This Week’s Market Commentary

This week is relatively light in terms of scheduled economic reports that are relevant to mortgage pricing. None of the factual economic reports are considered to be highly important to the financial markets or mortgage pricing. The data that is on the agenda is considered to be moderately important, but Wednesday afternoon and Thursday morning have events scheduled that could be the biggest factor in whether mortgage rates move higher or lower this week.

The first release of the week will come from the Commerce Department, who will post April’s Factory Orders data late tomorrow morning. This manufacturing sector report is similar to last week’s Durable Goods Orders release, but also includes orders for non-durable goods. It can cause some movement in the financial markets if it varies from forecasts by a wide margin, but it isn’t expected to cause much of a change in rates. Current forecasts are calling for an increase in new orders of 0.2%.

There is nothing of relevance scheduled for release Tuesday, but Wednesday has two events that we will watch. The first is the revised 1st Quarter Productivity and Costs data at 8:30 AM ET. This data measures employee output and employer costs for wages and benefits. It is considered to be a measurement of wage inflation. This is relevant because it is believed that the economy can grow with low inflationary pressures when productivity is high. Economic growth isn’t much of a concern to the bond market at the moment, but if productivity is at a high level when the economy does turn the corner, inflation may not be as much of a topic as it would be without strong productivity levels. Last month’s preliminary reading revealed a 0.5% decline and analysts are expecting to see a 0.7% decline, but I don’t think this piece of data will have much of an impact on the bond market or mortgage pricing unless it varies greatly from that reading.

Wednesday afternoon has the Federal Reserve’s release of their Beige Book. This data details economic conditions throughout the U.S. by Federal Reserve region. It is relied upon heavily by the Fed to determine monetary policy during their FOMC meetings. If it shows surprisingly softer economic activity since the last report, the bond market may thrive and mortgage rates could drop shortly after the 2:00 PM ET release. If it reveals signs of inflation growing or rapidly expanding economic activity in many regions, we could see mortgage rates revise higher Wednesday afternoon.

Thursday has no important economic data scheduled, but Fed Chairman Bernanke will speak before a Congressional Joint Economic Committee about his outlook for the economy. His words are always the focus of attention and can be highly influential on the markets and mortgage rates. It will be interesting to see exactly what he says and how much his outlook has changed in the recent weeks, especially after Friday’s disappointing Employment report. He is scheduled to testify at 10:00 AM ET, so we could see many lenders post rates later than usual to allow the markets to react to his prepared speech and the Q&A that follows. I think this event is more likely to benefit mortgage shoppers than lead to a spike in rates, but it is the week’s most important event so I recommend proceeding cautiously into it if still floating an interest rate.

April’s Goods and Services Trade Balance report will close the week’s economic reports early Friday morning. This data gives us the size of the U.S. trade deficit and will be released at 8:30 AM ET. It isn’t likely to cause much movement in the markets or mortgage rates, but nevertheless forecasters are expecting to see a $49.9 billion trade deficit. It will take a wide variance from this projection for the data to influence mortgage rates.

Overall, it likely is going to be a moderately busy week for the mortgage market. The most action will likely come during the middle days, assuming that the stock markets don’t go into heavy selling or rally. Friday’s employment data helped fuel large stock losses and pushed bond yields to new record lows. The loss puts the Dow just a little more than 100 points away from breaking below an extremely important benchmark of 12,000. If stocks recover a good part of last week’s losses, we can expect bond prices to suffer and mortgage rates to rise. On the other hand, further stock weakness could lead to more funds moving into bonds and another round of improvements to mortgage rates.

As referenced Friday, I believe the major indexes still have plenty of room to fall, which traditionally makes bonds more attractive as investors seek a safe-haven to place funds and escape the volatility. However, we should note that the 10-year Treasury is currently at a historic low yield of 1.47%. Even lower than when the financial crisis was at its peak. My concern is that I am not sure just how much lower we can see yields fall before investor appeal wanes, raising concerns about inflationary risks in the future. We are in unchartered waters with mortgage rates so low, stocks still relatively overpriced, overseas concern rising again and bond yields at record lows. It is going to be interesting to see what happens over the summer. At some point in the near future we will need to shift to a conservative approach towards mortgage rates, but for the time being, enjoy the improvements

This Week’s Market Commentary

Monday’s bond market has opened in positive territory following early stock weakness. As expected, the stock markets are showing sizable losses as they react for the first time to Friday’s Employment numbers. The Dow is currently down 153 points while the Nasdaq has lost 40 points. The bond market is currently up 7/32, which with Friday’s strength after pricing was issued, should improve this morning’s mortgage rates by approximately .250 of a discount point.

