Market Update 

Friday May 27, 2011 4:21 pm ET

Mortgage Bonds have flirted with the 200-day moving average for 3 weeks and was finally able to break above that ceiling of resistance.
This was very encouraging for interest rates, but get ready for more volatility as the Bond Bears will try to force Bond prices lower on any sign of weakness. Adding to the upbeat news are rumors of a possible QE3.
Therefore if you haven’t locked into your mortgage rate, I advise doing so.

Economic News

New Home Sales Rise Again in April, Up 7.3% to 323,000, Topping Estimates.

Real Estate Affordability is at an All Time High.
The ability for Americans to own a home has reached its highest level in the more than 20 years,

US Economy Grew Less than Expected in First Quarter, Revised to Up 1.8%;  Weekly Jobless Claims Post Surprise Increase, Up 10,000 to 424,000

Mortgage Applications are up for a fourth week.

Mark Haines “The Godfather of CNBC” Dies at Age 65

Veteran Journalist Mark Haines died unexpectedly Tuesday evening.
Mark was the founding anchor of CNBC’s morning show “Squawk Box” and co-anchor of the network’s “Squawk On The Street” program.

I had the pleasure of being interviewed by Mark during the credit market melt down.  He was a genuine, humorous and insightful reporter.  He held back nothing in his interviews and was well known for getting answer’s to tough questions.
He will be missed.

Update on FINREG (Financial Regulation)

Protect your homes value and your right to affordable home financing.

The focus is now on the Dodd-Frank Bill.
With implementation of the Dodd-Frank Bill a couple of months away, much has to be done to repeal or at least modify language in the Bill.
This Bill is another government power grab and will its unintended consequences will ad further pressure to the real estate market.
Get involved and let you elected officials know your concerns.

Already prepared template letters and contact info for your Congressman and Senator are available at:

www.RepealFinreg.com .

Friday May 13, 2011 10:15 am ET  

 By John Sauro

Bonds Up, Mortgage Rates Down

Over the last twenty six days mortgage rates have benefited from the Bond markets impressive gains.

Mortgage Bonds 4.50 percent coupon closed at $98.00 on April 13^th and moved steadily higher to close at $100.43 on May 9^th, a gain of $2.43. 

While Mortgage Bonds did break above the 200-Day Moving Average briefly, the gains were not sustainable. A poor 30 year bond auction on Thursday pushed Mortgage Bonds lower, which now stand at $100.18, 25 basis points lower as I write this (see chart below).

Mortgage Applications jumped 8.2 percent last week due to mortgage rates moving lower. The 30 Year Fixed Rate is currently 4.625 percent.

Jumbo Loan Deadline is October 1^st

Time is running out for buyers to buy a home and for those who want to refinance a home in high-cost areas.  As of October 1^st, the maximum loan amount Fannie Mae and Freddie Mac will accept is set to decrease from $729,750 to $625,600. Currently a Jumbo loan up to $729,750 in Hi-cost areas like NYC carries a rate of 4.75%. Its anyone’s guess where Jumbo Mortgage rates will be after October.  

Millions Refinance-Billions Saved

Housing remained affordable for the month of March as mortgage interest rates remained near record lows. Almost 10 million Homeowners have taken advantage of low-interest mortgage loan rates and are showing a steady pace of refinancing since 2009, according to the Obama Administration Housing Scorecard.  Consumers have saved around $18.8 billion in mortgage payments by refinancing to a lower interest rate. 

 Existing Home Sales

Wednesday the National Association of Realtors stated Existing Home Sales are on the path to recovery.

 Existing sales of Single-family homes and condo’s rose 8.3 percent to a seasonally adjusted annual rate of 5.14 million in the first quarter from 4.75 million in the fourth quarter. However, the national median price is down 4.6 percent in the first quarter.  A home that would have sold for $166,400 in the first quarter of 2010 is now $158,700 for the first quarter of 2011.

