Mortgage Market Guide Vol. 10 Issue 5

Last Week in Review: The Fed met and a “Gross” Domestic Product was reported.

If at first you don't succeed, try, try again. Last week, that popular idiom could have applied to the Gross Domestic Product (GDP) Report. Read on to learn why...and how all the week's news impacted Bonds and home loan rates.

The Advanced GDP reading - or first of three readings - for the 4th Quarter of 2011 came in at 2.8%, a bit below expectations of 3.2%. This number will be revised two more times, but if the final GDP remains at 2.8%...then the overall GDP for 2011 would be a scanty 1.57%. That is certainly a "Gross" Domestic Product, when you consider that the government has underwritten more than half of that economic growth with the Payroll Tax benefit.

Also in the news last week, the Fed's Policy Statement after its regularly scheduled Federal Open Market Committee meeting was pretty much the same story as recent Statements, including stable long-term inflation expectations, a tepid economic recovery, and fragile job market. But there was one big exception to their norm. The Policy Statement said there will be "exceptionally low levels for the Federal Funds Rate at least through late 2014." This is a huge change from the previous statements of "low rates until mid-2013."

On the surface, extending the zero interest policy until 2015 tells us the Fed thinks the economy will just be slogging along, and accommodative monetary policy will be required to keep the economy growing at least at a modest pace. One could argue that recent economic data is better of late and that all this loose monetary policy is unnecessary. But the Fed has spoken, and as the old adage goes: "Don't fight the Fed."

In news out of Europe, yields in European Bonds have come down…and by quite a bit. This sparked some optimism that Europe's Long-term Refinance Operation (LTRO) has helped alleviate some pressure in the peripheral countries in the Eurozone, like Spain and Italy. So what's the takeaway? In honor of the upcoming Super Bowl, here's a football analogy: think of the LTRO as a super punt or "kick of the can" down the road. Europe needs to play a serious offensive line by creating a tighter fiscal union, implementing austerity measures, and developing growth strategies to help pay down the enormous debt.

The bottom line is that Bonds and home loan rates remain at historic best levels, which means now is still a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients. 

Forecast for the Week: A busy week is ahead, with important news on inflation, manufacturing, and the job market. 

As you can see in the chart below, Bonds and home loan rates remain near their historic bests. I'll be watching closely to see which way they move next.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Jan 27, 2012)                      Economic reports will be plentiful - and important - this week: The week kicks off Monday with the Core Personal Consumption Expenditure (PCE), which is        the Fed's favored gauge of inflation. This report will be closely watched, since any hint of an uptick in inflation could push Bond prices lower and, in turn, move home loan rates higher. Manufacturing will also be in the spotlight with the Chicago PMI on Tuesday, followed by the ISM        Index on Wednesday. Consumer Confidence will also be delivered on Tuesday. The ADP Private Employment Report will be released on Wednesday and comes before the government's total job's report on Friday. As usual, Initial Jobless Claims will be released on Thursday. This week's report comes after an uptick of 21,000 last week. Finally, on Friday the government's monthly Employment Report will be released. The Employment Report consists of Non-farm Payrolls, the Unemployment Rate, Average Workweek and Hourly Earnings. This is an important report that can have a big impact on the markets. So I'll be watching it closely. Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. View: Ever wondered what the world was really like when you were born? There’s a fun way to find out.  Share This Site…And Try it Yourself Every once in a while, you come across a website that's just plain fun. This is one of those sites. We've all seen websites that provide stats about what happened the year you were born. The website whathappenedinmybirthyear.com takes it a step further. It doesn't just offer stats and facts. Instead, it provides a picture of the world you grew up in - including what it looked like and how it was different than the world we live in today. But it's more than just a fun website. For one thing, it provides you with a light-hearted reason to connect with your clients on a personal level. You can share the site with them on social media or in one of your outreach pieces (such as a newsletter or email). In addition, this site offers you a unique way to better understand your clients. If you know when a client was born, you can simply type in the year. In return, you'll get a picture of that client's social influences that have helped shape him or her. And that's exactly the kind of information you need to put yourself in your clients' shoes and understand them a little better. Of course, it doesn't hurt that it's entertaining too!  Try the site today…and consider sharing it with your clients as a way to connect with them on a more personal level.  Economic Calendar for the Week of January 30 - February 03 As your mortgage professional, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.

Mortgage Market Guide Vol. 10 Issue 4

Last Week in Review: Rumors were swirling out of Europe, while inflation news was swirling here at home. 

It's almost all Greek to me. Last week, more news from Greece hit the wires, as did several pieces of inflation news here at home. Read on to learn what happened, and what the impact was on home loan rates.

