• Home
  • About
    • Our Advantage
    • Meet the Brokers
    • FAQ Using a Broker
  • Pre-Approval
    • Pre-Qualification Form
    • Loan Application
    • Documents Required for a Home Loan Mortgage
    • Credit >
      • Imperfect or Bad Credit Loans
      • Fico Score
      • Good Fico Score
      • How Fico Scores Work
      • Fico Scores Ignore
      • How Fico Scores Help
      • Fico Tips
  • Loan Types
    • What is an Arm?
    • Conventional Loan
    • FHA Loan
    • VA Loan >
      • VA Loan Eligibility
      • VA Refinance IRRL
    • HARP
    • Jumbo Loan
    • Hard Money Loans
    • Reverse Mortgage >
      • What Is A Reverse Mortgage
      • Benefits Of A Reverse Mortgage
      • Reverse Mortgage VS HELOC
      • Loan Process
      • Reverse Mortgage Presentations
      • Reverse Mortgage Quote
  • Buyers/Sellers/Homeowners
    • Refinance >
      • What Not To Do When Refinancing
    • First Steps in Homebuying >
      • Down Payment Strategies
      • Rent vs. Buy
      • 6 Benefits to Owning Your Own Home
    • After You Sign the Contract
    • The Loan Process
    • Mortgage Payment
    • FSBO
    • Preparing for an Open House
  • Blog
  • Support
    • Property Search
    • Property Tax Information
    • Mortgage Glossary
    • Mortgage FAQs
    • Useful Links
  • Contact
  • Reviews
Effective Mortgage Company
Follow Us

Effective Mortgage Company

Blogs on Mortgages, Markets And Other Items Of Interest. Stay Up To Date!

Blog

Market Update

4/30/2015

0 Comments

 
Prior to 8:30 this morning the 10 yr note was unchanged frm yesterday and MBS prices up 2 bp frm yesterday. 8:30 uncovered three reports, two friendly to the bond market, one not so friendly. March personal income was expected to have increased 0.2% as reported income was unchanged. March personal spending was thought to be up 0.5%, as reported up 0.4%. Q1 employment cost index was a little stronger than thought, up 0.7% against +0.6%. The not-so-good for the bond market; weekly jobless claims were expected down 7K to 288K, as re[ported -34K to 262K. The reaction sent the 10 yr to 2.07% +3 bp and 30 yr MBS price down 14 bps.

Weekly claims the lowest in 15 years (April 15th 2000). The level of firings is consistent the Federal Reserve’s view of sustained progress in the job market. The number of people continuing to receive jobless benefits dropped by 74,000 to 2.25 million in the week ended April 18, the lowest level since December 2000. The four-week average of claims, a less-volatile measure than the weekly figure, declined to 283,750 from 285,000 in the prior week. March personal spending increased 0.4%; when adjusted for inflation, consumer spending rose 0.3% in March. Spending on services increased 0.2% in March from the prior month. Spending on goods jumped 1% after three consecutive monthly declines,   Personal income, which measures money received from various sources including wages and government assistance programs, was basically flat in March from the prior month, the weakest reading since December 2013. At 9:30 the DJIA opened -39, NASDAQ -20, S&P -5. 10 yr note 2.08% +4 bp; 30 yr MBS price -28 bps frm yesterday’s close and -13 bps frm 9:30 yesterday. At 9:45 April Chicago purchasing mgrs. index, expected 50.0 frm 46.3 in March. The index increased to 52.3. One more better data point to add to today’s list of mixed news. German interest rates continue to increase; at 0.35%, three weeks ago the rate at 0.07%. Dollar decline against the euro and increasing European rates married to the data today and the US outlook has changed the near term outlook for the interest rate markets. The increase in interest rates across Europe, the softening dollar against the euro currency are some of the drivers that are now driving interest rates higher. The Greek tragedy continues with nothing new but more talking. The data this morning on declining weekly claims fortifies the view the Fed will move in Sept, but it remains a moving target.  PRICES @ 10:00 AM

10 yr note:                   -17/32 (56 bp) 2.10% +6 bp

5 yr note:                     -12/32 (37 bp) 1.50% +7 bp

2 Yr note:                     -4/32 (12 bp) 0.62% +4 bp

30 yr bond:                  -32/32 (100 bp) 2.81% +5 bp

Libor Rates:                1 mo 0.184%; 3 mo 0.278%; 6 mo 0.406%; 1 yr 0.696%

30 yr FNMA 3.0 May:  @9:30 101.52 -28 bp (-13 bp frm 9:30 yesterday)

