May

24

Last Week in Review:There was more drama out of Europe, plus some important inflation news.Forecast for the Week: Several important reports are ahead of the holiday weekend, with news on the housing market, durable goods, and consumer sentiment.

 

View: You’ve probably heard of phishing emails…but did you know you also need to keep a look out for “smishing” texts? See important details below.

 

Last Week in Review
It’s all Greek to me.And last week, news out of Europe dominated the headlines…impacting our markets and home loan rates. Read on for details.Last week there was news that the European Central Bank (ECB) stopped providing funding to some Greek banks, adding to the drama in the region. ECB President Mario Draghi backed the move saying that the ECB will not compromise “the integrity of our balance sheet” to bail out Greek banks and the recapitalization effort must come from the Greek government themselves.

 

What will be made of Greece? Will there be a “Grexit,” with the country exiting the Euro? What’s more, Spain looks like it will be in a recession throughout 2013 and that country is drowning in debt with Bond yields now approaching very lofty levels. When there is this much risk out in the market, Traders seek a safe haven like the US Dollar and US Bonds…and the drama and risk in Europe benefitted our Bonds (including Mortgage Bonds, to which home loan rates are tied) last week.

 

Here at home, inflation as measured by the Consumer Price Index (CPI) came in at 2.3% year-over-year. Remember, inflation hurts the value of fixed investments like Bonds (thus, hurting home loan rates)…so inflation staying in check is crucial when it comes to home loan rates remaining near record best levels. And while the year-over-year CPI reading was the lowest since February 2011, it’s important to realize that there is a negative correlation between inflation and what Treasuries are yielding…and this negative correlation can’t last forever. Investors will not continue to “lose” money to inflation by holding Treasuries. Either inflation has to moderate a lot OR the Bond Market has to adjust for inflation with prices moving lower. This will result in home loan rates moving higher.

The bottom line is that home loan rates remain near historic lows and now continues to be a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.

 

Forecast for the Week
This week’s economic calendar is light, but there are still some important reports to watch:

  • Existing Home Sales and New Home Sales will be released on Tuesday and Wednesday, respectively. The data comes after last week’s positive Housing Starts report.
  • Weekly Initial Jobless Claims will be released on Thursday as usual.
  • Also on Thursday we’ll see the Durable Goods Reportfor April. This report measures orders for big ticket items that last for an extended time.
  • Consumer Sentiment rounds out the week and will be delivered on Friday.

 

In addition to those reports, the markets may be impacted by the upcoming holiday weekend. That’s because the week leading up to Memorial Day weekend usually sees low trading volumes – and by Friday afternoon, trading desks have pretty much cleared out. When volumes are low, markets can easily see some big swings.

 

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. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on.

 

When you see these Bond prices moving higher, it means home loan rates are improving – and when they are moving lower, home loan rates are getting worse.

 

To go one step further – a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

 

As you can see in the chart below, the drama in Europe helped Bonds and home loan rates reach record best levels. I’ll be watching closely to see what happens this week.

 

Chart: Fannie Mae 3.5% Mortgage Bond (Friday May 18, 2012)

 

Japanese Candlestick Chart

 

The Mortgage Market Guide View…
    Don’t Click That Link!Beware of Smart Phone SMS Scams

 

Smart phones can make life – not to mention business – much easier. You can send and receive text messages in a flash to clients and colleagues. You can even text links to important web pages that can be opened right on a smart phone.

 

Of course, those same benefits make scams much easier for criminals. Take for instance the latest craze: smishing.

 

What Is Smishing?

 

Smishing uses SMS technology to deliver fake (and criminal) messages. In fact, the name actually comes from combining the acronym SMS with the word phishing (that is: SMs + phISHING = SMISHING).

 

How Does It Work?

 

It works much like a phishing email, except you receive it on your smart phone as a text message. It starts with a text message to your phone, often stating that you’ve won a prize or that your account requires some kind of update.

 

Two recent smishing scams consist of text messages that appear to be sent by Best Buy or Wal-Mart, stating that you’ve been randomly selected for a $1,000 gift card. The text message includes a link to a web page that looks professional and official. But it’s not. It’s really just a clever way for criminals to collect your personal data.

 

What Should You (NOT) Do?

 

If you receive any message that seems out of the ordinary or too good to be true, take the following precautions:

 

  • Don’t open: If you didn’t register for a prize, you probably didn’t win one. So always be skeptical about emails or text messages that are unsolicited or offer free prizes that you didn’t register for yourself. If you see one that looks suspicious, don’t open it.

 

  • Don’t click: If you do open the message before you realize it’s suspicious, don’t click the link.

 

  • Don’t reply: Sometimes, people try to reply STOP in an effort to avoid receiving future text messages. But what they don’t realize is that there isn’t a list in most cases. Instead, criminals program their computers to randomly dial/text different phone number combinations. So, by replying to the message, you may actually be informing the criminals that you have an active number that received the message.

 

  • Don’t call: Some smishing text messages will direct you to call a phone number rather than click a link. That may lower your guard, but the toll-free number is just part of the plan. Once you dial it, you’ll hear an automated voice that will collect your personal data for use by the criminals. If you do decide that you want to check if the message is real, don’t dial the number in the text or email. Instead, look the number up in the phone book or on a reputable site.

 

Here are just a few options that you should do if you receive a suspicious message:

 

  • Delete: One of the best options is to simply delete the suspicious text or email.

 

  • Report: You can also report the scam by filing a complaint on the FBI’s Internet crime website at http://www.ic3.gov.

 

  • Stay up to date: You can stay up to date on the latest scams by following websites that track these issues. One option is the website ScamBook.com, which relies on user submissions to track everything from smishing to false advertising.

 

The bottom line is that no reputable company would text you to ask for your information. Keep your guard up and be suspicious of anything that seems odd or too good to be true. And remember to pass these tips on to your friends, family members and clients.

 

Economic Calendar for the Week of May 21 – May 25

 

Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Tue. May 22
10:00
Existing Home Sales
Apr
NA
4.48M
Moderate
Wed. May 23
10:00
New Home Sales
Apr
NA
328K
Moderate
Thu. May 24
08:30
Jobless Claims (Initial)
5/19
NA
NA
Moderate
Thu. May 24
08:30
Durable Goods Orders
Apr
NA
-4.0%
Moderate
Fri. May 25
10:00
Consumer Sentiment Index (UoM)
May
NA
77.8
Moderate

 

 

The material contained in this newsletter has been prepared by an independent third-party provider. The content is provided for use by real estate, financial services and other professionals only and is not intended for consumer distribution. 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, there is no guarantee it is without errors.
As your mortgage professional, 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.
Mortgage Market Guide, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated.   Mortgage Market Guide, 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, no cost refinance, overland park,  purchase, rate, rates, refinance, Shawnee

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