Unstable Rating May Impact Home Loan Rates

Apr

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

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:

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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

To Shutdown or Not To Shutdown

By Curtis Schartz, CMPS

Apr

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

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:

MMG Weekly: Is Your Home Equity Line Hurting Your Credit?

By Curtis Schartz, CMPS

Mar

In This Issue…

Last Week in Review: Our thoughts continue to go out to people suffering in both Japan and the Middle East. Read on to learn how world events impacted the markets.
Forecast for the Week: The volatility is sure to continue, as will the barrage of news, including several reports that will tell us how our economic recovery is faring.
View: Have a home equity line of credit? Know if it is impacting your credit score unfairly? Check out important details below!
Last Week in Review

“It’s a small world after all…” That notion was especially evident last week, with both the news in Japan and the Middle East impacting our markets. Here’s what happened, and what the impact was on home loan rates.
The first thing to understand is the concept of “safe haven trading.” At times of global unrest and uncertainty, like with last week’s nuclear crisis in Japan and the ongoing fighting in Libya, Traders will park their money in “safe” investments like our Bonds. And since Bonds such as Mortgage Backed Securities (MBS) are tied to home loan rates, when Bond pricing improves, our home loan rates can improve… which is what we saw last week.
But it’s also important to understand how incredibly volatile this situation is. A “safe haven trade” is just that… a trade, which is short-term. Should events around the world become more stable, this safe haven trade can unwind very quickly… with Bond prices and home loan rates worsening as a result. This is similar to how the market reacted at the end of last week, when Libya declared a cease fire to fighting after the United Nations declared a no-fly zone.
Another thing to note is that Bonds and home loan rates are facing some additional headwinds that could hamper their improvement. First, if Japan sells some of their Treasury holdings to help finance the recovery and reconstruction, like they did in 1995 after the Kobe earthquake, this could spur a sell-off in Bonds overall, which would cause Bonds and home loan rates to worsen.
Second, we cannot overlook the impact of inflation… which is the arch enemy of Bonds and home loan rates… both here and overseas. Not only is China struggling with inflation even though they have raised rates and tightened lending requirements multiple times over the past few months, but last week both our Producer Price Index (which measures inflation at the wholesale level) and our Consumer Price Index were hotter than expected.
The bottom line: If inflation is allowed to grow, it can be very difficult to rein in and control… and this will hinder improvement in home loan rates. And, if the situations in Japan and the Middle East stabilize or improve, we could see further unwinding of the “safe-haven” buying of US Bonds… which will also hinder improvement in home loan rates.
If you have been thinking about purchasing or refinancing a home, call or email me to learn more about how you can benefit. Or forward this newsletter on to someone you know who may benefit from today’s historically low rates.
Forecast for the Week

Continuing developments in world events are sure to impact the markets this week, but there are some important US economic reports to look for, too, including:
• Monday’s Existing Home Sales Report and Wednesday’s New Home Sales Report for February – will they show improvement in the housing market?
• We’ll get a read on the economic recovery with the Durable Goods Report on Thursday, 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 (i.e. televisions, appliances, vehicles, etc). It’s an interesting report, as people tend to hold back on these types of purchases when they are feeling a need to be extra conservative with their finances or feel insecure about their employment.
• We’ll also get a read on the labor market with Thursday’s weekly Initial and Continuing Jobless Claims Report. Last week’s Initial Jobless Claims were reported at 385,000, right smack at expectations, and show that the labor market is continuing to improve.
• Friday will bring two additional reads on our economic recovery: The Consumer Sentiment Index and the Gross Domestic Product Report, which is the broadest measure of economic activity.
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 improved due to the turmoil around the world, but they were unable to improve above a key technical level. I’ll be watching to see which way the markets move this week.

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Chart: Fannie Mae 4.0% Mortgage Bond (Friday Mar 18, 2011)

The Mortgage Market Guide View…

Home Equity Lines of Credit and Your Credit Score
What You Need to Know and Do
Credit reports have always been important, but they’ve grown even more important in recent years. Now more than ever, you need to make sure you understand what’s on your credit report – and you need to know what steps you can take to improve your score.
For example, did you know that a Home Equity Line of Credit (HELOC) can impact your credit score quite dramatically… and sometimes unfairly… depending on how it is reported?
Here’s What You Need to Know… and Do!
First, you need to know that HELOC’s are commonly reported by the three credit bureaus as revolving accounts. In reality however, they do not fall under the typical revolving terms, even though they are set up in the same way as a revolving account. That’s because HELOC’s are secured by an asset.
Here’s the Good News…
The Fair Credit Reporting act requires reporting agencies to report true and accurate information. So when a HELOC is reported as a revolving account, you can actually send a letter to the three credit bureaus asking them to change the type of account from “Revolving” to “Line of Credit” or “Other.”
This way, the account will not be rated by the scoring system using the “Balance to Limit” ratio scenario – which can drop a credit score by as much as 75 points if the HELOC is maxed out to the limit of the available credit line.
A Final Word of Advice
If you do decide to send a letter, you should send it as a Certified Letter, along with a copy of the HELOC agreement. You may have to send the letters more than once, but persistence is the key to accomplishing a positive result with the bureaus.
This article was adapted from information provided by national credit expert Linda Ferrari, author of “THE BIG SCORE: Getting It and Keeping It, Buying Power for Life.” Learn more and check out her credit resources at www.lindaferrari.com

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Economic Calendar for the Week of March 21-25, 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 March 21 – March 25
Date ET Economic Report For Estimate Actual Prior Impact
Mon. March 21 10:00 Existing Home Sales Feb 5.05M 5.36M Moderate
Wed. March 23 10:00 New Home Sales Feb 288K 284K Moderate
Thu. March 24 08:30 Jobless Claims (Initial) 3/19 384K 385K Moderate
Thu. March 24 08:30 Durable Goods Orders Feb 0.9% 3.2% Moderate
Fri. March 25 08:30 Gross Domestic Product (GDP) Q4 2.9% 2.8% Moderate
Fri. March 25 08:30 GDP Chain Deflator Q4 0.4% 0.4% Moderate
Fri. March 25 10:00 Consumer Sentiment Index (UoM) Mar 68.0 68.2 Moderate

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:

Certified Mortgage Planner, Curtis Schartz, Home loan, Interest Rate, Interest Rates, kansas city, lees summit, Mortgage, mortgage backed securities, no cost refinance, overland park, Pulaski Bank, purchase, Rates, Refinance, shawnee

Markets Moved by Tsunami and Saudi Arabia

By Curtis Schartz, CMPS

Mar

In This Issue…

Last Week in Review: Our hearts and minds – as well as the markets – were moved by the tsunami in Japan and unrest in Saudi Arabia. Read how both impacted Bonds and home loan rates!
Forecast for the Week: Double dose after double dose hits the news wires this week. Find out what to watch and why!
View: Discover the pros, cons, and interesting tidbits about Daylight Saving Time, which begins this week.
Last Week in Review

“And now… the rest of the story” – Paul Harvey. With his famous line, Paul Harvey pointed out for years that there’s more to every story – and often those hidden details influence what happened. With that in mind, let’s look at the “rest of the story” behind last week’s news items, which had alternating impacts on Bond prices and home loan rates.
First, let us start by sending our thoughts and prayers to the families affected by last week’s earthquake and tsunami in Japan. The earthquake was a magnitude of 8.9 – the strongest in 140 years. The earthquake in Japan and its damage created some counterintuitive market reactions.
One would think that US Treasuries and Mortgage Bonds would have traded much higher, as often is the case with devastating natural events that drive money into “safe haven” trades. But that wasn’t the case. Why? The answer is that buying of Treasuries and Mortgage Bonds as a safe haven trade was offset by the Japanese selling some of their own massive holdings of Treasuries and Mortgage Bonds, in order to repatriate money back to their country during the time of emergency. Considering that Japan is the second largest holder of U.S. debt at $877 Billion, selling just a tiny position of their holdings has an impact on Bond prices.
In addition, Bond prices traded in very volatile fashion last week after getting jockeyed around on news out of Saudi Arabia that police had opened fire on protesters with rubber bullets. Let’s look at how this influenced the markets in a different way than one might at first imagine.
Like other recent uprisings in the Middle East, Saudi protesters are looking for more democracy, the right to elect public officials, greater civil rights, freedom of expression, more women’s rights and a higher minimum wage. Interestingly, however, oil fell last week, despite the news. Why? Shouldn’t unrest in Saudi Arabia – the world’s largest oil producer, push prices higher? Yes, but that news was offset by the earthquake in Japan. That’s because Japan is a huge importer of oil… and the market senses that the earthquake and subsequent tsunami may create an economic slowdown and diminish the demand for oil.
Seeing that Mortgage Bonds are lower – even in the face of weak Stocks and enormous uncertain global news – tells us that the gains in Bonds are not coming with a lot of conviction and Traders are selling into this strength. This is because a lot of headwinds remain for Bonds – like inflation abroad, rising government debt and continued QE2 purchases.
This is a good example of why it is important to work with a mortgage professional that understands not only what was reported in the news, but also how the many cross currents may have alternating effects on everything from Bonds, Stocks, Oil to the US Dollar.
Forecast for the Week

“Double dose!” is the phrase of the week, as we’ll see multiple reports this week focusing on the same segments of the economy:
• We’ll start off with some big news Tuesday, when the Federal Reserve holds its FOMC meeting and releases its Policy Statement later that afternoon. As always, what the Fed says about the economy, inflation, and its Quantitative Easing program could have an impact on home loan rates.
• There’s a double dose of real estate news with Wednesday’s release of data on Housing Starts and Building Permits in February. Check back with me on Wednesday to get the breakdown of how the news actually arrived!
• There’s also a double dose of manufacturing news. Tuesday’s Empire State Index looks at New York State’s manufacturing sector and is a good gauge of manufacturing overall, while on Thursday we’ll also see another important manufacturing report in the Philadelphia Fed Index.
• A double dose of inflation news also comes our way this week with Wednesday’s Producer Price Index Report, which highlights inflation at the wholesale level, and Thursday’s Consumer Price Index Report, measuring inflation for consumers like you and me! Remember: The Fed is intent on creating inflation, which is unfriendly to home loan rates, and signs of inflation from these reports could be unfavorable for rates.
• Thursday we’ll get a read on employment with the weekly Initial Jobless Claims Report. Initial Jobless claims rose 26,000 in the latest week to 397,000, which was above expectations but still below that psychological barrier of 400,000.
• Finally, on Thursday we’ll see a double dose of manufacturing data with the release of reports on Capacity Utilization and Industrial Production in February. The capacity utilization rate provides an estimate of how much factory capacity is in use. If the utilization rate climbs too high it can lead to inflationary bottlenecks in production. The Federal Reserve watches this report closely and decides how to set interest rates on the basis of whether production constraints are threatening to cause inflation.
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 by the arrows in the chart below, Bond prices experienced some up-and-down volatility last week, but ended the week near where they began – meaning home loan rates are still near historic lows.
So what should you do if you or someone you know is in the market for a new home?
The bottom line is that even if housing were to drop a little further in some areas, the affordability coming from today’s rates serves as a backstop against any moderate price reduction. Remember, housing will likely be in a much better position in the second half of the year and at that time rates could be a bit higher. Now’s the time to take advantage of the combination of low rates and affordable housing. Call or email today to get started.