15 yr FNMA 3.0 May:  @9:30 104.43 -25 bp (-12 bp frm 9:30 yesterday)

30 yr GNMA 3.0 May:  @9:30 102.38 -27 bp (-11 bp frm 9:30 yesterday)

Dollar/Yen:                 119.58 +0.56 yen

Dollar/Euro:               $1.1128 unch

Gold:                         $1186.80 -$23.20

Crude Oil:                 $58.71 +$0.13

DJIA:                        17,955.11 -80.42

NASDAQ:                 4994.36 -29.28

S&P 500:                  2096.36 -10.49

 

0 Comments

Understanding Debt to Income Ratio

4/29/2015

0 Comments

 
Amount in versus amount out: You hear that all the time in relation to calories when you’re working on your physical health. Here’s a fun fact: it applies to your financial health, too — specifically when you’re applying for a mortgage loan. A mortgage lender will review your credit history, your assets, and your employment, but they’ll also look at your income vs. your expenses, otherwise known as your debt-to-income ratio, or DTI.

Consider this a “big picture” look at your finances. Lenders want to be sure you’re not living paycheck-to-paycheck, and that you can cover your mortgage as well as credit card debt, auto loans, child support and any other recurring monthly debt payments.

The percentage fluctuates, but generally the amount of money you spend on your mortgage and other debts should be no more than 45% of your total monthly pre-tax income. The actual percentage changes based on the type of loan, the sales price of the home, and the lender you choose.

To calculate your DTI, add up your recurring monthly expenses, including your proposed housing expenses, and divide by your monthly pre-tax income. If your housing expenses total $1,000, your car loan is $250 and your credit card averages $300 every month, you’d have expenses totaling about $1,550. If your pre-tax monthly paycheck is $3,750, that gives you a DTI of 41%. This is also known as the “back-end ratio.”

You may see DTI written as a fraction, such as 28/41. The second number is the back-end ratio. The first number is called the front-end ratio. This is the calculation of how much you spend on housing costs compared to your income. When making these calculations, it’s important to remember that your mortgage payment is not your sole housing expense; taxes, insurance, and other fees are part of this number. The most common limit today for a front-end ratio is 28%. FHA loans may allow a higher number.

A few years ago, during the housing boom, some lenders allowed DTIs up to 55% for nonconforming loans. These days, lenders are more wary about ensuring their borrowers are a good risk and unlikely to default on their debt. As credit requirements have risen, DTIs have dropped. So a borrower with a high credit score and low DTI will more easily secure a loan with favorable terms in today’s market. These days, your DTI may be just as important as your credit score when you are applying for a new home mortgage.

It’s important to remember that your DTI is not a true calculation of all your monthly expenses. It does not include food, clothing, fuel, utilities, health/car insurance and other such expenses.

So, just like a bodybuilder trying to bulk up, when you’re looking for a new home financing loan, the amount in (your income) should be greater than the amount out (your expenses).
0 Comments

Market Update

4/29/2015

0 Comments

 
Q1 GDP, weaker than most economists were expecting, the general expectation was an increase of 1.0% growth in the quarter. GDP advance report hit at +0.2% after increasing 2.2% in Q4 2014. Exports declined, businesses cut investments and consumers continued to exhibit a lot of caution. Yes, there was the weather but that was a known for economists and analysts that sweat over forecasts, yet the optimism was again too excessive. Is there a trend here, Q3 2014 GDP +5.0%, Q4 +2.2%, now +0.2%? Before this year, first-quarter GDP growth had averaged 0.6% since 2010 and 2.9% for all other quarters. Back to the drawing boards, immediately after the report a number of comments that were blamed on the soft growth. Consumer spending in the quarter declined 1.9%; consumers account for 70% of GDP growth. Fixed investments that include spending on software, research and development, equipment and structures--retreated at a 3.4% rate, compared with a 4.7% rise in the fourth quarter. Most all the growth in the quarter was in inventory builds, +0.74% of the total. The advance report is generally revised when the preliminary report hits the next month; some of the third month in the quarter data is missing. The deflator (inflation) dropped 0.1% against +0.5% expected.

The reaction was not what you might expect; the 10 yr note started the session at 2.02% prior to the 8:30 data; the last time the 10 was at that level was at the last FOMC meeting. One reason for interest rates increasing recently is the dollar has weakened taking a little incentive away frm foreign investors. The dollar fell to a two-month low after this morning’s GDP data; the dollar has been weakening against the euro currency the last month.

