Present (market conditions), Expectations (industry expert’s forecast) and Guidance (personal, client specific advice).

Posted on February 9, 2011 by Edgar DeJesus

Week of: Monday, February 07, 2011

Present Market Conditions
Interest rates moved a little higher last week due to inflation concerns. There was higher than expected economic growth and increased commodity prices. However, last week’s employment report fell a bit short but was considered to be positive overall. Frank Nothaft, vice president and chief economist for Freddie Mac stated “In the fourth quarter, the economy grew at a 3.2% annualized rate, compared to the 2.6% in the third quarter and was lead by a 4.4% gain in consumer spending.”

Expectations
This week’s economic calendar is fairly light. Weekly Jobless Claims are announced on Thursday and Consumer Sentiment numbers will be released on Friday. There are Treasury auctions on Tuesday, Wednesday and Thursday. Recent auctions have produced significant swings in rates, so investors will be watching these closely.

Guidance
Overall rates are remaining relatively steady and are still extremely low. There is still time to take advantage and lock into a low rate on a purchase or refinance.

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Present (market conditions), Expectations (industry expert’s forecast) and Guidance (personal, client specific advice).

Posted on January 10, 2011 by Edgar DeJesus

Week of: Monday, January 10, 2011

Present Market Conditions
Mortgage rates ended the week nearly the same last week. Nearly all economic data with the exception of Friday’s employment report was stronger than expected, which typically means higher rates. Frank Nothaft, vice president and chief economist for Freddie Mac says “Mortgage rates began the new year a little lower this week and remained below those at the start of 2010, which should help aid the recovery in the housing market.“

Expectations
Treasury auctions begin a relatively light week for economic indicators A few key reports to watch for come late in the week as Thursday we will see Jobless Claims numbers and Friday we have the Consumer Sentiment report, the Consumer Price Index and Retail Sales numbers. Friday could be a pivotal day to watch.

Guidance
While rates held steady last week the economy is showing signs of improvement which could mean an increase in rates. Advise your clients there is still a great opportunity to lock into a low rate.

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Present (market conditions), Expectations (industry expert’s forecast) and Guidance (personal, client specific advice).

Posted on January 10, 2011 by Edgar DeJesus

Week of: Monday, January 03, 2011

Present Market Conditions
Mortgage rates rose slightly this week on economic news that showed stronger growth for the US economy. While this was not the trend for the majority of 2010, this is how the year ended. While rates still hover near historic lows, upward movement has been prevailing in recent weeks. “Interest rates on fixed mortgage rose slightly over the holiday week, but were still below the year’s highs set in the first half of 2010. For the year as a whole, 30-year fixed mortgage rates averaged just below 4.7% which represented the lowest annual average since 1955 when secondary market yields on FHA mortgages were above 4.6 percent and the average price of a home was $22,000” as stated by Frank Nothaft, vice president and chief economist for Freddie Mac.

Expectations
This week is light as to the number of economic reports to be released however Friday brings the most impactful news with the Employment report and an anticipated increase of approximately 110,000 jobs. Prior to Friday, look for ISM Manufacturing Index and Construction Spending reports on Monday, the Fed meeting on Tuesday and ISM Service Index on Wednesday.

Guidance
Rates remain at or near historic lows. The beginning of the year is an excellent time to meet with your mortgage advisor to ensure your mortgage meets your financial needs.

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Present (market conditions), Expectations (industry expert’s forecast) and Guidance (personal, client specific advice).

Posted on November 9, 2010 by Edgar DeJesus

Week of: Monday, November 08, 2010

Present Market Conditions
Mortgages rates went up on Friday after a stronger than expected employment report, however for the week they ended lower than the previous week. On Wednesday the Fed announced it will purchase another $600 billion in treasury securities by the end of the second quarter of 2011 to boost the economy. Frank Nothaft, vice president and chief economist for Freddie Mac says “With little sign of inflation to push up long-term interest rates, fixed mortgage rates held relatively steady this week, while ARM rates hit new all-time record lows.

Expectations
This week is a very light week for economic data coming out. Consumer sentiment will come out on Friday. Thursday is Veteran’s Day and mortgage markets will be closed, however the stock market will be open. The first treasury auctions since the Feds announcement about quantitative easy will be held on Monday, Tuesday and Wednesday.

Guidance
Rates were down at the end of last week but they continue to bounce around, all while remaining at historic lows. It is a great time to take advantage of the market.

