In love with my career

In love with my career


Is that how you feel? The housing industry is ever changing but it is still so rewarding in many ways.

I got a call from a client that was wanting to see about purchasing a home with a Realtor I work with and was told she needed to call and get preapproval for a mortgage. She told me that she really didn't think they would be able to at this time but a job transfer could be in the works for her husband and they really didn't want to go into an apartment. They have three small children and really wanted a yard for them to be able to play in.

I did the mortgage interview with her and told her that I would be able to finance them a new home. To her surprise I told her that we could use his VA elgibility which she didn't even realize we could do a 100% loan. She started weeping on the phone as she was so thrilled!! She stated she couldn't wait to call her husband.

This past week we closed her and her husband on there new home. The new home has plenty of space for the children, has been totally remodeled and the mortgage payment is cheaper then the rent they were paying. It was a win win for everyone involved, especially me as it reminded me again of why I love my career.

Let's all remember to treat our clients and business partners with the greatest respect we can. May the excitement of our work keep us all in love with our careers. It's a tough market out there, but together we will all help each other and have a great time doing it.

Ready for cooler weahter

Ready for cooler weather

I am so ready for cooler weather! I run in a marathon training class at White Rock Lake in Dallas. This morning at 6am we started on our 13.3 mile run and the temperature was already 82 degrees and humid!

I know cooler weather is just ahead but I am impatient! The great State Fair of Texas starts this coming Friday! It seems we typically get a cool spell during the three week run of the fair.

I see mums and pumpkins at the stores and garden centers. That must be a sure sign that fall is just ahead. And haven't you all seen the Halloween costumes at the local retailers already.

And of course Friday night high school football has started. Most local high schools have already played for three weeks but before they get finished with the season cool weather will be upon us. Last year I went to a high school playoff game that was being played at SMU and the temperature was in the low 30's!

Summer, we enjoyed you but will be happy to pack you away until next year!! Fall, we anxiously await your arrival!!

Carrollton Texas Zero Down Payment Program

Carrollton Texas Zero Down Payment Program

Now is the perfect time to take advantage of the Carrollton Texas Zero Down Payment Program, low interest rates and the current low sales prices of homes in Carrollton, Texas. If the only thing holding you or your clients back from purchasing a home is the down payment, then we have solved that for them.

Glenn Colley with WR Starkey Mortgage will walk you step by step to utilize this wonderful Carrollton Texas Zero Down Payment Program. You must be a first time homebuyer (cannot have owned a home within the past 3 years), purchase price must be below $145,000, income limitations apply and you must have a 620 or higher credit score.

The Carrollton Texas Zero Down Payment Program provides down payment and closing cost assistance to low to moderate income first time home buyers within the Denton County area of Carrollton. Assistance upto $15,000 is provided in the form of a 10 year forgivable loan at a 0% interest rate for down payment and non recurring closing costs associated with the purchase of a new home in Carrollton, Texas within Denton County.

If you have family or friends that you know that could take advantage of this great program then have them call The Glenn Colley Team today. If you need a Realtor to help you find the perfect home for you that qualifies for the Carrollton Texas Zero Down Payment Program we can help you with that too. Do not miss this rare opportunity.

I would love to help you experience the feeling of owning your own home. It is a wonderful feeling to know that you too can afford your American dream of being a homeowner. No more renting or living with family members when you take advantage of the Carrollton Texas Zero Down Payment Program.

Click here to apply for the CarrolltonTexasZeroDownPaymentProgram

Mortgage Rate indicators for Dallas

Market Comment - Week of August 30th, 2010
Mortgage bond prices fell slightly last week pushing interest rates higher. Unfortunately the seesaw trading pattern continued with rates rising and falling throughout the week. We started the week with stronger than expected Industrial Production and Capacity Use data pressuring mortgage interest rates higher. Stocks fell mid-week following a shocking 27.2% decline in existing home sales and weaker than expected durable goods orders. This helped us recover some of the earlier losses. Friday was choppy with 1/4 point up and down swings occurring throughout most of the morning. Despite all the volatility we were able to stay relatively flat overall for the week as rates rose by about 1/8 of a discount point.

The employment report Friday will be the most important release this week. Expect more volatility.
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Economic Factors
Economic Indicator Release Date Time Consensus Estimate Analysis
Personal Income and Outlays Monday, Aug. 30, 2010 Up 0.3%, Up 0.3%, Important. A measure of consumers' ability to spend. Weakness may lead to lower mortgage rates.
PCE Core Inflation Monday, Aug. 30, 2010 Up 0.1% Important. A measure of price increases for all personal consumption. Weaker figure may help rates improve.
Consumer Confidence Monday, Aug. 30, 2010 51.3 Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates.
ADP Employment Tuesday, Aug. 31, 2010 -20k Important. An indication of employment. A large decrease in payrolls may bring lower rates.
ISM Index Tuesday, Aug. 31, 2010 53.3 Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
Revised Q2 Productivity Wednesday, Sept. 1, 2010 Down 1.5% Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Factory Orders Wednesday, Sept. 1, 2010 Up 0.5% Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Employment Friday, Sept. 3, 2010 9.6%, Payrolls -120k Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.

Productivity
Productivity is the rate at which goods or services are produced. It is most commonly defined in terms of labor, which is the contribution of people to the process. Labor costs represent about two thirds of the value of the output produced. The Bureau of Labor Statistics of the US Department of Labor releases the most widely cited productivity statistics quarterly and annually. Increased productivity is often credited for economic growth with little signs of inflation.

Productivity is significant in that as it increases, businesses can produce more with the same or less input. This wealth building effect is vital to the US economy. As productivity increases, the US economy generally performs better. As productivity decreases, the economy generally suffers. While the bond market generally favors signs of weakness in the economy, bonds tolerate growth as long as the economic environment shows little or no inflationary pressures. Keep in mind that rates remain very favorable. Now is a great time to avoid the uncertainty surrounding continued market volatility.

Mortgage Rate Indicators for Dallas

Market Comment - Week of August 16th, 2010
Mortgage bond prices were higher last week applying downward pressure on mortgage rates. Turmoil and volatility remain high with wide swings occurring in both stocks and bonds on an almost daily basis. The economic outlook remains clouded at best. Weekly jobless claims and the trade deficit remained high, hindering recovery in the jobs market. As expected, the Federal Reserve will restart the quantitative easing program by purchasing Treasury bonds.

Rates fell by about 1/4 of a discount point for the week.

The most important data this week will be the Producer Price Index Tuesday. Housing starts and LEI data may also move the financial markets.
________________________________________
Economic Factors
Economic Indicator Release Date Time Consensus Estimate Analysis
Housing Starts Tuesday, Aug. 17, 2010 Up 2.2% Important. A measure of housing sector strength. Weakness may lead to lower rates.
Producer Price Index Tuesday, Aug. 17, 2010 Up 0.2%, Core up 0.1% Important. An indication of inflationary pressures at the producer level. Lower figures may lead to lower rates.
Industrial Production Tuesday, Aug. 17, 2010 Up 0.5% Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Capacity Utilization Tuesday, Aug. 17, 2010 74.5% Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates.
Weekly Jobless Claims Thursday, Aug. 19, 2010 450K Important. An indication of employment. An increase in jobless claims may bring lower rates.
Leading Economic Indicators Thursday, Aug. 19, 2010 Up 0.2% Important. An indication of future economic activity. Weakness may lead to lower rates.
Philadelphia Fed Survey Thursday, Aug. 19, 2010 5.10 Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.

Fed Results
The Federal Open Market Committee kept rates unchanged last week at the historically low levels. The remarks following the meeting were bond friendly. They indicated the pace of economic recovery slowed in recent months. Inflation is expected to remain subdued for some time. Most importantly they confirmed the suspicions that they would restructure their quantitative easing actions in an effort to continue to keep rates low for an extended period of time and to spur the economy.