First, it's important to remember that back in October, a deal called for Bondholders to "accept" a 50% haircut on the face value of the Greek debt. Last week, rumors about this amount were swirling, saying that Greece is close to a deal that would entail a 68% haircut on the face value of their debt. And if that's not concern enough, a larger issue remains.

After the proposed austerity measures, wage cuts, and tax increases are instituted, will Greece - not to mention Italy, Portugal, and other struggling economies - be able to "grow" their way out of debt? Given that the World Bank lowered its 2012 global growth forecast to 2.5% from last summer's estimate of 3.6%, the odds sure seem tough. This is an important story to watch as the year unfolds.

Here at home, inflation was in the news twice last week...and the results were mixed. On Wednesday, the wholesale inflation measuring Core Producer Price Index (PPI) came in hot, elevating the year-over-year Core PPI rate to a lofty 3%...the highest since April 2009. Meanwhile, Thursday's Core Consumer Price Index (CPI) was inline with expectations and tame overall, though it is worth noting that the 2.2% Core CPI year-over-year reading is near the upper end of the Fed's tolerance level.

Remember, inflation is the archenemy of Bonds and home loan rates, like Kryptonite to Superman. That's because inflation erodes the value of the fixed return provided by a Bond, which causes home loan rates to rise. It will be interesting to see what - if anything - the Fed says about inflation after it's regularly scheduled meeting of the Federal Open Market Committee this week...as any talk or sign of inflation can move the markets and impact rates.

Even with all the news last week, it's still a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week: The second half of the week heats up with news on the housing market and the state of the economy. Plus, the Fed meets.

 The reports that will be released this week will carry some weight:

• We'll see a double dose of housing news with Pending Home Sales on Wednesday and New Home Sales on Thursday.
• As usual, Initial Jobless Claims will be released on Thursday. Last week's read came in at 352,000, a drop of 50,000. That's the biggest decline since September 2005!
• We'll also see two important reports that will show us how the economy is doing. Thursday brings the Durable Goods Report, which gives us a read on big ticket items. This will be followed by the first reading on Gross Domestic Product (GDP) for the Fourth Quarter of 2011 on Friday.
• Finally, Consumer Sentiment will also be released on Friday.

In addition to those reports, the Federal Open Market Committee will hold a two-day meeting this week. The meeting will begin January 24 and end with a policy statement at 12:30 pm ET on January 25. There is no chance of a rate hike, but I will be listening for any hint of a third round of Quantitative Easing (QE3).

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

View: A fee increase is coming that will impact home loan rates. Be sure to read the details below.

Fee Increase to Impact Home Loans

In December 2011, Congress reached a last-minute deal to fund the payroll tax cut extension. The payroll tax extension will provide a 2% tax reduction for individuals making up to $106,800, so the tax extension will be very helpful for many Americans who are struggling during these tough economic times. But like so many things in our tangled economy, there's a flip side. In this case, the tax cut deal has a rippling effect that will impact the mortgage world.

Here's what's happening and what it means to home loan rates:

What is happening and why? To put it bluntly, the passage of the payroll tax cut extension is being funded via a mandate to Fannie Mae and Freddie Mac (the nation's largest providers of mortgage money) to increase their guarantee fees or "g-fee's" by at least 10 basis points on the rate. So rather than giving a par rate of 4.00%, for example, the par rate is now increased by at least 10 basis points, or approximately 4.10%. But as you probably know…home loan rates are priced and offered in .125% increments, so this will most likely impact the consumer by .125% in rate. Whether you agree or not on the politics behind this cost being passed along to folks who are taking out mortgages, the Congressional Budget Office recently estimated that the increase will ultimately pay for about $35.7 Billion of the cost of the payroll tax extension.

What exactly is this "g-fee"? The guarantee fee or "g-fee" is an amount charged by mortgage-backed securities (MBS) providers, like Freddie Mac and Fannie Mae, to help protect against credit-related losses in the overall mortgage portfolio. In other words, it acts a lot like insurance and helps lower the overall risk…which means home loans can be offered at terrific interest rates to borrowers that have good - but not perfect - credit.

What exactly is the impact of the rate increase? For example, for a $200,000 home loan, the increased g-fee (assuming a .125% increase in rate) would equate to $250 more per year in interest, or $7,500 more over 30 years. Someone buying or refinancing a home can certainly choose to buy down the cost with cash up front - but most folks will not do this.

Who will this impact? The change will impact all new borrowers of Fannie Mae and Freddie Mac loans. The bill will also impact Federal Housing Administration (FHA) loans by increasing the annual mortgage insurance premium that borrowers pay by one-tenth of a percent.

When will it start? Officially, the increase to guarantee fees will begin on April 1, 2012. However, the increase is already starting to be seen in rate sheets right now, since home loans being originated now will likely not be closed, pooled and securitized until April…and therefore will need the increased g-fee priced in earlier.

