31 Congressmen Ask Fed to Delay Rule 226

Friday March 18th, 2011 6:49 PM ET

By John Sauro

Lock In And Avoid The Volatility

Earlier in the week Bond prices benefited from the concerns over Japans Nuclear situation. 

Investors nervous over how Japans situation could hurt stock move to Bonds in a “Flight to Quality”.

On Thursday and Friday stocks recovered as it appeared that the problems with Japans nuclear situation most likely get worse.

The 4% coupon finished down 9bo to 99.31. Some lenders lowered mortgage rates in response improvements in the bond market.  However, there is still much uncertainty regarding Libya and the situation in Japan is far from over.  Therefore I am recommending locking into rates.

The 30 Year fixed rate is currently 4.75% – Zero points and the 5/1 Arm is 3.875%-zero points.

There have also been rumors that QE3 may be coming if there is a global slowdown.

Housing Starts were down 22% in February to 479,000 units and was the biggest monthly percentage drop since March 1984. Building permits, a sign of future construction came in at 517,000 versus the 573,000 expected.  While these reports at first glance are disappointing, they may ultimately have a positive effect on home sales, as fewer new homes on the market allows existing inventory to be sold more easily.

Update on FINREG Update Financial Regulation

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

Earlier in the week I was in Washington D.C., meeting with the members of the House Financial Services Committee regarding the Fed rule on loan originator compensation and the Dodd-Frank Bill.

The meetings were constructive and resulted in a letter sponsored by Congressman Spencer Bachus, signed by 31 congressmen asking the Federal Reserve to delay the rule.  Additionally Senator’s Jon Testor & David Vitter also sent a letter to the Fed requesting the same.

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

Market Update   

Friday March 11th, 2011 6:50 PM ET

By John Sauro

I first want to send our thoughts and prayers to the families affected by this morning’s earthquake and tsunami in Japan.

This should remind us how fragile life is and how quickly things can change.

Another Roller Coaster week for Bonds.

 News form around the globe has been responsible for the volatility in the markets.  Now Saudi Arabia the world’s largest oil producing country is the focus.  Hopefully, King Abdullah can stave off a revolt, as he has allocated $36B to increase wages and boost programs.

However, the short term focus will be Japan. Typically, devastating natural events drive money into bonds, but that’s not the case this time.

That’s because the Japanese are selling some of their holdings in Treasuries and Mortgage Bonds, in order to put money back into their country during this emergency.  Japan is the second largest holder of our debt at $877B, so selling a small portion has an impact on Bond prices and raises interest rates.

Update on FINREG (Financial Regulation)

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

Two law suits were filed against the Federal Reserve this week, hoping delay a rule that could add further pressure on the credit and real estate markets.

The first was filed by the National Association of independent Housing Professionals (NAIHP). The other was filed by the Association of Mortgage Professionals (NAMB). I am on the Government Affairs Committee for NAMB and will be traveling to D.C. this week for upcoming meetings with members of the House Financial Services Committee, for the purpose of delaying or even better repealing these very regulations that can be so very damaging to an already fragile real estate market. Wish me luck.

If you haven’t already done so, please visit www.RepealFinreg.com  and see why these regulations will further cripple the lending and housing markets and be sure to sign the petition and send the pre written letters to your elected officials.

Thank you.

My Bias remains locking into mortgage rates at this time.?? 

Market Update  

 Friday March 4th, 2011 5:30 PM ET

By John Sauro

 Inflation, Inflation, Inflation

Inflation is the arch enemy of bonds and bond prices dictate mortgage rates.  So while Federal Reserve Chairman Bernanke stated this week inflation has been declining, others like PIMCO’s Bill Gross is not convinced.  Bill Gross also expects the 10 Yr will hit 4.00% very soon. Recent economic reports also suggest that inflation is beginning to raise it’s ugly head.

 It’s Your Move

 With the spring home buyers market just around the corner, many are now considering getting off the fence before rates move higher.