The Fed stated they would keep holdings of securities at current levels through reinvesting funds from maturing mortgage-backed securities into longer term US Treasuries. The Fed is concerned the recovery is waning and specifically noted that it was "more modest" than previously thought. Consumer spending increased gradually but there remain concerns that increasing unemployment along with tight credit conditions may limit increases in the future.

The Fed decision was a result of a 9-1 vote as the lone dissenter disagreed with stance of keeping rates low for an extended period of time. He was concerned that position would limit the Fed's ability to raise rates in the future and also disagreed with the quantitative easing program.

Interest rates remain historically favorable. The demand for bonds remains high pushing rates lower. Anytime prices rise substantially there is always a danger of a correction. The big unknown is if or when that correction may come. For now it remains wise to take advantage of mortgage interest rates at their current levels.

Mortgage Rate Indicator for Dallas

Market Comment - Week of August 2nd, 2010
Mortgage bond prices rose last week pushing mortgage interest rates lower. Tame inflation readings and lower than expected US economic growth figures helped mortgage interest rates remain very favorable. The employment cost index came in as expected while the gross domestic product data showed a smaller than expected increase. The Treasury auctions generally went well and trading in stocks remained choppy.

Rates fell by about 3/8 to 1/2 of a discount point for the week.

The most important data this week will be the employment report Friday. PCE inflation data and ADP employment may also move the markets.


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Economic Factors
Economic Indicator Release Date Time Consensus Estimate Analysis
Construction Spending Monday, Aug. 2, 2010 Down 1.0% Low importance. An indication of economic strength. A significant decrease may lead to lower rates.
ISM Index Monday, Aug. 2, 2010 53.5 Important. A measure of manufacturer sentiment. A large decline may lead to lower mortgage rates.
Personal Income and Outlays Tuesday, Aug. 3, 2010 Income up 0.2%, Outlays up 0.1% Important. A measure of consumers' ability to spend. Weakness may lead to lower mortgage rates.
PCE Core Tuesday, Aug. 3, 2010 Up 0.1% Important. An indication of inflation. A lower figure may lead to lower rates.
Factory Orders Tuesday, Aug. 3, 2010 Up 0.8% Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
ADP Employment Wednesday, Aug. 4, 2010 Up 30k Important. An indication of employment. Weakness in payrolls may bring lower rates.
Employment Friday, Aug. 6, 2010 Unemp. @ 9.6%, Payrolls -116k Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.
Consumer Credit Friday, Aug. 6, 2010 Down $3b Low importance. A significantly large increase may lead to lower mortgage interest rates.


Core PCE

The US Department of Commerce's Bureau of Economic Analysis releases the core PCE price index. The report provides the average increase in costs for personal consumption expenditures excluding food and energy. As of July 2009 the figure now includes food services in the figure.

The report is significant in that the Fed uses the PCE in determining inflation as opposed to the prior use of the consumer price index. The reports vary in that the CPI uses a predetermined pricing of a basket of goods and services for several years while the PCE data uses pricing of expenditures the changes from quarter to quarter. An important difference is also the fact that PCE includes the price of spending for and on behalf of households. This includes health care spending paid for a household by a business. The CPI only reflects out of pocket expenses paid directly by consumers.

While inflation fears remain subdued as of late there are concerns that inflation could eventually emerge. Taking advantage of rates at these historically low levels makes sense with so much uncertainty in the US economy.

Mortgage Rate Indicators for Dallas

Market Comment - Week of July 26th, 2010
Mortgage bond prices rose last week pushing mortgage interest rates lower. Higher than expected weekly jobless claims and continued claims helped mortgage interest rates remain very favorable. Higher than expected existing home sales and leading economic indicators data prevented rates from improving dramatically. Stocks remained volatile, which also resulted in some mortgage interest rate volatility.

Rates fell by about 1/8 of a discount point for the week.

The most important data will be the gross domestic product and employment cost index. The Treasury auctions may also result in mortgage interest rate volatility as foreign appetite for US debt instruments is gauged.




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Economic Factors
Economic Indicator Release Date Time Consensus Estimate Analysis
New Home Sales Monday, July 26, 2010 Up 12.6% Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
Consumer Confidence Tuesday, July 27, 2010 51.5 Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates.
2-year Treasury Note Auction Tuesday, July 27, 2010 None Important. $38 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Durable Goods Orders Wednesday, July 28, 2010 Up 1.25% Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
5-year Treasury Note Auction Wednesday, July 28, 2010 None Important. $37 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
7-year Treasury Note Auction Thursday, July 29, 2010 None Important. $29 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Fed "Beige Book" Thursday, July 29, 2010 None Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates.
Q2 Advance GDP Friday, July 30, 2010 Up 2.5% Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.


Fed "Beige Book"

The Fed "Beige Book" is a summary of economic conditions from each of the 12 Federal Reserve regional districts. The release takes place eight times a year approximately two weeks ahead of each of the Federal Open Market Committee meetings. The report is used at the FOMC meetings, which tends to be one of the most influential events in the market.

Market participants are continually attempting to determine what FOMC interest rate policy will be ahead of the next meeting. Any deviation from expectations usually results in extreme short-term market volatility. The timing of the "Beige Book" provides analysts a valuable look at one of the many factors the FOMC consider.

Mortgage Rate Indicator for Dallas

Market Comment - Week of July 19th, 2010

Mortgage bond prices rose pushing mortgage interest rates lower. Retail sales figures came in lower than expected with a 0.5% decrease. The Treasury auctions were mixed but didn't result in much volatility. Inflation generally remained in check as the producer price index fell 0.5%, lower than the expected 0.2% decline. Core consumer prices were slightly higher than expected with a 0.2% increase. Weekly jobless claims were not as bad as expected but continued claims increased which was bond friendly. Significant stock weakness Friday helped mortgage interest rates improve. Rates fell by about 5/8 of a discount point for the week.

The most important data will be the housing starts Tuesday. Weekly jobless claims and leading economic indicators data will also be important. Be cautious in this normally lackluster mid-summer trading environment as stocks remain very volatile and economic conditions remain uncertain.


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Economic Factors

Economic Indicator
Release Date Time
Consensus Estimate
Analysis

Housing Starts
Tuesday, July 20, 2010
Down 0.5%
Important. A measure of housing sector strength. Weakness may lead to lower rates.

Weekly Jobless Claims
Thursday, July 22, 2010
420k
Important. An indication of employment. Higher claims may result in lower rates.

Existing Home Sales
Thursday, July 22, 2010
Down 9.7%
Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.

Leading Economic Indicators
Thursday, July 22, 2010
Down 0.4%
Important. An indication of future economic activity. Weakness may lead to lower rates.




Housing Starts

Housing starts data is a leading indicator of the state of our economy. This report, provided by the Bureau of the Census, takes into account data from both single-family homes and multi-family dwellings. Building permits are also released with the housing starts data. By knowing the number of permits issued monthly, analysts can attempt to estimate for the upcoming months. Normally, starts are 10% higher than permits since all locations are not required to have a building permit.

Housing starts and permits give a warning of future economic activity. In effect, a rise in housing starts can lead to a fall in the bond market and vice versa. Consumers tend to hold off on the purchase of new homes, new cars, and other big-ticket items if they are worried about the future of the economy. Housing is an important part of our economy. Continued declines in housing starts can lead to continued economic slowdown and essentially a deeper recession. On the other hand, increases in housing starts could signal a possible reversal.

From the opposite perspective, changes in interest rates often lead to changes in housing starts. High interest rates can cause a significant decline in home sales, which can lead to a drop in housing starts. Just the opposite happens when rates drop and is one of the additional reasons the Fed is trying to keep rates low. Low mortgage rates affect both home sales and housing starts.