Update on FINREG (Financial Regulation)

Protect your homes value and your right to affordable home financing.

The focus is now on the Dodd-Frank Bill.

With implementation of the Dodd-Frank Bill a couple of months away, much has to be done to repeal or at least modify language in the Bill.

This Bill is another government power grab and will its unintended consequences will ad further pressure to the real estate market.

Get involved and let you elected officials know your concerns.

 Already prepared template letters and contact info for your Congressman and Senator are available at:

 www.RepealFinreg.com .

Market Update   

Friday May 6,, 2011 12:14 pm  ET

By John Sauro

Bond Face Technical Resistance

Take a look at the chart and you can see a “triple top” forming.  This means it will take a lot for Bonds to break through that level of resistance.  Mortgage rates have improved a bit and I suggest locking into a rate while they are attractive.  Don’t make the mistake of waiting, only to see the rates move back up again.  For those who haven’t refinanced, this may be another opportunity to do so.

Home Buyers – Wake Up!

Home buyers are not prepared to take out a mortgage and answer basic mortgage questions nearly half of the time.

In a recent survey by an online Real Estate Search Provider, home buyers were asked about their general knowledge of mortgages and mortgage facts. A shocking, 44 percent admitted they are not confident in their knowledge of mortgages or the mortgage process.

More than half of prospective home buyers who were polled do not understand how adjustable rate mortgages work. When asked if interest rates on 5/1 ARMs always reset higher after five years, the majority of home buyers answered yes.

Mortgage professionals were surprised to hear these results.

You would think that people would be more in tune with home financing, especially  after the last few years of it being in the media spotlight.  Its amazing how so many people are willing to take out the largest loan in their lifetime without understanding essential information about mortgages.  This is why the government should spend more time on educating people about homeownership and financing then they do on over regulation.

Lender fees seem to be another trying topic, one-third (34 percent) of the respondents do not understand that lender

Other areas home buyers are ill-informed are:

• Forty-Five percent of polled prospective home buyers believe that they should always buy mortgage discount points when obtaining a mortgage.

• Fifty-five percent of the respondents in the study do not understand that mortgage rates vary throughout the day.

• Thirty-seven percent of prospective home buyers who were polled believe that pre-qualifying for a loan means they have secured financing.

• Forty-two percent of the polled prospective home buyers do not understand that Federal Housing Administration (FHA) loans are available to ALL buyers.

Jobs, Jobs, Jobs

The economy added 179,000 private sector jobs last month, according to a report that was a bit below expectations. Economists had expected the report, which comes two days before the key nonfarm payrolls number the government will issue Friday, to show a gain of 200,000 jobs. So far this year, employers announced 167,239 job cuts, 24 percent less than the 219,509 layoffs by the same point last year.

There was more bad news than met the eye to Friday’s jobs report, even beyond the bump up in the unemployment rate.

While the top-line number of 244,000 jobs created sounded great initially, the internals were somewhat weaker.  The household survey, an actual head count, suggested that the job creation barely kept up with the expansion of the labor force.  Nothing in the data supports that many of the millions of discouraged workers were coming off the sidelines looking for jobs. The actual amount of people out of work, which also was unchanged at 13.7 million.

The unemployment rate ticked up to 9% from 8.8%. Another measure of unemployment rose as well: the so-called “real” unemployment rate, which rose to 15.9 percent, up two-tenths from the prior month. This rate measures not just those looking for work and unable to find jobs but also those “marginally” attached to the labor force and those who are working part-time but who want full-time work.

Update on FINREG (Financial Regulation)

Protect your homes value and your right to affordable home financing.

The focus is now on the Dodd-Frank Bill.

With implementation of the Dodd-Frank Bill a couple of months away, much has to be done to repeal or at least modify language in the Bill.

This Bill is another government power grab and will its unintended consequences will ad further pressure to the real estate market.

Get involved and let you elected officials know your concerns.