How long will this be in effect? The increase will be effective through October 1, 2021.

The bottom line is that the g-fees will be going up…and this will impact homebuyers looking to obtain a home loan through Fannie Mae, Freddie Mac and FHA.

The good news is that home loan rates are still at historic lows right now, and it's a great time to purchase a new home or refinance. If you or anyone you know has any questions, please call or email! 

January 2012 Views You Can Use

Despite what the Mayan calendar may say, the world probably won't come to an end in 2012. But like 2011, this coming year may bring some significant challenges here in the US...and around the world. Here are just a few important topics to keep an eye on in the new year:

• Working for a Living – The labor market made modest improvements in 2011…but what should you expect in 2012? Here’s the answer!
• Home Sweet Home – The housing market is still uncertain, but here’s something to celebrate!
• What to Watch – Inflation is extremely influential. Read the article below to discover what to watch in 2012.
• Q&A: The Bottom Line? – What’s the bottom line for 2012? The answer may surprise you!

Best wishes to you and yours in the coming year. If you have any questions or would like to discuss your unique situation, call or email today. And please forward this newsletter to friends, family members and coworkers who may find the information helpful.

Working For a Living: The Labor Market in 2012

The mantra “I’m taking what they giving ’cause I’m working for a living” was made famous in the 1980s by the band “Huey Lewis and the News.” Today, the feeling is the same around much of the country as many Americans were able to find work in 2011. But we’re not out of the woods yet, as many more workers are still searching for employment.


The labor market made modest improvements in 2011, and that trend is likely to continue in 2012. As you can see in the bar graph next to this article, the number of new people claiming unemployment each week saw a drastic improvement by the year’s end compared to the high reported the last week of April 2011. Recently, the number of new claims has stayed below the important line of 400,000 new claims each week. That’s a welcome site compared to most of 2011.


That said, it’s a good bet that the official Unemployment Rate will remain north of 8% throughout 2012, as more gains in the private sector are offset by government jobs being removed with our belt tightening measures. Another factor to consider is that Baby Boomers who are headed into retirement will be removed from the labor force, and this continuing shift in our country's demographics will help add to the decline in the unemployment rate.


Rather than looking at the official Unemployment Rate, which always brings up controversy due to its methodology, we should start looking at the labor force’s "participation rate," as this may be a more accurate reflection of labor market conditions. This rate is a little more straightforward, since it simply measures the number of people eligible to work against the number of people actually working.


And get this: the current labor force participation rate is 64%, which represents the lowest level of eligible workers participating in roughly thirty years. One of the contributing factors to the decline in the rate is the aforementioned effect of the Baby Boomer generation retiring and leaving the labor force. However, that only makes up a portion of the decline in the rate as obviously, there are still lots of folks looking to "participate" in the workforce, but they haven't been able to find a job. With businesses still somewhat reticent to hire until they feel more confidence, estimates are for little to no improvement in the participation rate in 2012.


This is obviously a very important topic not only for people looking for work but also for the economy as a whole. I will continue to monitor the labor market and its impact on housing and home loan rates over the coming weeks and months.

Home Sweet Home

On the one hand, the housing market still remains uncertain. For instance:

• Foreclosures will still be a concern in 2012 as a fresh wave will be hitting the market…and that will prevent a broad-based pricing recovery in housing. However, the good news is that the delinquency rates have declined and should continue to do so.
• While some parts of the country are seeing signs of improvement in housing, others continue to struggle. Overall, home prices will likely decline modestly in the first half of 2012 and then recover in the second half of the year.
• Rentals and investment properties will continue to be popular in 2012 as more people continue to rent.

On the other hand, we are closer to the bottom in housing and with historically low rates in 2012, it will be another incredible purchase opportunity for homebuyers.


In fact, it looks like home loan rates could move a leg lower in the first part of 2012, as rumors continue to swirl around the possibility of the Fed stepping in with a third round of Quantitative Easing (or QE3), and this could lead to the lowest rates ever. HOWEVER…like all windows of opportunity, this one may be short as well. History has shown that Bonds move higher in anticipation of Quantitative Easing, but then selloff once the official announcement is made. Think about the old investing adage: "Buy on the rumor, and sell on the news." So the best home loan rates may be seen leading up to any actual announcement.


If the Fed doesn't do QE3, rates will still be very attractive in the first part of year, before moving a bit higher in the second half of 2012 as the economy continues to pick up. Overall, the early part of 2012 looks to be a great environment for interest rate, which means lots of opportunity for homebuyers.