Worth noting is that this morning’s early selling has brought the Dow below 13,000 again. It is early in the day and a lot can happen between now and closing, but closing and staying below 13,000 should bode well for the bond market and mortgage rates. That was a threshold that was difficult to cross, so giving it up could signal further stock losses in the immediate future. This would create a flight-to-safety scenario that would likely bring funds from stocks into bonds.

There is no relevant economic news scheduled for today or tomorrow. The rest of the week brings us the release of five economic reports that are relevant to mortgage rates, in addition to a couple of Treasury auctions that have the potential to be influential on the bond market and mortgage pricing. Corporate earnings season also kicks off this week, which will be instrumental in stock market direction and possibly mortgage rate movement.

The first report of the week comes Wednesday afternoon when the Federal Reserve will post its Fed Beige Book report at 2:00 PM ET. This report is named simply after the color of its cover and details economic conditions throughout the U.S. by Federal Reserve region. Since the Fed relies heavily on the contents of this report during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any significant surprises. Unexpected signs of strong economic growth or rising inflation would be considered negative for bonds and mortgage rates. Slowing economic conditions with little sign of inflationary pressures would be considered favorable for bonds and mortgage pricing.

Overall, look for the most movement in rates the latter part of the week due to the Producer and Consumer Price Indexes being released and the two Treasury auctions that are scheduled, but this morning was a good start. There is also a high probability that the stock markets will also influence bond trading and mortgage rates due to earning releases that could disappoint the markets. I am expecting it to be an active week for the mortgage market, so please maintain contact with your mortgage professional if still floating an interest rate.

How to Hire A Contractor: Five Important Steps

Whether remodeling or making more simple home improvements, it is vital to find the right contractor. Times are tight, and horror stories about lingering projects abound. These five steps, outlined by the San Jose Mercury News, will help you hire the perfect contractor that you can trust to improve your home.

Step One: Get referrals
While there are many ways to find contractors, an easy way to start is simply asking friends and family about it. Put the question out to your contacts on Facebook, and a friend may refer you to a fantastic and trustworthy contractor.
Online sites such as Angie’s List, which requires a subscription fee, provide reviews of local contractors among other small businesses.
                                                         Step Two: Interview potential contractors

Prepare to ask the candidates questions about their professional background, recent experience with similar projects, their workers, professional associations, and obtain a list of references. Be sure to follow through and call all of the given references!

Step Three: Look for red flags
Contractors offering extremely low bids could be cutting corners with cheap labor and substandard materials. While times are difficult for many, the cheapest bid is not always the best.
Other red flags include asking for too much cash up front – more than a third – or demanding to be paid only in cash.

Step Four: Narrow it down
From those you have interviewed, narrow it down to three candidates and call all of their references. Ensure that those projects were completed on time and at the expected price. You can also check on your candidates with the Better Business Bureau for former complaints.
Meet with the three candidates face to face, and ask for a broken down price estimate that shows materials and labor expected.

 Step Five: Finalize the deal
Once you have chosen your contractor, get the agreement down in writing! This is crucial if any problems should arise later on. The Mercury recommends including the “beginning date, a completion date, and how payments will be made. It’s typical to pay a third up front, a third when the project is half done and the final third once the job is done and meets your expectations.”
Also ensure that the contractor has a certificate of insurance showing liability and workman’s compensation insurance in case of an accident.

This Week’s Market Commentary

This week brings us the release of five relevant economic reports along with an FOMC meeting and two Treasury auctions for the markets to digest. A couple of the week’s reports are considered highly important, as is of course the FOMC meeting. There is nothing of relevance to mortgage rates being released or taking place tomorrow, so all of the week’s events are scheduled over four days.

