This Week’s Market Commentary

by admin on September 27, 2011

This week brings us the release of six relevant economic reports for the bond market to digest in addition to two relevant Treasury auctions. Most of the reports are considered to be of moderate to fairly high importance to the markets, so they do have the potential to affect mortgage rates. We also have to consider stock market swings as they also can have a direct impact on bond trading and mortgage pricing, as we have seen over the past few weeks.

Generally speaking, stock market strength makes bonds less appealing to investors and leads to higher mortgage pricing. On the other hand, stock weakness often leads to safe-haven investing where investors move funds away from stocks and into bonds to escape the volatility. That translates into higher bond prices and lower mortgage rates.

The first release of the week is August’s New Home Sales late this morning. The Commerce Department is expected to say that sales of newly constructed homes slipped last month, indicating further housing sector weakness. This report will likely not have a significant impact on mortgage rates unless its readings differ greatly from forecasts. This is the week’s least important report in terms of potential impact on mortgage rates, partly because it covers only approximately 15% of all homes sales.

September’s Consumer Confidence Index (CCI) is next, coming late Tuesday morning. This Conference Board index will be posted at 10:00 AM ET and gives us a measurement of consumer willingness to spend. It is expected to show an increase in confidence from last month’s reading, indicating that consumers were more optimistic about their own financial situations than last month, therefore, more likely to make a large purchase in the near future. This is bad news for the bond market and mortgage rates because consumer spending fuels economic growth. Analysts are calling for a reading of approximately 46.7, up from August’s 44.5 reading. The smaller the reading, the better the news for the bond market and mortgage rates.

August’s Durable Goods Orders is the week’s most important data and will be posted early Wednesday morning. This report gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. Analysts are expecting to see little change July’s orders. A large drop in new orders could help boost bond prices and cause mortgage rates to drop Wednesday because it would point towards manufacturing sector weakness. However, a sizable increase would indicate a stronger than expected manufacturing sector and would likely help push mortgage rates higher.

The Treasury will sell 5-year Notes Wednesday and 7-year Notes Thursday, which will tell us if there is still an appetite for medium-term securities. If investor demand in these sales is strong, particularly from international buyers, the broader bond market should move higher, pushing mortgage rates lower. But a lackluster interest from investors could lead to bond selling and higher mortgage pricing. The results of the sales will be announced at 1:00 PM ET each day, so any reaction to the results will come during afternoon trading Wednesday and Thursday.

Thursday’s sole monthly or quarterly data is the final revision to the 2nd Quarter Gross Domestic Product (GDP). Since this data is aged now and the preliminary reading of the 3rd Quarter GDP will be released next month, I don’t see this revision having much of an impact on the financial markets or mortgage pricing. The GDP is important because it is the total sum of all goods and services produced within the U.S. and is considered the best measurement of economic activity. It is expected to show a 0.2% upward revision to the previous estimate of a 1.0% increase in the GDP. It will take a fairly large revision for this data to move mortgage rates Thursday.

Friday has two reports scheduled that may influence mortgage rates. The first is August’s Personal Income and Outlays early Friday morning. It gives us an indication of consumer ability to spend and current spending habits. This is relevant to the markets because consumer spending makes up two-thirds of the U.S. economy. Rising income generally indicates that consumers have more money to spend, making economic growth more of a possibility. This is negative news for the bond market and mortgage rates because it raises inflation and economic growth concerns, making long-term securities such as mortgage-related bonds less attractive to investors. It is expected to show no change in income and a 0.2% increase in spending. If we see weaker than expected readings, the bond market should react positively, leading to lower rates Friday.

The second report is the University of Michigan’s revised Index of Consumer Sentiment for September. The preliminary reading that was released earlier this month showed a 57.8 reading. Analysts are expecting to see a small downward revision, meaning consumer confidence was slightly weaker than previously thought. As with Tuesday’s CCI release, a lower than expected reading would be good news for bonds and should help improve mortgage rates.

Overall, it is likely going to be a fairly active week in the markets and mortgage rates again, but probably not by last week’s standards. The most important day will likely be Wednesday or Friday, but Tuesday’s data can also influence mortgage rates. This is one of those weeks that I recommend maintaining contact with your mortgage professional if still floating an interest rate.

Real Estate Agent Safety Tips: New Clients

by admin on September 13, 2011

While new clients are a great thing, it is important to trust your instincts and stay on the safe side when meeting someone for the first time. Real estate agents have been tricked and hurt because they walked into dangerous situations, thinking it was a simple showing of a property to a new client.

THE RISK: Meeting with people you don’t know can put your safety at risk. You don’t know whether this person could potentially be a criminal, stalker, thief, or worse.