The housing market across the country is a vital component in sustaining the economy. The continued weakness of the housing market has many worried. Many economists believe housing will continue to suffer.

There is still uncertainty regarding the future state of the economy. The Fed minutes indicate growth expectations are lower. The Fed Chairman has stated that the timing of an economic recovery was "highly uncertain."

Mortgage interest rates are historically low. A cautious approach is wise to protect against future volatility. Rates could head lower but there are no guarantees. We all remember the housing price corrections that came when many people thought prices would only go higher. While rate spikes are not expected any time soon, they are still a lingering possibility.

Mortgage Rate Indicators for Dallas

Market Comment - Week of June 28th, 2010

Mortgage bond prices rose last week applying downward pressure on mortgage rates. Volatility in both the stock and bond markets remained high with broad swings occurring on a daily basis. Mortgage rates moved lower following the release of weak housing data. The improvements seen earlier in the week were reversed following a weak 5-year Treasury auction on Wednesday. The volatility seen this week is expected to continue until the future of the economy becomes clear.

Rates fell by about 3/8 of a discount point for the week.

Personal income and outlays will set the tone for trading this week. The employment report to be released on Friday will be the most important release this week. The focus lately has been on the payrolls component rather than the headline figure. If payrolls come in stronger than expected, mortgage interest rates may worsen.


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Economic Factors

Economic Indicator
Release Date Time
Consensus Estimate
Analysis

Personal Income and Outlays
Monday, June 28, 2010
Income up 0.5%, Outlays up 0.1%
Important. A measure of consumers' ability to spend. Weakness may lead to lower mortgage rates.

Consumer Confidence
Tuesday, June 29, 2010
62.
Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates.

ADP Employment
Wednesday, June 30, 2010
+56K
Important. An indication of the employment. Weakness in payrolls may bring lower rates.

ISM Index
Thursday, July 1, 2010
58.8
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.

Employment
Friday, July 2, 2010
Jobs -70K, Unemp @ 9.7%
Very important. An increase in unemployment or weakness in payrolls may bring lower rates.

Factory Orders
Friday, July 2, 2010
-0.6%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.




Employment

The employment report provides an abundance of information for almost every sector of the economy. Not only does the employment report give basic employment payroll statistics for the major working sectors, it also provides the average hourly earnings and the average workweek. Using this information provided by the Bureau of Labor Statistics (BLS) of the U.S. Department of Labor, economists estimate many other economic indicators such as industrial production, personal income, housing starts, and GDP monthly revisions. Since there is little data for economists to base their estimates on, the margin of error for the estimates tends to be high. As a result, the employment report can cause substantial market movements.

The BLS compiles data from two unrelated surveys that they conduct, the household survey and the establishment survey, in order to complete the employment report. This explains why sometimes there is an unexpected divergence between the unemployment rate and payrolls figures each month.

This week's employment data will provide valuable insight into factors the Federal Open Market Committee will use to make future rate decisions. An employment rebound may prompt the Fed to raise short-term interest rates. However, if employment remains weak, then the Fed may seriously consider keeping rates low. Floating into this report is very risky without considerable gains Thursday afternoon heading into it.

Dallas Mortgage Rate Indicator

Market Comment - Week of June 21st, 2010
Mortgage bond prices rose last week pushing mortgage interest rates lower. Uncertainty in the Euro zone resulted in some flight to quality buying of US debt instruments. There were concerns that Spain could be the next economy to falter following the Greek instability. Most of the data showed a US economy that continues to struggle with little current price pressures. Weekly jobless claims were higher than expected and the consumer price data came in exactly as expected. Rates fell by about 1/2 of a discount point for the week.

The Fed meeting Wednesday will be the most important event this week. With the world economies in turmoil the Fed is expected to keep the course with the current low interest rate policy. Some Fed officials indicate that rate increases may eventually be necessary. Few expect the hikes to come this week. If there are surprises we could see huge swings in the financial markets.


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Economic Factors
Economic Indicator Release Date Time Consensus Estimate Analysis
Existing Home Sales Tuesday, June 22, 2010 Up 4.3% Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.
New Home Sales Wednesday, June 23, 2010 Down 4.8% Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
Fed Meeting Adjourns Wednesday, June 23, 2010 No change Important. No rate changes are expected but some volatility may surround the adjournment of this meeting.
Durable Goods Orders Thursday, June 24, 2010 Down 1.4% Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
Weekly Jobless Claims Thursday, June 24, 2010 460k Important. An indication of US employment situation. A higher figure should help rates.
Preliminary Q1 GDP Friday, June 25, 2010 3.0 Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment Friday, June 25, 2010 75.2 Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates.


Fed Meeting

The United States central bank, the Federal Reserve, coordinates the borrowing and lending activities of federally chartered banks. The principal reason the Federal Reserve was created was to reduce severe financial crises. One way of accomplishing this goal is to control the amount of money that flows through the economy. By manipulating the US money supply, the Fed influences inflation, unemployment, and the level of US economic activity. The Fed has a variety of tools that it uses to control the money supply, but its chief policy tool is the manipulation of short-term interest rates.

The Federal Reserve can adjust two distinct short-term interest rates. The discount rate is the interest rate which banks pay the Fed for primarily overnight loans. Despite its name, the Fed funds rate is the rate banks pay to borrow from other banks. The Federal Reserve has direct control over the level of short-term interest rates, the Fed's influence over longer-term interest rates is less certain. All eyes will be focused on the Fed meeting Wednesday. Most analysts predict no rate change following the tame inflation data.

Keep in mind that Fed rate changed do not automatically mean mortgage interest rates will change. The Federal Reserve has direct control over the level of short-term interest rates. The Fed's influence over longer-term interest rates is less certain. A cautious approach to float/lock decisions is prudent heading into the Fed meeting this week. Market volatility is likely.

Race for a Cure

Here we are doing the Race for the Cure this past Saturday at the Shops at Legacy in Plano, Texas.

Mortgage Rate Indicators for Dallas

Market Comment - Week of June 14th, 2010

Mortgage bond prices fell last week pushing mortgage interest rates higher. Trading was positive for the week through Wednesday's close. The data generally was benign causing no large mortgage bond market swings. Unfortunately a strong 273-point jump in the DOW Thursday resulted in mortgage rates worsening by about 3/8 of a discount point that afternoon. Fortunately bond prices recovered some Friday, as the stocks were unable to hold those gains. Rates rose by about 1/8 of a discount point for the week.

The producer and consumer price index data will be the most important releases this week. If inflation remains tame mortgage interest rates may improve. Expect global economies to continue to factor into trading.


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Economic Factors

Economic Indicator
Release Date Time
Consensus Estimate
Analysis

Housing Starts
Wednesday, June 16, 2010
Down 2.5%
Important. A measure of housing sector strength. Larger than expected decreases may lead to lower rates.

Producer Price Index
Wednesday, June 16, 2010
Down 0.4%, Core up 0.1%
Important. An indication of inflationary pressures at the producer level. Lower figures may lead to lower rates.

Industrial Production
Wednesday, June 16, 2010
Up 0.7%
Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates.

Capacity Utilization
Wednesday, June 16, 2010
74.2%
Important. A figure above 85% is viewed as inflationary. A decrease may lead to lower rates.

Weekly Jobless Claims
Thursday, June 17, 2010
450K
Important. An indication of US employment situation. A higher figure should help rates.

Consumer Price Index
Thursday, June 17, 2010
Down 0.1%, Core up 0.1%
Important. A measure of inflation at the consumer level. Lower figures may lead to lower rates.

Leading Economic Indicators
Thursday, June 17, 2010
Up 0.4%
Important. An indication of future economic activity. A smaller increase may lead to lower rates.