Chart: Fannie Mae 4.0% Mortgage Bond (Friday Mar 11, 2011)

Sping Forward Beginning March 13

Daylight Saving Time (DST) begins on Sunday, March 13, 2011. The way we refer to time zones also changes. For example, Eastern Standard Time (EST) becomes Eastern Daylight Time (EDT).
But remember, some areas of the United States don’t use DST, such as Arizona, Puerto Rico, Hawaii, the US Virgin Islands and American Samoa.
Benefits of Daylight Saving Time
Despite some concerns, Americans overwhelmingly like Daylight Saving Time. There is simply more sunlight in the evenings to enjoy the outdoors and get things done. Plus, additional hours of daylight can help save energy on a national scale – as much as 100,000 barrels of oil per day according to some estimates.
And brighter is safer. Studies have shown that the DST shift reduces traffic accidents. Additionally, a study by the US Law Enforcement Admin also determined that crime is consistently lower during DST, with violent crimes down as much as 10% to 13%. For many crimes, like mugging, darkness is a factor–so more light in the evening hours reduces these types of crimes.
Cons of Daylight Saving Time
Not everyone benefits from DST. For example, many farmers say that DST has a negative impact on their livestock’s natural schedules. The airline industry also reports that it costs millions of dollars to adjust time schedules – and even then, airlines report numerous problems with international flight connections during the transition time since DST isn’t followed uniformly around the world.
Interesting DST Facts
• A man was actually able to avoid the draft for the Vietnam War using a Daylight Saving Time loophole. When he was born, it was just after midnight, DST. When he was drafted, he successfully argued that in his home state of Delaware, standard time – not DST – was the official time for recording births. So he was technically born on the previous date – which had a much higher draft lottery number – and he was able to avoid being drafted.
• In September 1999, the West Bank was on Daylight Saving Time, while Israel had switched back to standard time. A group of West Bank terrorists prepared some timed bombs. Unfortunately for them, they misunderstood the time change and the bombs exploded early – killing the terrorists themselves rather than the intended victims, two busloads of innocent citizens.
• In the 1950s and 60s, each state and locality was permitted to choose start and end DST dates as they desired. During 1965, Minneapolis and St. Paul – which are considered one metropolitan area – didn’t agree on start dates, and for a period of time, these Twin Cities had a one hour time change between them. And on one Ohio to Virginia bus route, passengers technically had to change their watches seven times in 35 miles!
• To keep to their published timetables, Amtrak trains cannot leave a station before the scheduled time. So when the clocks “fall back” in the fall, all trains that are running on time actually stop at 2 am – the official time of DST change – and wait one hour before resuming their routes. In the spring, the routes instantaneously become one hour behind schedule, but they just keep going and do their best to make up the time.
Finally, since many electronic devices and computer programs are set to adjust to DST based on the old dates, they may not change automatically on March 13. So, you’ll want to double-check all of your devices and confirm that the time is correct.

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Economic Calendar for the Week of March 14-18, 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 March 14 – March 18
Date ET Economic Report For Estimate Actual Prior Impact
Tue. March 15 08:30 Empire State Index Mar 17.0 15.43 Moderate
Tue. March 15 02:15 FOMC Meeting Mar HIGH
Wed. March 16 08:30 Housing Starts Feb 551K 596K Moderate
Wed. March 16 08:30 Building Permits Feb 570K 562K Moderate
Wed. March 16 08:30 Producer Price Index (PPI) Feb 0.6% 0.8% Moderate
Wed. March 16 08:30 Core Producer Price Index (PPI) Feb 0.2% 0.5% Moderate
Thu. March 17 10:00 Index of Leading Econ Ind (LEI) Feb 0.9% 0.1% Low
Thu. March 17 09:15 Capacity Utilization Feb 76.5% 76.10% Moderate
Thu. March 17 09:15 Industrial Production Feb 0.6% -0.1% Moderate
Thu. March 17 08:30 Core Consumer Price Index (CPI) Feb 0.1% 0.2% HIGH
Thu. March 17 08:30 Consumer Price Index (CPI) Feb 0.4% 0.4% HIGH
Thu. March 17 08:30 Jobless Claims (Initial) 3/12 387K 397K Moderate
Thu. March 17 10:00 Philadelphia Fed Index Mar 28.0 35.9 HIGH

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:

Certified Mortgage Planner, Curtis Schartz, home, Home loan, Interest Rates, kansas city, lees summit, overland park, Pulaski Bank, purchase, Refinance, shawnee, No Cost Refinance

MMG Weekly: Something to sing about in 2011

By Curtis Schartz, CMPS

Jan

In This Issue…

Last Week in Review: Traders were singing one minute only to scream the next. Read below to see why!
Forecast for the Week: How many high-impact reports can you fit in a week? Find out below.
Video View: Which credit card is right for you? Discover how to decide… plus learn about new rules that impact you!
Last Week in Review

“Wild thing! You make my heart sing!” – By The Troggs. Traders found themselves singing one minute only to be screaming the next, as Bonds saw huge swings up and down of 100 basis points on multiple days last week.
Remember, home loan rates are based on Mortgage Bond prices, so huge swings in Bonds causes home loan rates to shift as well. This underscores why it’s so important to work with a knowledgeable professional who understands how interconnected the market is and can help homeowners lock in at the most opportune times.
To help make sense of the volatility, here’s a montage of the top 5 hits last week that Traders and Bond investors appeared to be singing… and why.
#1 “Monday, Monday… so good to me.” – By The Mammas and the Papas
Last week started out with Bond prices receiving a nice bump on Monday thanks to strong demand for the Treasury Department’s auction of $35 Billion in 2-Year Notes.
#2 “Bonds in low places.” – To paraphrase Garth Brooks
On Tuesday, the Treasury Department auctioned off another $35 Billion… this time in 5-Year Notes, which carry more inflation risk. That auction wasn’t received nearly as well and sparked a sell off of Bonds.
To make matters worse, the sell off was exacerbated by the ultra-thin holiday trading volume. In other words, with many Traders out of the office for the holidays, there simply weren’t enough buyers in the market to offset the selling. So when prices dropped on Tuesday, the selling pressure gained momentum with each sale and the losses grew more dramatic. The end result was a drop of 100 basis points in Bond prices!
#3 “I’m Back. Bonds have lifted. And raised the gifted.” – To paraphrase Kid Rock
What a difference a day makes! Just one day after Bonds dropped 100 basis points, the opposite happened and Bonds saw a huge upswing. How was that even possible? Bargain hunting and a strong performance by the Treasury Department’s 7-Year Note auction were the catalysts behind the move, as buyers came out in droves and pushed Bonds up 119 basis points!
#4 “Home sweet home!” – By Mötley Crüe
Volatility wasn’t the only story that hit home last week. The final S&P Case-Shiller Home Price Index for the year was also released last week. According to the report, home prices in 20 metropolitan cities fell 0.8%, which was below the 0.1% improvement that was expected and the sharpest year-over-year decline in a year. This was not a good report, and when you consider more foreclosures coming to the market, it is likely that home prices could remain under pressure for part of 2011. Stubbornly high unemployment has played a role in seeing meaningful improvement in housing.
#5 “You’re unbelievable!” – By EMF
The volatility continued throughout the week, swinging another 54 basis points on Thursday alone. But in the end – through all the ups and downs – Bonds and home loan rates were able to finish the week strong. That means home loan rates are still unbelievably low as we start the new year.
That means you still have something to sing about. Despite the overall negative trend, home loan rates are still near historic lows… at least for the time being. That may not be the case in the weeks and months ahead. Call or email today to start the process – it only takes a few minutes.
Forecast for the Week

The new year kicks off with a bang, as nearly all of the reports due out this week are rated as having the potential for a high impact on the markets!
• We start off right away Monday morning with the ISM Index. This is the king of all manufacturing indices and is considered the single best snapshot of the factory sector, so it has the potential to move the markets if it doesn’t meet expectations that it will come in better than the prior reading.
• Tuesday brings us the first release of FOMC Minutes of the year. Although the Fed has already released its policy statement, the markets will be examining the minutes closely for indications of the Fed’s thinking regarding important topics like inflation, rates, and the overall economy.
• We’ll also see some important employment news this week. First up is the ADP National Employment Report on Wednesday, which measures non-farm private employment. The report is expected to show fewer jobs created in December than the previous reading of 93,000 jobs created in November.
• The ADP Report will be followed the next day with another round of Initial Jobless Claims on Thursday. In last week’s report, Initial Jobless Claims was reported at the lowest level since July 2008. That was good news for the labor market, but we still need to see if this report was skewed by the holidays or if it was the start of a trend lower in new unemployment claims.
• The big news of the week will be the release of the all-important Jobs Report this Friday. The Average Work Week and Unemployment Rate are expected to hold steady, while Hourly Earnings and Non-Farm Payrolls are expected to rise.
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 important thing to note in the chart below is that the overall trend for Bond prices has been downward, which is not good for home loan rates. But last week, Bonds were able to finish strong, which demonstrates that there are opportunities to benefit from positive shifts in the market and low home loan rates despite the overall negative trend.
If you or someone you know has been thinking about purchasing or refinancing a home, call or email today to discuss your goals and how you can take advantage of these nice bumps in the Bond market.

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Chart: Fannie Mae 4.0% Mortgage Bond (Friday, December 31, 2010)

The Mortgage Market Guide View…

Which Card is Right for You?
These days, most people use at least one credit card and many of us use more than one. And while it’s certainly important to avoid amassing large amounts of debt, it’s also important to make sure you pick the right credit card for you. The following video from www.Kiplinger.com contains tips that can help you do just that.
View Video ————————–
Economic Calendar for the Week of January 3-7, 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 January 03 – January 07
Date ET Economic Report For Estimate Actual Prior Impact
Mon. January 03 10:00 ISM Index Dec 58.0 56.6 HIGH
Tue. January 04 02:00 FOMC Minutes 12/14 HIGH
Wed. January 05 08:15 ADP National Employment Report Dec 100K 93K HIGH
Wed. January 05 10:00 ISM Services Index Dec 55.6 55.0 Moderate
Thu. January 06 08:30 Jobless Claims (Initial) 01/01 405K 388K Moderate
Fri. January 07 08:30 Non-farm Payrolls Dec 132K 39K HIGH
Fri. January 07 08:30 Unemployment Rate Dec 9.8% 9.8% HIGH
Fri. January 07 08:30 Hourly Earnings Dec 0.1% 0.0% HIGH
Fri. January 07 08:30 Average Work Week Dec 34.3 34.3 HIGH

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:

Certified Mortgage Planner, Curtis Schartz, home, Home loan, Interest Rates, kansas city, lees summit, overland park, Pulaski Bank, purchase, Refinance, shawnee, No Cost Refinance

MMG Weekly: What A Year It’s Been

By Curtis Schartz, CMPS

Dec

In This Issue

Last Week in Review: The Fed met, and Congress passed the Tax Cut Bill. But what do both of these mean for home loan rates?
Forecast for the Week: Housing, inflation, and jobs news – all in a holiday shortened week.
View: As you unwrap gifts this holiday season, don’t throw the wrapping paper in with your Yule Log… find out why, and other tips on keeping your holiday season safe and fun.
Last Week in Review

“All good things must come to an end…” or so the popular saying goes. And right now, many people are wondering if this sentiment holds true for the historic low rates we’ve seen this year. Here’s what last week’s news suggests.
First, it’s important to understand that home loan rates are based on Mortgage Backed Securities, which is a type of Bond. Bonds typically help provide some built in “assistance” when the nation is suffering economic headwinds. For example, negative economic news serves to help Bond prices improve and rates decline, including home loan rates. This is helpful to have when the economy is struggling, as buyers of all products – including homes – need the extra incentive of low rates to be encouraged to buy.
But now, the sharply higher expectations for future economic growth has caused rates to climb – particularly including home loan rates, since the Fed announced its second round of “Quantitative Easing” or QE2 on November 3rd. With QE2, the Fed will purchase $600 Billion in Treasury Securities through mid-2011 to keep our economic recovery on track.
But is there any likelihood rates can rebound? Many experts expect that home loan rates will continue to move higher over time because:
• At its meeting last week, the Fed left the door open for further QE programs if our economic recovery requires which, like QE2, could hurt Bonds and home loan rates.
• Congress passed the $858 Billion Tax Cut Bill, and while this is a good economic stimulus, in the short run it adds to the ever-growing deficit – also bad for Bonds and home loan rates.
• Last week’s Producer Price Index and Consumer Price Index Reports showed that the Fed appears to be on track with their goal of stimulating a bit more inflation. Inflation erodes the value of the fixed return provided by a Bond, which causes home loan rates to rise.
It’s important to understand that rates don’t simply rise in a straight line. In fact, Bonds and home loan rates did have a late-week rally last week, and that trend of rates worsening with improving dips here and there like we saw last week may be what’s in store for us in the weeks and months ahead. At the end of the day, the ongoing and potential addition of further stimulus from the Fed, combined with the stimulus from the tax cuts, will make it tough for Bonds and home loan rates to return to the levels seen earlier this year.
But the good news is that home loan rates are still extremely attractive right now. If you have been thinking about purchasing or refinancing a home, call or email me now to get started. Or forward this newsletter on to someone you know who may benefit from today’s historically low rates.
Forecast for the Week

It will be a holiday shortened week, with the Bond Market closing at 2:00pm ET Thursday and both the Stock and Bond Markets closed Friday in honor of the Christmas holiday. But there will be plenty of action first, including:
• A double dose of housing news with Wednesday’s Existing Home Sales Report and Thursday’s New Home Sales Report.
• Wednesday also brings a read on the economy with the Gross Domestic Product Report, which is the broadest measure of economic activity.
• Big inflation news comes on Thursday with the Personal Consumption Expenditure (PCE) Index, which is the Fed’s favorite gauge of inflation, plus there’s also the Personal Income and Personal Spending Reports, which give us some information on the consumer perspective of the economy.
• Thursday’s Initial and Continuing Jobless Claims Reports will also tell us if the good trend continues – last week’s Initial Claims was the second lowest number seen during 2010, and also the third decline in four weeks.
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 rallied at the end of last week. Now would be a great time to call or email me if you have any questions about your situation!