The first thing on the calendar will come from the Commerce Department early Tuesday morning when they post February’s Retail Sales data. This data is extremely important to the financial markets because it measures consumer spending. Since consumer spending makes up over two-thirds of the U.S. economy, data that is related usually has a big impact on the markets. This month’s report is expected to show an increase in sales of approximately 1.0%. If it reveals a larger than expected increase, the bond market will likely fall and mortgage rates will move higher as it would indicate a stronger level of economic growth than many had thought. If it reveals a much smaller than expected increase, I expect to see bond prices rise and mortgage rates improve Tuesday morning.

Also Tuesday is the Federal Open Market Committee (FOMC) meeting. This is a single-day meeting that will adjourn at 2:15 PM ET. It is widely believed that the Fed will make no change to key short-term interest rates at this meeting, but the post-meeting statement will be watched closely for any change in their feelings about the economy or any other moves they may make, such as QE3. Generally speaking, the bond market wants to hear that inflation is not an immediate concern and that key rates will be kept at current levels for a long time. An announcement of another round of Quantitative Easing to help keep long-term interest rates low could fuel a bond rally.

There are two Treasury auctions this week that could potentially affect mortgage rates. The first is the 10-year Treasury Note auction Tuesday and the 30-year bond sale will be held Wednesday. Results of both sales will be posted at 1:00 PM ET on the sale days. If investor demand was high, we may see bonds rally during afternoon trading as it would indicate that investors still have an appetite for longer-term securities. However, weak demand in the sale could lead to selling and an increase in mortgage rates.

Wednesday also has a speaking engagement by Fed Chairman Bernanke. He will be speaking to the Independent Community Bankers Association in Nashville at 9:00 AM ET. I don’t believe he will say anything that will be a market mover, especially the morning after the FOMC meeting. However, market participants always watch his words closely so any surprises will have an impact on the markets and possibly mortgage pricing.

The Labor Department will post February’s Producer Price Index (PPI) early Thursday morning. This important index measures inflationary pressures at the producer level of the economy. There are two portions of the index- the overall reading and the core data. The core data is more important and watched more closely because it excludes more volatile food and energy (including gasoline) prices. If the index shows a large increase, inflation concerns will rise, making long-term investments such as mortgage-related bonds less attractive to investors. This would lead to higher mortgage rates Thursday morning. Current forecasts are calling for a 0.5% increase in the overall reading and a 0.2% increase in the core data.

Friday has the remaining three economic reports scheduled. February’s Consumer Price Index (CPI) will be released early Friday morning, which measures inflationary pressures at the very important consumer level of the economy. Its results can definitely have a huge impact on the financial markets, especially long-term securities such as mortgage-related bonds. It is expected to show a 0.4% increase in the overall index and a 0.2% rise in the more important core data. If we see weaker than expected readings, bond prices should rise and mortgage rates would likely fall Friday.

Friday’s next report will come mid-morning when February’s Industrial Production report is posted. This report measures manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is expected to show a 0.5% increase from January’s level. A decline would be considered extremely favorable news for bonds and mortgage rates because it would indicate manufacturing sector weakness and a broader economic recovery is more difficult if manufacturing activity is slipping.

The week’s final piece of data is the University of Michigan’s Index of Consumer Sentiment for March just before 10:00 AM ET Friday. This index gives us a measurement of consumer willingness to spend. If confidence is rising, then consumers are more apt to make large purchases. This helps fuel consumer spending and economic growth. A drop in confidence will probably hurt the stock markets and boost bond prices, leading to lower mortgage rates, assuming the CPI matches forecasts. Bad news for bonds and mortgage rates would be rising confidence. It is expected to show a reading of 76.0, which would be an increase from February’s final reading 75.3.

Overall, look for Tuesday or Friday to be the most important day of the week due to the importance of those day’s reports and the FOMC meeting. Tomorrow will likely be the least active day for mortgage rates, but we could see plenty of movement in the markets and mortgage pricing several days this week. Therefore, please be attentive to the markets and maintain contact with your mortgage professional if still floating an interest rate.

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Credit Bureaus Selling Your Info: How to Opt Out

Written in our customer agreements with borrowers is a promise that our company would never release personal or financial information. Unfortunately, credit bureaus do not abide by these same rules.
The credit bureaus are the culprits on trigger leads which can cause solicitation for anyone borrowing for a home loan because they sell the leads to companies.  It’s not the vendors (LandSafe, IR, etc).  Unfortunately, we are at the mercy of the bureaus on this deal. However, there are simple steps you can take to opt out of your information being sold by credit bureaus.