The European Commission’s economic sentiment index—a measure of business and consumer confidence—fell for the first time in five months, to 103.7 in April from 103.9 in March; it is still above 100 its longer term average. Investors turning toward Europe as thoughts that the worst is behind the region. Greece’s deepening debt crisis could restrain the broader Eurozone recovery unless some deal can be cobbled together to keep the country in the EU. Reading a few comments frm EU analysts suggests Greece could default and still remain in the EU.

Huge selling yesterday and today in the rate markets. The 10 yr, after 30 days in the range of 1.99% to 1.86%, blew out this morning generating additional selling. In the past we noted that once that range broke the initial reaction would be either strong buying or strong selling. Technical trading was dominant yesterday and early this morning. Fundamentally, foreign buying has slowed as the dollar declines. The weakness in Q1 didn’t faze the selling this morning. The 10 yr rate hit 2.09% up 9 bps, MBS prices -40 bp frm yesterday’s 46 bp decline.

At 9:30 the DJIA opened -60, NASDAQ -23, S&P -6. 10 yr recovering a little at 2.04% +4 bps after trading 2.09%. 30 yr MBS price at 9:30 -20 bps after -40 earlier. Most pricing this morning reflects the worst levels this morning.

 Interest rates also jumped this morning in Europe; Germany’s 10 yr bund yield up 9 bps to 0.27% its rate has doubled in the last three sessions; the increase occurred prior to the US GDP data this morning; a very weak 5 yr auction likely part of the cause. Euro growth is gaining momentum. Europe and the US seeing a sizeable increase in rates in the last 24 hours;

At 10:00 March pending home sales; on target up 1.1% frm Feb and +11.1% yr/yr. Earlier this morning weekly MBA applications declined 2.3% after increasing 2.3% the previous week; purchases unch while refinances -4.0%.

More to come today; at 1:00 Treasury will sell $29B of 7 yr notes, with the current increase n rates it should be met with good demand; if not markets will expect more rate increases.

2:00 pm FOMC meeting, the policy statement will be released.

 The trading this morning is about what we had ahead of the March FOMC meeting. Technicals all bearish now with MBSs and the 10 yr note testing their respective 100 day averages. There have been only two times the 10 has breached its 100 day since last September, each time after a few sessions rallies drove the 10 back below it. Europe and the US in the middle of monthly buying on auctions frm governments; the U.K. auctioned 10-year Gilts at a yield of 1.88%, Italy auctioned 10-year BTP's at a yield of 1.40%, and Germany held a 3.274B euro 5-year auction that was met with weak demand. This current selling is overdone, there is no real change in the near term outlooks, how markets react this afternoon is key.

PRICES @ 10:15 AM

10 yr note:                    -10/32 (31 bp) 2.04% +4 bp

5 yr note:                     -5/32 (15 bp) 1.43% +4 bp

2 Yr note:                    -1/32 (3 bp) 0.57% +1 bp

30 yr bond:                  -33/32 (103 bp) 2.76% +7 bp

Libor Rates:                1 mo 0.181%; 3 mo 0.279%; 6 mo 0.407%; 1 yr 0.701%

30 yr FNMA 3.0 May:  @9:30 101.64 -20 bp (-46 bp frm 9:30 yesterday)

15 yr FNMA 3.0 May:  @9:30 104.52 -21 bp (-26 bp frm 9:30 yesterday)

30 yr GNMA 3.0 May:  @9:30 102.50 -14 bp (-52 bp frm 9:30 yesterday)

Dollar/Yen:                 119.04 +0.18 yen

Dollar/Euro:               $1.1017 +$0.0090

Gold:                         $1208.90 -$5.00

Crude Oil:                  $57.15 +$0.09

DJIA:                         18,037.40 -72.74

NASDAQ:                  5037.31 -18.12

S&P 500:                   2106.25 -8.51

0 Comments

Money Saving Tips

4/28/2015

0 Comments

 
There are many ways to save money. Sometimes it's just making many small changes that will result in a much larger outcome. A few that I really like are:

1. Call your credit card company and ask for a rate reduction.
2. One persons junk is another's treasure. Sell items you no longer use and make some extra cash.
3. Create a visual reminder of your debt. This will help you visualize your progress and keep you focused.
4. Save all your change. Get a piggy bank and put all your excess change in it eventually you will be surprised on how much you can save.