Regardless of what happens at the Federal level, I’ll be here ready to help you get the best home loan for your unique goals and situation. And if you have any friends or family members who could use some insight and help navigating a home loan, please forward them this newsletter along with my contact information. I’m always happy to help out in any way I can.

What to Watch: A Breeze of Inflation

Inflation, as measured by the Core Consumer Price Index, ran at 2.2% from November 2010 through November 2011. That was up rather sharply from the previous year and was closing in on the comfort range threshold of the Fed. What is interesting and a little disturbing to note is the increasing consumer inflation in the face of stagnant wage growth. Typically, consumer inflation increases are fueled by wage-based inflation, where wages move higher…but we are not seeing that just yet.


With US consumers still behaving conservatively, the political climate promoting uncertainty and the labor market only making modest improvement, inflation may still tick higher to possibly 2.5%. But that would still be considered within the tolerance limits of the Fed.


Of course, even if the inflation number is within the Fed’s comfort, any increase can negatively impact home loan rates. Remember: inflation is the archenemy of Bonds and home loan rates, so inflation ticking higher would not be good for rates. But inflation (and its impact on rates) doesn't exist in a bubble or an isolated test tube. Home loan rates are also impacted by other economic factors. Part of the magic in watching rates and how they behave is understanding all the competing factors at play. So the coming year will be an example of why it’s so important to work with a knowledgeable mortgage professional like me, who understands the complexity of the markets and can help identify opportunities for homebuyers.


As always, I’ll be watching the inflation news closely in the coming months…and I’ll continue to share any important news that may impact you or the economy as a whole. And if you ever have any questions, please just call or email.

Q & A: The Bottom Line

QUESTION:What’s the bottom line for 2012?


ANSWER: The bottom line is that opportunity lies around every corner. For people looking to purchase a home, the abundance of affordable housing and historically low home loan rates will create a number of opportunities. And for those seeking to refinance, this may prove to be another year where you can move into a better mortgage.


If you have any questions at all as we enter the new year, please call or email. It only takes a few moments to look at what’s going on and to discuss what it means to your unique housing and financial goals. 

Best wishes and happy New Year! 

Mortgage Market Guide Vol. 10 Issue 3

Last Week in Review: Consumers are feeling good, but how good was last week's news? 

"Happy days are here again." Milton Ager and Jack Yellen. And while it seems that consumers are certainly feeling happier, not everything that happened last week was cause for song.

There was good news last Friday, as the first look at Consumer Sentiment for January came in at 74.0, which is the highest level since May 2011. However, there was also news last week that the holiday shopping season may not have been as robust as previously thought.

Retail Sales in December rose by a meager 0.1% from 0.4% in November, and when stripping out autos, sales actually fell 0.2%. Why did this happen? It seems that steep holiday discounting held down the value of goods sold, so sales were big, but only because of the heavy discounting.

The news out of Europe last week also wasn't too happy. German Chancellor Angela Merkel and International Monetary Fund Managing Director Christine Lagarde met to discuss and finalize the debt restructuring deal for Greece. Back in October, a deal called for Bondholders to "accept" a 50% haircut on the face value of the Greek debt - but as creditors and authorities have started to forge a final deal, the actual haircut back to investors is looking quite likely to be larger than 50%. This is simply because worsening financial conditions in the Greek economy make paying the debt back with "just" a 50% haircut highly unlikely...maybe impossible. What's more, the next reasonable question to consider is will Ireland, Portugal and even Italy ask for a similar haircut or deal on what may be unsustainable debt in their countries?

The happy news is that these problems are finally being addressed to make things better in the future. And in the short term, the uncertainty should keep money flowing into the relative safe haven of the US Dollar and US Bonds - including Mortgage Bonds, to which home loan rates are tied. In addition, Mortgage Bonds continue to be supported by the Fed's purchases, which are also helping to keep home loan rates at record low levels.

All of this means that now continues to remain a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week: It's a holiday shortened week, but the economic calendar is full. News on manufacturing, inflation, and housing is ahead.

Despite the Bond Markets and all Capital Markets being closed on Monday in observance of Martin Luther King, Jr. Day, the rest of the week's economic calendar is full:

• Manufacturing strong? The week's economic data kicks off on Tuesday with a manufacturing indicator from New York's Empire State Index for January. In addition, the Philadelphia Fed Index for January will be released on Thursday. Last month, both reports reached their highest levels in months. Remember: The Stock Market likes to see healthy economic growth because that translates to higher corporate profits. However, the Bond market prefers a moderate growth environment that won't generate inflationary pressures.
• Speaking of inflation… We'll see inflation reports on the wholesale level in the Producer Price Index on Wednesday, followed by the Consumer Price Index on Thursday. Inflation has remained tame…and Bondholders will be closely watching these two indicators for any signs of an uptick.
• Back on track this week? Initial Jobless Claims will be released as usual on Thursday. Last week's number showed an uptick in claims and broke the recent trend of decreasing claims. However, the rise could have been due in part to layoffs of seasonal holiday workers. So the markets will be watching to see if this report gets back on track with the recent positive trend.
• No place like home! Housing data in the form of Housing Starts, Building Permits and Existing Home Sales will all be reported this week. Housing continues to troll around low levels despite record low home loan rates.