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A Simple Explanation Of The Federal Reserve Statement (September 21, 2010 Edition)

Posted on September 21, 2010 by Edgar DeJesus

Putting the FOMC statement in plain EnglishToday, in its 7th meeting of the year, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged. 

The Fed Funds Rate remains at a historical low, within a Fed’s target range of 0.000-0.250 percent.

In its press release, the FOMC said that the pace of economic recovery “has slowed” in recent months. Household spending is increasing but remains restrained by high levels of unemployment, falling home values, and restrictive credit.

For the second straight month, the Federal Reserve showed less economic optimism as compared to the prior year’s worth of FOMC statements dating back to June 2009. However, the Fed still expects growth to be “modest in the near-term”.

This outlook is consistent with recent research showing that the recession is over, and that growth has resumed — albeit at a slower pace than what was originally expected.

The Fed also highlighted strengths in the economy:

  1. Growth is ongoing on a national level
  2. Inflation levels remain exceedingly low
  3. Business spending is rising

As expected, the Fed re-affirmed its plan to hold the Fed Funds Rate near zero percent “for an extended period”.

There were no surprises in the Fed’s statement so, as a result, the mortgage market’s reaction to the release has been neutral. Mortgage rates in Florida are thus far unchanged this afternoon.

The FOMC’s next meeting is a 2-day affair scheduled for November 2-3, 2010.

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The Federal Reserve Meets Today. Should You Lock Your Rate Before It Adjourns?

Posted on September 21, 2010 by Edgar DeJesus

Comparing 30-year fixed mortgage rate to Fed Funds Rate since 1990The Federal Open Market Committee adjourns from its 6th scheduled meeting of the year today, and 7th overall.

Upon adjournment, Federal Reserve Chairman Ben Bernanke will release a formal statement to the market. In it, the Fed is expected to announce “no change” to the Fed Funds Rate.

Currently, the Fed Funds Rate is within a target range of 0.000-0.250 percent.  It’s been at this same level since December 2008.

Note that the Feds Funds Rate is not “a mortgage rate” — nor is it a a consumer rate of any kind. The Fed Funds Rate is a rate that defines the cost of an overnight loan between banks. And, although the Fed Funds Rate has little direct consequence to everyday Brandon homeowners, it is the basis for Prime Rate, the interest rate on which most consumer cards are based, plus many business loans, too.

Therefore, because the Fed Funds Rate won’t change today, neither will credit card rates.  Mortgage rates, however, are a different story.  Mortgage rates should change today — regardless of what the Fed does.

It’s more about what the Fed says.

In its statement, the Federal Reserve will highlight strengths and weaknesses in the economy, and threats to growth over the next few quarters. Depending on how Wall Street interprets these remarks, mortgage rates may rise or fall.

If the Fed’s comments signal better-than-expected growth, bond markets should lose and mortgage rates should rise. Conversely, if the Fed’s comments signal worse-than-expected growth, mortgage rates should fall.

If you’re actively shopping for a mortgage, it may be prudent to lock your rate ahead of the Fed’s announcement today. The Fed adjourns at 2:15 PM ET.  Call your loan officer to lock your rate.

The Fed meets 8 times annually.

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What’s Ahead For Mortgage Rates This Week : September 20, 2010

Posted on September 20, 2010 by Edgar DeJesus

FOMC meets this weekMortgage markets were highly volatile, yet relatively unchanged last week in back-and-forth trading on Wall Street. Global investors are grappling with the state of U.S. economy and unable to discern whether it’s growing, or slowing.

As an real-world illustration, the government’s August Retail Sales report showed strong growth nationwide. However, in looking at a subset of that same data that accounted for rising gas prices, and excluded automotive-related sales, the results were far more tame.

In other words, despite the winning headlines, there was no clear conclusion in August’s Retail Sales.

As another example, consumer confidence dropped to its lowest level since August 2009, it was reported last week. Now, on most days, this statistic would lead mortgage rates lower, but the figures happened to be offset by improving employment report that suggests a looming jobs recovery.

Again, markets got confused and without clear direction, mortgage rates have been dancing.

Last week, conforming rates carved out a range close to 0.375 percent, making it difficult for Florida rate shoppers to zero-in on pricing. 30-year fixed rates worsened, 15-year fixed held steady, and ARMs improved overall.

This week, expect rates to be equally jumpy.  There’s a lot of housing data due for release and the Federal Open Market Committee is meeting.