Philadelphia Fed Survey
Thursday, June 17, 2010
17.0
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.




Industrial Production

The Federal Reserve releases the Industrial Production report each month. It is a real measure of output from manufacturing, mining, electric, and gas utilities. The data is significant in that it provides an indicator of the state of the economy. Analysts use the data to attempt to determine market direction. The Fed uses the data to help set the course for monetary policy. Generally the Fed likes to see steady growth in the economy with little price pressures.

Mortgage interest rates generally react favorably to weaker than expected industrial production data. In times of economic weakness investors often move out of stocks and into mortgage bonds. When things look good investors often move out of bonds and back into stocks. We have seen these patterns frequently in recent months.

Floating into significant economic data always has some risk involved but the last release came in as expected and didn't move the market much. Nonetheless, now is a great time to take advantage of mortgage interest rates at these historically low levels to avoid future market volatility.

Mortgage Rate Indicators for Dallas

Market Comment - Week of May 31th, 2010
Mortgage bond prices fell last week pushing mortgage interest rates higher. The global economic turmoil continued with concerns about instability on the Korean peninsula. The Spanish government took over a regional bank, which added to the fray of an already battered Euro. The Chinese indicated they would not liquidate Euro bond holdings, which was a concern. Stocks continued to bounce up and down, as one hundred point swings were often the norm. Rates rose by about 1/2 of a discount point for the week.

The employment report Friday will be the most important event this week. The bond market will be closed Monday for Memorial Day. Mortgage interest rates may be volatile Tuesday as trading resumes following the extended holiday weekend. Look for continued choppy trading amid global economic instability.



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Economic Factors
Economic Indicator Release Date Time Consensus Estimate Analysis
Construction Spending Tuesday, June 1, 2010 Up 0.1% Low importance. An indication of economic strength. A significant decrease may lead to lower rates.
ISM Index Tuesday, June 1, 2010 58.9 Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
ADP Employment Wednesday, June 3, 2010 Up 50k Important. An indication of employment. Weakness in payrolls may bring lower rates.
Revised Q1 Productivity Wednesday, June 3, 2010 Up 3.6% Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Weekly Jobless Claims Thursday, June 4, 2010 455k Moderately Important. A measure of unemployment. Higher claims may bring lower rates.
Factory Orders Thursday, June 4, 2010 Up 1.1% Important. A measure of manufacturing sector strength. A larger decrease may lead to lower rates.
Employment Friday, June 5, 2010 Unemp. @ 9.8%, Payrolls +500k Very important. An increase in unemployment or weakness in payrolls may bring lower rates.


ADP Employment

The ADP employment report is a measure of employment derived from data of roughly 500,000 US businesses. The survey focuses on the private sector of the economy. In contrast, the Bureau of Labor Statistics releases the regular employment report which includes both private and government employment statistics.

The ADP employment report has gained more prominence lately in that it is delivered prior to the Friday employment report. This gives analysts an improved forecast heading into the payrolls component of the employment report later in the week.

The Fed is usually focused on keeping inflation in check. Tightening employment conditions can result in wage inflation. The ADP report provides solid data on these conditions. Despite this, the data still can diverge from the regular employment report. The employment report is derived from a household survey and an establishment survey. These surveys often differ from one another and from the ADP employment report in that they are based on different data sets. There are no guarantees that the most important employment report the first Friday of each month will mirror the ADP report released 2 days prior. With this in mind floating into the data is always very risky. Now is a great time to take advantage of mortgage interest rates at these historically low levels to avoid future market volatility.

Mortgage Rate Indicators For Dallas

Market Comment - Week of May 24th, 2010
Mortgage bond prices rose last week applying downward pressure to mortgage interest rates. The Greek economic turmoil spread throughout the globe with equities falling precipitously. As a result we saw a tremendous amount of flight to quality buying of US debt instruments. The majority of the data came in bond-friendly with higher than expected weekly jobless claims helping rates improve. Rates fell by about 3/4 of a discount point for the week.

The Treasury auctions, gross domestic product data, and the PCE core inflation reading will be the most important events this week. Look for continued choppy trading amid global economic instability.


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Economic Factors
Economic Indicator Release Date Time Consensus Estimate Analysis
Consumer Confidence Tuesday, May 25, 2010 58.5 Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates.
2-year Treasury Note Auction Tuesday, May 25, 2010 None Important. $42 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Durable Goods Orders Wednesday, May 26, 2010 Up 0.9% Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
New Home Sales Wednesday, May 26, 2010 Up 2.2% Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
5-year Treasury Note Auction Wednesday, May 26, 2010 None Important. $40 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates
Q1 GDP Thursday, May 27, 2010 3.3% Important. The aggregate measure of US economic production. Weakness may lead to lower rates
7-year Treasury Note Auction Thursday, May 27, 2010 None Important. $31 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Personal Income and Outlays Friday, May 28, 2010 Up 0.4%, Up 0.2% Important. A measure of consumers' ability to spend. Weakness may lead to lower mortgage rates.


New Home Sales

New Home Sales data is compiled monthly by the Department of Commerce's Census Bureau and is gathered from builders throughout the country. The data represents new home sales for the nation as well as four areas of the country: the Northeast, the Midwest, the South, and the West. Information on the average price of a home, the number of homes for sale, and the supply of unsold homes are also provided. The data is an important indicator because it shows any strength or weakness in the housing sector. A slowdown in new home sales tends to lead to a slowdown in housing starts, which will continue to affect other indicators. New Home Sales data is often volatile and difficult to predict. The data remains significant and can move mortgage interest rates.

The City of McKinney, TX Down Payment Assistance Program

The City of McKinney Down Payment Assistance Program provides down payment and closing cost assistance to low-to-moderate-income first-time homebuyers within the City of McKinney. Assistance is provided in the form of up to $7,500 as a 0% interest 5-year forgivable loan for down payment and non-recurring closing costs associated with the purchase of the new home. The loan is repayable only if you refinance, pay off the first mortgage, sell or otherwise convey title to the property within the 5-year period.

These funds are made available through a grant from the Texas Department of Housing & Community Affairs' HOME Investment Partnership Program.

You are Eligible if:
■You are a first-time homebuyer. A first-time homebuyer is an individual or household who has not owned a home in the last three years or is a displaced homemaker.
■You are able to provide proof of U.S. citizenship or permanent legal resident alien status.
■You are able to qualify for a mortgage loan with a private lender.
■You will reside in the home as your principal residence.
■The home is located within the city limits of McKinney, Texas.
■Your income does not exceed 80% of the Area Median Income.
■The home does not cost more than $132,000
■You complete a HUD and City of McKinney approved homebuyer counseling workshop.

Market Comment- Week of May 10, 2010

Mortgage bond prices rose last week pushing mortgage interest rates lower. Trading was once again dominated by foreign influences as the Greek debt concerns spread across the globe. US stocks fell precipitously Thursday afternoon. At one point the DOW was down over 900 points. This sent a flood of investor funds into mortgage bonds helping rates improve. The data for the week was mixed with higher than expected unemployment and a larger than expected payrolls figure. Oil prices fell to around $77/barrel, which helped alleviate inflation concerns. Rates fell by about 3/4 of a discount point for the week.

The retail sales data Friday will be the most important event this week. The Treasury auctions will also take center stage as market participants cautiously await the result to determine foreign investor appetite for US debt instruments.


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Economic Factors
Economic Indicator Release Date Time Consensus Estimate Analysis
3-year Treasury Note Auction Tuesday, May 11, 2010 None Important. $38 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Trade Data Wednesday, May 12, 2010 $39.5 billion deficit Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
10-year Treasury Note Auction Wednesday, May 12, 2010 None Important. $24 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims Thursday, May 13, 2010 410k Moderately important. An increase in claims may bring lower rates.
30-year Treasury Bond Auction Thursday, May 13, 2010 None Important. $16 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Retail Sales Friday, March 14, 2010 Up 0.4% Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates.
Industrial Production Friday, March 14, 2010 Up 0.5% Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates.
Capacity Utilization Friday, March 14, 2010 73.3% Important. A figure above 85% is viewed as inflationary. A decrease may lead to lower mortgage interest rates.