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

View: Wondering what the housing trends for 2012 will be? Check out 11 trends we saw in 2011.

Housing News: 11 Trends from 2011

The National Association of Realtors® surveys homebuyers and sellers each year to uncover housing trends and monitor changes taking place in the industry. This year's report highlights a number of trends that haven't been seen in years. Here are just 11 highlights from the 2011 report.

1. In 2011, 37% of homebuyers were first-time buyers - which was down from 50% in 2010.

2. Last year, 88% of homebuyers used the Internet to search for a home. That number was down slightly from a high of 90% in 2009.

3. The typical homebuyer searched for 12 weeks and viewed 12 homes.

4. The number of buyers who purchased their home through a real estate agent or broker climbed to 89% - a share that has steadily increased from 69% in 2001.

5. Nearly 1 out of 4 buyers said the application and approval process was "somewhat more difficult" than expected…and 16% reported it was "much more difficult" than expected.

6. About half of home sellers traded up to a larger and more expensive home…and 60% traded up to a new home.

7. The top 3 factors influencing neighborhood choice were: the quality of the neighborhood, the convenience to job, and the overall affordability of homes.

8. The typical seller lived in their home for 9 years. That number has increased from 6 years in 2007.

9. Although 61% of sellers said they reduced their asking price at least once, the average home sold for 95% of the listing price.

10. Only 10% of sellers sold their homes without the assistance of a real estate agent. Of those people, 40% knew the buyer prior to the sale.

11. The typical "for sale by owner" home sold for $150,000 compared to $215,000 for the average agent-assisted home sale.

All Contents ©2012 The National Association of Realtors®. 

Congress Mandated Conventional Guarantee Fee Increase to Pay for Payroll Tax

Got my first email notice tonight from a Lender about the upcoming Guarantee Funding fee that Congress is mandating to pay for that payroll tax mess. I announced a few weeks back to expect changes in your rates with this mandate. Well, they are telling me that it appears it is going to instantly raise your conventional loan rates by .5%. I cannot stress this enough, if you or any of your clients are looking to purchase or refinance and go conventional financing, you need to lock your loan soon. I have a feeling that Government backed loans like FHA will soon follow.

Here is more information on this bill.

The Federal Housing Finance Agency will increase guarantee fees on single-family mortgage-backed securities charged by the government-sponsored enterprises for loans delivered effective April 1, 2012, in response to the new funding mechanism for the payroll tax cut extension passed by Congress.

Passage of the payroll tax cut extension requires Fannie Mae and Freddie Mac to raise g-fees to cover this Payroll Tax Extension.

DeMarco said the FHFA will take "into consideration risk levels and conditions in financial markets" when the agency contemplates rates.

President Barack Obama signed the temporary two-month tax cut in December after House and Senate leaders reached a last-minute deal prior to the holiday break.

Payroll Tax Cut Extension Deal

Please share this with others so that they are not caught unaware.

Feel free to contact me for a free consultation or good faith estimate.

Home Shopping the Smart Way

When shopping for a home, there are quite a few things that can snatch your attention.  When you look at a home, it’s very easy to fall immediately in love with it.  New homes are clean, decorated perfectly, and many are what you pictured in your dreams.  If you don’t shop the smart way though, you’ll end up like many other homeowners and find faults shortly after you move in.

When you look at your potentially new home, you’ll want to check and see if you can fit your furniture in the way you want.  A lot of homes these days are configured so that the furniture will only fit in one position.  Often times, this leaves a television or other device in a weird location, sometimes making your furniture nearly impossible to fit through the doors.  This is surely something to bear in mind, as you certainly don’t want to have to buy entirely new furniture.

You’ll also want to be sure that you get the right home for yourself and your family.  Even though you may be a young couple now, you may want to get a house with enough room in case you decide to have kids later on down the road.  If you don’t get a big enough house and end up having to move, you’ll find that moving with kids is a hard task indeed.  If you have babies when you move, you’ll find moving to be even more difficult.

Once your children start to leave home, you may want to look into getting a smaller house.  The choice is entirely up to you, and what will work the best for your needs.  Anytime you purchase a house though, you’ll want to think about the size of your new home and consider the future needs of your family as well.  This way, you’ll have everything covered for years to come and won’t have to look into getting a new home.

