the Fed meeting on Wednesday. No change in rates is expected, but investors will be closely watching for clues from the Fed about the timing of future rate hikes. The most significant economic data next week will be the monthly inflation reports. The Producer Price Index (PPI) focuses on the increase in prices of “intermediate” goods used by companies to produce finished products and will come out on Tuesday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Wednesday. CPI looks at the price change for those finished goods which are sold to consumers. In addition, Industrial Production, an important indicator of economic activity, will be released on Tuesday. Housing Starts is scheduled for Wednesday. Leading Indicators and Philly Fed will round out a busy week.

Still recommend Locking if ready to close within 30 days or less.

Call if you need assistance.

SDMortgagefinder

Best Regards

Today is Friday, December 4, 2009, and the financial markets ended up slightly down for the week.  Yet, mortgage rates are still holding to all time lows, even though just slightly higher than the beginning of the week.  Today was an erratic day in the financial markets with today’s employment numbers.  Although rates tanked this morning, we had three rate changes to the better for the day.  Below is a synopsis of this week’s news.

  
Employment Data Surprises

After several weeks of strong performance, it was a tough week for mortgage markets. Stronger than expected economic data and an improved economic outlook from the Fed increased concerns about future inflationary pressures. Rising inflation expectations result in higher yields, and mortgage rates increased during the week.

The big news this week was the Employment report. Against a consensus forecast for a loss of -125K jobs in November, the economy lost just -11K, and the figures from prior months were revised higher by 159K. This represented the strongest monthly data since December 2007. The Unemployment Rate unexpectedly dropped to 10.0% from 10.2% in October. While weakness remained in manufacturing and construction, the service sector added jobs. Average Hourly Earnings, an indicator of wage growth, rose slightly.

This week’s housing data also exceeded expectations. October Pending Home Sales rose for the ninth consecutive month, increasing 4% to the highest level since March 2006. The index is up 32% from one year ago. Pending sales are based on contracts signed but not yet closed and are a leading indicator of housing market activity. The home buyer tax credit again provided a lift.

Also Notable:

• The European Central Bank (ECB) made no change in rates
• The Treasury will auction $74 billion in 3-yr, 10-yr, and 30-yr Treasuries next week
• The Dow stock index reached a new high for the year above 10,500
• The Fed purchased $16 billion in agency MBS during the week ending 12/2

Rates as of Closing Today for 30 Day Locks

Conforming 30 Year Fixed Closed at 4.500% with an APR of 4.700%

Conforming Jumbo 30 Year Fixed Closed at 4.750% with an APR of 4.862%

Recommendation for next week is to watch cautiously.  Any clients closing within 30 days, we strongly encourage them to lock.

Have a great weekend selling, and if you need assistance please do not hesitate to call one of San Diego’s loan experts.  For more information, please visit us at:

SDMortgagefinder

A highly anticipated speech on Monday by Fed Chief Bernanke on the economic outlook revealed no change in the Fed’s stance on short-term monetary policy. There were also few surprises in the economic data released during the week. The monthly inflation readings continued to show that inflation is not a cause for concern in the short-term. As a result, mortgage rates edged just slightly lower during the week, remaining at historically low levels.

The decline in the value of the dollar has received a great deal of attention lately. While Fed officials rarely discuss the value of the dollar, Bernanke assured investors that the Fed is closely watching exchange rates. However, he then reminded investors that the Fed’s dual mandate is to promote full employment and to keep prices stable. According to Bernanke, the value of the dollar is just one of many factors affecting inflation, and the Fed is not concerned by the movement in the dollar so far. With a fragile economy and high unemployment rate, he suggested that the Fed intends to keep the fed funds rate at very low levels. Tightening monetary policy to strengthen the dollar would hurt the economic recovery and slow job creation. After the speech, the value of the dollar fell to the lowest level since August 2008.