Global Uncertainty

The inability of Greece to pay their debt continues to result in economic uncertainty across the globe. The recent announcement that Greece would receive aid from the other Euro members initially resulted in some stability. However, the aid package didn't erase the concern that Greece could still default and the contagion may spread to other countries.

The positive for US dollar-denominated securities is the flight to quality buying that often occurs with the turmoil abroad. Investors often exit troubled markets and pour their money into US securities such as mortgage bonds. This pushes mortgage bond prices higher causing rates to fall in the short term. Unfortunately the improvements can evaporate just as quickly as they appear if the inverse flight occurs. With that in mind be cautious in the event the wild market swings continue.

First Time Homebuyer Credit runs out at midnight tonight

Market Comment - Week of April 26th, 2010

Mortgage bond prices fell last week pushing mortgage interest rates higher. The first portion of the week had very little data. Leading economic indictors came in stronger than expected which really didn't help us. Strong stocks pressured mortgage bonds a bit. Producer prices rose more than expected but the core rate was tame. New home sales shocked the market with a 26.9% increase. This was the largest increase in 47 years and not bond friendly. Rates rose by about 3/8 of a discount point for the week.

The Fed meeting Wednesday will be the most important event this week. The Treasury auctions will also likely overshadow a lot of the other releases as traders digest record debt that continues to hit the market. Friday morning may be volatile as the employment cost index and gross domestic product data are very important releases.


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Economic Factors

Economic Indicator
Release Date Time
Consensus Estimate
Analysis

Consumer Confidence
Tuesday, April 27, 2010
54.0
Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates.

2-year Treasury Note Auction
Tuesday, April 27, 2010
None
Important. $44 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.

5-year Treasury Note Auction
Wednesday, April 28, 2010
None
Important. $42 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.

Fed Meeting Adjourns
Wednesday, April 28, 2010
No change
Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting.

Weekly Jobless Claims
Thursday, April 29, 2010
455k
Moderately important. An indication of employment. A larger figure may lead to lower rates.

7-year Treasury Note Auction
Thursday, April 29, 2010
None
Important. $32 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.

Q1 Advance GDP
Friday, April 30, 2010
3.5%
Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.

Q1 Employment Cost Index
Friday, April 30, 2010
Up 0.4%
Very important. A measure of wage inflation. Weakness may lead to lower rates.




Consumer Confidence

The Conference Board releases the Consumer Confidence Index on the last Tuesday of every month. The report details the levels of confidence individual households have in the performance of the economy. The data is derived from a survey of 5,000 households nationwide. The survey polls consumer opinions on current business conditions, their jobs, their incomes, and their future spending plans.

The consumer confidence index is significant in that it provides a precursor into consumers' willingness to spend in the months ahead. However, many analysts point out that willingness to spend does not always convert to actual expenditures.

This week's release will be eagerly anticipated. Look for any variation from estimates to cause mortgage interest rate volatility. Signs of eroding consumer confidence could lead to improvements in mortgage interest rates. However, stronger than expected figures could spike rates higher.

Fico is King...

I was looking at Yahoo and came across this story...


In the land of credit scores, FICO is king. The bulk of banks in the United States use FICO scores to decide whether to offer credit to potential borrowers and at what interest rate. FICO has a major global presence, as well: According to the company's testimony before a House Financial Services Committee, FICO scores are used in about 10 billion decisions worldwide each year.


So how does FICO come up with its widely used score?

While the inner workings of the FICO scoring system are a closely guarded secret, the company is open about the general components of a FICO credit score. Using the information in a borrower's credit report, FICO breaks that information into categories. Those five components each get different weights. "FICO scores give the most attention to how you have paid back lenders in the past and how much you are using of the credit available to you, as shown on your credit report. Those two factors contribute roughly two-thirds of a typical person's FICO score," says FICO spokesman Craig Watts.

Here's a breakdown of the five elements of the FICO score:

1. Payment History: 35 Percent of the Total Credit Score

Based on a borrower's payment history, making the repayment of past debt the most important factor in calculating credit scores. According to FICO, past long-term behavior is used to forecast future long-term behavior.

FICO keeps an eye on both revolving loans -- like credit cards -- and installment loans, such as mortgages or student loans. Although the weight of each loan varies between individuals, FICO indicates that defaulting on a larger installment loan like a mortgage will damage a credit score more severely than defaulting on a smaller revolving loan. One of the best ways for borrowers to improve their credit score as a whole is by making consistent, timely payments.

2. Debt Amounts -- 30 Percent

Based on a borrower's total outstanding debt. Revolving lines of credit, which allow a consumer to borrow as much or as little as desired up to a limit (versus installment loans where a set amount -- say, $20,000 plus interest for a car -- is determined at the outset), are more heavily weighted. Credit cards are a type of revolving account.

Since FICO views borrowers who habitually max out credit cards -- or who get very close to their credit limits -- as people who cannot handle debt responsibly, a borrower should maintain low credit card balances. Experts recommend that the amount owed should not exceed 30 percent of the individual's credit limits. That 30 percent rule of thumb applies to each individual credit card as well as the overall level of debt.

The final components of a FICO credit score get less weight in the score's calculation. "The remaining one-third of your score is determined by how long you have managed credit, to what degree you have pursued new credit recently and the variety of credit types you have successfully handled," Watts says.

3. Length of Credit History -- 15 Percent

Based on the length of time each account has been open and the length of time since the account's most recent action.

As a result, it is impossible for a person who is new to credit to have a perfect credit score. A longer credit history provides more information and offers a better picture of long-term financial behavior. Therefore, to improve their credit scores, individuals without a history should begin using credit, and those with credit should maintain longstanding accounts.

4 and 5. New Credit and Credit Mix -- Each Comprise 10 Percent

Borrowers, even those new to credit, should avoid opening too many credit lines at the same time, since such behavior could suggest they are in financial trouble and need significant access to lots of credit. FICO suggests that borrowers only take on additional credit when they must have it or when it makes sense financially.

Credit mix, meanwhile, is somewhat of a vague category, but experts say that repaying a variety of debt indicates the borrower can handle all sorts of credit. According to FICO, historical data indicates that borrowers with a good mix of revolving credit and installment loans generally represent less risk for lenders.

Knowing the various weights given to components of a FICO credit score give borrowers a better idea where to focus their attention. "So to get a good score you mostly need a credit history with no reported late payments, as well as low reported balances currently on any credit cards," Watts says.

Market Comment - Week of April 19th, 2010

Mortgage bond prices rose last week, which helped mortgage interest rates improve. Oil prices continued to fall off the beginning of the week. Fortunately mortgage bonds rallied nicely amid the tame inflation environment. Unfortunately that trend reversed mid week as oil prices spiked tied to a report which indicated supplies declines. Stocks also surged higher as earnings reports generally pleased investors. The DOW easily eclipsed the 11,000 mark.

Despite this, rates still managed to improve by about 1/4 of a discount point for the week.

Leading economic indicators data Monday will set the tone for trading this week. The producer inflation data will be the most important release. If inflation pressures emerge mortgage interest rates may be pressured higher.


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Economic Factors

Economic Indicator
Release Date Time
Consensus Estimate
Analysis

Leading Economic Indicators
Monday, April 19, 2010
Up 1.0%
Important. An indication of future economic activity. Weakness may lead to lower rates.