You may also want to look at any extras as well.  Things like a pool and a hot tub may be a great thing to have, although you should look into the money that regular maintenance would cost you as well.  There are a lot of things that may be great to have along with your home, although you should always look at long term costs before you purchase.

Location is also something you’ll need to consider as well.  Some prefer to live out in the country, while others prefer the city life.  Some prefer to be close to stores and such, while others prefer to be miles and miles away.  The location of a home is very important, and in most cases will have a big impact on the price.  Living in the city will cost quite a bit of money, although a home out in the country can cost just as much if there is a lot of land included with the property. 

Whenever you decide to buy a house, there is a lot of things that you’ll need to consider.  Buying a home is no easy feat; with a lot of things you’ll need to decide on.  If you give yourself enough time and plan out your budget and the type of home you want, you’ll have plenty of time to make that very important decision.  You never want to rush the process, as you could end up with a home that is less than perfect.  If you take your time and look at several different houses, you’ll end up in your dream home before you know it.

Mortgage Market Guide Vol. 10 Issue 2

Last Week in Review: Unemployment hit a three-year low. How did Bonds and home loan rates react?

"Workin' nine to five. What a way to make a livin.'" Dolly Parton. And with last week's Jobs Report showing that unemployment has reached three-year lows, that's something more people have been able to do lately. Read on to learn more about what's happening in the labor market...and with home loan rates.

On Friday, the Labor Department reported that 200,000 jobs were created in December, with 212,000 private job gains offsetting modest losses in government jobs. Adding to the positive spin of the report was the Unemployment Rate falling to 8.5% from a previously reported and upwardly revised 8.7% reading.

While people being removed from the labor force are skewing this unemployment number to some degree, it's important to note that the U-6 unemployment rate dropped a few ticks as well, to 15.2%. This number includes ALL unemployed individuals, including those "marginally attached" to the labor force, who are either 'discouraged' and haven't sought work recently, as well as those folks working part-time who really desire full-time jobs.

Overall the Jobs Report was a modestly positive reading on the labor market. We still have 5.6 million people unemployed for 27 weeks or more, and that number is little changed this month. But the big takeaway today is that the trend is improving.

The other big takeaway is that bad news out of Europe helped balance out the good Jobs news here at home...allowing Bonds and home loan rates to recover from their initial negative reaction to the Labor Department's report. The Euro is continuing to be weighed down by rising concern on member countries' ability to get their deficits in order and their debt in manageable position.

The bottom line is that the problems in the Eurozone are vast, complicated, and without easy solutions…so it will take a very long time for clear resolution. And during times of global uncertainty, money will flow into the relative safe haven of the US Dollar and US Bonds - including Mortgage Bonds, which home loan rates are tied to. This means that home loan rates should continue in their sideways trend and remain near historic lows, making now a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients. 

Forecast for the Week: The second half of the week will be a busy one, with news on retail sales, consumer sentiment, and more.

 The second half of the week features several important economic reports:

• The Fed's Beige Book will be released on Wednesday. This is a report on economic conditions from the 12 Federal Reserve District Banks around the country.
• Initial Jobless Claims will be released on Thursday. Last week's number fell by 15,000 to 372,000 and the report signaled that the labor market could be turning the corner to greener pastures.
• Retail Sales will be released on Thursday and will be closely watched by both investors and traders. Last week, it was reported that retailers saw better-than-expected revenues for same-store sales in December, but the numbers were achieved by big discounts. Sales on Black Friday were robust, but fell off in the ensuing weeks during December. So the markets will be watching closely for the final numbers this week.
• The first look on Consumer Sentiment for January will be released on Friday.

In addition to those reports, the Treasury Department will sell a total of $66 Billion in government securities on Tuesday, Wednesday, and Thursday. Those auctions could impact the markets, depending on how they're received. So, I'll be watching the results - and their impact - closely. 

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

View: Want some help keeping your New Year’s Resolutions? There’s an app for that!

There's an App for That New Year's Resolution!
Making It Happen, Part 2


In last week's View article, we focused on 5 steps to achieving your New Year's Resolutions. Those steps included: setting realistic goals, making a simple plan for each goal, announcing your goals, tracking and celebrating your progress, and avoiding the urge to give up if you have a setback.


Luckily, you're not on your own to work through those steps. That's because there are a number of social media websites and smart phone applications designed to help you.


Obviously, popular apps like Facebook and Twitter can help you announce your goals, hold yourself accountable, and receive supportive feedback from friends and family members. But there are a number of additional resources that you may not know about.


Here are just 5 social media sites and apps that can help you set your New Year's resolutions…and stay on track! 

