Consumer Confidence Lower than Expectations

Consumer Confidence came in today well below expectations. This shows the continued disconnect with the average consumer who is feeling pretty down about job prospects and the overall economy vesus the press who wants to announce things are doing better.

Though there are signs the worst may be behind us that doesnt make the 5 million workers who are now unemployed feel much better about their own circumstances. If consumers don't feel good about their own economic future they may be less willing to part with the money they do have for discretionary spending. Ultimately if consumers aren't consuming businesses will suffer and that will keep employers from hiring new employees as well as limit the tax revenue the government recieves.

Low tax receipts will make our deficit problems continue for a longer period of time. Deficits also need to be covered (paid for) by the issuance of Treasury Bonds and the more debt we accumulate the more real inflation becomes for us in the future.

On a positive note...today interest rates are better because of the low Consumer Confidence number and the implication that low Consumer Confidence will keep inflation low. Other news that has been a help to mortgage bonds is the turmoil in Greece. With the struggles in Greece hitting front page news it is clear now that there are other countries that are weighed down with a lot of debt that are having trouble covering their bills through this recesion.

It is worth looking around the world and noticing the policies of Greece, Spain and others who have expanded the services their government offers that they can no longer afford. Accross the ocean in Japan we see very similar issues. The US is not immune to this issue. With the HUGE budget deficits the past two years we need to be taking a hard look at the road ahead and changes may be necessary...even though change would be painful for many in our society.

We should all take these stories and apply to them to our own lives. If you are going to buy a home always make sure you are purchasing a home that you can afford and make sure you have funds available for that 'rainy day' as things aren't always going to be rosey. I would love to help you work through your budget to find the right price point for your family if you are looking to purchase a new home while the buyer credits are still offered through April 30th.

Producer Price Index Hotter Than Expected

The PPI numbers were released today with signs that inflation is a little more 'real' than we have been seeing for the past few years. When producers (manufacturers) have higher costs for their raw materials or the energy it costs to manufacture their products they will often try to pass those higher costs on to the consumer in higher prices for their products. We will find out tomorrow if the Consumer Price Index (CPI) comes out showing the higher PPI costs being passed on to the consumer. Given the current economy many manufacturers are having trouble passing their higher costs on to the consumer who has been a little tight fisted with their money.

However, today the very important support of the 200-day moving average for the FNMA 30-year bond was violated and thus rates have moved up a fair amount over the past three days and could move a bit higher before finding a new floor of support. Given the Federal Reserves exit from the MBP program in March and talk that they may begin to sell some of the mortgage bonds they have already purchased we may have seen the end of rates below 5% sooner than later.

I have been encouraging all my clients who are considering a refinance to get their rate locked as soon as possible and if the are shopping for a new house to find one quickly and lock down a rate. Based on the research I have done I do expect rates to be over 6% by summer...which could put a damper on new home sales this summer. Hopefully I am wrong and rates will remain low through the end of the year, but its not something I would bank on.

Job Report Friday 2/5 - how to plan

http://www.lender411.com/id/Rob+McAllister/Job report tomorrow. Please go to my lender411 page to view my full blog, but I am recommending you lock your rates today. Job report will certainly move the market. Rates are great. Don't gamble on what will happen tomorrow...most likely rates will go up from where they are regardless of what the number is tomorrow.

Fed does not extend mortgage purchase program

Well...The Fed met on the 27th and did announce it did not have plans to expand, or extend, their mortgage bond purchase program. This means the Fed will not be a mortgage bond buyer after March 31st. You may think...big deal! Well, you would be right...it will be a BIG DEAL. The Fed has acted as a major buyer of mortgage bonds for the past 13 months. Buyer is another word for DEMAND in economic terms. If you have taken an Economics 101 class you will remember when demand goes down and supply stays the same prices will down. Price, as it relates to bonds, works inversly with interest rates. So when the bond price falls the rate goes up. So when the Fed (Demand) stops buying prices should fall and thus rates go up. This will happen over the month of March in anticipation of this move, but you can certianly expect rates on April 1st to be much higher than the 4.75%-5% rates we have come use to seeing....and that is not an April Fools joke.
Have a great weekend. Please call if you have found a house and want to talk about loan options or if you havent refinanced and you may want to do something before the rates go up.

Bulls and Bears fighting for control

Happy Friday to you. Mortgage bonds are enjoying a nice ride this week. Rates have improved over the week and today with ecomonic news that has been bond friendly. Currently mortgage bonds have pushed above the 25-day moving average and are doing battle at the 200-day moving average. If the Bulls can push bonds up through the day and close above this important level we may see better rates for the weeks ahead. I am not confident the Bulls will be able to close out the day strong enough to close above the 200-day moving average. If you are currently in contract to buy a house or have made application and not yet locked I would recommend you contact your broker toward the 3pm hour to see how the battle ends. If the market closes below the 200-day moving average I would recommend locking in your rate. If it does close above the 200-day moving average it may be worth waiting to see if the trend can hold next week when the market opens up again on Tuesday.
The Fed is also meeting on January 27th. In this months meeting I am sure the Fed Presidents will discuss the extention of the current Mortgage Bond Purchase Program. Many of the Fed Presidents have voiced their support to extend this program to keep rates low for a longer period than the current March 31st end date. IF the Fed can get enough presidents to vote in favor of this and get the money to make the program viable going forward we could see rates stay low further into 2010 which would be good news for home buyers and the housing sector.
The banks are all closed Monday in observance of MLK day. I hope you will take some time on Monday to read some literature from MLK and listen to his message on how we should each treat our fellow man. In that message I would also encourage you to take a moment and pray for those in Haiti dealing with the disaster that occurred there. In addition to your prayers there is a real need for funds to help people in that country. Please donate funds to www.worldconcer.org or a similar charity that is doing good work there in the wake of this tragedy.
Have a great weekend. Rob

westseattlemortgage: Changes coming July 30th to industry

westseattlemortgage: Changes coming July 30th to industry

http://www.mortgagedaily.com/forms/WbskMdia051109.asp

Changes coming July 30th to industry

2009 may be remembered as the year the economy turned around when its all said and done, but in my world I think it will be known as the year the mortgage industry was inundated with new regulations. It's been a full time job to keep up with the programs coming out as part of the housing recovery act, but on top of the lenders underwriting changes and new programs being announced there have been a number of new regulations to the mortgage industry to keep track with.

The first big change that took place this year was the Home Value Code of Conduct (HVCC) which applies to how appraisals are managed during the loan process to keep the loan originator and the appraiser apart to remove any concern of undue pressure on an appraiser. The idea is certainly a good one, but as it is with many things the unintended consequences are that buyers are paying more and the work being done is of a lower quality. The other down side is that lenders wont accept other lenders appraisals so as a broker if one bank declines a file after the appraisal is done the buyer would need to pay for a 2nd appraisal with a new lender even if the appraisal wasn't the reason the file was declined....add $500 to your long list of closing costs.

The newest changes that will roll out in a few days is set up to be a safeguard for buyers to make sure their loan officer isn't changing fees on their loan at the end of the loan process without being notified. As a broker myself who prides himself on being upfront with my costs I don't see this as being a big issue, but it could cause a delay in closing due to the waiting periods that are part of the new law. The good thing here is that buyers will know what they are going to pay for a loan several days in advance of them having to sign the loan documents so its a good thing.

I posted some basics on the new rules to my links.