Weekly Jobless Claims
Thursday, April 22, 2010
465K
Important. An indication of employment. An increase in jobless claims may bring lower rates.

Producer Price Index
Thursday, April 22, 2010
Up 0.5%, Core up 0.1%
Important. An indication of inflationary pressures at the producer level. Decreases may lead to lower rates.

Existing Home Sales
Thursday, April 22, 2010
5.3M
Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.

Durable Goods Orders
Friday, April 23, 2010
Unchanged
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.

New Home Sales
Friday, April 23, 2010
Up 1.9%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.




Durable Goods Orders

Durable goods orders are generally believed to be a precursor of activity in the manufacturing sector because manufacturing must have an order before considering an increase in production. Conversely, a decrease in orders eventually causes production to be scaled back; otherwise the manufacturer accumulates inventories, which must be financed.

Unfortunately, durable goods orders data has many drawbacks. The first problem with the orders data is that they are extremely volatile. The volatility of the data usually is attributed to the civilian aircraft and defense components of the figure. For example, if Boeing has a big order for one of its jumbo jets, the civilian aircraft category can change by $3-4 billion. The same scenario is evident when an aircraft carrier is ordered, surges in the defense category result. The second problem with the data is that orders are continuously being revised. There are many times in the past when the advance report on durables showed an increase while a revision a week later showed a decrease. The revised data is found in the report on manufacturing orders, shipments, and inventories.

Since the data is very volatile and difficult to forecast, there is quite often a huge disparity between the actual release and the initial projections. If the durable goods report is much stronger than expected, look for mortgage interest rates to push higher. If favorable, the data may help interest rates remain steady or even push lower.

Don't forget..............

Market Comment - Week of April 12th, 2010

Mortgage bond prices rose last week, which helped mortgage interest rates improve slightly. The first portion of the week was generally bond friendly as the Fed minutes showed real concern about the economy's ability to recover with so many job losses. Stocks and bonds generally traded inversely as the DOW tested the 11,000 mark a few times during the week in up and down trading. Unfortunately a large portion of the improvements was erased as oil prices traded around $87/barrel and inflation fears emerged. Despite this, rates still managed to improve by about 1/4 of a discount point for the week.

The consumer price index Wednesday will be the most important release this week. The abundance of important economic releases has the potential to result in a very volatile week for mortgage interest rates. If the data shows signs of weakness we could see rates improve.


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Economic Factors

Economic Indicator
Release Date Time
Consensus Estimate
Analysis

Trade Data
Tuesday, April 13, 2010
$38 billion
Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.

Consumer Price Index
Wednesday, April 14, 2010
Up 0.1%, Core up 0.1%
Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates.

Retail Sales
Wednesday, April 14, 2010
Up 0.2%
Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates.

Business Inventories
Wednesday, April 14, 2010
Up 0.1%
Low importance. An indication of stored-up capacity. A significantly larger increase may lead to lower rates.

Fed "Beige Book"
Wednesday, April 14, 2010
None
Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates.

Industrial Production
Thursday, April 15, 2010
Up 0.2%
Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates.

Capacity Utilization
Thursday, April 15, 2010
72.5%
Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates.

Housing Starts
Friday, April 16, 2010
Down 2.1%
Important. A measure of housing sector strength. Larger than expected decreases may lead to lower rates.




Oil

Inflation fears tied to rising energy prices have reemerged. At one point oil prices rose near $87/barrel last week causing many analysts to revise forecasts. Goldman Sachs and Morgan Stanley both predict oil prices will rise above $100/barrel next year. The concern is that rising energy costs could permeate through the markets and damage economies around the globe that are struggling to regain footing. Inflation, real or perceived, generally erodes the value of fixed income securities causing prices to fall and rates to rise. This could pressure mortgage interest rates higher further stifling a recovery in the US housing sector

Last Week, Why Did Rates Rise So Much?
A lot transpired last week that directly impacted mortgage rates.

First, the Federal Reserve stopped buying new mortgage-backed securities. This was not a surprise by any means -- the Fed had been announced a March 31 end date for month, but after all the short coverings had come and gone, mortgage markets traded worse ahead of the expected supply-demand imbalance.

Lower bond prices yield higher mortgage rates.

Better-than-expected data on the economy helped push rates north, too. Auto sales were way up, the Case-Shiller showed strength in housing, and the jobs report was nearly nearly as bad as it looked on the surface.

Furthermore, because of Spring Break, trading volume was thin and that magnified the jumps in pricing.

Overall, mortgage pricing shed 103 basis points, roughly equal to a 0.375% rise in rates.

Things to avoid before buying a home

Many new homebuyers make the mistake of rushing out to buy things to fill their home with as soon as the seller accepts their purchase offer and the lender pre-approves their loan. But there are still a few major hurdles to overcome before the keys are handed out. Here are some things to avoid during the home buying process to assure your transaction goes as smoothly as possible:



Don't make an expensive purchase. It may be tempting to order that new sofa for your soon-to-be living room, but its best to avoid making major purchases like furniture, cars, appliances, electronic equipment, jewelry, or vacations until after the closing. Financing that furniture with a store credit card or even one of your own credit cards could jeopardize your credit worthiness during the time it means the most. Using cash to purchase big items can also create a problem because many banks take into consideration your cash reserve when approving your mortgage.
Don't get a new job. Lenders like to see a consistent job history. Generally, changing jobs will not affect your ability to qualify for a mortgage loan - especially if you are going to be making more money. But for some people, getting a new job during the loan approval process could raise some concern and affect your application.
Don't switch banks or move money around. As your lender reviews your loan package, you will likely be asked to provide bank statements for the last two or three months on your checking accounts, savings accounts, money market funds and other liquid assets. To eliminate potential fraud, most loans require a thorough paper trail to document the source of all funds. Changing banks or transferring money to another account - even if its just to consolidate funds - could make it difficult for the lender to document your funds.
Don't give a good faith deposit directly to the seller in a FSBO purchase. As a rule, your good faith deposit belongs to you, not to the seller, until the deal closes. Your FSBO seller may not know that your good faith funds should be applied to your expenses at closing. Get an attorney or other neutral party who can hold the deposit or put it in a trust account until you close on the home. Your purchase contract should dictate to whom the funds go should the transaction fall through.
Don't disregard your lenders requirements. You may have been pre-approved for the loan but your work with the lender is far from over. In order to process your loan, you need to meet certain requirements. Your lender will need copies of your bank statements, W2s and other paperwork. It is up to you to get it to him or her as soon as possible. Failure to submit certain qualifying documents could cause you to lose your loan and the financing you need to buy your home.

Market Comment - Week of April 5th, 2010

Mortgage bond prices fell again last week pushing mortgage interest rates higher. The Fed ended the mortgage backed securities purchase program last Wednesday. There was no coincidence that rates spiked higher Thursday morning with the Fed no longer there to buffer negative movements and keep rates in check. Stock strength also pressured bonds as the Dow approached the 11,000 mark. Escalating oil prices also caused rates to spike higher as inflation fears begin to increase. Fortunately the PCE Price Index data came in as expected. Rates rose about 3/4 of a discount point for the week.

The Treasury auctions will once again take center stage this week. If foreign demand is lackluster like the last few auctions we could see that carry over to the mortgage bond market causing rates to spike. The Fed minutes and weekly jobless claims may also move the market this week.


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Economic Factors

Economic Indicator
Release Date Time
Consensus Estimate
Analysis

3-year Treasury Note Auction
Tuesday, April 6, 2010
None
Important. $40 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.

Fed Minutes
Tuesday, April 6, 2010
None
Important. Details of last Fed meeting. Volatility may surround the release.

Consumer Credit
Wednesday, April 7, 2010
Up $1.6 billion
Low importance. A significantly larger than expected increase may lead to lower mortgage interest rates.