Already prepared template letters and contact info for your Congressman and Senator are available at:

www.RepealFinreg.com .

Market Update   

Friday April 29, 2011 9:45 Am ET

By John Sauro

Lock & Load

A look at the chart below will show that bond prices are inching their way back up to the price highs of 2011and will most likely fall upon hitting the level of resistance. Therefore, I recommend locking in before bond prices drop and rates rise.

Bernanke Press Conference

There were no big surprises from the Fed meeting or from Ben Bernanke’s press conference. As expected there were no change in Fed Funds rate and the Policy Statement remained pretty much the same. Fed chairman Ben Bernanke provided a modestly more rosy outlook for the U.S. economy than he has done in  the past, citing gains in household spending, improved confidence, and increased bank lending pointing toward stronger growth in 2011.

 Bernanke stated “Although economic growth will probably increase this year, we expect the unemployment rate to remain stubbornly above, and inflation to remain stubbornly below, the levels that Federal Reserve policymakers have judged to be consistent over the longer term with our mandate,” he said in an appearance at the National Press Club in Washington. He also urged Congress to take steps to cut the federal budget deficit to take the budget off an “unsustainable” path. Bernanke was clear that he Fed intends to complete its $600 billion bond buying program in June as scheduled.

Economic News

New Home Sales increased in March from a record low a month ago, according to the IHS Global Insight. Sales of new single-family homes were at a seasonally adjusted annual rate of 300,000 in March, showing growth of 11.1 percent. And demonstrate an upward trend.

 The S&P/Case Shiller composite index of 20 metropolitan areas declined 0.2 percent in February from January on a seasonally adjusted basis, slightly better than economists’ median expectations for a drop of 0.3 percent.

Contracts to buy homes were up in March, but sales were uneven across the country and aren’t enough to suggest a rebound in the housing market. Sales agreements for homes rose 5.1 percent last month to a reading of 94.1, according to the National Association of Realtors’ pending home sales index released Thursday. Contract signings are more than 20 percent above June’s index reading, the low point since the housing bust. However, the index is below 100, which is considered a healthy level. Contract signings are usually a good indicator of where the housing market is heading. That’s because there’s usually a one- to two-month lag between a sales contract and a completed deal.

Jobless Claims climbed to 429,000 for the week, well above expectations and above that psychologically important 400k level.

Consumer Confidence Rises More than Expected, Index at 65.4 in April vs. 63.8 in March

 Update on FINREG (Financial Regulation)

Protect your homes value and your right to affordable home financing.

 The focus continues to be on the Dodd-Frank Bill.

 With implementation of the Dodd-Frank Bill a couple of months away, much has to be done to repeal or at least modify language in the Bill. This Bill is another government power grab and will its unintended consequences will ad further pressure to the real estate market.

 Get involved and let you elected officials know your concerns.

Already prepared template letters and contact info for your Congressman and Senator are available at:

 www.RepealFinreg.com.

Market Update 
 
Thursday April 21, 2011 5:15 PM ET
 
By John Sauro
 
 
Mortgage Rates Try to Move Lower
 
Mortgage Bonds moved higher at each session since last Friday.  The 4 % coupon rose to $102.06, a gain of 22 basis points over the last seven sessions. Mortgage Rates, which move in the opposite direction of the price of Bonds, moved lower by about .125 percent, although this was not reflected in mortgage rates posted by most lenders.  The Bond closed Thursday at resistance at the 100-Day Moving Average.  It’s likely that the 4% coupon will continue to be capped at that level until a Bond friendly catalyst emerges. That may become more difficult as investors are now moving toward Gold, which moved higher to $1,509.60/oz this week, as their flight to safety instead of U.S. Bonds. The Bond Markets closed at 2pm today and are closed tomorrow in observance of Good Friday.
 