For tips like these and more check out this article "Little Steps: 100 Great Tips For Saving Money For Those Just Getting Started."
0 Comments

Market Update

4/28/2015

0 Comments

 
More inital selling this morning after prices slipped yesterday. Preparing for tomorrow’s FOMC policy statement. The 10 at 9:00 1.954% +2.5 bps, 30 yr MBS price -20 bps frm yesterday’s close. Feb Case/Shiller 20 city home price index expected +4.8% hit at +5.0% yr/yr and +0.9% frm January against expectations of +0.7%; extending its best performance since late 2013. Old data and we generally don’t put much emphasis on the report, nevertheless a positive for the housing sector. While we don’t put it on the top of the last, the announcement added additional pressure on MBS prices.

 The UK released its Q1 GDP this morning; at +0.3% was the softest expansion since Q2 2012. GDP was half of what Q3 was; estimates were for +0.5%.

 Greece’s Prime Minister is said to have been beaten up in closed door meetings in Latvia. Finance ministers said Varoufakis’s handling of the talks was irresponsible and accused him of being a time-waster, a gambler and an amateur, a person familiar with the conversations said, asking not to be named because the discussions were private. The Dutch chairman of the euro-zone finance chiefs’ group said “It was a very critical discussion and it showed a great sense of urgency around the room,” he said at a press conference after the meeting. Asked if there was any chance of a partial disbursement, he said, “The answer can be very short: No.” Reporting on Greece/EU talks is increasingly more like a soap opera. The governing council is due to discuss the matter on May 6, according to two people with knowledge of the talks.

 All focus in the bond and mortgage markets today is on tomorrow’s FOMC policy statement. The market has changed the outlook for a June increase in the FF rate, now thinking is a September lift off. Guessing on the timing is based on incoming economic reports, so the estimate of when should not be anything more than a momentary view. The weak Q1 GDP (the first look tomorrow at 8:30) is being discounted on weather conditions in the quarter that slowed spending and business expansion. However the statement is framed it isn’t going to be anything surprising; look for about the same statement issued after the March meeting.

 At 9:30 the DJIA opened +35, NASDAQ -2, S&P +1. 10 yr 1.95% +2 bps, 30 yr FNMA 3.0 coupon -14 bps frm yesterday’s close and 19 bps lower than at 9:30 yesterday.

 At 10:00 April consumer confidence from the Conference Board, expected at 103.0 frm 101.4, dropped to 95.2, the lowest index this year. There was no reaction on the soft confidence but the decline won’t go unnoticed at the FOMC meeting. April Richmond Fed manufacturing index -3.0 frm -8.0 in March; two months of decline not seen since 2014, it too won’t get initial reaction. It is all about tomorrow. Again though it is another weaker than expected report, forecasts were for -2.0.

 Yesterday Treasury sold $26B of 2 yr notes in what was described as a modest auction in terms of demand, demand was stronger than last month’s 2 yr but was weaker compared against the last 12 auction averages. Tis afternoon at 1:00 Treasury will sell $235B of 5s, a more significant auction; tomorrow $29B of 7s one hour prior to the FOMC policy statement.

 Still stuck in the range that has held now for 29 sessions. Like that spring we mention frm time to time, coiling tighter and tighter. Whatever way the 10 and MBS break out it will be swift and a large move. Global economic conditions, the US economy based n Q1 data weak, but discounted presently. Until April data flows the general consensus frm Wall Street is onward and upward for stocks and interest rates.

PRICES @ 10:15 AM

10 yr note:                    -4/32 (12 bp) 1.94% +1 bp

5 yr note:                      -2/32 (6 bp) 1.35% +1 bp

2 Yr note:                      unch 0.54% unch

30 yr bond:                  -15/32 (47 bp) 2.64% +3 bp

Libor Rates:                1 mo 0.181%; 3 mo 0.279%; 6 mo 0.408%; 1 yr 0.705%

30 yr FNMA 3.0 May:  @9:30 102.16 -14 bp (-19 bp frm 9:30 yesterday)

15 yr FNMA 3.0 May:  @9:30 104.78 -13 bp (-6 bp frm 9:30 yesterday)

30 yr GNMA 3.0 May:  @9:30 103.02 -17 bp (-16 bp frm 9:30 yesterday)

Dollar/Yen:                 119.02 -0.20 yen

Dollar/Euro:               $1.0945 +$0.0054

Gold:                          $1202.00 -$1.20

Crude Oil:                  $57.10 +$0.11

DJIA:                         17,948.35 -89.62

NASDAQ:                  5011.88 -48.36

S&P 500:                   2095.63 -13.29

0 Comments

Market Report

4/27/2015

1 Comment

 
Bonds and MBSs opened weaker this morning (price); Friday the 10 yr note yield declined 4 bps to 1.92% and improved the near term technical outlook. Looking for any bright spot, however the rate markets are well-contained in tight trading ranges; until the ranges are breached our models are best described as neutral. The 10 as noted Friday in a 8 bp range the last 28 sessions (1.86% to 1.94% closing). MBS prices also in a very narrow range tracking the 10 yr note.