  • Monday : Homebuilder Confidence Survey
  • Tuesday : Housing Starts, Building Permits, FOMC Meeting
  • Wednesday : FHFA Home Price Index
  • Thursday : Existing Home Sales
  • Friday : New Home Sales

That’s one housing-related release per day, and a Federal Reserve meeting to boot. Today’s low rates could be vanished by Friday. 

Therefore, if you haven’t already, it may be time to call your loan officer for a refinance. Rates could certainly fall further, but they’re looking more likely to rise.

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Rent A Home Or Buy A Home : The Case For Both Sides

Posted on September 17, 2010 by Edgar DeJesus

Is it better to rent a Tampa home, or to buy one? The answer may not be as clear-cut as you think. In this balanced, 3-minute joint interview from NBC’s The Today Show, you’ll hear the case for both sides.

From the pro-renting part of the talk, there’s valid points about the economic impact of low credit scores and/or no cash for downpayment, and the ongoing, annual cost of home maintenance — estimated at 2% of a home’s value.  Plus, renters have the ability to “follow a job” to a new town or region whereas a homeowner may be restricted, somewhat.

From the pro-purchase part, however, there’s excellent points that were made, too:

  • Mortgage rates are low and each 1% drop to rates equates to a 9% drop to home price
  • Buyers can zero in on a particular area with particular schools or walkability, for example, better than renters
  • A home can a piggybank over the long-term; a place for “forced savings” for families that want it

The segment then closes with 5 of the best cities in which to rent, and 5 of the best cities in which to buy.

Whether buying or renting, don’t try to go at it alone. There’s lot of resources online, and an email to a local real estate or mortgage pro can set you in the right direction.

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Home Defaults Dropped For The 7th Month In A Row In August

Posted on September 16, 2010 by Edgar DeJesus

Foreclosures per capita, August 2010

According to foreclosure-tracking firm RealtyTrac, the number of foreclosure filings climbed 4 percent in August from the month prior. A foreclosure filing is defined as default notice, scheduled auction, or bank repossession.

Despite the number of filings surpassing 300,000 for the 18th straight month, RealtyTrac’s report shows some bright spots for housing.

  1. The number of default notices served per month fell for the 7th time this year
  2. Foreclosure activity in Nevada, the nation’s leading foreclosure state, is down 25% from last August
  3. Foreclosure activity has not materially increased since early-2009, pointing to a stabilization

In addition, each of the 10 leading metro areas for foreclosures posted year-over-year declines for the second month in a row.

But, perhaps, most important, is that mortgage lenders and servicers appear to be managing their REO more effectively, making properties available for sale at a measured pace as opposed to flooding markets with new homes.  As noted by RealtyTrac, the probable reason is “to prevent further erosion of home prices”.

For home sellers, it’s a welcome development.

Foreclosures have had a hand in falling home values in Florida and across the country. And, although it’s self-serving for banks to meter the release of homes under ownership, everyday homeowners benefit, too.  Fewer homes on the market helps to provide a floor for land o lakes housing values.

If you have an interest in buying foreclosed homes, be sure to talk with a real estate agent first. The process of buying a home from a bank is different from buying from “a person”. Having the help of a professional should work to your benefit.

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Home Affordability Gets A Boost From Weak Back-to-School Retail Receipts

Posted on September 15, 2010 by Edgar DeJesus

Retail Sales (September 2008 - August 2010)The recent rise in mortgage rates was slowed this week after the government released its Retail Sales report for August.

Prior to Tuesday, mortgage rates had been spiking across Florida on the resurgent hope for U.S. economic recovery. The sentiment shift was rooted in reports including the Pending Home Sales Index and Initial Jobless Claims, both of which showed surprising strength last week.

August’s Retail Sales, though, after removing motor vehicles, auto parts and gasoline sales, failed to maintain the momentum. Its figures were actually in-line with expectations — it’s just that expectations weren’t all that high.

Wall Street now wonders whether the weak Back-to-School shopping season will trend forward into the holidays.

The doubt spells good news for mortgage rates and home affordability.

Because Retail Sales is tied to consumer spending and consumer spending accounts for two-thirds of the economy, a weak reading tends to drag down stock markets and pump up bonds, and when bonds are in demand, mortgage rates fall.

This is exactly what happened Tuesday. The soft Retail Sales data eased stock markets down, and generated new demand for mortgage bonds. This demand caused bond prices to rise, which, in turn, caused mortgage rates to fall.

Mortgage rates did not cut new lows this week, but they’re very, very close.

With mortgage rates at historical lows, it’s an excellent time to look at a refinance, or gauge what financing a new home would cost. Low rates like this can’t last forever.

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