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Chart: Fannie Mae 4.0% Mortgage Bond (Friday, December 17, 2010)

The Mortgage Market Guide View…

Make Your Holiday as Safe as it is Happy
The holiday season is a special time of year, but the Consumer Product Safety Commission (CPSC) wants to remind everyone that it can also be dangerous. So the CPSC has issued a number of safety tips for the holidays and a holiday safety video to help keep families healthy, safe, and happy this season.
Here are just three of the important tips that the CPSC posted on its website:
1. Choose Age-Appropriate Toys. Look at the age recommendation on the toys you are choosing and match that recommendation to your child. Avoid toys with small parts for children younger than three-years-old. Those small parts can cause a child to choke. For children under six-years-old, avoid play sets or building toys with small magnets. A child can swallow those magnets, which can result in a serious injury or even death. Starting at a young age, teach your children not to put toys in their mouths.
2. Gear Up. If sports-related gifts such as ride-on toys, bicycles, skates or scooters are on your gift list or around your house, make sure to include helmets that are sized to your child’s head and other appropriate safety gear. And then, make sure your child wears the gear properly EVERY time he or she uses the toy or sports equipment.
3. Plastic Wrap. Keep a trash bag at your fingertips while your kids are opening presents. That way, you can immediately throw away plastic wrappings and other toy packaging before they become dangerous playthings. As an added bonus, it makes your cleanup faster, too.
Plus…
Here are two bonus tips from the CPSC’s Twitter account:
• “Heated rooms rapidly dry out live trees. Be sure to monitor water levels and keep the tree stand filled with water.”
• “Never put wrapping paper in the fireplace. It can result in a chimney fire.”
If you ever have questions about the safety of a toy or product, visit the CPSC’s website at http://www.cpsc.gov/onsafety/.
You can also follow the CPSC on Twitter at http://twitter.com/OnSafety and even watch safety videos on YouTube at http://www.youtube.com/USCPSC.
Have a safe and happy holiday!

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Economic Calendar for the Week of December 20-24, 2010
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 December 20 – December 24
Date ET Economic Report For Estimate Actual Prior Impact
Wed. December 22 08:30 Gross Domestic Product (GDP) Q3 2.7% 2.5% Moderate
Wed. December 22 08:30 Chain Deflator Q3 2.3% 2.3% Moderate
Wed. December 22 08:30 Existing Home Sales Nov 4.68M 4.43M Moderate
Thu. December 23 10:00 Consumer Sentiment Index (UoM) Dec 75.0 74.2 Moderate
Thu. December 23 08:30 Jobless Claims (Initial) 12/18 424K 420K Moderate
Thu. December 23 08:30 Personal Consumption Expenditures and Core PCE Nov NA 0.9% HIGH
Thu. December 23 08:30 Personal Consumption Expenditures and Core PCE Nov 0.1% 0.0% HIGH
Thu. December 23 08:30 Personal Spending Nov 0.5% 0.4% Moderate
Thu. December 23 08:30 Personal Income Nov 0.2% 0.5% Moderate
Thu. December 23 10:00 New Home Sales Nov 303K 283K Moderate

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:

Certified Mortgage Planner, Curtis Schartz, home, Home loan, Interest Rates, kansas city, lees summit, overland park, Pulaski Bank, purchase, Refinance, shawnee

MMG Weekly: Where are rates headed – and why?

By Curtis Schartz, CMPS

Dec

In This Issue

Last Week in Review: Are rates going to come back? Here’s a break down of possible scenarios!
Forecast for the Week: Get ready for a busy week. Find out what you should watch.
View: Know someone in college or headed there soon? Watch the video below for tips to avoid unexpected college costs.
Last Week in Review

“Where do we go from here?” That question from Alicia Keys’ song is on the minds of many Americans, as they wonder where home loan rates are headed after the recent negative news for Bonds.
Last week, Congress was busy at work on negotiations to extend the Bush-era tax cuts. That news kept a lid on any improvement for Bonds and home loan rates, due to the prospect of an ever-increasing deficit.
And adding to the troubles for Bonds and home loan rates last week was news that inflation is growing in China… and growing fast. How does that impact us? Remember, it’s a global economy, so Bond prices all over the world worsen on news of inflation, which is bad for home loan rates.
So the big question is: Will home loan rates go back down?
Although rates are still near historic lows, they have been headed up… and indications are that those unbelievably low home loan rates may be behind us. In fact, there are only a few things that would bring back the lows that we saw in early November:
• If the tax cut package doesn’t get passed, it would be very bad news for the economy and Stock market – but it would help interest rates.
• If the Fed’s recent round of Quantitative Easing falls on its face and doesn’t meet its mission of creating inflation, boosting Stock prices, lowering unemployment and creating consumer demand – Bond prices could make some gains as the threat of deflation reemerges. But this is a long shot.
• If the financial problems in Europe worsen significantly – which would drive investors into the safe haven of the US Bond market – it could help Bond prices, but probably only modestly.
Realistically, the chances of these events happening are unlikely – and in the end, rates may see some brief and fleeting improvements, but many experts believe they will likely continue to creep up over time. And when you include the stimulative action of extending the present tax rates and adding further cuts, it’s tough to see Bonds or home loan rates improving much.
The good news is that home loan rates are still extremely attractive and are still near historic lows for now. If you or someone you know has been thinking about purchasing or refinancing a home, NOW is the time to call or email to get started.
Forecast for the Week

Get ready for a busy week of economic reports and news that could impact home loan rates!
• We’ll start off Tuesday morning with the Retail Sales report for November, as well as the Fed’s final FOMC Meeting and Policy Statement of the year coming on Wednesday.
• We’ll also see new inflation reports starting on Tuesday with the Producer Price Index (PPI), which measures inflation at the wholesale level. The very next day, we’ll see the Consumer Price Index (CPI) with a look at inflation on the consumer level. With all of the recent talk over inflation concerns in the future, it will be important to see what these reports reveal – since inflation is the archenemy of Bonds and home loan rates.
• We’ll also get a dose of manufacturing news in the Empire State Index, which looks at New York State’s manufacturing sector, and is a good gauge of manufacturing overall. On Thursday, we’ll also see the Philadelphia Fed Index, which is another important manufacturing report. Those two indices have the potential to impact the market, since they indicate the health of the manufacturing sector in the US.
• Thursday brings the Initial and Continuing Jobless Claims Report. Last week, Initial Jobless Claims came in at 421,000, which was below expectations. That was encouraging news, but we still need to see consistent readings below 400,000 before real confidence in the labor market can take hold.
• Finally, we’ll see more housing news this week, when reports on Housing Starts and Building Permits in November are released on Thursday.
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 the recent direction of Bonds – and, therefore, home loan rates. The important thing to note is the downward trend, which shows how Bond pricing and therefore home loan rates continued to worsen last week.
Fortunately, there’s still time to lock in at near historic lows. It only takes a few minutes to see if this makes sense for you, or one of your friends, family members, neighbors, clients or coworkers. Call or email today, and I’ll be happy to help right away.

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Chart: Fannie Mae 4.0% Mortgage Bond (Friday, December 10, 2010)

The Mortgage Market Guide View…

Surprise: More College Expenses! Here’s How to Avoid Them…
College tuition costs are staggering these days – and so are some of the college-related expenses that you may not be expecting. Watch this video from Kiplinger.com on unexpected college expenses to come up with ways to avoid those indirect costs.
Whether you’re planning to send a child to college soon or you know a student in college this year that has already experienced some of these unexpected costs, this video is invaluable!

————————–
Economic Calendar for the Week of December 13-17, 2010
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 December 13 – December 17
Date ET Economic Report For Estimate Actual Prior Impact
Tue. December 14 08:30 Producer Price Index (PPI) Nov 0.5% 0.4% Moderate
Tue. December 14 08:30 Core Producer Price Index (PPI) Nov 0.2% -0.6% Moderate
Tue. December 14 08:30 Retail Sales Nov 0.8% 1.2% HIGH
Tue. December 14 08:30 Retail Sales ex-auto Nov 0.6% 0.4% HIGH
Tue. December 14 02:15 FOMC Meeting 12/14 Unch 0.25% HIGH
Wed. December 15 09:15 Capacity Utilization Nov 75.0% 74.8% Moderate
Wed. December 15 09:15 Industrial Production Nov 0.3% 0.0% Moderate
Wed. December 15 08:30 Empire State Index Dec 3.0 -11.14 Moderate
Wed. December 15 08:30 Core Consumer Price Index (CPI) Nov 0.1% 0.0% HIGH
Wed. December 15 08:30 Consumer Price Index (CPI) Nov 0.2% 0.2% HIGH
Thu. December 16 08:30 Jobless Claims (Initial) 12/11 425K 421K Moderate
Thu. December 16 08:30 Housing Starts Nov 545K 519K Moderate
Thu. December 16 08:30 Building Permits Nov 558K 550K Moderate
Thu. December 16 10:00 Philadelphia Fed Index Dec 12.5 22.5 Moderate
Thu. December 16 10:00 Index of Leading Econ Ind (LEI) Nov 1.2% 0.5% Low

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:

Certified Mortgage Planner, Curtis Schartz, home, Home loan, Interest Rates, kansas city, lees summit, overland park, Pulaski Bank, purchase, Refinance, shawnee

MMG Weekly: Is the Labor Market Showing Signs of Life… or Not?

By Curtis Schartz, CMPS

Oct

In This Issue

Last Week in Review: The highly anticipated Jobs Report for September is in. What was the news… and what does it mean for home loan rates?
Forecast for the Week: With the Meeting Minutes from the Fed’s last get together coming – as well as Retail Sales numbers, two inflation reports, and more Third Quarter earnings season ahead, a busy news week is in store!
View: Texting while driving has become a hot issue… but it doesn’t have to worry you anymore. Find out why below.
Last Week in Review

“EVERYBODY’S WORKING FOR THE WEEKEND….” (Loverboy, 1981) Or… are they? Unfortunately, many folks out there these days sure wish they were working at all… and the Labor Department reported last Friday that the US lost 95,000 jobs in September. What else did the Jobs Report say and what could the news mean for home loan rates? Read on for details.
A closer look at the Jobs Report for September shows that 159,000 of the jobs lost were government workers, many of which are the unwinding of the temporary census hires. The more important private sector added 64,000 jobs – but still not great, and also below the 74,000 expected. But this number confirms the thought that the economy, or the Job market, is stabilizing and perhaps even improving, albeit it at a very gradual pace. More on why this is so important in a minute.
The Jobs Report also showed that the Unemployment Rate remained at 9.6%, just below the 9.7% anticipated. However, it’s likely the actual rate of unemployment is higher. Why? Because if an unemployed individual does not seek employment for four weeks, they are removed from the count of the “officially unemployed.” And with unemployment benefits available for about 2 years, it increases an unemployed individual’s chances of becoming less motivated to look for a job, until the benefits are close to running out.
This can skew the headline Unemployment Rate, and is evidenced by the sharp rise in the overall unemployment rate or “U6″ measurement of unemployment, which stands at 17.1%. The U6 rate accounts for these discouraged workers who have not sought employment for the past four weeks, as well as those who have accepted part-time employment but would prefer to be working full-time.
Now, back to the question of why signs of good – or bad – economic news are particularly important of late. The Fed will be watching the various economic reports very closely over the next few weeks in advance of their next regularly scheduled meeting on November 2-3, as they are considering a second round of Quantitative Easing (QE2) to ensure that our slowing economy does not slow even further. If the economic reports that are ahead are more negative than positive, this will increase the likelihood of more QE… but it’s not a foregone conclusion at this point in the least.
So what does all this have to do with home loan rates? If the economic news continues to be soft and the Fed does go through with another round of QE, Bond prices and home loan rates may initially improve for two reasons. First, if the economic data is weak leading up to an announcement – that soft economic news tends to be bad for Stocks, but good for Bonds and therefore home loan rates. Additionally, Bonds would improve simply because the announcement of QE would include large Bond purchases. But keep in mind that the key word is “initially.” Even though Bonds and home loan rates could initially improve, the eventual softening of the Dollar, rising commodity prices, and rise in Stock prices would become a drag on Bonds, which would negatively impact home loan rates.
We’ll see what happens in the coming weeks leading up to the Fed’s next meeting on November 2-3. But last week, meanwhile, the news had a positive impact on Bonds and home loan rates, as they ended the week about .125 to .25 percent better than where they began.
If you or anyone you know would like to learn more about taking advantage of historically low home loan rates, please don’t hesitate to call or email me as soon as possible. Or forward this newsletter on to anyone you think may benefit and I’d be happy to talk to them free of charge.
FINDING IT HARD NOT TO TEXT AND DRIVE? YOU CAN DO IT SAFELY…THANKS TO THIS GREAT NEW APP. CHECK OUT THE MORTGAGE MARKET GUIDE VIEW FOR DETAILS.
Forecast for the Week