If foreign investors expect the value of the dollar to continue to fall, it may pose a risk for mortgage rates in the future. Foreign investors historically have been major buyers of mortgage-backed securities (MBS). When the dollar falls, the value of US assets to foreign investors in their own currency declines, making US investments less rewarding. With the Fed scaling back its MBS purchases over the next few months, a drop in foreign demand would further pressure yields higher to fill the void left by the Fed.

Conforming Fixed Rates ended the day today at 4.375% with an APR of 4.573%. **

Conforming Jumbo Rates here in San Diego ended today at 4.625% with an APR of 4.747%. **

** Rates quoted are for 30 Day Locks

Also Notable for the Week

• October Core CPI inflation was a tame 1.7% higher than one year ago
• October Housing Starts dropped 11% from September
• The Treasury will auction a record $118 billion next week
• The Fed purchased $16 billion in agency MBS during the week ending 11/18

The Week Ahead

A wide range of economic data will be released during the holiday-shortened week ahead. Existing Home Sales will come out on Monday. GDP, Consumer Confidence, and the FOMC Minutes from the November 4th Fed meeting will be released on Tuesday. Durable Orders, Personal Income, Core PCE inflation, New Home Sales, and Consumer Sentiment will all be packed in on Wednesday. In addition, there will be Treasury auctions on Monday, Tuesday, and Wednesday. Mortgage markets will be closed on Thursday for Thanksgiving.

Advice for next week is to watch the market closely if you have any clients closing soon who have not locked..  Recommendation for your clients is to tread cautiously, and lock if possible.

Good luck, and have a great weekend.  Best Wishes also for a Happy Thanksgiving Holiday.

Best Regards

SDMortgagefinder

Since the Fed meeting on Wednesday of last week, mortgage rates have edged slightly lower for most of the week with minor bumps up periodically.  The Fed indicated that monetary policy would remain on hold for quite a while.  The Fed acknowledged that eventually rates would have to increase;however, their message was clear that it could take some time to do so.

Conforming fixed rates ended the day today at 4.50% with an APR of 4.678%.

Conforming Jumbo here in San Diego ended today at 4.75% with an APR of 4.851%.

Clearly the rates this week ended up better than they started earlier in the week. Bloomberg announced today that Consumer Sentiment dropped again in November as job losses were on the minds of workers and Wall Street traders.  This helped to improve rates with multiple rate adjustments down today by several key lenders.  To view the article, click on the link to Bloomberg below:

http://www.bloomberg.com/apps/news?pid=email_en&sid=ap_ThMQkTaJg

The Week Ahead

The most significant data next week will be the monthly inflation reports with the Producer Price Index due out on Tuesday, and the Consumer Price Index which clearly the most watched coming out on Wednesday.  Retail Sales will be announced on Monday.  Also notable, the Treasury will announce the size of the upcoming auction of Treasuries on Thursday.

Advice for next week is to watch closely.  Recommendation for your clients is to tread cautiously, and lock if possible.Good luck, and have a great weekend.

Best Regards

SDMortgagefinder

With many homeowners facing difficulties in refinancing due to drastically reduced home values, this program offers many of those people an option to refinance and lowers their payments in many cases.

While there are some restrictions to this Fannie Mae or Freddie Mac Program, it at least gives some hope to those seeking assistance.  Lenders or brokers must follow guidelines including pricing limits set forth by these agencies.

Important questions that the borrower needs to address are the following:

1.  Are they the owner of a 1 to 4 unit property?

2.  For Fannie Mae, is thier loan guaranteed or owned by Fannie Mae.  Freddie Mac has their own separate program similiar to Fannies with slightly more restrictions.

3.  Is their mortgage payment current with no lates of 30 days or more within the last twelve months?

4.  Do they believe that the current first mortgage balance is equal to the current market value of their property?

If they can answer yes to all of these questions, they may be able to qualify for this program.

Note:  At the time of this writing, lenders can only go up to the maximum conforming limit in their area.    $ 417,000 is the current limit here in California.  Exceptions are made in selected areas.  Most important, lenders have announced that borrowers who have loans above this limit may fall under this program when they are permitted to lend up to the High Conforming Balance Limits sometime within the next 30 days.