This week the main sport event is Pacquiao/Mayweather; the main  financial event, the FOMC policy statement; the fight on Saturday night, FOMC at 2:00 Wednesday afternoon. Treasury will start it’s bi-weekly auctions today with $26B of 2s at 1:00 pm. There are no major data points today. No real changes over the weekend in Greece/EU attempts to work out a deal to get funds to save it frm default. Weekend polls showed a majority of the country’s people (Greeks) want the government to make compromises needed to release funds for its economy. The government is hoping deposits of local governments, cities and other funds to meet end-of-month payments of over 1.5 billion euros ($1.62 billion) after euro-area finance ministers on Friday said they won’t disburse more aid until bailout terms are met. The Greek prime minister re-thinking is election pledge as citizens want Greece to stay in the EU.

Greek news should not be taken at face value, too much day to day changes but Europe’s stock markets did better because on the momentary news. The Stoxx Europe 600 Index added 0.9% to 412 at 8:06 p.m. US time. .

US stocks opening better this morning; the bond and MBS markets began under a little pressure; at 9:00 the 10 +1 bp while 30 yr FNMAs -5 bp frm Friday’s close. At 9:30 the DJIA opened +92, NASDAQ +14, S&P +6; 10 yr note 1.93% +1 bp; 30 yr MBS price -6 bps frm Friday’s close and +10 bp frm 9:30 Friday morning. This week there are a number of key economic reports but the FOMC policy statement on Wednesday afternoon is at the top of the list. Once the statement is reported, Thursday and Friday’s data will increase focus on the policy statement in the context of the data. Q1 advance GDP on Tuesday is expected up just1.0% frm +2.2% growth in Q$ 2014. The advance report is usually revised the following month when the preliminary read is reported; the advance report lacks some the data from the third month in the quarter. Treasury auctions recently haven’t garnered the demand in 2014, demand bidding (bid/cover) will be a major focus.

Technicals are neutral presently;

the 28 day trading range in treasuries and MBSs hasn’t moved interest rates since early March. Our outlook remains constructive but data dependent. Technically our work’s longer view remains bullish but as we have said recently the degree of bullishness currently is best described as neutral.



PRICES @ 10:10 AM
10 yr note:                  -10/32 (31 bp) 1.95% +3 bp
5 yr note:                    -6/32 (18 bp) 1.36% +4 bp
2 Yr note:                   -1/32 (3 bp) 0.53% +2 bp
3
0 yr bond:                 -20/32 (63 bp) 2.64% +3 bp
Libor Rates:               1 mo 0.181%; 3 mo 0.277%; 6 mo 0.408%; 1 yr 0.706%
30 yr FNMA 3.0 May: @9:30 102.34 -6 bp (+10 bp frm 9:30 Friday)
15 yr FNMA 3.0 May: @9:30 104.84 -8 bp (-2 bp frm 9:30 Friday)
30 yr GNMA 3.0 May: @9:30 103.17 -14 bp (+4 bp frm 9:30 Friday)
Dollar/Yen:                119.38 +0.39 yen
Dollar/Euro:              $1.0867 -$0.0006
Gold:                         $1184.90 +$9.90
Crude Oil:                 $57.47 +$0.32
DJIA:                        18,143.90 +63.76
NASDAQ:                 5116.38 +24.30
S&P 500:                  2123.95 +6.26

1 Comment

Market Update

4/21/2015

0 Comments

 
Tuesday, April 21, 2015 10:30 AM

No movement again early this morning in the bond and MBS markets but losing some ground at 9:30. The 1.86% 10 yr wall has held since March 24th, no additional improvement but equally no selling. Greece is in the headlights; after a few months of not much interest in Greece markets are now fully focused on Greek debt discussions with varying fears and concerns. Another critical meeting set for Friday, the government looking under every rock to find more money ordering local governments to transfer funds to the central bank will keep the country afloat until the end of May. The new Greek government an anti-austerity coalition government has repeatedly expressed confidence that a deal to free bailout disbursements was imminent, however so far they appear to be fooling themselves as the IMF and EU officials are not nearly so confident. The ultimate question is, if Greece defaults and has to exit the EU will it lead to more EU countries defaulting and leaving, destroying the EU as currently constructed. The European Central Bank is studying measures to rein in emergency funding for Greek banks as resistance to further aiding the country’s stricken lenders grows among policy makers, people with knowledge of the discussions said.