SAFETY TIPS

• Meet at the office first. Get them on your territory before you visit any property with them so you can learn more about them and collect personal information about them for your files.

• Ask for identification. The public is used to having their identification checked, so don’t be reluctant to ask because you’re scared you’ll offend someone, Siciliano says. Tell clients it’s company policy that all clients’ driver’s licenses are photocopied. “This will significantly reduce your risk because the bad guys don’t want to give you their I.D. or get their picture taken,” Siciliano says.

• Have all clients fill out a customer identification form. You can find an example of this at REALTOR.org. Click on “Prospect Identification Form” under the Office Safety Forms heading. The form asks for car make and license number, contact information, and employer information, and also requests a photocopy of the driver’s license.

• Introduce them to a coworker. When you meet them at the office, introduce them to at least one other person in your office. Criminals won’t like that others have seen them for identification purposes, according to tip sheets provided by the Washington Real Estate Safety Council.

This Week’s Market Commentary

by admin on September 5, 2011

This week brings us the release of only two pieces of economic data, but neither of them is considered to be highly important. In addition to the economic releases, we also have two speaking engagements that may influence the markets and possibly mortgage pricing.

The first release of the week comes Wednesday afternoon. The Federal Reserve will release its Beige Book report at 2:00 PM ET Wednesday. This report details current economic conditions in the U.S. by Federal Reserve regions. It is believed to be a key source of data when the Fed meets for their FOMC meetings and is usually released approximately two weeks prior to each meeting. If it reveals any significant surprises, we may see movement in the markets and mortgage pricing as analysts adjust their theories on the Fed’s next move.

July’s Goods and Services Trade Balance data will be posted early Thursday morning, giving us the size of the U.S. trade deficit. It is expected to show a deficit of approximately $51.5 billion, which would be a decline from June’s $53.1 billion. However, I would consider this the least important of this week’s events, meaning it will likely have little impact on bond trading or mortgage rates unless it varies greatly from forecasts.

Thursday also has the two speeches that we need to watch. The first is at 1:00 PM ET when Fed Chairman Bernanke speaks to the Minnesota Economic Club in Minneapolis. Anytime Mr. Bernanke speaks, there is a potential for his words to cause havoc in the markets. However, I don’t believe he will say anything that we did not see or hear in last week’s FOMC minutes or his speech in Jackson Hole the previous week. Still, he is speaking, so we are listening.

The one that is more likely to have a noticeable impact on the markets and mortgage pricing comes from President Obama Thursday evening. He will speak to the nation via a joint session of Congress at 7:00 PM ET about the economy and the current employment situation. He is looking for support in his ideas to boost economic activity and payroll numbers. It will be interesting to see what ideas he has, but there is little doubt that if anything substantive is proposed, we will see an active morning in the markets Friday. Since he will be speaking after market hours Thursday, his words will influence the international markets before the U.S. markets. That should give us an idea of what to expect Friday morning.

I think many believe that the current situation in Washington makes it very difficult for all parties to quickly pass any type of bill that will really lower unemployment and help the economy gain momentum. Therefore, it is unlikely that Thursday’s speech will unveil a plan that will make everyone happy, but hopefully it will at least get the ball rolling. After the debt ceiling debacle, maybe Washington learned to play a little nicer with each other. We will see.

Overall, this week looks like it may be a little less active for mortgage rates than last week was. With the financial markets closed tomorrow, we only have four days of trading. There is no particular data that is important enough to label its day of release as the most important of the week, but Thursday’s speeches make that day the best candidate. The lack of important economic news may allow the stock markets to heavily influence bond trading and mortgage rates this week. As long as the stock markets do not stage a sizable rally or sell-off, the likelihood of seeing significant changes to mortgage rates before Thursday or Friday morning is fairly minimal.

Prepare for an Earthquake: Making a Disaster Kit

by admin on August 26, 2011

In California, earthquakes can and will happen here quite often. If a big one strikes on this earthquake-prone area, it is important to be prepared and keep you and your family safe.

Creating a disaster kit for your home is not difficult and could make all the difference one day, as well as providing peace of mind. The California Emergency Management Agency (CalEMA) emphasizes that the first 72 hours after a major disaster are critical.

“Electricity, gas, water, and telephones may not be working. In addition, public safety services such as police and fire departments will be busy handling serious crises. You should be prepared to be self-sufficient – able to live without running water, electricity and/or gas, and telephones – for at least three days following a major emergency.”

In order to prepare for three days, create a Disaster Kit with supplies for three days and place it in a central location. Most importantly, make sure you have one gallon of water per person, per day. This is the amount of water needed for survival.

Other supplies, including food, essential medications, and a freshly stocked first aid kit are essential in a proper disaster kit