 
For those of you who have been reading my Market Updates, you have come to understand the importance technical analysis has on the direction of the markets. For those of you that are new to my Market Updates, the important thing to note when reviewing these charts is that they shoe the price of the Bond, not the rate. So, remember that the mortgage rates move in the opposite direction of the bond prices.
The chart below shows a Falling Resistance Trend line. It starts at the beginning of QE2 (The Feds Quantitative Easing Stimulus) in early November, touches the intra-day high of March 15, 2011 and rests just above the current levels. Notice how for all of 2011the trend line mirrors the 100-Day Moving Average which is also falling in tandem. Both lines are a strong layer of resistance and it will take strong Bond friendly news for Bonds to push through them. Locking into Mortgage Rates when prices trade near tough resistance is always prudent

Mortgage Bond Chart

 
 
Economic News
 
Existing Home sales rose 3.7% in March after a disappointing
February report, according to the National Association of Realtors. “With rising jobs and excellent affordability conditions, we project moderate improvements into 2012, but not every month will show a gain — primarily because some buyers are finding it too difficult to obtain a mortgage,” said Lawrence Yun, NAR’s chief economist, in a statement.
He said the generally upward trend in monthly existing-home sales suggests the housing market is “clearly on a recovery path.”
 
The Labor Department reported that Initial Jobless Claims fell in the latest week, but were above the 400,000 level as the job market continues to be problematic to the economy. The Unemployment rate stands at 8.8% and this will not improve until we see unemployment claims well below 400,000.
 
Standard and Poor’s cut their credit outlook on the US to negative from stable and said it’s AAA credit rating could be cut within two years if headway isn’t made in closing the budget gap. Many believe S&Ps rating is too little, too late. This is a serious issue as it would increase the interest cost on US debt and this affects us all.
 
 
Update on FINREG (Financial Regulation)
Protect your homes value and your right to affordable home financing.
This week a letter that was written on March 24th by Congressman Barney Frank to Federal Reserve Chairman Ben Bernanke surfaced, urging him to take immediate action to make changes to Fed rule 226 regarding industry compensation. http://tinyurl.com/3f3tlv4 .
So far, no action has been taken by the Federal Reserve.
 
The focus is now on the Dodd-Frank Bill.
With implementation of the Dodd-Frank Bill a couple of months away, much has to be done to repeal or at least modify language in the Bill.
This Bill is another government power grab and will its unintended consequences will ad further pressure to the real estate market.
Get involved and let you elected officials know your concerns.
 
Already prepared template letters and contact info for your Congressman and Senator are available at:
 
www.RepealFinreg.com .

Friday April 14th, 2011 7:05 PM ET

By John Sauro

Bonds Rally

A lower core inflation report by the government today sparked a rally in Bonds despite the rise in stocks.

The 4% Coupon rose 62 basis points to finish the day at $98.44, above resistance at both the 25 and 50 Day Moving Averages, A 22 basis point move typically equates to a .125% move in 30 year fixed mortgage rates.  Short covering could also have driven Bond prices higher due to the vacation week.

The long term outlook for mortgage rates is still higher. Don’t be complacent about the present opportunity in interest rates.  Inflation will move higher in the future and when it does, so will mortgage rates.  That’s why it’s important to monitor this market, be nimble and lock into an interest rate when the short term opportunity arises.

Also, look to lock into a rate with a lender that allows you to re lock into a lower rate should rates fall again.

North Atlantic Mortgage has that type of program.

 Jobs

 Initial Jobless Claims climbed higher to 412,000 and above the 400,000 level since March 5^th. Bonds held their ground as this was a very disappointing number. Job growth is still sluggish.  A healthy jobs market is critical to a housing market recovery.

The housing market is responsible for one fifth of the Gross Domestic Product (GDP), yet very little has been done by our government to help the ailing housing market. When are they going to get it?

The Producer Price Index (PPI), measuring prices and inflation at the wholesale level came in at 0.7%, much lower than the expected 1.1%.

The Core PPI, which strips out food and energy, came in at 0.3%, a bit more than the expected 0.2%.