There are no data points again today. The bond and mortgage markets opened flat again while early trading in US stock indexes pointed to another positive open this morning. Q1 earnings also in play with most reports so far as good or better than expected. In the old normal the bond markets would be pressured on improving stocks; these days with global economic issues somewhat trumping the domestic conditions the bond market isn’t seeing any selling as investors continue worrying over world economic events. China in the last two market days caused additional confusion with two announcements; Friday opening the door to make it easier for investors to short their stock markets on concerns a bubble may be forming. Yesterday lowering bank reserve requirements to push more lending to consumers and businesses.

The Fed also in play for investors attempting to handicap when the Fed will begin increasing interest rates. When is the guessing game; not in June in our view and possibly no increase this year pending the economy’s performance in the next two months. Even when the Fed starts Fed officials including Yellen have made in clear (as clear as the Fed can) that the pace of increase will be slow; meaning the Fed isn’t about to raise the FF rate at each successive meeting after it starts. Yesterday William C. Dudley stressed  that once they start to lift rates above zero, “we will simply be moving from an extremely accommodative monetary policy to one that is only slightly less so.” Last week Atl. Fed President Dennis Lockhart saying, “I would lean to a little later versus a little earlier.” The timing and pace of increases depends entirely on economic performance and inflation expectations; all the talk and all the forecasts depend solely on those two things.

 The DJIA opened +65, NASDAQ +36, S&P +9. 10 yr at 9:30 1.90% +1 bp, 30 yr MBS price -6 bps. By 10:00 the stock indexes lost some of the opening gains.

 The 10 and 3.0 FNMA coupon still hanging tough in their respective ranges. Our work is continuing to hold slightly bullish patterns however each day with no improvements at these levels becomes increasingly more concerning. Patience is needed now, as long as the 10 holds at 1.92% on selling the potential remains positive, a move above that rate would change our momentary bullish outlook. The last week the bond market has been influenced more by global news rather than domestic data; tomorrow March existing home sales and Thursday March new home sales will turn traders inward to US economic news. Take a minute or two and look at the charts above, pictures worth a lot more than of my words.

0 Comments

August 15 Brings Longer Escrows

4/20/2015

0 Comments

 
Important Information for AGENTS to Read!!

We are seeing some big changes coming soon to the mortgage market.
Realtors are being urged to write longer contracts to accommodate this new rule:  what was a 30 day escrow, will take 45 days;  what was a 45 days will take 60, etc.

Read the below article to understand some of the changes that are coming our way.

http://www.inman.com/2015/04/18/come-august-there-will-be-a-new-roadblock-to-closing-a-deal-on-a-house-2/
0 Comments

Market Update

4/20/2015

0 Comments

 
Friday the stock markets around the world took big hits; the DJIA down 279, Nasdaq -76. China made it easier to short their stock market in an effort to slow speculation, Greece back in play on comments frm Christine Lagarde that she isn’t interested in any extensions unless Greece increases its austerity programs. Nothing however has changed for trading US stocks; for months now any day when the key indexes decline in big swings the following day the market rallies. Traders have to love it, wait for a major sell-off then buy on the close, the next trading day will be an up day. This morning the key indexes are stronger at 8:00.

 The 10 fell to its resistance level on Friday at 1.86% down 4 bps frm Thursday; we thought this morning the note would continue lower and break out of the three week plus trading range. Not the case, the 10 traded up 1 bp to 1.87%. MBS prices on Friday didn’t improve much closing the day 9 bps better on the day. MBSs also locked in narrow ranges unable to exit.

Over the weekend, talks between the government and the institutions overseeing the Greek bailout took place in Paris. Negotiations have so far yielded little in terms of progress and European officials have cautioned that discussions between the two sides are nowhere near the point where bailout money can be disbursed. Chinese officials over the weekend made an attempt to cool the negativity that exploded last week by lessening the reserve requirements of banks hoping that would spur increased lending. The decision to lessen reserves in a sense counters Friday’s news that the government made it easier to short the Chinese markets, a move to calm global markets. It was the second in less than three months and the largest in magnitude since the 2008 financial crisis.