It may be a short week in the Bond Market, with the market closed Monday for the Columbus Day holiday (the Stock Market will be opened), but there will still be plenty of news to work through. On Tuesday, we’ll get a look at the Minutes from the Fed’s September 21st Meeting, and these may give us even more information about which way the Fed is leaning in the QE department.
A double dose of inflation news ends the week, with the Producer Price Index on Thursday (which measures inflation at the wholesale level) and the Consumer Price Index on Friday. Remember, inflation is the archenemy of Bonds and home loan rates, so any hint that inflation is increasing could cause home loan rates to worsen.
Two other reports to note include Thursday’s Initial and Continuing Jobless Claims (last week’s report, while not great, was slightly better than expected) and Friday’s Retail Sales Report. In addition, third quarter earnings season kicks into full gear this week. Some reports to look for include JP Morgan Chase and General Electric, reporting respectively Wednesday and Friday before the markets open.
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 hit record levels as the talk of QE2 continued. I’ll be listening closely for the latest developments on that front this week.

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Chart: Fannie Mae 3.5% Mortgage Bond (Friday, October 8, 2010)

The Mortgage Market Guide View…

Safer Driving… There’s an App for That!
A recent study by the National Highway Traffic Safety Administration found that distracted driving was the leading cause in 448,000 accidents and 5,474 highway deaths in 2009. That represents a 16% increase from 2008.
That increase is one reason why U.S. Transportation Secretary Ray Lahood has proposed mandatory warnings in automobiles about distracted driving. Lahood, like many parents today, is concerned about the growing increase of technology use in automobiles – including distractions that are being added to new cars that allow “drivers to update Facebook, surf the Web or do any number of other things instead of driving safely,” Lahood said.
Even without such built-in technology, drivers today are often distracted by incoming text messages on their cell phones. The good news is that technology can also help solve this problem. New services – like DriveSafe.ly – have sprung up that eliminate the need to read text messages AND eliminate the need to respond.
Here’s how it works… You download an application to your phone. Then, when you get in your car to drive, you simply turn the application on. When you receive a text message, the application actually reads it to you… automatically… and out loud. So there’s no need to take your eyes off the road.
Better still… the application automatically sends a reply message stating that you are driving and will respond as soon as you reach a destination that allows you to safely reply.
The application can be used on a variety of phones and there are even different plans – including a free version of DriveSafe.ly as well as family and business plans.
If you receive a lot of text messages while driving or if you have a teenager of driving age, this could be one of the most important safety steps you do this year. Take a few minutes to check it out.
After all, this simple application could save your life or the life of someone you know.

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Economic Calendar for the Week of October 11-15, 2010
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 October 11 – October 15
Date ET Economic Report For Estimate Actual Prior Impact
Tue. October 12 02:00 FOMC Minutes 9/21 HIGH
Thu. October 14 08:30 Jobless Claims (Initial) 10/9 449K 445K Moderate
Thu. October 14 08:30 Producer Price Index (PPI) Sept 0.2% 0.4% Moderate
Thu. October 14 08:30 Core Producer Price Index (PPI) Sept 0.1% 0.1% Moderate
Thu. October 14 08:30 Balance of Trade Aug -$44.5B -$42.8B Moderate
Fri. October 15 08:30 Empire State Index Oct 6.0 4.10 Moderate
Fri. October 15 08:30 Retail Sales ex-auto Sept 0.4% 0.6% HIGH
Fri. October 15 08:30 Retail Sales Sept 0.4% 0.4% HIGH
Fri. October 15 08:30 Core Consumer Price Index (CPI) Sept 0.1% 0.1% HIGH
Fri. October 15 08:30 Consumer Price Index (CPI) Sept 0.2% 0.3% HIGH
Fri. October 15 10:00 Consumer Sentiment Index (UoM) Oct 68.6 68.2 Moderate

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:

Certified Mortgage Planner, Curtis Schartz, home, Home loan, Interest Rates, kansas city, lees summit, overland park, Pulaski Bank, purchase, Refinance, shawnee

The Fed is Talking, But Will They Act?

By Curtis Schartz, CMPS

Jun

In This Issue

Last Week in Review: Fed members did a lot of talking…find out what they’re saying and what it means for home loan rates.
Forecast for the Week: Inflation, housing, and manufacturing reports are ahead. Plus, will the Euro show signs of stabilization?
View: Travel safely with these tips from Kiplinger.com on avoiding travel scams.

Last Week in Review

“ACTIONS SPEAK LOUDER THAN WORDS,” or so the popular saying goes. But the words from various Fed members on the actions they feel need to be taken are getting pretty loud. And what could all this potential action mean for home loan rates? Read on to learn more.
There has been growing debate among Fed members about when to begin raising the Fed Funds Rate. What is the Fed Funds Rate? It’s the lending rate banks charge each other for the use of overnight funds, and it is used as a base rate that many other lending rates are based on, for consumer and business loans. A higher Fed Funds Rate tends to slow economic activity, as it means the cost of borrowing to finance a purchase will be higher, while a lower rate helps to stimulate activity, a ripple effect that expands into all sectors of the economy. As you can see in the chart below, the Fed Funds Rate is currently at a range of 0.0-0.25%, and it has been this low for over a year to help stimulate our economy and move us from recession to recovery.
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Fed Funds Rate

If the Fed raises the Fed Funds Rate too soon, it could slow economic activity and cause a “double dip” recession. However, if the Fed waits too long to raise the Fed Funds Rate, inflation could result…and inflation concerns were a big reason for all the Fed chatter last week. Remember, inflation is the arch enemy of Bonds and home loan rates.
With mounting debt in the US and concerns that US debt will overtake GDP by 2012 – as well as the problems in Europe – there are many factors the Fed needs to consider before taking action. For instance, last week Fed Chairman Ben Bernanke said that the Unemployment Rate is likely to remain high for a while and he noted that the Fed “can’t wait until unemployment is where we’d like it to be” before tightening credit, or inflation could too easily get out of control. That said, recent reports like May’s Jobs Report and Retail Sales Report – which showed the first monthly decline since September 2009 – indicate that our economic recovery is still fragile at the moment. This means the Fed won’t want to act too quickly, either.
The next Fed Meeting is June 22-23rd, and while the Fed will most likely not raise the Fed Funds Rate at this time, more and more Fed members are expressing concerns about the current very accommodative monetary policy in place. Although home loan rates are not tied to the Fed Funds Rate, I’ll be watching this situation very carefully as it continues to unfold.
In addition, Bonds and home loan rates have benefitted lately from the situation in Europe, as global investors have sought the safe haven of our US Bonds. However, as the Euro’s freefall is finally showing some signs of stabilization, traders and investors can be very fickle in unwinding or reversing these trades pretty quickly. This could reverse the improvement we’ve seen in home loan rates, and we saw a sign of that last week. Bonds and home loan rates ended the week a bit off their best levels of the week…but are still incredibly low overall.
If you or anyone you know would like to take advantage of the exceptional opportunity that exists in the home loan marketplace at this point in history, please don’t hesitate to call or email. Or forward this newsletter on to anyone you think may benefit as well!
PLANNING A VACATION IS AN ACTION MANY OF US TAKE DURING THE SUMMER. CHECK OUT THE MORTGAGE MARKET GUIDE VIEW BELOW FOR TIPS FROM KIPLINGER FOR AVOIDING TRAVEL SCAMS.
Forecast for the Week

There will be plenty of inflation news for the Fed to gather this week, ahead of its meeting later this month. First, there’s Wednesday’s Producer Price Index, which measures inflation at the wholesale level, which will be followed by Thursday’s Consumer Price Index. As mentioned above, inflation is the arch enemy of Bonds and home loan rates, so it will be important to see what these reports reveal.
Housing, manufacturing, and job news are also in store this week, with Wednesday’s Housing Starts and Building Permits Reports (which give us an update on the health of the new construction sector of the housing market) and Thursday’s Philadelphia Fed Report (which gives us an update on the manufacturing sector).
We’ll also have another weekly Initial Jobless Claims Report. Initial Jobless Claims numbers have remained stubbornly high. The most troubling numbers in last week’s report are the additional 5.13M people claiming EUC (Emergency Unemployment Compensation), which are benefits lasting longer than 26 weeks, up to 99 weeks in total.
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 have rallied in the last few months, helped by the uncertainties in Europe. But remember, traders are fickle, and stabilization in Europe could bring an end to this rally. I’ll be watching closely to see what happens this week.
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The Mortgage Market View

Six Travel Scams to Avoid
All of these deals are too good to be true.
By Cameron Huddleston, Kiplinger.com
The summer travel season is almost here. If you’re looking for deals, make sure you don’t become the victim of a scam when trying to score a bargain. I spoke with SmarterTravel.com contributing editor Ed Perkins to find out which scams are most common and what you can do to avoid them. Here’s his list:
1. Phony airline tickets
How it works: A Web site or travel agency offers a deal better than anyone else’s, won’t accept credit cards and instead demands direct transfer of funds. What you get is a plane ticket that’s worthless.
How you can avoid this scam: Don’t deal with an outfit you’ve never heard of. See our list of the 28 best travel sites for legitimate companies. Don’t purchase airline tickets or any travel accommodations through a group that won’t accept a credit card. If you have a dispute with a merchant — for example, you were sold a phony plane ticket — you may have an easier time working out a solution if you paid with a credit card.
2. Pay now for future travel
How it works: You’re approached to enroll in a club that will enable you to take future vacations for an upfront fee of thousands to tens of thousands of dollars. After enrolling, you try to book a vacation but are told that the location or time period you want is unavailable. Then you might be asked for more money to gain access to more upscale spots that would be available.
How to avoid this scam: Unless you know someone who participates in a particular program and is happy with the service, stay away from these clubs. Even if your friend recommends a club, do some research of your own. See Resources to Help You Check Out a Company.
3. Travel like a travel agent
How it works: You receive a promotion in the mail or e-mail telling you that you can travel like a travel agent or sell travel from your home. The group purports to be a large travel agency that will provide back-office support while you sell travel packages. For a fee (usually $495 or $4,900), you’ll receive training and a travel agent ID card that you can use when making reservations to get a special rate.
How to avoid this scam: “There’s hardly an airline or hotel that doesn’t know about these phony IDs,” Perkins says. Even legitimate travel agents have a tough time getting discounts on airfare. Toss the promotion in the trash or hit “delete.”
4. No-ticket event packages
How it works: A tour operator offers a package for a big event, such as the Super Bowl, but doesn’t actually have tickets to the event.
How to avoid this scam: Ask the tour operator if it has event tickets in hand. Of course, the representative could lie. So it’s best to buy through an organization you know.
5. Phony insurance
How it works: A travel agent sells you a “protection plan” that’s supposed to reimburse you if you have to cancel your trip. The policy, however, is unlicensed and you won’t get your money back.
How to avoid this scam: Make sure the product you’re being sold really is a licensed insurance policy. You can see a list of licensed travel insurance companies at the U.S. Travel Insurance Association site. See The Case for Travel Insurance to learn more about what travel insurance covers. You can compare policies at InsureMyTrip.com.
6. “We will sell your timeshare”
How it works: Groups charge an upfront fee to sell your unwanted timeshare. “The bottom line is they don’t,” Perkins says.
How to avoid this scam: Avoid any group that promises to sell your timeshare for a fee (other than cheap listing fee). If you have a timeshare you just can’t unload, consider posting on Craigslist with an offer to give away your timeshare for free to anyone who will take over the commitment.
Reprinted with permission. All Contents © 2010 The Kiplinger Washington Editors. www.kiplinger.com.
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Economic Calendar for the Week of June 14 – June 18
Date ET Economic Report For Estimate Actual Prior Impact
Tue. June 15 08:30 Empire State Index Jun 20.0 19.11 Moderate
Wed. June 16 10:30 Crude Inventories 6/12 NA -1.83M Moderate
Wed. June 16 09:15 Industrial Production May 0.7% 0.8% Moderate
Wed. June 16 09:15 Capacity Utilization May 74.2% 73.7% Moderate
Wed. June 16 08:30 Producer Price Index (PPI) May -0.4% -0.1% Moderate
Wed. June 16 08:30 Core Producer Price Index (PPI) May 0.1% 0.2% Moderate
Wed. June 16 08:30 Building Permits May 655K 610K Moderate
Wed. June 16 08:00 Housing Starts May 655K 672K Moderate
Thu. June 17 08:30 Jobless Claims (Initial) 6/12 NA 431K Moderate
Thu. June 17 08:30 Consumer Price Index (CPI) May -0.1% -0.1% HIGH
Thu. June 17 08:30 Core Consumer Price Index (CPI) May 0.1% 0.0% HIGH
Thu. June 17 10:00 Index of Leading Econ Ind (LEI) May 0.4% -0.1% Low
Thu. June 17 10:00 Philadelphia Fed Index Jun 17.0 21.4 HIGH

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:

Curtis Schartz, Certified Mortgage Planner, Pulaski Bank Home Lending, Overland Park, Kansas City, Lee’s Summit, Olathe, Leawood, Lenexa, Independence, Liberty, Parkville, Gladstone, Shawnee.