1. Tweet Reminders. Twitter is great for connecting with people and sharing news instantaneously. But did you know it's also a great way to remind yourself about tasks? Need a reminder to go to the gym… or to call those past clients? No problem. Visit the Tweet Reminders site, and then enter your Twitter username and up to 5 tasks or reminders. You can even pick a date and time. Then, Tweet Reminders will send you a direct message on Twitter to remind you about them. It's both an easy and helpful thing to do. 

2. Moteevate. Regardless of whether your goal is big or small, this site has the inspiration, energy, and advice you need to reach it. With moteevate, you get support from people you already know as well as advice from experts in the field - all while being surrounded by people looking to achieve similar goals. You can even moteevate in teams and act as moteevators for each other. The site also includes cool trackers to record your progress and milestones. Plus, you can customize the privacy settings to keep your goals to yourself or share them with others. And best of all, the basic platform is free to use with the caveat that you pay whatever you want after you achieve your goal. In fact, this honor system is the only thing old-fashioned about moteevate.


3. Toodledo. This is a businessperson's dream app. You've no doubt seen a To-Do list before…but this app kicks it up a notch! Not only does it help you easily organize your tasks and set alarms, but it also allows you to collaborate with other people and establish sub-tasks to work towards your goal in small steps! Plus, Toodledo can be used on your mobile phone, in your email, on your calendar, and even integrated directly into your web browser. So you can stay on track from anywhere…and at any time. 

4. Stickk. The basic principle of this app is that "incentives get people to do things." So if you really want to achieve a goal - whether it's personal or professional - it's time to put your money where your mouth is. Basically, stickK allows you to create a Commitment Contract focused on achieving a specific goal. As part of the process, you set your goal and timelines, stakes, referee who will monitor your progress, and supporters who will cheer you on. If you achieve your goal in your timeframe, you don't lose the stakes you wagered. But - the best part is - even if you don't achieve your goal, the money you wagered goes to a worthy cause or charity that you designate. So it truly is a win-win situation!


5. GymPact. This is similar to stickK in that you put money on the line…but it's different in that you can also earn some money. You start by making a commitment that you will go to the gym a certain number of times per week (don't worry, you can change your pact any week). You also set the monetary stakes that you'll pay if you don't meet your commitment. Then, you simply use the GymPact iPhone app to check in when you go to the gym. When you meet your weekly goal, you'll be rewarded with real cash, funded by the people who didn't work out! The more days you commit, the more cash you earn. The only downside is that you need an iPhone (or an iPod Touch and a gym with Wi-Fi) to participate, since apps for other systems aren't available. 

Of course, this is just the tip of the iceberg when it comes to social media websites and apps designed to help you set and achieve your goals. Best wishes to you in the coming weeks and months.


And, if your New Year resolutions involve any financial or housing matters that I can help with, please call or email today. I'll be happy to help out in any way that I can. 
 

Mortgage Market Guide Vol. 10 Issue 1

Last Week in Review: Consumer Confidence here in the U.S. is on the rise, but what does that mean for home loan rates?

It's been said that "the only constant is change." And we certainly saw a lot of changes in 2011. As we ring in 2012, here's a look at how 2011 ended, and what lies ahead for home loan rates.

The Stock and Bond Markets were closed on Monday in observance of the Christmas holiday, and it was a fairly quiet week after that. However, there was some good news, as Consumer Confidence came in at 64.5 for December. Not only was this the third highest number reported for 2011, but this important index has jumped nearly 25 points in the past three months and now sits at its highest level since April. What's more, this report followed the recent Consumer Sentiment Index reading, which also came in at its highest level in six months.

While consumers certainly appear more optimistic here, the news hasn't been as positive out of Europe. The Euro struggled somewhat last week after just an okay performance from one of Italy's Bond auctions. While the country sold all their debt at yields slightly lower than where they were just the day prior, yields are still historically high (near 7% on 10-Year Notes) for a country that has a lot of debt to service and refinance in the coming year. In addition, Spain's government announced on Friday that the country's budget deficit will surpass 8%. Spain also unveiled new austerity measures to combat their economic and budgetary difficulties.

So what does all of this mean for home loan rates here in the U.S. in 2012? The uncertainty in Europe should continue to help Bonds and home loan rates, as investors will see our Bonds as a safe haven for their money - and remember, home loan rates are tied to Mortgage Bonds, so rates typically improve as Mortgage Bonds improve. However, continued good economic reports here in the U.S. could balance out those improvements. That's because investors will typically move their money out of Bonds and into Stocks during good economic times, so they can take advantage of gains.

The bottom line is that whatever lies ahead this year, 2012 begins with home loan rates near historic lows...which makes this a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week: The Markets will be closed on Monday for the New Year holiday, but we will see important news on the Jobs Market after that. 

