Apr

25

In This Issue…

Last Week in Review: The US credit outlook was cut from stable to negative… but what does it mean to the markets and you?
Forecast for the Week: It’s hard to believe how many jam-packed economic reports are due out this week!
View: Did you know you can track your tax refund? Check out the tips below to see how.

Last Week in Review

WHEN IT RAINS, IT POOR’S… With the US already facing tough decisions over its national debt, the credit rating firm Standard and Poor’s last week cut its credit outlook on the US from stable to negative. Standard & Poor’s also said the US’s AAA credit rating could be cut within two years, if headway isn’t made in closing the budget gap. This is important because countries have credit ratings, just like individuals.
But what does all this mean? Let’s break it down…
First of all, it’s important to note that the downgrade to the credit outlook was a long time coming, and Traders in the pits even joked that S&P is late to the party with this call. For more information about different countries credit ratings – as well as your own state’s credit ratings – check out this Credit Ratings Link.
All joking aside, this is a serious issue, as the last thing the US wants to endure is an outright credit downgrade. That would make the interest expense on the US debt even more burdensome – and, remember, we are all on the hook for this debt and the carrying costs.
But if this was a long time coming, what sparked the change in outlook? The S&P cited the wide political divide amongst Congress as a major hurdle to meaningfully lower the federal budget deficit. Both parties want to lower the deficit but there is stark disagreement on how to get there. Hopefully, the S&P’s actions will spark a fire in Congress to get serious and get something done.
How does this issue impact Bonds and home loan rates?
The national debt concerns won’t be addressed easily, especially when you remember that the country is approaching the debt-ceiling limit on May 16th. So in the immediate future, this will make for more volatility in the markets as headlines gyrate both Stocks and Bonds. Bonds are in an even tougher spot in the long term – and here’s why:
First… if the US government is successful in taking action to lower the budget deficit and avoid an outright credit downgrade, then we should expect a longer duration of accommodative Fed monetary policy, as the Fed doesn’t want an economic slowdown to recreate a “deflationary” environment. If things do slowdown significantly, we may start hearing debate for a QE3 (or a third round of Quantitative Easing), which would not be good for Bonds and home loan rates.
Second… if the US debt received an outright downgrade, it would be really bad for Bonds. As it stands now, this doesn’t seem likely and you shouldn’t be overly alarmed. But, it’s important to understand what is at stake here. The bottom line is that with some extra belt tightening as a result of this issue, we could expect to see slower economic growth in the future, as government spending would have to slow immensely to help close the budget gap.
That said… home loan rates remain historically low right now. However, there are a lot of headwinds for Bonds down the road and last week’s credit outlook downgrade was just another one.
Now’s the time to learn more about these issues and see how you can take advantage of the current low home loan rates and affordable home prices. It only takes a few minutes to look at your specific situation. Call or email to get started.

Forecast for the Week

This week will be jam-packed with economic reports that can have a big impact on the markets and home loan rates:
• We’ll see more housing news this week with the New Home Sales report right away Monday morning, followed by the Pending Home Sales report on Thursday.
• Consumers are also in the news this week. First, we’ll see the Consumer Confidence report on Tuesday, followed by the Consumer Sentiment Index on Friday. Both those reports give us some insight into how confident consumers are in the economy. Second, we’ll get a look at Personal Spending and Personal Income on Friday – which provide insight into the financial picture of consumers.
• The Federal Reserve holds its FOMC meeting this Tuesday and Wednesday, with the release of its Policy Statement coming Wednesday afternoon. As always, what the Fed says could impact home loan rates.
• Speaking of the Fed, we’ll see the Fed’s favorite gauge of inflation this Friday in the Personal Consumption Expenditures report.
• We’ll also get a read on the economic recovery with Wednesday’s Durable Good Orders, which gives us an update on consumer and business buying behavior on big-ticket items that are designed to last for an extended period of time, like furniture, televisions, appliances, vehicles, copy machines, and so on.
• On Thursday, the markets will see the latest report on Gross Domestic Product (GDP) – which is the broadest measure of economic activity – as well as Friday’s Chicago PMI, which is a good indicator of overall economic activity.
• The Jobless Claims report also comes out Thursday. In the latest week’s report, Initial Jobless Claims fell but still remained above that pesky 400,000 level as the job market continues to be a thorn in the side of the economy. Until we can see a pattern of unemployment claims well below 400,000, we will not see a significant fall in the Unemployment Rate.
• Finally, on Friday the Employment Cost Index (ECI) will be released. The ECI is one way to evaluate wage trends and the risk of wage inflation, as well as possible price pressures. This is important to the housing industry because if wage inflation threatens, it is possible home loan rates will rise through Bond prices dropping.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.
As you can see in the parallel black lines on the right side of the chart below, Bonds hovered in a tight range and were unable to improve much last week due to rising Stocks and inflation concerns.
Those two elements only add to the headwinds for Bonds and indicate that now may be the ideal time to take advantage of low home loan rates. Call or email to see how you can benefit by acting now.
Chart: Fannie Mae 4.0% Mortgage Bond (Friday Apr 22, 2011)