I encourage any members who come across customers, clients, friends, or associates who may fall under this category to contact their local mortgage broker or lender.

For more information, please refer to the site listed below:

http://www.sdmortgagefinder.com/FNMA_HARP_PROGRAM_TO_105.htm

I will once again do my utmost to keep the public at large up to date on matters which are effecting the public relating to real estate and mortgage financing.

I welcome your comments or suggestions.

While I understand the importance of our election that just took place along with all of the other pressing financial issues taking place due to the financial crisis that we have been experiencing over the last few months, I feel pressed to address one key issue facing Americans today that you might not be totally aware of taking place now.

One of the side effects of our financial crisis has to do with credit cards, and specifically the issuers of those cards.  Many Americans are being severely effected by this crisis.  Two consequences taking place are the sudden elimination or lowering of credit limits and raising of annual percentage rates on our cards.  I can only speak for myself, but I have also read many accounts on the Internet and news publications regarding this specific issue.

I also speak to you as an individual who has been in the banking and now mortgage lending arena for almost 38 years………my point is that I come to you with experience.

There has not been one article or Internet column on this subject has addressed how a consumer can challenge the affect this is having on our credit scores.  It is devastating, and is only getting worse.

Many in our nation are facing this same challenge.  I also have several real estate loan clients who have had their home equity lines of credit frozen or canceled…………many with zero balances.  One client has had their payment terms changed from what the original loan documents say when we initially closed their equity loan.

I understand the current crisis.  Yet for many who have had stellar credit before, this is drastically effecting their credit since all bureaus have similar scoring models that they use to determine a credit score.  I can only imagine the effect that these changes have had with people with lower scores or past credit issues.

Wake up Washington !!  Our crisis is and has gone past the sub-prime loan market to effect good past paying citizens.  In the meantime, the banks and card issuing companies…many banks or subsidiaries of them, are killing our credit out of fear.  They are also taking your bailout handout, and not lending but instead buying other companies or paying bonuses.

This is not getting America going again, but is rather creating an off-shoot of the crisis.  If you were not aware of this latest issue, you are now !

Do something about it!  You are our leaders that we elected.  Please take care of the normal average American for a change before you dole out your next or further bailout to the big-boys on Wall Street or banking communities.  Believe me, lenders are afraid to lend.  Consequently, small business men and women are facing challenges because of this latest issue.

My God speed you to quick action.

To:  The Board of Governors of the Federal Reserve

From: Wayne L. Brown, Broker

San Diego, California 92109

Subject:  Docket No. R 1305

Thank you for the opportunity to express my views regarding the upcoming review and amendments to Regulation Z.  While I concur that consumers should be protected under the law and regulations, I do have some concerns regarding the proposed changes.

I come to you with more than 38 years of experience.  Twelve years in commercial banking, twenty in mortgage banking, and now 6 years as a Mortgage Broker.  Previously, I had reached executive rank in both industries.  My point is that I come to you with vast years of personal experience within the industry.

It has taken me a long time to draft this response as I feel in many ways threatened by many of the upcoming changes.  Additionally, we Brokers seem to be taking the brunt of the punishment for problems in our industry when in fact we All must take some form of blame and responsibility.

I specifically am concerned regarding the proposal to restrict compensation for mortgage brokers.  I am also very disillusioned over the fact that for years our industry has had to disclose All forms of revenue; whereas, Bankers and Mortgage Bankers Do Not have to follow the same form of disclosure.  This in itself places us in a disadvantage and makes us appear to be non-competitive with our competitors who do not have to disclose any back end revenue.  As a former Banker, this makes No sense to me at all.

I chose to become a Broker after years in the Banking and Mortgage Banking arena.  Believe me, I saw enough to make the decision to get out since I would not put up with what goes on behind management’s closed doors.  We Ethical Brokers strive to ensure that our customers are getting the best terms available.  The proposed changes will only further the cause of Reducing competition.