With real estate price stabilizing, many don’t want to miss the bottom. How do you know when prices have bottomed out? After they go back up.  Therefore, it would be prudent for those considering buying, to do their home work and start looking.  

I recommend speaking with a mortgage professional about available financing options before you start your search.

Refinancing – Rates Still Attractive

Even with recent increase’s in interest rates.  It still may make sense for some to consider refinancing.  Moving from an adjustable to a fixed rate, or consolidating equity loans or credit card debt may result in substantial savings.

Call us for a free consultation and available options.

Update on FINREG (Financial Regulation)

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

I will be meeting with many of our elected officials on Capitol Hill while I attend the NAMB Legislative Conference in Washington D.C. later this month to discuss the concerns with the Fed Rule 226, Dodd-Frank Financial Regulation and Fannie Mae and Freddie Mac.

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

Several Trade Organizations are preparing to initiate a law suit against the Federal Reserve to seek an injunction to delay FR 226.

 My Bias remains locking into mortgage rates at this time.?? 

 Market Update  

Friday February 19th, 2011 6:30 PM ET  

By John Sauro

Mortgage Bonds Rebound

After hitting near 12-month lows last week, Mortgage Bonds have rebounded off those levels and broke through resistance at $96.78 on Monday. The 4% coupon closed up 3bp on Friday to end at 97.56 near the high for the week. This is positive as investors feel that a short term bottom is in place from February 9.

 The Future of Mortgage Rates

As I mentioned in past updates, the long term trend for interest rates is still to move higher, although, these markets do not move in a straight line, and that provides for low rate opportunities in the short term.  The trick is, knowing when to lock.

You can benefit from our daily monitoring and knowledge of these markets and can be provided with timely advice for when to lock in a rate. Currently, 30 Year Fixed rates are 4.99% for loans up to $417,000 and 5.125% for Jumbo’s to $729,000. My bias is toward floating rates here, as we anticipate possible higher prices for mortgage bonds, Lower interest rates for mortgages.

No Income Check Loans

Yes, No Income Check loans are still available.  At least until the Dodd-Frank Financial Regulation goes into effect.  Look, these loans, done for the right individual’s tend to be the highest performing loans in our lenders portfolio.  Why? Because your not going to get one with 10 or 20% down. Typically, you can borrow up to 60% of the homes value for loans up to $750k and 55% up to $1M.  Stated income is also available and allows for a bit more borrowing at 70% to $750k and 55% to $1M.  You must be self employed, have great credit and strong cash assets.

Rates are actually very attractive; 30 Year fixed-5.75% up to $729k and 5.875% up to $1M. Arm’s are also available; 5/1 Arm 4.50% up to $1M.

Interest Only Payments are available on all our loans.

John Sauro’ Interview on Yahoo Tech Ticker Show

Aaron Task, Dan Gross and John Sauro, of the Government Affairs Committee for NAMB-The Association of Mortgage Professionals & President of North Atlantic Mortgage Corp. discuss Housing and Mortgage Backed Securitization.

http://tinyurl.com/5t3gacd

Update on FINREG (Financial Regulation)

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

Last week the Congressional oversight plan stated it will hold hearings on the Fed Rule 226 regarding industry compensation.

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

Several Trade Organizations are preparing to initiate a law suit against the Federal Reserve to seek an injunction to delay FR 226.

My bias is toward floating rates here, as we anticipate possible higher prices for mortgage bonds..

Friday February 4th, 2011 5:11 PM ET

 By John Sauro

Bond Prices Fall, Mortgage Rates Rise

After trading in a narrow range for the last three weeks, Mortgage Bonds fell below levels of support and their 25-day moving average.  Global economic recovery and growth continues to expand and so does the rise in Mortgage Rates.   

The Jobs Report came in at 36K vs the 148K with the Unemployment rate at 9%, adding pressure to Mortgage Bond prices.