 Today Europe’s equity markets recovering a little from Friday’s selling; Hong Kong suffered their largest one-day tumble this year on Monday and trading volumes in Shanghai jumped to a fresh record, as reassurance from Beijing over the country’s slowing economy failed to persuade investors.

 This week’s trading should be focused on global markets; China and Europe. US earnings also will be in play, so far 75% of earnings reported have been better than estimates. Only three economic reports but all of the them have the potential of moving US market outlooks; March existing and new home sales and March durable goods orders.

 The DJIA opened +160, NASDAQ +30, S&P +14. The 10 at 9:30 1.87% +1 bp, 30 yr MBS price +2 bp frm Friday’s close and +11 bps frm 9:30 Friday morning.

 

This Week’s Calendar:

         Wednesday,

             7:00 am MBA mortgage applications

             9:00 am Feb FHFA home price index (+0.6%)

            10:00 am March existing home sales (+4.5% to 5.045 mil frm 4.88 mil)

        Thursday,

            8:30 am weekly jobless claims (-8K to 286K)

            10:00 am March new home sales (-3.9% to 517K frm 539K)

        Friday,

           8:30 am March durable goods orders (+0.5% frm -1.4% in Feb; ex transportation orders +0.3% frm -.06%)

 

Debate within Europe and the US whether the EU and IMF will let Greece default and eventually leave the EU will be in play. If Greece leaves the EU what are the downside repercussions? Will the debt issues spread to other southern Europe countries and cascade into more defaults then threaten the very existence of the EU? Safety moves should push investors toward US treasuries with our interest rates substantially higher than other safe sovereigns. In the end we expect Greece will not leave, the possibility of other debt ridden countries leaving while remote is  too great to bet on the end of Greece.

We floated over the weekend, not much benefit; thought there was a better risk that the US 10 would finally break below 1.86%; so far it hasn’t happened. Expecting two strong down days in the US stock markets continues to be wishful rather than possible. How many times in the last two months have the key indexes had triple digit moves lower (on the DJIA) only to encourage buying on any dips. Both MBS prices and the 10 yr treasury are at critical pivots, the 10 at 1.86% and FNMA 3.0 coupon at 102.63 (at 10:00 102.54). We expect the 10 will break lower but the longer it holds it lessens our enthusiasm . Friday afternoon we said if the 10 yield does break it will drop to 1.70% and MBS prices would decline 200 basis points, a freshman brain fade, MBS price would increase 200 bps.

 PRICES @ 10:00 AM

10 yr note:                   +1/32 (3 bp) 1.86% unch

5 yr note:                     +1/32 (3 bp) 1.30% unch

2 Yr note:                     +1/32 (3 bp) 0.50% -1 bp

30 yr bond:                  -10/32 (31 bp) 2.53% +2 bp

Libor Rates:                1 mo 0.180%; 3 mo 0.275%; 6 mo 0.402%; 1 yr 0.691%

30 yr FNMA 3.0 May:  @9:30 102.55 +2 bp (+11 bp frm 9:30 Friday)

15 yr FNMA 3.0 May:  @9:30 104.92 +5 bp (+13 bp frm 9:30 Friday)

30 yr GNMA 3.0:         @9:30 103.61 +8 bp (+12 bp frm 9:30 Friday)

Dollar/Yen:                119.05 +0.15 yen

Dollar/Euro:               $1.0745 -$0.0061

Gold:                         $1195.60 -$7.50

Crude Oil:                  $55.54 -$0.20

DJIA:                         18,039.10 +212.80

NASDAQ:                  4970.79 +38.97

S&P 500:                   2098.30 +17.12

0 Comments

Market Report

4/17/2015

0 Comments

 
It happened again this morning; the 10 yr note at 7:00 am this morning traded down to 1.86% then stalled on CPI data at 8:30. CPI increased 0.2% as expected but the core also was +0.2%, higher than 0.1% expected; yr/yr CPI unchanged however the core yr/yr +1.8%. By 9:00 the 10 was unchanged from yesterday at 1.90%. Yesterday Stanley Fischer, Vice Chair of the Fed said he sees inflation moving closer to the 2.0% but also led with concerns about the economic growth. “The inflation rate was coming up reasonably well, and I think most of us thought we were going to get to 2% quite soon, possibly by next year,” Mr. Fischer said. But, he said, inflation was pushed down by falling gasoline prices, and also restrained by a stronger U.S. dollar.