I feel that due to the mess that we are in, we Brokers are being made as the “ Sacrificial Lamb” so to speak.  While I agree that there have been bad characters in our business….our industry segment surely is Not alone in this arena.

Years ago, HUD, with the blessing of Congress and the Senate helped to pass changes to RESPA that forever changed the way we do business.  Specifically, Affiliated Business Arrangements (Originally called Controlled Business Arrangements) were created to basically legalize “ Kickbacks”.  What was intended as a bundling of services to reduce costs to consumers turned into “ Cash Cows” for all Builders, Large Real Estate Brokerages, Title and Escrow companies?  The Bankers and Mortgage Bankers rushed into this as well forming allegiance with various builders and Realtor shops to Control the flow of business.

I know this to be true since the mortgage banker that I worked for assigned me to one of these arrangements with the builder.  I left in less than a year after seeing first hand the “ Fleecing” of Americans so to speak.

A review and possible change is in order; however, Why disclosures are Not uniform for all is beyond my comprehension.  We must disclose YSP; whereas, Banks and Mortgage Bankers do not have to disclose any back end revenue.

There are times where this option allows the customer to choose whether to pay costs, or apply all or most of this to cover loan costs.  It is also almost impossible with rates being so volatile to guarantee exactly what we disclose up front.  Some borrowers elect to float, rather than lock, making this option almost impossible to guarantee.  Yes we should disclose, but we must be given the flexibility to change with the market.  The final result should also not be a surprise to the customer………but close or even less than originally disclosed.

I could go on for hours explaining the “Horrors “ I have seen over the years in ALL segments of the industry.

Let’s make sure that our consumer is protected, but in doing so, do not ruin a segment of the industry where most are ethical and honest.  If we are to disclose, it should be uniform for All.

Thank you for considering my comments. 

Wayne L. Brown

Mortgage Broker

Within the next few days, I will detail an Account of what has transpired Over the Last Decade or so……..Beginning with Changes to RESPA by HUD with Congresstional and Senate Approval WHICH IN FACT is a MAJOR FACTOR THAT CREATED THE MESS THAT WE ARE CURRENTLY EXPERIENCING WITH THE FINANCIAL AND HOME BUILDING INDUSTRY, as well as, the FORECLOSER EXPLOSION WE ARE CURRENTLY EXPERIENCING.

First, let me tell you that I come to you with More than 30 years of Banking, Mortgage Banking, and now more than 8 years of Mortgage Brokerage Experience.  The Bottum Line is that I have Sufficient Experience to at least Write with Some Credibility within that Regard.  Also Note that while I admit that I am of the Conservative Side of the Poilital Fence, BOTH Parties Share Responsibility in the Debacle that We Now Face.  Lastly, while I have Extensive Background in this Field, I do Not Pretend to have All the Answers or Solutions to these Problems ……..Although I will Give You My TWO Cents Worth if You care to Read All that I have to Say.

Make sure to come back over the next few days to get a Major load of Facts that will help Identify the Real Purportrators of THIS MESS !

 In the meantime, besides working, I will be Formally Responding to the Fed and Banking Regulators who are running a Dog and Pony Show in DC, and in the process Proposing Regulations to Help the Banking System Fall of the Cliff.

Best Regards

I’ve watched the news as I relocated and set up business here in San Diego.  Everyday, some tidbit of news send the markets Reeling in one direction or another depending on the perspective of the Traders on Wall Street.

Politicians Posture touting their ” Economic Stimulus Package” which in Reality is NOTHING more than Thin Air with NO teeth when it come to Resolutions.  The Mortgage Stimulus does Nothing but for a Mere FEW who fit the Parameters of said package………………………I’ve Seen the Directives and it does Squat for the majority of homeowners that I can think of with loans Maturing or Adjusting past, present, or future.

So I am BACK !!!  I can’t sit back Any  Longer while the Meltdown before me unravels with Politicians Mouthing off just how Wonderful they are to Create this Wonderful Stimulus Package, and Savior to Mortgage Crisis and Meltdown.

Stay Tuned……………………………………………