 End of QE2

Some Economists believe that without another round of Quantitative Easing (QE3) the markets would falter pretty quickly and the economy would follow in a few months. Then the Treasury bond rates would spike more over fears of a double dip recession and rising deficits. Even if the Fed comes up with QE3, bonds will respond much as they did with QE2. It will be seen as desperate and inflationary and rates will rise sooner and faster.  Either way, rising T-Bond rates rise and add pressure to an already weak housing market.

Update on FINREG (Financial Regulation)

Protect your homes value and your right to affordable home financing.

The focus is now on the Dodd-Frank Bill. With implementation a couple of months away, much has to be done to repeal or at least modify language in the Bill.

This Bill is another government power grab and will its unintended consequences will ad further pressure to the real estate market.

Get involved and let you elected officials know your concerns.

Already prepared template letters and contact info for your Congressman and Senator are available at:

 www.RepealFinreg.com .

Market Update  

Friday April 8th, 2011 6:30 PM ET

By John Sauro

Budget Uncertainty Pressures Bonds

Mortgage Bonds opened the day sharply lower as it remains very uncertain whether Congress will get a budget agreement passed in time to avoid a government shutdown. The uncertainty is pushing the US Dollar lower, and applying pressure on US Bonds.

Also adding pressure on the US Dollar and Bonds is yesterday’s ECB Rate Hike.  The ECB raised their benchmark rate by.25% to 1.25% in an effort to fight off inflation. The Euro now trades at its highest level against the US Dollar since January 2010.  My bias is toward locking into interest rates.

That said, home loan rates are still very low, buyers should get out and buy a home and those who did not refinance, should.  Soon the Fed and the Treasury will both be selling off their MBS holdings, and it will be tough to see mortgage rates stay low once that selling starts.

The spring housing market is under way with some areas reporting strong activity particularly for homes with prices above $1.5M. 

There was no economic news on the calendar this week except for the Initial Jobless claims which fell by 10,000 in the latest week to 382,00.

Update on FINREG (Financial Regulation)

Protect your homes value and your right to affordable home financing.

The US Court of Appeals made a final ruling Tuesday  and denied the National Association of Mortgage Brokers and National Association of Independent Housing Professionals appeal.  The fight has just begun, as we will now focus on repealing Dodd-Frank.

Go to www.RepealFinreg.com  and see why these regulations will further cripple the lending and housing markets.

By John Sauro

United States Court of Appeals Grants a Stay

On Tuesday, the National Association of Mortgage Brokers (NAMB) has had their request for a temporary restraining order (TRO) against the Federal Reserve Board’s rule denied by Judge Beryl Howell.  The NAMB immediately filed an appeal and on Friday The United States Court of Appeals for the District of Columbia granted a stay on implementation of the final rule.  The stay delays the enforcement date of the rule which was to take effect today, Friday, April 1, 2011.

The stay was granted by Appellate Judges Karen LeCraft Henderson, David Tatel and Brett M. Kavanaugh, and a date of appeal was set for this coming Tuesday, April 5, 2011.  This is an important win forour industry and the consumers we serve.  To learn more about how this effects you, please go to www.repealfinreg.com

Bond Prices Improve

Mortgage Bonds traded in a wide range today after New York Fed President William Dudley said that the economic recovery remains tenuous and helped to move Bond prices higher. The 4% coupon climbed 12bp to end at 98.31 and well off the intraday low of 97.25.   For now I suggest floating, not locking into 30 year fixed rates, as prices hover above a floor of support.

The Jobs Report came in at 216,000, which was above expectations of 185,000.  And 230,000 were created in the private sector – which was also better than expectations and offset a decline in government jobs.  The Unemployment Rate surprisingly dropped by 0.1% to 8.8% – the lowest unemployment rate since March of 2009. 

The Case-Shiller Index, reading on home prices within the 20 largest US cities, showed a 3.1% decline in prices year over year, .slightly better than expectations of a 3.3% decline.