Fed Doesn’t Change Their Tune

By Curtis Schartz, CMPS

May

Last Week In Review

They say “the only constant is change…”, yet last week’s meeting of the Federal Open Market Committee ended without any major changes…no change to the Fed Funds Rate, and no change to the now-famous verbiage in their Policy Statement, stating that rates will remain low for an “extended period” of time. While the Fed does not control home loan rates, what does all this mean for those seeking home financing in the months ahead? Read on for details.

There are two important things to note about last week’s Fed meeting. First, despite strong earnings, a stronger Stock market, and better consumer confidence and housing numbers, St. Louis Fed President Thomas Hoenig remains the lone dissenter to the verbiage in the Policy Statement on keeping rates low for an “extended period.” He feels that there is a strong risk of inflation ahead…and that the Fed needs to prepare the markets for the eventual hikes that will be coming to the Fed Funds Rate. When the Fed does indeed change this language, it will signal that the Fed has a consensus on inflation being a threat…and since inflation is the arch-enemy of home loan rates, the change in verbiage will cause rates to move higher.
In addition, the Fed made no mention in their Policy Statement about selling any of their Mortgage Backed Security (MBS) holdings – and the added supply coming into the market will also cause home loan rates to rise. That said, the Fed may have discussed the topic during the meeting, and it could come up when the Meeting Minutes are released. There is growing concern that if the Fed doesn’t begin selling some of these MBS holdings by 2011 that additional asset bubbles may arise. It’s likely that the Fed will look to sell a meaningful chunk by year end, and this will be yet another headwind for home loan rates during the coming year.
If you want to see if you can benefit from the current low-rate environment before these items adversely impact home loan rates, please give me a call or send me an email…and as always, please feel free to pass along this newsletter to a friend, coworker or family member that might benefit.
In other news, Consumer Confidence rose sharply in April, to its highest reading since September 2008. This number is important because the more confident that consumers feel…the more likely it is that they will help fuel the economy. Also, the Commerce Department’s Gross Domestic Product Report indicated that the economy grew for the third straight quarter, despite the report coming in slightly below estimates. Inflation readings within the report remained tame, giving the Fed cover to keep interest rates low, with inflation appearing to be subdued. But inflation concerns can arise quickly, and although the Fed is not acting just now…we can be sure they are watching very carefully.
Greece was still the word last week, as Standard & Poor’s Bond rating agency downgraded the debt of Greece to “junk” status. The lack of confidence in Greece’s ability to repay their debt has pushed yields on their 2-Year Notes up to a whopping 18% to try and incent investors – and by way of comparison, our own US 2-Year Notes are yielding just over 1%! This is why credit downgrades are such a concern, and why the warnings from Moody’s about the US overspending must be taken very seriously.
There has been much greater volatility in the Bond market lately, with large price swings in both directions. It’s no coincidence that the volatility increased just after the Fed exited their buying program. While concerns about Greece have caused some investors to lose some confidence in European debt instruments, and move their holdings over to US securities, which are viewed as a safer bet, the situation is fluid and there’s no telling how much and for how long Bonds and home loan rates will benefit from the situation. Overall – the mix of news and market activity benefitted Bonds and home loan rates last week, improving to better levels over the week prior.
LIBERTY AND FREEDOM FOR ALL IS ALWAYS A CHANGE IN THE RIGHT DIRECTION! CHECK OUT THE MORTGAGE MARKET GUIDE VIEW TO LEARN ABOUT THE HISTORY OF “CINCO DE MAYO”, BEING CELEBRATED THIS WEDNESDAY!

Forecast for the Week

Two important reports bookend the week ahead, and hopefully both will show changes in a good economic direction.
Monday’s Personal Income and Personal Spending Reports will give us a look at the Core Personal Consumption Expenditure (PCE), which is the Fed’s favorite gauge of inflation. Rest assured the Fed will be watching this report very closely, as it could impact their decisions on rates and Policy Statement verbiage, as we discussed.
Thursday will bring another Initial Jobless Claims Report. At this stage in the economic recovery, the weekly Initial Jobless Claims readings we are seeing are still pretty high, which suggests that businesses are both reluctant to hire and are looking to trim overhead.
And the big enchilada of employment news wraps up the week, as April’s Jobs Report is due for delivery on Friday morning. Last month’s report showed that 162,000 jobs were created in March, making it the biggest one-month increase in three years. Additionally, there were upward revisions to January and February, which brought the last two months’ net job losses to near zero. But it’s not time to break out the party hats just yet…last month’s report also showed that the official Unemployment Rate remained steady at 9.7%, and when factoring in the “underemployed”, including people who accepted part-time work because full-time work is simply not available, the rate of unemployment overall rose from 16.8% to 16.9%. This report will be very important to watch, as the labor market is key to our economic recovery.
Remember this rule of thumb: Weak or negative economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong or positive economic news normally has the opposite result.
As you can see in the chart below, the instability in Greece and the Fed’s decision to keep rates low for an extended period of time gave Bonds a boost above a key technical level. But remember, volatility is the name of the game at the moment, and things can change quickly. I’ll be watching closely to see in which direction Bonds and home loan rates move this week – and always welcome a call or email from you if I can help answer any questions!
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Chart: Fannie Mae 4.5% Mortgage Bond (Friday, April 30, 2010)

The Mortgage Market View

Celebrating Cinco de Mayo…and Its Connection to the United States
This Wednesday marks the celebration known as Cinco de Mayo, or “May 5th”, in Spanish. Although many people have heard of this holiday – and even join in the celebrations with gusto – plenty of folks are not aware of what this holiday is all about. And most people don’t realize that the event being commemorated may have actually played an important role in shaping the United States that we know today.
Let’s take a look at what this holiday is about, and have even more reason to celebrate Cinco de Mayo – as well as liberty and freedom – this Wednesday, May 5th.
What Does Cinco de Mayo Commemorate?
Many people believe that Cinco de Mayo is the day that recognizes Mexico’s independence from Spain. To set the record straight, that conquest happened on September 15th, 1810. Cinco de Mayo, on the other hand, celebrates an event that took place over 50 years later.
On May 5, 1862, the Mexican cavalry, under the command of Texas-born General Zaragosa, defeated the French at the battle at Puebla, a city 100 miles east of Mexico City.
The French army, having not suffered a defeat in nearly 50 years, landed in the port of Vera Cruz and headed toward the capital city with a specific mission. Fearless of any opponent, the French sought to overthrow the capitol and gain control of Mexico, even bringing along a Hapsburg prince to oversee the would-be empire.
So…What’s the Connection to the United States?
The goal of France’s leader, Emperor Napoleon III, was to gain proximity to the US, in hopes of supplying the Confederate Army with support in their fight against the North…as he desired to sustain the division within America.
To America’s benefit, the undersized Mexican cavalry used their knowledge of the terrain to defeat the powerful French army. This victory enabled the Northern States to continue to build the greatest army in the world at that time. Fourteen months later, the North soundly defeated the Confederate Army in the battle at Gettysburg, thus ending the Civil War. Union troops were subsequently rushed to the Texas/Mexican border to help expel the French from Mexico.
Cinco de Mayo is rightfully celebrated in both the US and Mexico – and it’s a great occasion to honor freedom and liberty.
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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 May 03 – May 07
Date ET Economic Report For Estimate Actual Prior Impact
Mon. May 03 08:30 Personal Income Mar 0.3% 0.0% Moderate
Mon. May 03 08:30 Personal Spending Mar 0.6% 0.3% Moderate
Mon. May 03 08:30 Personal Consumption Expenditures and Core PCE Mar NA 0.0% HIGH
Mon. May 03 08:30 Personal Consumption Expenditures and Core PCE YOY NA 1.3% HIGH
Mon. May 03 10:00 ISM Index Apr 60.0 59.6 HIGH
Wed. May 05 10:00 ISM Services Index Apr 56.1 55.4 Moderate
Wed. May 05 08:15 ADP National Employment Report Apr 30K -23K Moderate
Thu. May 06 08:30 Jobless Claims (Initial) 5/01 440K 448K Moderate
Thu. May 06 08:30 Productivity Q1 2.4% 6.9% Moderate
Fri. May 07 08:30 Average Work Week Apr 34.0 34.0 HIGH
Fri. May 07 08:30 Hourly Earnings Apr 0.1% -0.1% HIGH
Fri. May 07 08:30 Non-farm Payrolls Apr 187K 162K HIGH
Fri. May 07 08:30 Unemployment Rate Apr 9.7% 9.7% HIGH

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:

Curtis Schartz, Certified Mortgage Planner, Pulaski Bank Home Lending, Overland Park, Kansas City, Lee’s Summit, Olathe, Leawood, Lenexa, Independence, Liberty, Parkville, Gladstone, Shawnee.

Millions Still Seeking Nine to Five

By Curtis Schartz, CMPS

Mar

Last Week in Review

“WORKIN’ NINE TO FIVE – WHAT A WAY TO MAKE A LIVIN’…” Dolly Parton. But full time employment is nothing to gripe about these days – last week’s Jobs Report showed that there are millions of people who would love to be working full time…or even working at all. The labor market continues to struggle, though it has shown improvement from its worst levels.

As you can see in the chart below, the Jobs Report for February showed 36,000 jobs lost in February, which was better than the 68,000+ job losses that were expected. Adding to the positive tone of the report were upward revisions to the prior two month’s reports showing 35,000 fewer jobs lost. However – helping the numbers were 15,000 temporary census worker hires made by the government. Without these, actual job losses would have exceeded 50,000 for February.

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Chart: Nonfarm Payrolls

Additionally, the Unemployment Rate remained at 9.7%, better than expectations of a rise to 9.8%. But a deeper look beyond the headlines of the report showed what many consider to be the Real Unemployment Rate to be at 16.8%, a rise from last month’s 16.5%.

This rate includes both discouraged workers – those who are no longer seeking work at this time – and those who are working part-time that would rather be “workin’ nine to five” with full time employment, but are forced to accept part time out of necessity to earn whatever they can. And just last month, another nearly 500,000 people accepted part time work, citing economic reasons for doing so.

In related news, Productivity rose by 6.9% during the Fourth quarter of 2009, up from the previous reading of 6.2%. This is an encouraging report, because during an economic recovery, it is normal to see a pick up in productivity before seeing fresh job creations. Think about it – companies may start to see their business pick up, but before making the commitment of hiring new workers, they will squeeze more productivity out of their present staff. Job creations may be coming – but it appears that the labor market recovery will be slow going.

Bonds attempted to rally through the week, but ultimately, improvements in Stocks and positive economic news caused Bonds and home loan rates to end the week around the same levels as where they began.

ALERT! Two important deadlines are on the horizon: the Fed will stop buying Mortgage Backed Securities at the end of March (which means home loan rates may soon be on the rise), and the Homebuyer’s Tax Credit is due to expire on April 30. If you or any of your friends, family members, neighbors or colleagues want to learn more about how you can benefit from the current situation, give me a call or email – I’d be happy to explain more about the opportunity at hand.