How to opt out of trigger leads

There are two ways to opt-out of trigger lead programs and ensure your information is not sold.
1. Complete and submit an online form at www.optoutprescreen.com. This method stops trigger leads for five years.

2. Complete a separate form at the same Web site (www.optoutprescreen.com) and then print, sign and mail a letter generated by that form to confirm your opt-out request. This method stops trigger leads permanently.
Both of the opt-out methods take five days to become effective, so if you don’t want your information to be sold, you need to opt-out at least five days before you make a specific inquiry.

If your information is already in the trigger lead pool, you may continue to receive telephone calls and mailings for some time after you elect to opt out.

Opting out via one of these methods is highly recommended for your privacy.

Top Five Tips to Increase Your Home’s Appraisal Value

The importance of the appraisal in a real estate transaction can’t be overestimated. An appraisal can completely kill a deal if it does not turn out well.

The Wall Street Journal recently posted an article with tips on upping your homes value during an appraisal, and here are some of our top picks:

                                                                    1. Spruce up the house

While a couple of dishes in the sink won’t make a difference, there are quick fixes that do. Overgrown landscaping should be trimmed, and things like marks on walls and stained carpets should be cleaned. These affect the home’s overall value in appraisal, according to the WSJ.

2. Curb appeal matters

Take the time to mow the lawn, trim the hedges, and pull out any weeds. A nice-looking yard is not only a great first impression, but it can offset any nearby foreclosed properties.

3. Note the neighborhood improvements

Location, location, location! Make note of any changes to the neighborhood that are positive, such as a new playground or a Whole Foods nearby.

4. Keep the $500 rule in mind
According to the WSJ, appraisers often value a home in $500 increments. This means that if there is a repair over $500 that can or ought to be made, do it, or it could count against the property’s value.

5. Maintain a list of all updates to home
All updates, major and minor, to the home should be listed. “Itemize each update with the approximate date and approximate cost,” recommends Matthew George, the chief appraiser of Eagle Appraisals Inc. Remember to include things the appraiser might not notice, such as insulation and roof updates.

Common First Time Homebuyer Mistakes

Many first-time homebuyers make simple and common mistakes that are easily avoidable.

They face multiple challenges anyway, such as finding the right home, the right agent, getting approved for a mortgage, and staying within their budget. By avoiding these common mistakes, the process of buying a home can be much less stressful.

                                                                 1. Overlooking extra costs of homeownership

While some see themselves as ready for homeownership once they can afford a mortgage payment, it is important to remember the other fees that come along with owning a home. Property taxes, home owners association fees, maintenance, higher water and electrical bills, and property insurance are among the extra costs of owning a home, and should be calculated into your budget.

 2. Not getting preapproved
It is very important to get preapproved for a loan before you go out searching for the perfect place. That way, you will be making financially sound decisions versus unrealistic emotional ones as to what you can afford.

3. Spending your entire savings on your down payment
This is one of the most common mistakes first time homebuyers make. Homebuyers who put 20 percent or more down don’t have to pay for mortgage insurance when getting a conventional mortgage, which often translates into substantial savings on the monthly payment. However, it is smarter to keep your rainy day savings intact instead.

Why Real Estate Agents are at Risk for Theft and How to Prevent It

Open houses are becoming targets for thefts more often, and real estate agents are at risk of losing valuable items, as are the homeowners.

As a real estate agent, you’re inviting the public to a property, which is an invitation to anyone, from thieves to those who might want to harm you.

A common tactic thieves use at open houses is teamwork and distraction. Linda Powers of Specialists Real Estate in Las Vegas told her story of such an encounter on Realtor.org.

“Last year I was holding an open house on my listing, and four women walked in and said they were sisters and looking for a home for their mother. Two of them walked out to the yard while I stayed with the others.

“The two in the yard then called me outside because they had a few questions. When we walked back in, the gals stayed a little longer talking and asking more questions about the house.

“It wasn’t until the next morning that I noticed my debit card and a few dollars missing. They managed to spend a few hundred dollars before I canceled the card. I found out later that these ladies had been making the rounds around Las Vegas doing the same to other agents while sitting on their open houses.