10-year Treasury Note Auction
Wednesday, April 7, 2010
None
Important. $21 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.

Weekly Jobless Claims
Thursday, April 8, 2010
430k
Moderately Important. An indication unemployment. Higher claims may lead to lower rates.

30-year Treasury Bond Auction
Thursday, April 8, 2010
None
Important. $13 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates.




Treasuries

The 10 and 30-year Treasury bond yields are often viewed as "benchmarks", reflecting the overall state of interest rates in the US economy. Many people concerned about mortgage interest rates track these bonds as a barometer for mortgage interest rates. However, in reality the Treasury and mortgage markets trade independently.

The supply and demand characteristics of Treasury bonds and mortgage-backed securities (MBSs) differ. Treasury securities represent money needed to fund the operations of the US government. MBSs, on the other hand, represent borrowing by homeowners. Demand for mortgage credit is seasonal and is also affected by the state of the overall economy. In terms of demand, Treasury securities are regarded as "risk free" investments, and often benefit from a "flight to quality" in times of financial crisis. Treasury bill, note, and bond prices are dictated by yield requirements and inflationary concerns. Because homeowners can sell or refinance their homes, investors in 30-year mortgage-backed securities usually see principal repayment in significantly shorter periods of time.

In the absence of information directly related to the mortgage interest rate markets, Treasury information can be useful. However, mortgage interest rates can vary significantly. In fact, many times the Treasuries will trade wildly while MBSs only see minor price changes and vice versa.

Happy Easter

Market Comment - Week of March 29th, 2010

Mortgage bond prices fell last week pushing mortgage interest rates considerably higher. The Treasury auctions resulted in poor foreign demand for US debt instruments. Unfortunately that carried over into the mortgage backed securities market causing prices to fall and rates to rise. The data hurt us with weekly jobless claims coming in better than expected and existing home sales also beating estimates. Durable goods orders data was mixed with ex-transportation figures considerably stronger than expected. Rates rose about 5/8 of a discount point for the week.

The PCE inflation reading Monday will set the tone for trading this week. The employment report Friday will be the most important release. The bond market will close early Friday in honor of Good Friday.


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Economic Factors

Economic Indicator
Release Date Time
Consensus Estimate
Analysis

Personal Income and Outlays
Monday, March 29, 2010
Up 0.1%, Up 0.3%
Important. A measure of consumers' ability to spend. Weakness may lead to lower mortgage rates.

PCE Prices-Core
Monday, March 29, 2010
Up 0.1%
Important. An indication of inflationary pressures at the producer level. Weakness may lead to lower rates.

Consumer Confidence
Tuesday, March 30, 2010
49.0
Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates.

ADP Employment
Wednesday, March 31, 2010
Up 45k
Important. An indication of employment. Weakness in payrolls may bring lower rates.

Factory Orders
Wednesday, March 31, 2010
Up 0.5%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.

Construction Spending
Thursday, April 1, 2010
Down 1.0%
Low importance. An indication of economic strength. A significant decrease may lead to lower rates.

ISM Index
Thursday, April 1, 2010
57.0
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.

Employment
Friday, April 2, 2010
Unemp. @ 9.7%, Payrolls +150k
Very important. An increase in unemployment or weakness in payrolls may bring lower rates.




Personal Consumption Expenditures

The personal consumption expenditures price index is a measurement of the average increase in prices for all domestic personal consumption. The Bureau of Economic Analysis creates the report. The release is the preferred measure of inflation of the Federal Reserve. The 2000 Monetary Policy Report to the Congress indicated, "the Federal Reserve Board's semiannual monetary policy reports to Congress have described the Board's outlook for inflation in terms of the PCE. Prior to that, the inflation outlook was presented in terms of the CPI." The report went on to note "the PCE chain-type index is constructed from a formula that reflects the changing composition of spending and thereby avoids some of the upward bias associated with the fixed-weight nature of the CPI. In addition, the weights are based on a more comprehensive measure of expenditures. Finally, historical data used in the PCE price index can be revised to account for newly available information and for improvements in measurement techniques, including those that affect source data from the CPI; the result is a more consistent series over time."

Be cautious heading into this release in the event signs of inflation begin to materialize.

Interest Rates Rise with the Tempature

What is a Credit Score?

Before deciding on what terms lenders will offer you on a loan (which they base on the "risk" to them), they want to know two things about you: your ability to pay back the loan, and your willingness to pay back the loan. For the first, they look at your income-to-debt obligation ratio. For your willingness to pay back the loan, they consult your credit score.
The most widely used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. (and they're named after their inventor!). Your FICO score is between 350 (high risk) and 850 (low risk).
Credit scores only consider the information contained in your credit profile. They do not consider your income, savings, down payment amount, or demographic factors like gender, race, nationality or marital status. In fact, the fact they don't consider demographic factors is why they were invented in the first place. "Profiling" was as dirty a word when FICO scores were invented as it is now. Credit scoring was developed as a way to consider only what was relevant to somebody's willingness to repay a loan.
Past delinquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and number of inquiries are all considered in credit scores. Your score considers both positive and negative information in your credit report. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.
Different portions of your credit history are given different weights. Thirty-five percent of your FICO score is based on your specific payment history. Thirty percent is your current level of indebtedness. Fifteen percent each is the time your open credit has been in use (ten year old accounts are good, six month old ones aren't as good) and types of credit available to you (installment loans such as student loans, car loans, etc. versus revolving and debit accounts like credit cards). Finally, five percent is pursuit of new credit -- credit scores requested.
Your credit report must contain at least one account which has been open for six months or more, and at least one account that has been updated in the past six months for you to get a credit score. This ensures that there is enough information in your report to generate an accurate score. If you do not meet the minimum criteria for getting a score, you may need to establish a credit history prior to applying for a mortgage.

Market Comment - Week of March 22nd, 2010

Mortgage bond prices rose last week helping mortgage interest rates improve slightly. We started the week on a positive note with rates falling amid tame inflation readings. The producer price index fell 0.6% and the core rose 0.1%. The headline figure was the lowest since July 2009. Weekly jobless claims showed the employment situation remained poor. Unfortunately we saw the market fall a bit pushing rates higher Thursday afternoon following the announcement of the size of the upcoming Treasury auctions and amid fear of future rate hikes. Rates fell about 1/8 of a discount point for the week.

The durable goods and gross domestic product data will be the most important releases this week. Supply concerns will continue to weigh heavily upon the bond market with the continued record Treasury auctions. If foreign demand falters mortgage interest rates could be pressured higher.


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Economic Factors

Economic Indicator
Release Date Time
Consensus Estimate
Analysis

Existing Home Sales
Tuesday, March 23, 2010
Down 0.9%
Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates.

2-year Treasury Note Auction
Tuesday, March 23, 2010
None
Important. $44 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.

Durable Goods Orders
Wednesday, March 24, 2010
Up 0.5%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.

New Home Sales
Wednesday, March 24, 2010
Up 1.5%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.

5-year Treasury Note Auction
Wednesday, March 24, 2010
None
Important. $42 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.

7-year Treasury Note Auction
Thursday, March 25, 2010
None
Important. $32 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.

Q4 GDP third estimate
Friday, March 26, 2010
Up 5.8%
Important. The aggregate measure of US economic production. Weakness may lead to lower rates.

U of Michigan Consumer Sentiment
Friday, March 26, 2010
71
Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates.




Gross Domestic Product

The Gross Domestic Product (GDP) is one the most important reports during any given quarter. GDP is a measure of US economic output and spending. The report is significant in that it provides investors, analysts, traders, and economists with a comprehensive report of the direction of the economy. In addition, it also influences the decisions of Federal Reserve policy makers, Congressional budget employees, and corporate financial planners.