The Mortgage Market Guide View…

Ways to Check on Your Tax Refund
By Mary Beth Franklin, Kiplinger.com
Some 75% of U.S. taxpayers are expecting a refund this year. If you’re wondering when you’ll get your money, you have several ways to check.
Go to www.irs.gov and choose the “Where’s My Refund” tool. You’ll need to provide your Social Security number, your filing status — single, married filing either jointly or separately, head of household, or qualifying widow or widower — and the amount of your expected refund, as shown on your tax return, rounded to the nearest whole dollar. You can usually get information about the status of your refund 72 hours after the IRS acknowledges receipt of your e-filed return, or three to four weeks after you file a paper return. The tool is updated every Wednesday.
Also, this year the IRS unveiled a new smart-phone app, IRS2Go, for iPhone and Android phone users. You can download the free app at the Apple App store or Android Marketplace. Input the same three pieces of information — Social Security number, filing status and expected refund — to find out when you’ll get your money. (Next year, be sure to choose direct deposit if you’re filing your return electronically; you may receive your refund in as little as ten days.)
Start thinking about how you can put your refund to good use by paying down debt or building up savings. While you’re at it, file a new Form W-4 with your employer to increase your take-home pay immediately rather than waiting until next year for a tax refund. Tap our Easy-to-Use Withholding Calculator to help you fill in the values.
Reprinted with permission. All Contents ©2011 The Kiplinger Washington Editors. www.kiplinger.com.

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Economic Calendar for the Week of April 25-29, 2011
Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.
Economic Calendar for the Week of April 25 – April 29
Date ET Economic Report For Estimate Actual Prior Impact
Mon. April 25 10:00 New Home Sales Mar 280 k 250K Moderate
Tue. April 26 10:00 Consumer Confidence Apr 64.4 63.4 Moderate
Wed. April 27 08:30 Durable Goods Orders Mar 3.0% -0.6% Moderate
Wed. April 27 02:15 FOMC Meeting Apr NA 0.25% HIGH
Thu. April 28 08:30 Jobless Claims (Initial) 4/23 390K 403K Moderate
Thu. April 28 10:00 Pending Home Sales Mar 1.5% 2.1% Moderate
Thu. April 28 08:30 GDP Chain Deflator Q1 2.3% 0.4% HIGH
Thu. April 28 08:30 Gross Domestic Product (GDP) Q1 1.7% 3.1% Moderate
Fri. April 29 10:00 Consumer Sentiment Index (UoM) Apr 69.6 69.6 Moderate
Fri. April 29 09:45 Chicago PMI Apr 62.0 70.6 HIGH
Fri. April 29 08:30 Employment Cost Index (ECI) Q1 0.5% 0.4% HIGH
Fri. April 29 08:30 Personal Consumption Expenditures and Core PCE Mar 0.1% 0.2% HIGH
Fri. April 29 08:30 Personal Consumption Expenditures and Core PCE Mar 0.2% 0.2% HIGH
Fri. April 29 08:30 Personal Spending Mar 0.5% 0.7% Moderate
Fri. April 29 08:30 Personal Income Mar 0.4% 0.3% Moderate
Fri. April 29 08:30 Personal Consumption Expenditures and Core PCE YOY NA 0.9% HIGH

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.

As your trusted advisor, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.