“Needless to say, I now keep my wallet in the trunk of my car. It also helps to do open houses in twos, especially when the home is lived in and has things to steal. This economy is bringing out the worst in people.”

SAFETY TIPS

There are preventative actions, such as those mentioned by Linda, that will help you protect yourself from theft.

Promote security in your advertisements.
When you advertise the open house, note that identification will be required at the front door and video surveillance will be in use. “The bad guys will be less likely to show up,” Siciliano says.

Partner up.
When would-be assailants see two people at the front door, they’ll be less likely to go in. (Read one agent’s story how the buddy system protected her).

Introduce yourself to neighbors.
Let them know you’ll be showing the house so others know that you are there.

Watch for patterns.
At an open house, note any patterns in arrivals, particularly near the end of the open house. One common scam: Thieves come near the end of the open house, working as a team. They have “buyers” distract the agent as others steal valuables in the home. (Read what happened to one sales associate.)
Stow away your valuables.

Never leave your purse, laptop, or wallet unattended on the counter in plain view. Keep them in the trunk of your car. However, always keep your cell phone on you so you can call for help if you need to. Also, before the open house, tell your clients to put away all of their valuables, prescription drugs, and mail.

Seven Financial New Year’s Resolutions to Keep

Small changes in your financial behavior can add up to big savings over the long term, and New Year’s is a perfect time to make some financial resolutions.

DailyFinance.com has listed seven great resolutions that are simple and will fatten up your wallet in 2012. Click here to see the full list; a shortened version is below:

1. Get healthy by losing weight and quitting smoking, which can lower your insurance premiums.

2. Be a smart shopper by using sales, coupons, and programs and apps like LivingSocial and Groupon to find good deals.

3. Simplify your day to day finances with things such as online automatic bill pay.

4. Increase your financial literacy and educate yourself about things you don’t understand.

5. Be prepared and start an emergency savings fund in case something unexpected happens.

6. Pay down debt and try to pay more than the minimum each month.

7. Create a basic household budget that makes sense and is easy to follow.

This Week’s Market Commentary

This week bring us the release of only three monthly reports that are relevant to the bond market and mortgage rates, but two of them are considered to be highly important.

In addition to those three reports, we also will get the minutes from the last FOMC meeting that may influence the markets and possibly mortgage rates. The financial markets are closed today due to the New Year’s Day holiday.

The first report is the Institute for Supply Management’s (ISM) manufacturing index for December late tomorrow morning. This highly important index measures manufacturer sentiment. A reading above 50 means that more surveyed manufacturing executives felt that business improved during the month than those who felt it had worsened.

That indicates manufacturing sector strength rather than contraction. Analysts are currently expecting to see a 53.4 reading in this month’s release, meaning that sentiment strengthened from November’s 52.7. A smaller reading will be good news for the bond market and mortgage shoppers, while a higher than expected reading could lead to higher mortgage rates tomorrow morning as it would point towards economic strength.

Also tomorrow is the release of the minutes from the last FOMC meeting. This will give market participants insight to the Fed’s thinking and concerns regarding the economy, inflation and monetary policy. It is one of those pieces of information that may cause a great deal of volatility in the markets or be a non-factor, depending on what the minutes show. They will be released at 2:00 PM ET, so they won’t affect the markets or mortgage rates until afternoon hours.

The Commerce Department will post November’s Factory Orders data late Wednesday morning. This data gives us a fairly important measurement of manufacturing sector strength. It is similar to the Durable Goods Orders release that was posted late last week, except this report includes orders for both durable and non-durable goods. Durable goods are items that are expected to last three or more years such as electronics and autos. Examples of non-durable goods are food and clothing. Analysts are expecting to see an increase of 2.1% in new orders. This report generally does not have a huge impact on the bond market or mortgage rates, but it can influence bond trading enough to create a minor change in rates. The smaller the increase, the better the news for mortgage rates.

The final report of the week comes Friday morning when the Labor Department will post December’s employment figures. The Employment report is arguably the most important monthly release we see. It gives us the national unemployment rate, the number of jobs added or lost during the month and average hourly earnings, which is a key measure of wage inflation. Rising unemployment, a decline in payrolls and earnings would be ideal news for the bond market.