WHILE THE LABOR MARKET HAS BEEN STRUGGLING FOR AWHILE, THE GOOD NEWS IS THAT CERTAIN CAREER PATHS ARE DEFINITELY ON THE RISE! CHECK OUT THIS WEEK’S MORTGAGE MARKET GUIDE VIEW FOR MORE DETAILS.

Forecast for the Week

It will be a quiet week when it comes to economic reports, but with the healthcare debate heating up in Washington and the Fed’s Mortgage Backed Securities Purchase program winding down, there are still plenty of events that could impact the markets and home loan rates.

On the economic report front, Thursday brings another Initial Jobless Claims Report. Last week’s Initial Jobless Claims met expectations, but the big news was that the report showed 5.7M people claiming EUC (Emergency Unemployment Compensation) benefits, which was an increase of over 207,000 from the prior week.

On tap for Friday is the Retail Sales Report, and as the most-timely indicator of broad consumer spending patterns, it is important to see how the numbers come in. In fact, last week’s Personal Consumption Expenditure report revealed that during January, consumers made less, saved less and spent more – but it remains to be seen if the increase in spending will show up in the Retail Sales Data.

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 made some improvements during the week, but the gains were capped by a rally in Stocks and positive economic data. I’ll be watching closely as always during the coming week – and please feel free to contact me anytime to learn more, or discuss your own financial and home loan situation.

Chart: Fannie Mae 4.5% Mortgage Bond (Friday Mar 05, 2010)

The Mortgage Market View…

5 Careers You May Not Have Considered…But Perhaps Should!

In the wake of last week’s employment news, now is an ideal time to take a look at careers that are expected to grow in the coming months and years. Recently, US News & World Report released the results of its study on the Best Careers in 2010. The good news is there are a lot of jobs that are on the rise – including a number of careers that many people may not have considered.

If you or someone you know is looking to make a career move in today’s challenging work environment, here are 5 careers to consider.

Meeting Planner

Overview: Despite the economic downturn, companies still need to do business…and often that means bringing people together from around the country and the world. According to US News & World Report, the need for meeting planners is expected to grow 16% by 2018.

Education and training: To get a career as a meeting planner, you’ll probably need a bachelor’s degree. But the good news is that US News & World Report found that real-world experience “may be the most important factor in getting a job.”

Security System Installer

Overview: This job entails installing security and fire alarm systems. In addition to dealing with electronics, installers are also expected to deal with local building codes, blueprints, and even clients and homeowners. As US News & World Report stated, from 2008 to 2018, the opportunities in this field are expected to climb 25%.

Education and training: While some employers may want an associate’s degree or work experience, the good news is that a number of employers will train on the job. Candidates, of course, should have an interest and basic understanding of electronics.

Plumber

Overview: Think about it. Every home and every building needs a plumber when it’s built…not to mention down the road if water problems are encountered. Combine that with the fact that many of today’s plumbers will likely retire in the next 10 years, and it’s easy to see why this career is expected to grow more than 15% before 2018.

Education and training: If you’re interested in a career as a plumber, you have a few options. You can enroll in technical or community college – or look for employers who are willing to provide on-the-job training. Finally, you can enroll in an apprenticeship program that combines classroom and on-the-job training.

Firefighter

Overview: The good news is that the need for firefighters is expected to increase about 19% according to US News & World Report. The flip side is that there will probably be a lot of competition for those jobs, since the job provides stable work with a pension.

Education and training: If you’re in the right place at the right time, you can get a job as a firefighter with only a high school degree. But, with the competition mentioned above, you’ll have a better chance with additional training and education – such as an associate’s degree, EMT training, or a college degree.

Technical Writer

Overview: If you’ve ever read a how-to manual or operating instructions, you already have some idea of what technical writers do for a living. As you might imagine, the job requires you to understand and translate complex ideas and information. However, you may not have imagined that technical writing isn’t just limited to writing. Today’s technical writers often deal with graphic design, video, and multimedia software to communicate complex ideas. If these aspects sound good to you, this may be a field worth considering – especially with an expected job growth of 18% before 2018.

Education and training: For this job, you’ll need a college degree. But you don’t necessarily need a degree in journalism or technical writing (although, it would help). The reality is that technical writers can specialize in fields such as business, science, and engineering. So if you have a degree in one of those fields and if you’re good at communicating complex ideas, you may already be qualified. An interest and experience in multimedia software as well as a course or an online certificate in technical communication can help increase your chances of landing a job.

Those are just 5 of the jobs identified by US News & World Report as the best careers for 2010. If they don’t suit your interests, you may want to take a look at the entire list on the US News & World Report website. Then, take steps to transition to your new career.

The Week’s Economic Indicator Calendar

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 March 08 – March 12
Date ET Economic Report For Estimate Actual Prior Impact
Wed. March 10 10:30 Crude Inventories 3/6 NA 4.03M Moderate
Thu. March 11 08:30 Jobless Claims (Initial) 3/6 NA 469K Moderate
Thu. March 11 08:30 Balance of Trade Jan -$40.8B -$40.2B Moderate
Fri. March 12 08:30 Retail Sales Feb -0.1% 0.5% HIGH
Fri. March 12 08:30 Retail Sales ex-auto Feb 0.0% 0.6% HIGH
Fri. March 12 10:00 Consumer Sentiment Index (UoM) Mar 73.8 73.6 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 not 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:

Curtis Schartz, Pulaski Bank Home Lending, Lees Summit, Overland Park, Kansas City, Olathe, Parkville, Liberty, Shawnee, Leawood, Lenexa.

Weekly Update Special Video View

By Curtis Schartz, CMPS

Feb

Last Week in Review

“OPINION HAS CAUSED MORE TROUBLE ON THIS LITTLE EARTH THAN PLAGUES…” Voltaire. And lately, there have been a lot of opinions about inflation being voiced from Fed officials, respected economists, and the media. But what does all this talk really mean for our economy and home loan rates? Here’s what you need to know.

On Friday, the Consumer Price Index (CPI), which measures the prices US consumers pay, came in lower than expected for January. The chart below shows the year-over-year headline CPI at 2.6%, below expectations of 2.8%. What’s more, when volatile food and energy are removed from the equation, the “Core” Consumer Price Index was actually negative – and the last time that happened was 28 years ago.

———————–
Chart: Consumer Price Index
weeklychart1182010

So, if the CPI Report shows that inflation is currently non-existent, why are so many people expressing concern? The reality is that the factors which are currently restraining inflation pressures could easily swing the other way.

In fact, Kansas City Fed President Thomas Hoenig recently said, “Fiscal policy is on an unsustainable course. The US Government must make adjustments in its spending and tax programs. It is that simple. If pre-emptive corrective action is not taken regarding the fiscal outlook, then the United States risks precipitating its own next crisis.” And part of the crisis Mr. Hoenig is warning of is the possibility of hyperinflation, which occurs when prices rise so quickly that a currency becomes worthless.

Hoenig recently reminded us that he has a framed picture of a 500,000 German mark bill in his office…which would have purchased a home in 1921, but due to sudden inflation, wouldn’t purchase a loaf of bread just two years later. Adding to the inflation talk, recent Produce Price Index Reports, which measure inflation at the wholesale level, have shown a trend higher in wholesale inflation. January’s report, for example, was significantly higher than expected, due to rising energy costs.

Also chiming in with an opinion, Philadelphia Fed President Charles Plosser made some interesting comments regarding monetary policy and sales of assets that the Fed currently owns. Mr. Plosser stated that the Fed should begin to sell off their stockpile of Mortgage Backed Securities (MBS) as the economic recovery gains strength. With the Fed MBS buying program ending soon, and the Fed now potentially turning into a seller of MBS, Bond prices and home loan rates will very likely worsen over time. (More on this in the special “Video View” below…don’t miss it!)

In other news, the Empire State Manufacturing Index came in higher than expected and up from January’s reading. The report also showed business activity picking up and business leaders forecasting better economic conditions in the coming months. In addition, Housing Starts for January came in better than expected and at the highest level since July, thanks in large part to the extension of the Homebuyer Tax Credit.

Bond prices were unable to improve after falling below an important technical level this week, and as a result, home loan rates ended the week worse than where they began.

MANY PEOPLE ARE ASKING FOR OPINIONS ABOUT WHERE HOME LOAN RATES ARE HEADED…AND WHY. CHECK OUT THIS WEEK’S MORTGAGE MARKET GUIDE VIEW FOR A SPECIAL VIDEO THAT EXPLAINS HOW AND WHY HOME LOAN RATES MOVE…AND WHAT IT MEANS RIGHT NOW.

Forecast for the Week

While it’s hard to say what opinions might be uttered this week, there will definitely be plenty of news in store.

We’ll get a look at the housing market with Wednesday’s New Home Sales Report and Friday’s Existing Home Sales Report. It will be interesting to see if these reports are looking more positive, as many buyers are working to take advantage of the Homebuyer’s Tax Credit before it expires this spring. If you want to learn more about this Tax Credit and how it might help you or someone you know – don’t hesitate to get in touch with me, I can share all the details and important timelines.

Also this week, we’ll get several reads on the health of the economy with Thursday’s Durable Goods Report – which gives us an update on consumer and business buying behavior on big ticket items that last for an extended period of time – and Friday’s Gross Domestic Product Report, which is the broadest measure of economic activity.

Tuesday’s Consumer Confidence Report and Thursday’s Initial Jobless Claims Report will also be important to watch. Last week’s Initial Jobless Claims and Continuing Claims numbers were higher than expected, showing that the labor market is still struggling. The bottom line is that while some of the recent economic reports have had encouraging signs, the economy needs to create jobs and regain consumer confidence before any positive opinions on the economy will become reality.

And as if it won’t be a week jam packed full of opinions already, Fed Chairman Ben Bernanke will be weighing in with some thoughts of his own, as he testifies before Congress on Wednesday and Thursday.

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 ended the week below an important technical level. I’ll be watching closely to see if Bonds can reverse course and move higher this week, which would result in an improvement for home loan rates.

Chart: Fannie Mae 4.5% Mortgage Bond (Friday Feb 19, 2010)
weeklychart22210

The Mortgage Market View…

Rates May Be Headed Up Soon…But Why?

You’ve heard a lot over the last several months about historically low home loan rates…but lately, you’ve probably been hearing the buzz that interest rates may be heading up in the near future, due in part to the Fed ending their purchases of Mortgage Backed Securities.

All of this begs the question: How and why do rates move…and what is happening right now?

The answer involves a number of factors and can seem complex. But it doesn’t have to be!

To help you understand how interest rates move, take a look at this easy to understand video. You’ll learn what the Fed has been doing to keep rates low, as well as the connection between interest rates and Mortgage Backed Securities.

Take a look at the following video now for an easy explanation:

How Rates Move – and What it Means Right Now

The Week’s Economic Indicator Calendar

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 February 22 – February 26
Date ET Economic Report For Estimate Actual Prior Impact
Tue. February 23 10:00 Consumer Confidence Feb 55.0 55.9 Moderate
Wed. February 24 10:30 Crude Inventories 2/19 NA 3.08M Moderate
Wed. February 24 10:00 New Home Sales Jan 355K 342K Moderate
Thu. February 25 08:30 Jobless Claims (Initial) 2/20 460K 473K Moderate
Thu. February 25 08:30 Durable Goods Orders Jan 1.5% 0.3% Moderate
Fri. February 26 08:30 Gross Domestic Product (GDP) Q4 5.3% 5.7% HIGH
Fri. February 26 09:45 Chicago PMI Feb 59.0 61.5 Moderate
Fri. February 26 10:00 Consumer Sentiment Index (UoM) Feb 74.0 73.7 Moderate
Fri. February 26 10:00 Existing Home Sales Jan 5.50M 5.45M Moderate
Fri. February 26 08:30 GDP Chain Deflator Q4 0.6% 0.6% HIGH

Curtis Schartz, Certified Mortgage Planner, Pulaski Bank Home Lending, Lees Summit, Overland Park, Kansas City.

Fed Bond Buying Slows Rates will begin to increase

By Curtis Schartz, CMPS

Feb

Last Week in Review

“IT AIN’T OVER TIL IT’S OVER.” Yogi Berra. And whether you find those words deeply wise or simply puzzling…The Fed has told us repeatedly that their massive purchasing program of Mortgage Backed Securities is just about over – and this translates to home loan rates rising in the near future.