GDP is the sum total of goods and services produced by the United States. The initial report is often based on incomplete data. Therefore, additional revisions are released over the following two months. There are often substantial differences between the initial release and the revisions. The mortgage-backed security market generally responds favorably to weaker GDP growth.

While revisions generally don't move the market like the original release, they still have the potential to cause market volatility if vastly different from the prior releases. Be cautious heading into the data this week.

Market Comment - Week of March 15th, 2010

Mortgage bond prices fell last week applying slight upward pressure on home loan rates. The market remained very volatile within a narrow range. With the lack of data the first portion of the week, oil prices factored into trading. Oil remained above $80 a barrel, which reignited inflation concerns. The retail sales report released Friday was much stronger than expected, indicating the US economy may be getting stronger.

Rates rose about 1/8 of a discount point for the week.

The Fed meeting Tuesday afternoon will be the most important event this week. The inflation data from both the consumer and producer sides will also take center stage. Signs of inflation are generally not received well by the mortgage bond market. If inflation remains in check, mortgage bonds could benefit.


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Economic Factors

Economic Indicator
Release Date Time
Consensus Estimate
Analysis

Industrial Production
Monday, March 15, 2010
Up 0.1%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.

Capacity Utilization
Monday, March 15, 2010
72.3%
Important. A figure above 85% is viewed as inflationary. A decrease may lead to lower mortgage interest rates.

Housing Starts
Tuesday, March 16, 2010
Down 0.6%
Important. A measure of housing sector strength. A larger than expected decrease may lead to lower rates.

Fed Meeting Adjourns
Tuesday, March 16, 2010
No change
Important. Few expect the Fed to raise rates, but some volatility may surround the adjournment of this meeting.

Producer Price Index
Wednesday, March 17, 2010
Unchanged, Core up 0.1%
Important. An indication of inflationary pressures at the producer level. Decreases may lead to lower rates.

Consumer Price Index
Thursday, March 18, 2010
Unchanged, Core up 0.1%
Important. A measure of inflation at the consumer level. Lower than expected increases may lead to lower rates.

Leading Economic Indicators
Thursday, March 18, 2010
Up 0.2%
Important. An indication of future economic activity. A smaller increase may lead to lower rates.

Philadelphia Fed Survey
Thursday, March 18, 2010
17.5
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.




Producer Price Index

The producer price index is a measure of prices at the producer level and is important because it is the first inflation report to be released each month. Investors are typically able to gain an initial indication of inflationary pressures from the release. If producer prices are increasing, there is a tendency for producers to pass the increases on to consumers in the form of higher priced goods. It is important to note that the PPI is only a measure of goods, while the consumer price index is a measure of goods and services. It is possible for the price of goods to remain stable, while the price of services increases. In this scenario PPI would do little to warn of a change in inflationary pressures, while the CPI report would provide an indication of the inflationary effects of the service component. This distinction between the two reports shows why most analysts view the CPI as a more accurate indicator of inflation. Nevertheless, market participants still gain valuable insight into potential volatility in the financial markets from the PPI release.

Be cautious heading into the inflation data and Fed meeting this week.

Rock 'n Roll 1/2 Marathon

I thought I would share with you Glenn’s latest accomplishment! Yesterday he completed a ½ marathon! This is something Glenn has wanted to do for some time. So in January, he decided to start training for the Rock 'n' Roll Dallas Half Marathon. Since beginning his training, Glenn has been truly dedicated to succeeding. He has run in the snow, rain, fog, and freezing cold temperatures, never once backing down from his training to ensure he reached his goal! Glenn finished yesterday's event with a personal best time.


What's next for Glenn? Keep reading to find out...

Congratulations!!

Jenni

Remember To Spring Forward, Sunday March 14th

One of the biggest reasons we change our clocks to Daylight Saving Time (DST) is that it reportedly saves electricity. Newer studies are being done to see if that long-held reason is true.

In general, energy use and the demand for electricity for lighting our homes is directly connected to when we go to bed and when we get up. Bedtime for most of us is late evening through the year. When we go to bed, we turn off the lights and TV.

In the average home, 25 percent of all the electricity we use is for lighting and small appliances, such as TVs, VCRs and stereos. A good percentage of energy consumed by lighting and appliances occurs in the evening when families are home. By moving the clock ahead one hour, we can cut the amount of electricity we consume each day.

Studies done in the 1970s by the U.S. Department of Transportation show that we trim the entire country's electricity usage by about one percent EACH DAY with Daylight Saving Time.

Daylight Saving Time "makes" the sun "set" one hour later and therefore reduces the period between sunset and bedtime by one hour. This means that less electricity would be used for lighting and appliances late in the day. We may use a bit more electricity in the morning because it is darker when we rise, but that is usually offset by the energy savings in the evening.

We also use less electricity because we are home fewer hours during the "longer" days of spring and summer. Most people plan outdoor activities in the extra daylight hours. When we are not at home, we don't turn on the appliances and lights. A poll done by the U.S. Department of Transportation indicated that Americans liked Daylight Saving Time because "there is more light in the evenings / can do more in the evenings."

While the amounts of electricity saved per household are small...added up they can be very large.

In the winter, the afternoon Daylight Saving Time advantage is offset by the morning's need for more lighting. In spring and fall, the advantage is less than one hour. So, Daylight Saving Time saves energy for lighting in all seasons of the year except for the four darkest months of the year (November, December, January and February) when the afternoon advantage is offset by the need for lighting because of late sunrise.

Market Comment - Week of March 8th, 2010
Mortgage bond prices continued to rebound higher last week, which pushed mortgage interest rates lower. Stock gains kept mortgage bonds relatively in check but many of the data releases were very bond friendly. The core PCE inflation reading was unchanged compared to the slight increase expected by analysts. Q4 revised productivity rose 6.9%, much better than expected. Higher productivity means a company can produce more with less input helping to keep prices and thus inflation in check. Rates fell about 1/8 of a discount point for the week.

Expect stocks to factor into trading the early portion of the week with very little data on tap. The Treasury auctions will be the focus throughout the middle portion of the week. Strong foreign demand would likely help mortgage bonds also. The jobless figures and retail sales data will be the focus for the end of the week.
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Economic Factors
Economic Indicator Release Date Time Consensus Estimate Analysis
3-year Treasury Note Auction Tuesday, March 9, 2010 None Important. $40 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
10-year Treasury Note Auction Wednesday, March 10, 2010 None Important. $21 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims Thursday, March 11, 2010 450k Moderately important. An indication of the employment situation. A large increase may bring lower rates.
Trade Data Thursday, March 11, 2010 $40.3 billion deficit Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
30-year Treasury Bond Auction Thursday, March 11, 2010 None Important. $13 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Retail Sales Friday, March, 12, 2010 Up 0.1% Important. A measure of consumer demand. Weakness may lead to lower mortgage rates.
U of Michigan Consumer Sentiment Friday, March, 12, 2010 73.6 Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates.

Auctions
US Treasury bonds do not directly dictate fixed mortgage interest rate pricing however they do have an indirect impact. Both Treasuries and mortgage bonds often track in the same direction but this is not always the case. There are many times that Treasuries and mortgage bonds move inversely.

Despite the overwhelming size of the US economy, foreign investors can still have an effect on moving the financial markets. When foreign economies struggle foreign investors often purchase US based investments including mortgage bonds. This demand usually causes mortgage bond prices to rise and interest rates to fall. This flight to quality buying was one of the factors that helped mortgage interest rates to remain historically low in years past.

There is a real threat that continued global economic turmoil might keep foreign investors from purchasing mortgage bonds in the future. The Treasury auctions this week will be important in determining the current appetite of foreign investors for dollar denominated securities. If this week's auctions are poorly bid mortgage bond prices could fall pressuring mortgage interest rates higher.