Current forecasts call for a 0.1% rise from November’s unemployment rate of 8.6%, 150,000 new jobs added to the economy and an increase in earnings of 0.2%. If we see weaker than expected results, mortgage rates should improve Friday. However, stronger than expected readings will likely raise optimism about the economy, pushing mortgage rates sharply higher.

Overall, the key data of the week will be Friday’s Employment report, but look for tomorrow and Wednesday to be active due to the economic data and FOMC minutes scheduled. If they give us favorable results, mortgage rates will likely move lower for the week. But if not, we can expect to see mortgage rates move higher on the week.

This Week’s Market Commentary

This week is fairly light in terms of the number of economic releases scheduled for release. There are only three monthly or quarterly reports on the agenda that have the potential to influence mortgage rates and none of them are considered to be highly important. That means that the stock markets could be the focal point multiple days, especially the middle part of the week.

October’s Factory Orders is the first, coming late this morning. This report is similar to the Durable Goods Orders report that was released the week before last, except this one includes manufacturing orders for both durable and non-durable goods. This data usually isn’t a major influence on bond trading, but with little data this week that can impact mortgage rates, it could draw more attention than usual. Analysts are expecting to see a decline in new orders of approximately 0.4%. The larger decline, the better the news for bond prices and mortgage rates because it would signal manufacturing sector weakness.

There is no other relevant economic news scheduled for release until Friday morning. October’s Goods and Services Trade Balance report will be posted early Friday morning. This report gives us the size of the U.S. trade deficit, but it is considered to be of low importance to mortgage rates. It is expected to show a $44.0 billion trade deficit. Unless it varies greatly from forecasts, I don’t expect this data to affect mortgage pricing Friday.

Also Friday is the release of December’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment. This index measures consumer willingness to spend and can usually have enough of an impact on the financial markets to change mortgage rates slightly. Consumer sentiment or confidence is tracked because the more comfortable consumers are about their own financial situations, the more likely they are to make a large purchase in the near future. Since consumer spending makes up two-thirds of the economy, any related data is watched closely. Friday’s release is expected to show a reading of 65.0, which would be an increase from last month’s final reading. A decline in confidence would be considered good news for the bond market and mortgage rates.

Overall, today will probably bring us the most movement in rates as the markets digest weekend news. I don’t believe we will see as much volatility in the stock markets as we saw last week though. Interestingly, despite the sizable rally in stocks last week, mortgage rates didn’t take much of a hit. Even though mortgage bonds showed resilience last week, I still think that the upward risk outweighs the likelihood of seeing noticeable improvements in rates in the immediate future. Therefore, I recommend maintaining contact with your mortgage professional if still floating an interest rate

New Jumbo Mortgage Rules’ Effect on Expensive Areas

On Saturday October 1, the size of jumbo mortgage loans available to Fannie Mae and Freddie Mac will get smaller, changing the mortgage landscape.

According to a recent Yahoo! Finance article, this will have a greater effect on expensive zip codes, like many in the Bay Area and peninsula.

“In expensive housing markets where prices have fallen, the limits will drop the most,” reported Yahoo! Finance.

While the new lower limit of $625,500 — down from today’s $729,750 — is likely enough to cover a house in many places in the country, that is not the case everywhere.

To read more about these new limits and what they mean for expensive zip codes, read the full article here.

This Week’s Market Commentary

This week brings us the release of only two relevant monthly economic reports but neither of them is considered to be highly important. There are two important Treasury auctions this week that may influence mortgage rates more than the minor economic data that is scheduled.

It is also a holiday-shortened week with the bond market closed Friday in observance of the Veterans Day holiday. The stock markets will be open Friday, but bonds will not be traded meaning that many lenders will be closed.

Neither of this week’s monthly economic reports is expected to lead to noticeable changes in mortgage rates. This means that the stock markets will likely be a significant influence on bond trading and mortgage rates in addition to the two particular Treasury auctions. If the stock markets rally, we could see funds shift from bonds into stocks that potentially offer better returns, leading to higher mortgage rates. If stocks fall from current levels early in the week, bonds and mortgage shoppers should benefit.

The two important Treasury auctions come Wednesday and Thursday when 10-year Notes and 30-year Bonds are sold. The 10-year sale is the more important of the two as it will give us a better indication of demand for mortgage-related securities. If the sales are met with a strong demand from investors, we should see the bond market move higher during afternoon trading the days of the auctions. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader bond selling. The selling in bonds would probably result in upward revisions to mortgage rates.