As you can see in the chart below, the amounts of Mortgage Backed Securities the Fed is purchasing are slowly dwindling, as the program is set to wrap up by March 31st, and are clearly trying to ration out the remaining portion. Last week, the Fed purchased $11 Billion in Mortgage Backed Securities, which leaves them with $66 Billion to spend out of their original $1.25 Trillion allotment. So about 95% of the total has already been spent and has purchased about 3 out of every 4 home loans during the past year. When such a large buyer leaves the market, it is very likely that prices will worsen.

This is very important because as the Fed has less money to last through the remaining months of the program, their ability to keep home loan rates low via their purchasing power will wane. And those who can take advantage of currently low home loan rates do not wait, as the clock on these historically low rates is ticking.

———————–
Chart: The Fed’s Purchase of MBS (By Month)
weeklychart1182010

Also last week, Fed Chairman Ben Bernanke provided a speech on a number of topics, perhaps the most important of these being switching the Fed’s benchmark from the commonly watched and monitored Fed Funds Rate, to a new benchmark of “interest paid on excess reserves”. Banks are required to keep money on reserve with the Fed and may, from time to time, have an excess in those reserves, which the Fed can pay interest on. Since the Fed Funds Rate is only a “target rate”, banks can still lend money to other bank overnight at their own negotiated rate. Sometimes near the end of the trading day, banks have been lending their excess reserves out overnight for a rate that differs from the Fed Funds Rate, but is higher than interest on those reserves from The Fed. This undermines the Fed’s ability to set a reliable benchmark.

The Fed wants to fix this by using the amount of interest they pay as the new benchmark, since the Fed has total control of this rate, which should be right at or just under the Fed Funds Rate.

There is one major take-away from this discussion – it appears that the Fed is getting their ducks in a row as they prepare to push interest rates higher. And when they do increase rates, the Fed does not want any obstacles that may undermine their plan.

AND SPEAKING OF OBSTACLES THAT COULD CAUSE PROBLEMS…WATER DAMAGE CAN WREAK HAVOC ON YOUR HOME AND YOUR FINANCES, AND IS ESPECIALLY IMPORTANT TO WATCH OUT FOR DURING COLD WINTER MONTHS. CHECK OUT THE MORTGAGE MARKET VIEW ARTICLE BELOW FOR TIPS ON PROTECTING YOUR HOME!

Forecast for the Week

The financial markets will be closed on Monday in observance of Presidents Day, and in terms of economic reports, there won’t be much action until midweek. On Wednesday, we’ll get a look at the health of the housing industry with reports on Housing Starts and Building Permits for January.

It will be interesting to watch the housing reports over the next several months, as many people are acting to take advantage of currently low home loan rates that may be on the rise soon, as well as the potential of a juicy tax credit. Remember – the Homebuyers Tax Credit is only available on homes purchased with a contract date before April 30th, and the transaction must settle by June 30th.

We’ll also get an update on inflation this Thursday, as the Producer Price Index will be released. This index measures price changes for wholesalers, and prefaces the more important Consumer Price Index coming on Friday, which measures changes in the price paid by consumers for goods and services. These reports are both particularly important, as the Fed will be watching very carefully for any signs of inflation. If inflation begins to rise, the Fed will have no choice but to begin to hike rates to fight off the dangers that inflation could pose to our economy.

In addition to those reports, we’ll get our weekly look at employment through the Initial Jobless Claims data. Last week’s report showed some encouraging signs, but there is still a long way to go before we’ll see stabilization in the Unemployment Rate and some meaningful job creation. At the moment, 6.3 Million people remain unemployed for over six months – an increase of 5 million since the start of the recession in December of 2007. To reach the White House’s projection of a 6% unemployment rate by 2015, the US would need to create 225,000 jobs per month, every month, for the next five years. But that kind of long term job growth has never been seen before. The year 2006, was the only year in US history that had job gains average over 225,000. But that was for just a single year – doing it for five years may be too much of a stretch.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bond prices and home loan rates improve, while strong economic news normally has the opposite result.

As you can see in the chart below, Bond prices fell early last week due to weak results from the Treasury auctions, but were able to rally towards the end of the week. When Bond prices are moving higher, home loan rates are improving – so I’ll be watching out to see if the current ground can be held. If you have any questions about how home loan rates move – and if an opportunity exists that would benefit you – please don’t hesitate to call or email me.

Chart: Fannie Mae 4.5% Mortgage Bond (Friday Feb 12, 2010)
weeklychart21510

The Mortgage Market View…

Keeping Your Home Safe from Water Damage

Preventing water damage in your home is important at any time of year, but particularly in the winter when the cold weather can wreak havoc on plumbing. Here are some tips to make sure your water bill is as low as it should be…and that your home is as safe and dry as it needs to be:

Pay attention to your bill: Major fluctuations in water usage from one month to the next could mean that you have a problem. Taking just a few minutes to look at your bill each month could make a big difference in your wallet!

Inspect appliances: While much of your home’s plumbing can be hidden behind walls and cabinets, most of your appliances that use water can be easily inspected for potential leaks. Each month, take the time to inspect areas around your water heater, dishwasher, refrigerator, washing machine, sinks, and toilets. If any hoses or seals appear old or damaged, replace them. Also, inspect and repair obvious caulking and tile grout damage. It’s a small price to pay for what could be expensive repairs later.

Inspect the sewer line: Clear away build-up and roots from around your sewer line. Obstructions in this area could create major plumbing problems in the future.

Check your water pressure annually: This is easier than it sounds. Simply purchase a pressure gauge and attach it to the hose faucet. Normal results should range from 45 to 65 pounds per square inch (psi). A reading above 65 psi is considered high and could lead to problems down the line.

Find and fix leaks quickly: Make a habit of checking the main fixtures regularly so that when something out of the ordinary occurs you will notice it and take action immediately. Sometimes, however, slow water leaks aren’t very obvious. A great way to discover hidden leaks is to look for stains in areas where water is often used. For example, if you see even small stains on the cabinet floors beneath the sink in the kitchen or bathrooms, you could have a problem. Warm spots in the floor or tiles could also be an indication of hidden water damage.

Before a vacation: The worst thing to come home to after a great vacation is major water damage. Consider turning off your water while you’re gone. For many homeowners there is a separate shut-off valve for the home that doesn’t affect your irrigation system.

The bottom line is that a little time and effort can make a big difference when it comes to keeping your home safe and dry, and your expenses at a minimum!

The Week’s Economic Indicator Calendar

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 February 15 – February 19
Date ET Economic Report For Estimate Actual Prior Impact
Wed. February 17 08:30 Building Permits Jan 615K 653K Moderate
Wed. February 17 02:00 FOMC Minutes 1/27 HIGH
Wed. February 17 09:15 Industrial Production Jan 0.8% 0.6% Moderate
Wed. February 17 09:15 Capacity Utilization Jan 72.6% 72.0% Moderate
Wed. February 17 08:30 Housing Starts Jan 580K 557K Moderate
Thu. February 18 08:30 Producer Price Index (PPI) Jan 0.8% 0.2% Moderate
Thu. February 18 08:30 Core Producer Price Index (PPI) Jan 0.1% 0.0% Moderate
Thu. February 18 10:00 Index of Leading Econ Ind (LEI) Jan 0.5% 1.1% Moderate
Thu. February 18 10:00 Philadelphia Fed Index Feb 17.0 15.2 HIGH
Thu. February 18 08:30 Jobless Claims (Initial) 2/13 430K 440K Moderate
Fri. February 19 08:30 Consumer Price Index (CPI) Jan 0.3% 0.1% HIGH
Fri. February 19 08:30 Core Consumer Price Index (CPI) Jan 0.2% 0.1% HIGH

Curtis Schartz, Certified Mortgage Planner, Pulaski Bank Home Lending, Lees Summit, Overland Park, Kansas City, Olathe, Leawood, Liberty

World News Brings New Perspective

By Curtis Schartz, CMPS

Jan

Last Week in Review

“WHAT DO WE LIVE FOR, IF IT IS NOT TO MAKE LIFE LESS DIFFICULT FOR EACH OTHER?” George Eliot. The current crisis in Haiti certainly puts this sentiment into perspective. For information on how you can help, see the View article below.

Last week it was reported that the inflation measuring Consumer Price Index (CPI) for December came in lower than expected. Overall, CPI for all of 2009 was fairly tame. But as you can see in the chart below, the closely watched Core CPI, which strips out volatile food and energy, rose to 1.8% year-over-year in December after hitting a multi-year low of 1.4% in August.

———————–
Chart: Core Consumer Price Index
weeklychart1410

So what does this mean for Bonds and home loan rates?

Clearly, inflation is tame at the moment…but slowly trending higher. The Fed will be watching this data very carefully in the coming months, as they seek to time perfectly the exit from what is essentially a zero rate environment. The Fed will likely err on the side of keeping the Fed Funds Rate lower for longer than they perhaps should, in order to avoid a “double dip” recession…but that will likely lead to more inflation down the road. Remember, Bonds and home loan rates hate inflation – so home loan rates are likely to trend higher as more inflation creeps into the economy.

Speaking of the Fed, they stepped up their Mortgage Backed Security (MBS) buying in the latest week, purchasing $14B in MBS, whereas the most recent prior purchases were around $9.5B. The Fed now has $113B left of their $1.25T allotted commitment, with the buying program set to wrap up on March 31st. The Fed’s purchases have helped home loan rates stay historically low – and although there has been some buzz about an extension of the program, it seems unlikely that will come to fruition. When the Fed purchases stop, home loan rates will be very susceptible to moving higher – so if we have not talked yet about your own home loan situation, or if you know of a friend, family member, neighbor or coworker who might like some advice, let’s be sure to connect very soon…time is of the essence.

The next Federal Reserve Policy Statement will be coming on January 27th, and they have gone out of their way to mention in the last several statements that the MBS buying program will not continue. Count on me to be listening closely when the Fed releases this next Statement, as this will help further gauge what home loan rates have in store.

In other news, Retail Sales for December came in well below expectations and were down from the 1.8% increase seen in November. While this suggests weakness in the Retail sector, it has to be taken with a grain of salt, as it is likely that frigid temperatures and snowy conditions throughout much of the country were contributing factors to the decline. Overall, 2009 was a very tough year for retail. Retail Sales for 2009 dropped 6.2% compared with 2008, which was the biggest decline on record, dating back to 1992.

There was some good news, however, on the manufacturing front, as the Empire State Manufacturing Index was reported above estimates, indicating manufacturing expansion in New York state and parts of New Jersey and Connecticut.

For the week overall Bonds were able to break above important technical levels, and home loan rates ended the week slightly better than where they began.

Forecast for the Week

The markets will be closed on Monday in observance of the Martin Luther King, Jr. holiday, but plenty of news will follow later in the week. Wednesday brings more news from the inflation front, with the Producer Price Index (PPI) Report, which measures inflation at the wholesale level. Wednesday will also bring a read on the housing market, with the Housing Starts and Building Permits Report.

There’s also more manufacturing news ahead on Thursday with the Philadelphia Fed Report. Also in store for Thursday is another look at the weekly Initial Jobless Claims Report…so it’s sure to be an interesting week, with a variety of data for the markets to absorb.

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 improved last week, largely due to tame inflation numbers and a decline in Stocks. In fact, Bonds were actually able to power through a tough technical “ceiling of resistance” at the 200-day Moving Average…but it remains to be seen if they will hold their gains. I’ll be watching closely to see if Bonds and home loan rates can build on their positive momentum in the coming week.

Chart: Fannie Mae 4.5% Mortgage Bond (Friday Jan 15, 2010)
weeklychart1182010

The Mortgage Market View…

A Helping Hand for Haiti

The catastrophe in Haiti cries out for all of us to do whatever we can to help. But many of us aren’t sure exactly how to help or which organization to entrust with a donation.

To help you make sure your donation makes as big a difference as possible, consider donating to AmeriCares, which is one of the many fine organizations helping Haiti through disaster relief. AmeriCares is in the business of disaster relief and has an extensive network on the ground in Haiti, so your money will go to get supplies directly to those stricken instead of setting up infrastructure. You can learn more about them and donate at http://www.americares.org.

Obviously, the current economy presents challenges for many of us, but if you are able to help, your donation will go a long way. Whether it is through AmeriCares, or some other organization of your choice, any assistance you provide can help ease the suffering of those in need.