In the unlikely event that you no longer wish to receive these valuable market updates, please USE THIS LINK or email: curtis@kcmortgageplanner.com

If you prefer to send your removal request by mail the address is:

Mortgage Success Source, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated. Mortgage Success Source, LLC does not grant to you a license to any content, features or materials in this email. You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.

Certified Mortgage Planner, Curtis Schartz, Home loan, Interest Rate, Interest Rates, kansas city, lees summit, lower interest, lower rates, Mortgage, mortgage backed securities, overland park, Pulaski Bank, purchase, rate, Rates, Refinance, shawnee

Apr

13

In This Issue…

Last Week in Review: The potential government shutdown dominated the headlines. How did home loan rates react?
Forecast for the Week: Important inflation news will end the week, plus retail sales and consumer sentiment will give us some hints on the mood in the country.
View: What’s in your inbox? That’s an especially important question after a recent security breach. See this week’s View for details about safeguarding your information.
Last Week in Review

There’s a Chinese proverb, which is sometimes referred to as a curse, that says, “May you live in interesting times.” And last week was certainly an interesting one, as much of the week was spent wondering whether there would be a government shutdown. Read on to learn what happened… and what the impact was on home loan rates.
A partial shutdown of the federal government was avoided late Friday night, when Democrats and Republicans agreed on a budget deal and a short-term funding extension little more than an hour before the deadline. The extension cuts spending by $2 billion and will last through next Friday, April 15.
But all the uncertainty leading up to this decision was just one factor that caused Bonds and home loan rates to worsen through the week. On Thursday, as expected the European Central Bank (ECB) raised their benchmark rate in an effort to curtail rising inflation, meaning the Euro now trades at its highest level against the US Dollar since January 2010.
Despite the weakness in the Dollar, the disparity between the two is somewhat surprising, given the economic headwinds and problems that Europe has been facing. But as the saying goes, “Markets can remain irrational longer than we can remain solvent.” At some point, we should expect weakness in the Euro and a rebound in the US Dollar. The passing of the US Budget agreement should help.
So the question remains: Why does this matter when it comes to home loan rates?
A weak US Dollar typically helps Stocks, as it makes our goods and services relatively cheaper for foreigners, thus helping our export business and GDP. And when Stocks are boosted, investors typically move their money from safe-haven investments like Bonds into Stocks to take advantage of gains there. And since home loan rates are tied to Mortgage Backed Securities (MBS), which are a type of Bond, when these Bonds worsen, home loan rates worsen, too.
That said, home loan rates are still relatively incredible, but keep in mind that before long, the Fed and the Treasury will both be selling off their MBS holdings accumulated through their first round of Quantitative Easing (QE1), and it will be tough to see Bonds and home loan rates make meaningful ground once that selling starts.
If you have been thinking about purchasing or refinancing a home, call or email me to learn more about how you can benefit from today’s historically low rates. Or forward this newsletter on to someone you know who may benefit.
Forecast for the Week

The second half of the week is chock full of important economic reports. Be sure to look for:
• Wednesday’s Retail Sales Report, which is a timely indicator of broad consumer spending patterns. Will this report, along with Friday’s Consumer Sentiment Index, show that consumers are feeling positive about our recovery, or will things like high gas prices and worries about inflation dampen these numbers?
• Thursday’s weekly Initial and Continuing Jobless Claims Report. Both Initial and Continuing Claims were inline with expectations last week, and show the job market continues to slowly improve.
• A double dose of news on the all-important subject of inflation, with Thursday’s Producer Price Index (which measures inflation at the wholesale level), and Friday’s Consumer Price Index. Inflation is the arch enemy of Bonds and home loan rates, and signs of inflation in these reports could cause them to worsen.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.
As you can see in the chart below, Bonds and home loan rates worsened through the week due to a variety of factors. I’ll be watching closely this week to see if they are able to change direction.