The first monthly data of the week is September’s Goods and Services Trade Balance report early Thursday morning. It helps us measure the size of the U.S. trade deficit, but usually is not a major influence on bond trading or mortgage pricing. It does affect the value of the U.S. dollar, which makes U.S. securities more attractive to international investors when the dollar is strong. This is because the securities’ proceeds are worth more when sold and converted to the investor’s domestic currency. However, its results will not likely directly lead to changes in mortgage rates. Analysts are expecting to see a $45.8 billion trade deficit.
November’s preliminary reading of the University of Michigan’s Index of Consumer Sentiment will be released late Friday morning. This index measures consumer confidence, which gives us an indication of consumer willingness to spend. It is expected to show a reading of 61.5, up from October’s final reading of 60.9. That would be considered negative news for bonds because rising sentiment means consumers are more optimistic about their own financial situations and are more likely to make large purchases in the near future. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely.

Overall, it is difficult to predict just how active this week will be for mortgage rates. As expected, last week brought us quite a bit of volatility in rates. This week could be very calm or could be just as active as last week was. I don’t believe the economic data on tap will be a catalyst. I think the key will be the stock markets and Wednesday’s Treasury auction. If they give us favorable results, mortgage rates will likely close the week lower than today’s opening levels.

This Week’s Market Commentary

This week brings us the release of seven economic reports for the markets to digest, in addition to a speaking engagement by Fed Chairman Bernanke. Also worth noting is the fact that this will be an extremely busy week for corporate earnings, which usually translates into stock volatility.

The most important economic reports are scheduled for the middle part of the week, but we may see movement in mortgage rates each day. Intra-day revisions to mortgage rates on more than one day are also possible. Therefore, proceed with caution if closing in the near future.

Today has September’s Industrial Production data scheduled to be posted. It will be released mid-morning, giving us an indication of manufacturing strength by tracking output at U.S. factories, mines and utilities. It is expected to show a 0.2% increase in output from August’s level, meaning that manufacturing activity rose slightly.

A larger than expected increase in production would be negative for bonds and mortgage rates as it would indicate economic strength. A decline in output would likely push mortgage rates lower tomorrow morning.
September’s Producer Price Index (PPI) will be released early Tuesday morning. This is one of the two very important inflation readings we get each month. This index measures inflationary pressures at the producer level of the economy. Analysts are expecting to see a 0.2% increase in the overall index and a 0.1% rise in the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices. A larger than expected increase could raise concerns in the bond market about future inflation and lead to higher mortgage rates Tuesday. However, weaker than expected readings should result in lower rates.

Wednesday has three reports scheduled that may influence mortgage rates. The first is the sister report of Tuesday’s PPI. This would be September’s Consumer Price Index (CPI). It measures inflationary pressures at the more important consumer level of the economy and is one of the most important reports that the bond market gets each month. Analysts are expecting to see a rise of 0.3% in the overall index and an increase of 0.2% in the core data reading.

A larger than expected increase in the core reading could raise inflation concerns, pushing bond prices lower and mortgage rates higher. Inflation is the number one nemesis of the bond market because it erodes the value of a bond’s future fixed interest payments. When inflation is a threat, even down the road, bonds sell for discounted prices that push their yields higher. And since mortgage rates tend to follow bond yields, this leads to higher rates for mortgage borrowers.

September’s Housing Starts is Wednesday’s second release, also coming at 8:30 AM ET. This report will probably not have much of an impact on the bond market or mortgage rates. It gives us a measurement of housing sector strength and mortgage credit demand by tracking construction starts of new homes, but is usually considered to be of low importance to the financial and mortgage markets. It is expected to show an increase in new home starts between August and September. I believe we need to see a significant surprise in this data for it to influence mortgage rates.

The final report scheduled for release Wednesday will come during afternoon trading when the Federal Reserve posts its’ Beige Book at 2:00 PM ET. This data details economic conditions throughout the U.S. by region and is relied upon heavily by the Federal Reserve when determining monetary policy at their FOMC meetings. If it reveals stronger signs of economic growth from the last release, we could see mortgage rates revise higher Wednesday afternoon.