The Week’s Economic Indicator Calendar

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 January 18 – January 22
Date ET Economic Report For Estimate Actual Prior Impact
Wed. January 20 08:30 Building Permits Dec 585K 584K Moderate
Wed. January 20 08:30 Core Producer Price Index (PPI) Dec 0.2% 0.5% Moderate
Wed. January 20 08:30 Producer Price Index (PPI) Dec 0.0% 1.8% Moderate
Wed. January 20 08:30 Housing Starts Dec 580K 574K Moderate
Wed. January 20 10:30 Crude Inventories 1/15 NA NA Moderate
Thu. January 21 08:30 Jobless Claims (Initial) 1/16 NA NA Moderate
Thu. January 21 10:00 Index of Leading Econ Ind (LEI) Dec NA 0.9% Low
Thu. January 21 10:00 Philadelphia Fed Index Jan NA 20.4 HIGH

Curtis Schartz, Certified Mortgage Planner with Pulaski Bank Home Lending. Serving Overland Park, Lees Summit, Leawood, Olathe, Shawnee, Liberty, Parkville, and the Kansas City Metro.

Labor Market Not Looking Optimistic Yet

By Curtis Schartz, CMPS

Nov

Last Week in Review

“BOTH OPTIMISTS AND PESSIMISTS CONTRIBUTE TO OUR SOCIETY. THE OPTIMIST INVENTS THE AIRPLANE, AND THE PESSIMIST – THE PARACHUTE.” G.B. Stern. The media’s recent analysis of the economy has run the gamut of late, some optimism, some pessimism…but also some confusion as they attempt to decipher recent economic reports, particularly relating to the job market. Let’s look at a few of the recent reports, and get behind the headlines to decipher what they really mean.

Last week’s Initial Jobless Claims Report showed that 505,000 people filed for unemployment benefits, which was about what was expected, and represented a ten month low for the report. The Continuing Jobless Claims Report, which indicates the total number of people collecting unemployment benefits, fell by 39,000 to a total of 5.61 Million.

———————–
Chart: Continuing Unemployment Claims
topchart112309

The media often spins this data as good news – but the labor market remains in exceptionally tough shape. The Continuing Claims number declining from a record high of 6.82M in June to last week’s 5.61M is the result of only two potential things happening: People are finding jobs and no longer need unemployment benefits, or they have been unemployed for so long that their benefits are running out before they’ve been able to find a job. With a 10.2% Unemployment Rate looking like it will move higher still, it is most likely the latter. Another clear sign of a very troubled labor market was back on November 6th, when President Obama signed a bill that will extend unemployment benefits by an additional 20 weeks…there would be no reason to do this if jobs were being created.

In other news, October Retail Sales were weak overall, which is concerning for several reasons. One somewhat overlooked impact is that tax receipts from retail sales help both the individual states and the country as a whole. If the consumer doesn’t spend – perhaps due to job loss or lower family income – and there are therefore less tax receipts from retailers, the government runs an ever-deeper budget deficit. The only way to get out of a deficit is to either raise other taxes or cut spending – and neither option is very popular. Many states are in poor fiscal shape because of soaring budgets and lower tax receipts.

There aren’t any easy answers – but it’s clear that the labor market needs to see some serious improvement for the economy to recover in a significant way.

Bonds and home loan rates were unable to hang onto improvements made in the earlier part of the week, and ended the week around the same levels as where they began.

THANKSGIVING IS THE PERFECT DAY FOR REMEMBERING ALL THE WONDERFUL THINGS YOU HAVE TO BE GRATEFUL FOR. CHECK OUT THIS WEEK’S MORTGAGE MARKET VIEW FOR SOME FUN FACTS ABOUT HOW THANKSGIVING BECAME A NATIONAL HOLIDAY.

Forecast for the Week

It may be a shortened work week due to the Thanksgiving holiday, but there will still be plenty of action in store. Both Monday’s Existing Home Sales Report and Wednesday’s New Home Sales Report will give us a read on the housing market. With many homebuyers jumping into the market to take advantage of the Homebuyer’s Tax Credit – which was recently extended until June 30, 2010 and expanded to include certain qualifying existing homeowners – it will be especially interesting to see what these reports reveal. Let me know if you have any questions on the Tax Credit, or if you’d like to learn how it might benefit you or someone you know.

We’ll also get several reads on the economy this week, first with Tuesday’s Gross Domestic Product (GDP) Report, which is the broadest measure of economic activity. Following will be Wednesday’s Durable Goods Report, which gives an update on consumer and business consumption and buying behavior via data on items that are “non-disposable”, like appliances, cars, cameras, etc. Wednesday also brings the Fed’s favorite gauge of inflation, the Core Personal Consumption Expenditure (PCE) Index, found within the Personal Income Report.

More auction action…the Treasury will auction $118B in securities this week, starting with a record $44B in 2-Year Notes on Monday, a record $42B in 5-Years on Tuesday, and another record – $32B in 7-Years on Wednesday. This is an enormous amount of supply, and the market’s ability to digest it all will be tested.

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 rates recently neared their best levels of the year, but were unable to make further improvements. Rates are likely to be moving higher in the coming months – so give me a call to discuss how the current rate climate might work in your favor, before these great rates slip away.

Chart: Fannie Mae 4.5% Mortgage Bond (Friday Nov 20, 2009)
weekly112309

The Mortgage Market View…

A Brief History of Thanksgiving

Thanksgiving Day is now a favorite American holiday…but did you know it took awhile to catch on as an annual tradition?

According to scholars, the first known Thanksgiving took place on September 8, 1565 in Saint Augustine, Florida when Spanish settlers held a Mass of Thanksgiving after arriving safely in the New World. English settlers in the Virginia Colony held a similar day of thanks in 1619. Two years after that, the colonists at Plymouth Plantation celebrated the most famous Thanksgiving, during 1621.

It wasn’t until October 3, 1789, that it actually became a holiday, when then President George Washington proclaimed a day of Thanksgiving…but just for that year. In 1795, Washington again proclaimed a day of Thanksgiving, and President John Adams also declared Thanksgivings in 1798 and 1799.

After a decade and a half without the celebration taking place at all, President James Madison renewed the tradition in 1814, and even went so far as to declare the holiday twice in 1815!

In 1863, President Abraham Lincoln finally proclaimed the last Thursday of November as a national day of Thanksgiving that should take place every year. Years later, President Franklin Roosevelt stated that Thanksgiving should always be celebrated on the fourth Thursday of the month – as opposed to landing on the occasional fifth Thursday.

In observance of the holiday, both the Stock and Bond markets will be closed on Thursday, November 26th, and on Friday the 27th, the Bond market will close early at 2:00 pm ET, while the Stock market will close at 1:00 pm ET.

I wish you and your family a safe and happy Thanksgiving holiday!

The Week’s Economic Indicator Calendar

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 November 23 – November 27
Date ET Economic Report For Estimate Actual Prior Impact
Mon. November 23 10:00 Existing Home Sales Oct 5.70M 5.57M Moderate
Tue. November 24 08:30 Chain Deflator Q3 0.8% 0.8% Moderate
Tue. November 24 10:00 Consumer Confidence Nov 47.5 47.7 Moderate
Tue. November 24 08:30 Gross Domestic Product (GDP) Q3 3.0% 3.5% Moderate
Wed. November 25 08:30 Personal Income Oct 0.2% 0.0% Moderate
Wed. November 25 10:30 Crude Inventories 11/20 NA -0.887K Moderate
Wed. November 25 10:00 New Home Sales Oct 405K 402K Moderate
Wed. November 25 10:00 Consumer Sentiment Index (UoM) Nov 66.5 66.0 Moderate
Wed. November 25 08:30 Durable Goods Orders Oct 0.5% 1.0% Moderate
Wed. November 25 08:30 Jobless Claims (Initial) 11/21 500K 505K Moderate
Wed. November 25 08:30 Personal Consumption Expenditures and Core PCE Oct 0.1% 0.1% HIGH
Wed. November 25 08:30 Personal Spending Oct 0.5% -0.5% Moderate
Wed. November 25 08:30 Personal Consumption Expenditures and Core PCE YOY NA 1.3% HIGH

Curtis Schartz
Certified Mortgage Planner
Pulaski Bank Home Loans
Office: 816-347-1678 x-307
Cell: 913-707-1525
Website: www.KCMortgagePlanner.com

The Time to Act is NOW!

By Curtis Schartz, CMPS

Oct

Interest Rates for Kansas City, Overland Park and Lees Summit have hit all time lows today. If you have not refinanced at or below 5% now is the time to act. These low rates will not last. Everything is pointing to higher rates in the near future. It appears that Mortgage Backed Securities found a top today. They spiked up after the poor jobs report and rapidly came back down. This action will typically signal a top – meaning that we may have bottomed out with the current interest rate cycle. The Fed announced that they will scale back the purchases of Mortgage Backed Securities so they can continue to purchase them through the first quarter of next year. We will see rates gradually creep up until the point that they are done purchasing. At that point rates will jump higher.
Contact Curtis Schartz Certified Mortgage Planner today to find if you can benefit from these low rates. Pulaski bank is one the top mortgage lenders in Kansas City. Call me today and find out why.

Rates are Improving

By Curtis Schartz, CMPS

Sep

Interest rates for Johnson County, Jackson County and the surrounding Kansas City metro area are improving today. Mortgage Backed Securities have been fighting a tough triple layer of resistance the last couple of days. If they are able to break through the resistance we could see lower rates in the near future. If Mortgage Backed Securities are turned away once again from this tough layer of resistance we will see rates go up again. September is notorious for being a poor month for the stock market. If the market continues to falter like it is right now we could see a convincing break above the current resistance and see lower interest rates. The door usually doesn’t stay open very long when the opportunity arises to lock in for a low interest rate. The best strategy at this point is to have everything ready to go and lock in at the first sign that the market starts to turn for the worst. Call Curtis Schartz at Pulaski Bank Home Loans to get your Mortgage Plan in place so you are prepared to save the most amount of money on a No Cost Refinance.

Your Certified Mortgage Planner for Life – Curtis Schartz

Rate Direction

By Curtis Schartz, CMPS

Aug

Interest Rates in Overland Park and Lees Summit have been improving over the last week. The Bond auctions are going farely well thus far this week. However Mortgage Backed Securities are up against a tough layer of resistance. This could keep rates from moving much lower in the near term. If you haven’t refinanced yet now is an opportune time to get locked in on a no cost refinance and take advantage of these low rates. Contact Curtis Schartz your Certified Mortgage Planner to find out about refinancing your home.

The Rally Coninues

By Curtis Schartz, CMPS

Aug

Lower interest Rates for the Kansas City, Overland Park, Shawnee and Lees Summit Market Continue. Mortgage Backed Securities rallied again today to test resistance at the 200 day moving average. By the end of the day Mortgage Backed securities were pushed back lower, yet ended the day in the positive. Rates have improved over the last week by approximately .25%. We are in a target zone for many people who have not refinanced yet to be able to take advantage of low rates. Call Curtis Schartz your Certified Mortgage Planner today to save the most on a no cost refinance. ARM rates continue to stay consistently lower. Some rates are in the 4.25% range. Call me to see if this fits into your Mortgage Plan.

Auction Results are in.

By Curtis Schartz, CMPS

Aug

Today’s interest rates for the Kansas City and Lees Summit Market are moving lower. There was a strong foreign participation in today’s 30 yr bond auction. With the well received auction Mortgage Backed Securities have rallied back today. Currently we have a floating bias as the Mortgage Backed Securities test resistance at the 25 day moving average. All in all this is good news for marginally lower rates. With all of the auctions over for the next couple of weeks we could see rates move a little lower. Stay tuned in this volatile market. The tide can change quickly. As your Certified Mortgage Planner with Pulaski Bank I will keep a watch on it for you.

Thanks – Curtis Schartz

Market Volatility today

By Curtis Schartz, CMPS

Aug

As your Certified Mortgage Planner in Lees Summit and Overland Park I am here to help guide you through the turbulent Mortgage Market and help you to get the best interest rate. Today Mortgage Backed Securities are moving with great volatility. They have already traded in an 82 basis point range. Current direction for rates is lower attempting to stabilize. Today the ADP employment report missed the mark to the low side fueling the volatility and helping bonds to rebound from the lows of the day. Additionally the ISM services index also came in worse then expected helping to support an improvement in bonds. The economy and job scene is not out of the woods yet. Poor economic news will cause the bonds markets to rise which leads to lower interest rates. The opposite is also true – positive economic news will cause bonds to fall and lead to higher interest rates.

Curtis Schartz's blog, the home of Kansas City's premier Certified Mortgage Planner

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