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Chart: Fannie Mae 4.0% Mortgage Bond (Friday Apr 08, 2011)

The Mortgage Market Guide View…

Watch Your Inbox!
You may have heard some vague reports about a security breach at a company called Epsilon. But, if you’re like many Americans, the news didn’t strike you as fairly relevant to your life. After all, you probably didn’t recognize the company’s name or didn’t think you had any affiliations with it.
Or do you?
The reality is, the news wasn’t just about the company Epsilon, but instead was about the more than 40 companies – from Walgreens and TiVo to J.P. Morgan Chase and Ameriprise Financial – who have said their customers were among the email addresses stolen. In other words, even if you don’t know the name Epsilon or have anything to do with that company, your email address may be part of this important news story.
The good news… It appears only names and email addresses were stolen as part of the breach. Most of that information is fairly public – and isn’t as sensitive as, say, a social security number.
The bad news… Clever criminals can put together very convincing email scams to steal the rest of your personal information… right from you, rather than the company.
What should you do?
Whether you were informed that your email address was stolen or not, here are some important tips to ALWAYS KEEP IN MIND when dealing with unsolicited emails… even from companies that you do business with regularly.
1. Never email personal information… even if the company or email looks legitimate! Cyber criminals today can create very sophisticated and convincing emails that ask you to reply with your password or social security number. In fact, some criminals may be creating emails that look as if they’re informational emails about the Epsilon breach as a way to seem even more legitimate. So, if you receive an email asking for any personal information – including your password, account number, date of birth, social security number, and so on – do NOT respond. Instead, look up the company’s phone number on a recent bill, receipt, or other paperwork, and call the company about the email. If it’s a scam, they’ll want to know that it’s going on.
2. Be careful which links you click. Today’s cyber criminals often don’t ask you to reply with personal information, but instead build and link you to fake company websites – in the hopes that you’ll let your guard down and enter your information for them there. Don’t be foolish. Legitimate businesses will not ask for your information – they already have it. Moreover, they won’t collect personal data outside of a secure website. So if it’s not the normal website URL that you use, be extremely skeptical and contact the company by phone if you even suspect it may be fake.
3. Don’t download. If an email looks suspicious be very careful about attachments. Email scams can include malicious programs that look harmless, but once downloaded can either infect your computer or steal your personal data without you even really knowing. The best word of advice is simply: Don’t download anything that seems even the slightest bit out of the ordinary.
Those tips are good advice any time of the year, but they are especially pertinent after widespread breaches. So be extra vigilant when it comes to reading, responding, and clicking on your emails in the weeks ahead.

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Economic Calendar for the Week of April 11-15, 2011
Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.
Economic Calendar for the Week of April 11 – April 15
Date ET Economic Report For Estimate Actual Prior Impact
Tue. April 12 08:30 Balance of Trade Feb -$45.7B -$46.3B Moderate
Wed. April 13 08:30 Retail Sales Mar 0.5% 1.0% HIGH
Wed. April 13 08:30 Retail Sales ex-auto Mar 0.8% 0.7% HIGH
Wed. April 13 02:00 Beige Book Apr Moderate
Thu. April 14 08:30 Core Producer Price Index (PPI) Mar 0.2% 0.2% Moderate
Thu. April 14 08:30 Producer Price Index (PPI) Mar 1.0% 1.6% Moderate
Thu. April 14 08:30 Jobless Claims (Initial) 4/09 385K 382K Moderate
Fri. April 15 08:30 Consumer Price Index (CPI) Mar 0.5% 0.5% HIGH
Fri. April 15 08:30 Core Consumer Price Index (CPI) Mar 0.2% 0.2% HIGH
Fri. April 15 08:30 Empire State Index Apr 15.0 17.5 Moderate
Fri. April 15 09:15 Capacity Utilization Mar 77.4% 77.0% Moderate
Fri. April 15 09:15 Industrial Production Mar 0.6% 0.0% Moderate
Fri. April 15 10:00 Consumer Sentiment Index (UoM) Apr 66.0 67.5 Moderate

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.

As your trusted advisor, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.

In the unlikely event that you no longer wish to receive these valuable market updates, please USE THIS LINK or email: curtis@kcmortgageplanner.com

If you prefer to send your removal request by mail the address is:

Mortgage Success Source, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated. Mortgage Success Source, LLC does not grant to you a license to any content, features or materials in this email. You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.

Certified Mortgage Planner, Curtis Schartz, Home loan, Interest Rate, Interest Rates, kansas city, lees summit, lower interest, lower rates, Mortgage, mortgage backed securities, overland park, Pulaski Bank, purchase, rate, Rates, Refinance, shawnee