Thursday has the last two reports of the week with the release of September’s Existing Home Sales data and Leading Economic Indicators (LEI), both at 10:00 AM ET. This index attempts to measure future economic activity, particularly during the next three to six months. Current forecasts are calling for an increase of 0.3% from August’s reading. This would indicate that economic activity is likely to increase moderately over the next couple of months. That would be relatively bad news for the bond market and mortgage rates, but this report is considered to be only moderately important. Therefore, a small increase would not be of much concern to the bond and mortgage markets. Ideally, we would like to see a decline in the index.

The National Association of Realtors will release September’s Existing Home Sales data. This report gives us an indication of housing sector strength and mortgage credit demand by tracking home resales. I don’t see it having much of an influence on the bond market or mortgage rates, but a reading that varies greatly from analysts’ forecasts could lead to a slight change in mortgage pricing. It is expected to show a decline in sales from August to September, meaning the housing sector remained soft. That would be favorable news for the bond market since a weak housing sector makes a broader economic recovery less likely.

Overall, it appears that Tuesday or Wednesday are the likely candidates for the most important day of the week. In addition to the economic data Tuesday, Fed Chairman Bernanke will speak at a Boston Fed conference during early afternoon hours. This adds to the days’ value as his words always have the potential to cause volatility in the markets. Besides the economic reports, there are many companies posting earning reports during the week, including some big names that include Apple, Citigroup, IBM and Intel.
If the corporate earnings releases are generally weaker than forecasts, stocks may suffer, making bonds more appealing to investors. The end result would likely be an improvement in rates. The flip side though is stronger than expected earnings that drive stocks higher, pushing bond prices lower and mortgage rates upward. Accordingly, please maintain contact with your mortgage professional if still floating an interest rate.

Foreclosures Slow Down in Bay Area

Bay Area foreclosures slowed in September, down 7% from August and 10% from this time last year, according to an article in the Contra Costa Times. A report released Thursday by RealtyTrac revealed these numbers, though how long the decline will last is uncertain.

2,594 homeowners in the Bay Area were given a notice of default in September, the first step in the foreclosure process.

RealtyTrac does not include Santa Clara County in its definition of the Bay Area, however, and there was a slight increase in foreclosures in that county, as well as in San Mateo County, though that is included in the Bay Area defined by the company.

RealtyTrac CEO Daren Blomquist said that “in the next six months, it’s likely that default notices will be on a consistent upward rise in the Bay Area, once banks catch up with their backlog of current foreclosures and more people fall behind on their mortgages.”

New API Scores Out For California Schools

The 2011 scores for California schools’ Academic Performance Index, also known as the API, were recently released.

They are very important as school’s scores can influence the value of nearby homes, especially in competitive Bay Area neighborhoods. In Santa Clara County, for example, these scores have a huge impact on home values.

“In our county it is particularly important because we have this huge variance,” said local Realtor Larry Miller. “On one side of the street, it’s one school, and a different school on the other side. That can mean a $150,000 difference in home price.”

The API scores can be found on the state’s website here. Some schools have gone up in their score, and some down, which affects a home’s values

Company Ranked #4 in Top Retail Producers by Inside Mortgage Finance

Great news! PHH, our parent company, moved up in the rankings after the close of Q2. We are now #4 in the Top Retail Producers list, according to Inside Mortgage Finance.

This Week’s Market Commentary

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 financial and mortgage markets will closed today in observance of the Labor Day holiday, meaning we will not see new mortgage rates until Tuesday morning.

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

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. This state video runs through how to make one: Emergency Kit Video

Homes and Hope: Coldwell Banker 2011 Habitat for Humanity Fundraiser

Coldwell Banker is holding its 13th annual Homes and Hope raffle fundraiser for Habitat for Humanity, and Princeton Capital is proud to be sponsoring it. Raffle tickets can be purchased at Coldwell Banker offices and from real estate agents for $2 each, and the grand prize, provided by us, is $5,000.

The prize list is extensive, with multiple hotel stays, gift certificates, and an iPad. This year’s fundraising goal is  just over $365,000.

In the past twelve years, Coldwell Banker has raised more than $2.1 million for Habitat for Humanity, helped to build 159 Habitat homes, and contributed more than 44,000 hours of volunteer labor. Help this tradition of success and philanthropy by picking up a raffle ticket during the month of August.