Mortgage Market At a
Glance

As we said on Monday, if this is the start of a positive trend in stocks, expect rates to rise. Tools implemented by the Fed should keep rates from jumping up, but slow and steady increases would signify investors are gaining faith in the economy.

I hope this has helped your business and provided clarity for your clients.
Use “Post By Category” on the right to review previous “Mortgage Market At a Glance”.

***************************

Sign up for a FREE subscription to the weekly “Mortgage Industry Update” with a full break down of what is going on and where we might be headed.Check out the archive

Mortgage Market At a Glance™ indicates the trend of mortgage rates and provides commentary about market conditions.

This format is not to meant to offer locking, or any other advice on any specific situation. It is for informational purposes only.

Market data is subject to change without notice.

Feel free to contact me if you have questions. 520-271-7495 Tom@TheHeathTeam.com

Mortgage Market At a
Glance

We will continue to monitor the markets. As we said in the Mortgage Market News on Monday, a continued upward trend for stocks will be good for the economy, but increase mortgage rates.

I hope this has helped your business and provided clarity for your clients.
Use “Post By Category” on the right to review previous “Mortgage Market At a Glance”.

***************************

Sign up for a FREE subscription to the weekly “Mortgage Industry Update” with a full break down of what is going on and where we might be headed.Check out the archive

Mortgage Market At a Glance™ indicates the trend of mortgage rates and provides commentary about market conditions.

This format is not to meant to offer locking, or any other advice on any specific situation. It is for informational purposes only.

Market data is subject to change without notice.

Feel free to contact me if you have questions. 520-271-7495 Tom@TheHeathTeam.com

Mortgage Market At a
Glance

We will be watching the markets closely for emerging trends.

I hope this has helped your business and provided clarity for your clients.
Use “Post By Category” on the right to review previous “Mortgage Market At a Glance”.

***************************

Sign up for a FREE subscription to the weekly “Mortgage Industry Update” with a full break down of what is going on and where we might be headed.Check out the archive

Mortgage Market At a Glance™ indicates the trend of mortgage rates and provides commentary about market conditions.

This format is not to meant to offer locking, or any other advice on any specific situation. It is for informational purposes only.

Market data is subject to change without notice.

Feel free to contact me if you have questions. 520-271-7495 Tom@TheHeathTeam.com

“We are being told that our central bank is going to do everything in its power, including taking extraordinary measures if necessary,” said Walter Gerasimowicz, chief investment officer of Meditron Asset Management
On that news, stock prices soared on Friday. The Fed indicating that they will do whatever it takes to get the economy back on track is not at all surprising news. However, after a string of bad news and weak prices, the reassurance was just what investors needed.

Bonds and Mortgage Backed Securities (MBS) felt the brunt of this optimism and prices fell. Investors turned from long term secure instruments and moved into riskier and potentially more profitable stocks. Even with the big swing on Friday, bond prices are at all time highs. This corresponds to low rates, as bond prices and yields move in opposite directions.

As we close out summer and move into fall, the economy is struggling along. We had a burst of good news in the spring, but it was overshadowed by concerns in Europe. Now we have talk of double dip recession in the US and our anemic housing market is an anchor on our overall recovery.

This week economic reports focus on consumer confidences, spending and sentiment; payrolls and unemployment; and monthly auto sales.

After a long period of upward moving prices, long term trends indicate bond prices are due for a correction. We will see if the optimism in stocks spawned on Friday will carry through this week and start us on an upward trend or if it was a short lived rally. If stocks continue to perform well, look for mortgage rates to steadily increase. We may move from “ridiculously low” to “low”.

Click for a glossary of the highlighted words
Subscribe to the daily “Market at a Glance” or the Weekly “Mortgage Market Update”
Archive

Mortgage Market At a
Glance

I hope this has helped your business and provided clarity for your clients.
Use “Post By Category” on the right to review previous “Mortgage Market At a Glance”.

***************************

Sign up for a FREE subscription to the weekly “Mortgage Industry Update” with a full break down of what is going on and where we might be headed.Check out the archive

Mortgage Market At a Glance™ indicates the trend of mortgage rates and provides commentary about market conditions.

This format is not to meant to offer locking, or any other advice on any specific situation. It is for informational purposes only.

Market data is subject to change without notice.

Feel free to contact me if you have questions. 520-271-7495 Tom@TheHeathTeam.com

“The awful jobs numbers kicked everyone in the teeth,” Frank Ingarra, portfolio manager at Hennessy Funds said. “Companies are flush with cash, but they’re not hiring.”

That statement sums up the markets’ apprehension. There has been so much reform, stimulus, and uncertainty that companies are unclear of long term implications of hiring. As they sort through their options, companies have grown through mergers and acquisitions. This eliminates the need to hire, and in fact, creates job duplication which leads to additional unemployment. When the initial jobless claims came out last Thursday with another 500k of unemployed workers seeking benefits stock prices plummeted. They stabilized on Friday, but still suffered some additional losses.

Mortgage rates remain at historic lows, but new home buying is sluggish because consumers are not confident in their job stability. The Fed has indicated they are going to stay invested in bonds to keep interest rates low for business credit. This should benefit mortgages, although not directly.

This week we have the remainder of earnings reports, and according to MarketWatch, “Investors are grappling with the growing disconnect between strong corporate earnings and a faltering U.S. economy. Currently, 75% of the 484 companies in the S&P 500 that have reported have beaten Wall Street expectations, compared with a quarterly average of 62%.” Investors saw good earnings reports from a corporate standpoint, but are still very concerned about long term economic growth. The battles of “bears” and “bulls” is evenly matched and markets shift quickly on rumors and speculation.