Stock and Bond Markets will be closed on Monday, January 2, in observance of the New Year's holiday, but the week will be a busy one after that.

• Tuesday brings the Federal Open Market Committee Minutes from the Fed's last meeting in 2011. The Markets will be especially interested to hear what the Fed may have said about inflation.
• The ISM Services Index will be reported on Thursday. This report gives investors a gauge as to how the service sector is holding up in this economy. Individuals employed in this sector produce services rather than products. Service sector jobs provide a significant number of jobs in the US - including housekeeping, messenger services, tax preparation, nursing, and teaching.
• Also on Thursday, we'll see another weekly Initial Jobless Claims Report. It is encouraging to see that Claims remain beneath the 400,000 mark, which is a sign that the labor market is improving.
• The biggest news of the week will be Friday's Jobs Report, as the Labor Department reveals the      latest unemployment figures and how many new jobs were created in December.

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

      
View: Are you "resolved" to keep your New Year's Resolutions this year? The tips below will help!

Making It Happen!

Part 1: 5 Simple Steps for Achieving Your New Year's Resolutions

Each new year is full of promise and potential. Perhaps that's why so many of us choose this time of year to make positive changes in our lives.

And, believe it or not, achieving your goals can be easier than you think. The following 5 steps can help you get started and follow through!

1. Set realistic goals. The first step to your successful New Year's resolutions is to set realistic goals for the coming weeks and months. You can start by focusing on the things you're passionate about or the things you've always wanted to do. Maybe it's a worthy cause you want to become involved in…or maybe you want to kick a habit that's bothered you for years. If it's something that you're passionate about, you'll have a better chance of being successful. Once you have the topic, make sure you write down a specific, attainable goal. It's not enough to just think about doing something. Come up with a specific statement you want to achieve. For example, the most common resolution is to lose weight. But that's not specific enough. Write down exactly how much weight you want to lose and by when. But make it realistic…and healthy at the same time.

2. Make a simple plan to achieve each goal. Once you have your goals written down, take the resolution a step further by figuring out how you'll achieve it. That means breaking the goal down into simple steps that you can achieve over time. And, often, it means multiple little steps. So, for the weight loss resolution, you may write down a number of simple, daily or weekly steps - such as exercise 20 minutes three times a week, eat vegetables and fruit with each meal, switch to diet cola or better yet water during the day, and lose a certain number of pounds per month. Remember to consult a physician before starting any weight loss or exercise routine to make sure you're approaching it in a healthy manner.

3. Announce your goals. One of the best ways to make sure you stick to your goals is to make them known to your friends, coworkers, and family members. The reality is, once you've told people you'll do something, you'll feel more accountability than if you just keep it to yourself. You'll also have a cheering section to help you stay focused and positive as you work to achieve your goals. But don't just share your goals; share the specific steps that you're going to take each day or week to achieve those goals. If you use any social media websites to connect with friends and family, make your goals and steps part of your daily/weekly updates…it's a great way to get the word out and hear feedback from people who want to help you stay on track.

4. Track and celebrate your progress. Small steps aren't just about making your way to a goal; they're also about building momentum, a positive attitude, and celebrating successes along the way. There are a number of ways to track and celebrate your success. For example, if your goal is to work out 20 minutes a day three times a week, you can use a marker and a calendar. Each day you work out, simply color that day in green (or another positive color that you like). As the month unfolds, you'll see more and more green covering the calendar, which will help you see just how much work you've done and keep you motivated to keep going. In addition, you can also use social media to track and celebrate your success. Maybe you tweet or update your Facebook status every time you exercise. Or maybe you announce when you've lost a few pounds. The point is, you've already announced your goals to friends and family as a way to hold yourself accountable, now it's time to celebrate with those same people every time you achieve a step along the way.

5. Don't get discouraged. You're bound to have good weeks and bad weeks. Just because you fall off track once or twice doesn't mean you should give up. Instead, acknowledge that you had a bad day or week, figure out what happened to throw you off track (maybe it was a busy or stressful week), and then make a plan to overcome the problem if it happens again. For example, if you had a tough week at work that required you to work late and miss the trip to the gym, make a plan to be proactive the next time work gets busy. Perhaps you make a plan to walk during your lunch break or wake up early to do jumping jacks and push-ups before heading into the office. But…whatever you do…don't give up on your goals or yourself. Review your plan and recommit yourself to those simple steps. You can even use social media to acknowledge a mistake and commit to overcoming that problem in the future. That way, you'll have a new sense of accountability and support from your friends and family.

Best wishes to you in achieving all your goals and dreams this year. And if your New Year's resolutions involve any financial or housing matters that I can help with, please call or email today. I'll be happy to help out in any way that I can.