Outlook for Mortgage Rates

Inflation in December remained tame as measured by the Personal Consumption Expenditure (PCE) Index, which fell to 0.0% from the November reading of 0.1%, 0.7% year-over-year.  The PCE  is the Fed’s favored inflation gauge.  It’s a bit different from the Consumer Price Index (CPI), as the PCE measure’s the changes in prices of goods and services, and is done based on surveys of businesses. The CPI is a measure of change in the purchasing power of an average family, based on calls to households.

The poor 0.7% year-over-year reading is below where the Fed “wants” inflation. The Fed wants to have a year over year reading somewhere between 1 and 2%, and likely closer to 2%.

Unless the economy starts growing at a much faster than expected rate, inflation as measured by PCE and CPI should continue to remain very low for this year and that will help keep rates at attractive levels for 2011.

Update on FINREG

The SBA Office of Advocacy Warns The Fed of Non Compliance

The Fed Rule on Regulation Z; Docket No. R-1366, Truth in Lending is due to be implemented on April 1^st.

 The SBA, NAMB as well as other organizations wants the rule to be postponed as the Fed has not issued guidance on the rule.

 Read SBA letter. 

This rule along with the Dodd-Frank Legislation will further cripple the lending and housing markets.

Many are unaware of the unintended consequences FINREG, the Dodd-Frank Bill and The Fed Rule will have on the cost of home financing and credit availability.

Unfortunately, without repeal or changes to these Bills and Rules , they will change the landscape of home financing by eliminating fair competition in the industry.

The end result will be increase costs to the consumer, create a monopoly of four banks, severely limit the availability of credit and will set precedent for the Fed to do the same to other industries.

It’s time we stand up and say enough is enough.

I ask you vist WWW.REPEALFINREG.COM .

This website will quickly inform on the issues and enable you to easily voice your concerns to your elected officials.

 My bias is toward floating rates here, as we anticipate a rebound in mortgage bond prices.

Friday January 21, 2011

By John Sauro

FINREG to Increase The Cost of Home Financing

Many are unaware of the unintended consequences FINREG, the Dodd-Frank Bill and The Fed Rule will have on the cost of home financing and credit availability.

Unfortunately, without repeal or changes to these Bills and Rules , they will change the landscape of home financing by eliminating fair competition in the industry.

The end result will be increase costs to the consumer, create a monopoly of four banks, severely limit the availability of credit and will set precedent for the Fed to do the same to other industries.

It’s time we stand up and say enough is enough.

I ask you vist WWW.REPEALFINREG.COM .

This website will quickly inform on the issues and enable you to easily voice your concerns to your elected officials.

Mortgage Bonds Still Volitile

Mortgage Bonds are trading in a wide 138 basis point range of $98.40 to $99.78.

Prices remain above the nearest level of support of $98.50.  We will see if Bonds can retest the top of the trading range. If not, it could be bad for mortgage rates.

 Good News on Housing

Existing Home Sales for December were reported at 5.2M, much better than 4.8M expected. Unsold homes inventory fell to an 8.1 month level- well below November’s 9.5 month reading. The lowest level in almost a year.

Housing starts however fell 4.3% in December to an annualized rate of 529,000 units, below the 550,000 that was expected.

Friday January 7, 2011 6:29 PM ET

By John Sauro

Jobs Report Disappoints

Wednesdays ADP report raised eyebrows and expectations; however, today’s Jobs headline was a bit of a disappointment.  Private job growth was 113,000, below expectations of 162,000.  The Unemployment rate declined to 9.4% from the previous reading of 9.8%. This is the lowest unemployment rate since May of 2009.  The real level of Unemployment, called the U-6 dropped to 16.7%, down from the prior month’s reading of 17%. This reading takes into account people that are marginally attached to the workforce and people that have accepted part-time jobs.

Sauro Interview on Bloomberg

http://tinyurl.com/y9t9or6 

Volatility Remains The Story

The Fannie Mae Bond dropped almost 100 basis points on Wednesday to close at 98.65 and recovered today up 59 basis points to close at 99.56.