After last weeks surprise unemployment numbers, there will be heavy focus on this week’s report due in on Thursday. Also, expect any deviation from expectation on new housing starts to set the markets off.

Channing Smith, co-manager of the Capital Advisors Growth Fund, sums up the opportunity investors have. “Stocks are very attractive,” Smith said. “You have to be selective because we expect volatility. But if we get a sovereign default, then all bets are off.”

Click for a glossary of the highlighted words
Subscribe to the daily “Market at a Glance” or the Weekly “Mortgage Market Update”
Archive

Mortgage Market At a
Glance

I hope this has helped your business and provided clarity for your clients.
Use “Post By Category” on the right to review previous “Mortgage Market At a Glance”.

***************************

Sign up for a FREE subscription to the weekly “Mortgage Industry Update” with a full break down of what is going on and where we might be headed.Check out the archive

Mortgage Market At a Glance™ indicates the trend of mortgage rates and provides commentary about market conditions.

This format is not to meant to offer locking, or any other advice on any specific situation. It is for informational purposes only.

Market data is subject to change without notice.

Feel free to contact me if you have questions. 520-271-7495 Tom@TheHeathTeam.com

Mortgage Market At a
Glance

I hope this has helped your business and provided clarity for your clients.
Use “Post By Category” on the right to review previous “Mortgage Market At a Glance”.

***************************

Sign up for a FREE subscription to the weekly “Mortgage Industry Update” with a full break down of what is going on and where we might be headed.Check out the archive

Mortgage Market At a Glance™ indicates the trend of mortgage rates and provides commentary about market conditions.

This format is not to meant to offer locking, or any other advice on any specific situation. It is for informational purposes only.

Market data is subject to change without notice.

Feel free to contact me if you have questions. 520-271-7495 Tom@TheHeathTeam.com

“Jobs are the only tonic to calm a skittish national mind-set,” James Paulson, chief investment strategist at Wells Capital Management, said. “Until we see some improvement there, we are going to see more fear.”

Last week, markets reacted to a series of events showing a weak economic outlook. The Fed stated “the pace of economic recovery is likely to be more modest in the near term than had been anticipated.” The central bank said it will buy U.S. Treasuries with proceeds from mortgage holdings to keep money and credit flowing for a recovery. Initial jobless claims took an unexpected jump up and retail sales rose less then expected.

On the positive side, Germany and France reported growing economies, which should subdue concerns about a European crisis.

Mortgage Backed Securities (MBS) performed well do the sluggish stock market and posted gains for the week. Investors did sell off on Friday to capitalize on the good prices, but MBS remain at all time highs, keeping borrowing costs low.

Usually, MBS and Treasury bonds move in the same direction, but the Fed’s actions will likely move investors out of MBS and into Treasuries. The Fed feels that backing bonds will create equal opportunity across all economic segments, whereas an MBS push would only benefit a limited section of the economy. Many home buyers use the 10-year Treasury as a guide to how mortgage rates are moving. This may not hold true and it will be important to be in contact with a lender that is watching the actual MBS market.

Earnings reports continue this week with some big names like Target, Wal-Mart and Home Depot will be announcing their results. We will also see data on home building and housing starts.

The wild card this week will be the conference on Housing Finance reform. The fate of mortgage giants Fannie Mae and Freddie Mac were not addressed in the recently passed financial reform bill and are now the center of their own debate. This conversation will have far reaching implications and will be watched closely. For more on housing finance please read “Does Uncle Sam Want You….to have a house”

Click for a glossary of the highlighted words
Subscribe to the daily “Market at a Glance” or the Weekly “Mortgage Market Update”
Archive

The conversation will center on what to do with mortgage giants Fannie Mae and Freddie Mac, but will explore the depths of government involvement in mortgages and home buying. Fannie and Freddie were originally government enterprises that eventually spun off as private corporations with a public purpose. The financial crisis and housing meltdown left both on the verge of collapse and in 2008 the Federal government stepped in to keep them from failing. Since then, these corporations have kept the housing market afloat, but have drained trillions from the tax payer coffers. In the second quarter alone, Freddie Mac announced that they lost $4.7 billion and asked for $1.8 billion in aid.

In addition to these behemoths, expect a debate on the continuation of capital gain exemptions and the mortgage interest tax deduction.

Regardless of the outcome, one thing is certain. Any reduction in government guarantee or subsidy of the housing market will increase borrowing costs and reduce incentives to be a home owner. It is a dangerous time for this discussion, but it must be had. The federal government cannot continue to be the sole supporter of the housing industry.

Unfortunately, I see this as being another opportunity for the largest banks to gain more control over the system. Right now, the big 4, Wells Fargo, bank of America, Chase and Citi have 56% of the mortgage market share. According to this WSJ article, this dominance has created a lack of incentive for them to be competitive with service or pricing. If these reforms push more business into their hands, expect a continued degradation of service and increase in fees.

A balanced and competitive market place is the only way to insure that consumers are not left with product scarcity an pricing hikes.

I doubt it will be the outcome, but a return to the Fannie Mae and Freddie Mac model with a few alterations would be a safe and solid solution. These corporations succeeded for decades and their demise was the result of practices that are correctable. We will examine this, and look at the proposed solutions, more thoroughly in the weeks to come.