Reports about the economy improving continue, as the Institute of Supply Managers Services Index was reported at 57.1, which was stronger than expectations of 55.7 and the best reading in almost four years.  

Mortgage Bonds may see a bit of a rally this month, but not enough to bring down significantly.

My bias is toward locking into rates here, as there is more of a chance of rates moving higher over the short term.

Market Update  

Thursday December 30, 2010 10:00 AM ET

By John Sauro

Bonds Pressured by China’s Rate Hike

Over the Christmas Holiday The Peoples Bank of China raised their key lending rate by .25% – the 2^nd hike since October, in and effort to fight inflation.

Markets were caught off guard as China has raised rates six times this year to fight off a feverish inflation, which now stands at 5.1%.

Investors looking for better returns abroad will pressure further selling in US Bonds. 

What this means is that US interest rates will have to move higher to attract the same investors.

On Tuesday the Fannie Mae 4% Coupon Bond lost 100 basis points, then, rallied 100 basis points on Wednesday, that’s .25% difference in interest rate for most lenders. 

On Thursday, Initial Jobless Claims came in better than expected at 388,000, below expectations of 416,000 adding pressure to Bond prices which dropped to a new low $98.66.

This extreme volatility is the reason you need to work with professionals when shopping for the best rate on a mortgage.  Keeping a watchful eye on the Bond market and knowing when to lock in a rate is a big benefit to our clients.

Housing

The S&P Case Shiller Home Price Index for the year ended October showed that prices for the 20 metropolitan cities fell 0.8%, below the 0.1% improvement that was expected, and the sharpest year over year decline in a year.  Unfortunately, high unemployment and foreclosure’s hitting the market has played a role in pressuring the housing market.

Pending Home Sales were reported up 3.5% in November, 5% below the November 09 reading.   

The National Association of Realtors expects existing home sales to rise 8% in 2011.

For now I recommend locking into a mortgage rate.

 Friday December 16, 2010 1:43 PM ET

By John Sauro

Bonds Rebound

After weeks of selling Bonds were overdue to bounce back, and did so midday yesterday. Mortgage Bonds are higher today by 69 basis points as I write this.

This is due in part to the Fed’s buying of longer term securities this morning and the labor Department Report saying that 21 states and Washington D.C. experienced jobless rate increases in October and November.

Lenders re priced Mortgage Rates lower on the news.  So, here’s a rare second chance to lock into a low rate.   But don’t wait for rates to go lower as the trend for interest rates to move higher is still intact.

Remember Mortgage rates move in the opposite direction of Bond prices.

Is The Fed’s “Quantitative Easing 2” (QE2) Responsible for Higher Interest Rates?

Many economists believe that QE2 is the reason for higher rates. However, their may be other forces at hand.

There is speculation that the selling in Bonds is due to the worldwide reallocation of globally indexed funds away from sovereign deb.  Add to that the recent tax compromise in the U.S. and extended tax cuts, and you have investors reconsidering holding long-term debt at low rates.  

Will Rates Move Back Down to Their Low’s?

In late May to early June Bond prices fell 650bp, then rose straight up in July by 460bp, and then gave up 230bp in a few days.

However, during that time the Fed was committing to buying $100B a month in Mortgage Backed Securities, and mortgage transaction volume had slowed prior to the initial price decline.  The lack of Mortgage Backed Security supply, along with the Fed buying, made for a significant rebound in prices, resulting in lower mortgage rates.

However, this time is different. The Fed is not buying Mortgage Backed Securities, and prior to the recent decline in Bond prices, mortgage rates were at all time lows.  The Mortgage Backed Securities supply of refinances done in mid-October won’t get into the market until January. It’s a classic supply and demand issue.  Remember, the Fed is trying to create inflation and inflation is the arch enemy of Bonds and mortgage rates, and therefore it is unlikely that we will see rates move back down to their lows.

For now I am taking a floating not locking bias towards mortgage rates.