 Data for March and February are coming in weaker than expectations increasing the view the Fed will not increase rates in June. Looking at all of the recent comments frm numerous Fed officials there is no consensus and together the back and forth opinions are keeping markets on edge. No movement for three weeks at the long end of the curve, the 10 1.98% to 1.86%. MBS prices in a 80 bp price range. No firm consensus frm all of the speeches but one thing is constant in all of the opinions; the Fed won’t begin increasing rates until the incoming economic news begins to turn more positive. So far this year most sector reports have been less than what economists and the Fed had expected. Weather still a scape goat but that will change when new measurements are gathered, no weather excuses. Back in Dec Yellen set the table for June as a target for the first increase, since then the economy has softened more than the Fed thought it would so June stuck in markets’ minds but it will not happen in June.

 The DJIA opened -172, NASDAQ -44, S&P -13. 10 yr 1.90% unchanged, 30 yr MBS price -8 bp frm yesterday’s close and -3 bp frm 9:30 yesterday.

 US stocks following markets in China and Europe. Chinese regulators saying its markets are becoming too frothy, opening the two exchanges making it easier to short Chinese markets. The  China Securities Regulatory Commission, warned small investors, who have been big drivers of the rally, not borrow money or sell property to buy stocks, ratcheting up its rhetoric about the market. “Margin business has been growing rapidly but short-selling business has been developing slowly,” a statement from the exchanges said.

 Greece moving closer to default. Yesterday Christine Lagarde commented that she isn’t going to relent on Greece’s austerity movement to increase more help for the country. Creditors are losing hope that Athens will do what is needed to unlock bailout funds before it runs out of money, and Greek government bond prices plunged as concerns rose about default and an exit from the Eurozone. Investors keeping an eye on the situation. Greece has been on the verge of default and exiting the EU for over a year, but it is still there even with all the saber rattling from the IMF, ECB and Germany’s leaders.

 The U. of Michigan consumer sentiment index expected at 95 frm 93 at the end of March; the index increased to 95.9. March leading economic indicators expected +0.3% was up 0.2% and Feb was revised from +0.2% to +0.1%.

 No safe haven moves into the arms of US treasuries even with equity markets trading lower hear and around the world. I realize it gets boring to hear the same stuff everyday but anytime the 10 yield falls to 1.86% in the last three weeks the door has closed. No matter other global and domestic news and events buying dries up at 1.86%. Our work is still bullish based on our models and key technical readings; that said, we won’t add new buying in the bond or MBS markets until the 10 breaks out and moves below 1.86%. 

PRICES @ 10:10 AM

10 yr note:                   +2/32 (6 bp) 1.89% -1 bp

5 yr note:                     unch 1.30% unch

2 Yr note:                    unch 0.50% unch

30 yr bond:                  +14/32 (44 bp) 2.55% -2 bp

Libor Rates:                1 mo 0.180%; 3 mo 0.274%; 6 mo 0.401%; 1 yr 0.692%

30 yr FNMA 3.0 May:  @9:30 102.45 -8 bp (-3 bp frm 9:30 yesterday)

15 yr FNMA 3.0 May:  @9:30 104.83 -4 bp (+3 bp frm 9:30 yesterday)

30 yr GNMA 3.0:        @9:30 103.48 +5 bp (+13 bp frm 9:30 yesterday)

Dollar/Yen:                119.00 -0.02 yen

Dollar/Euro:              $1.0773 +$0.0012

Gold:                         $1202.10 +$4.10

Crude Oil:                  $56.18 -$0.53

DJIA:                        17,838.31 -267.46

NASDAQ:                 4934.19 -73.60

S&P 500:                  2081.66 -23.33

0 Comments

    Categories

    All
    DIY
    FHA
    Holiday Tips
    Market Update
    Money Tips
    Monthly Newsletter
    Mortgage Knowledge
    Mortgage News
    Mortgage Programs
    Reverse Mortgage
    Seller Information
    VA

    Archives

    September 2021
    May 2021
    April 2021
    May 2020
    April 2020
    March 2020
    August 2018
    March 2018
    January 2017
    December 2016
    November 2016
    October 2016
    August 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    February 2015

    View my profile on LinkedIn

Our Services

Purchase Loans
Refinance Loans
Pre-approvals

Company

About Us
Contact Us
Our Blog

Support Page

FAQs
Mortgage Glossary
Mortgage Calculator
Property Tax Information
Credit Information
Useful Links
Property Search

Contact Us

Picture

Effective Mortgage Company BRE# 01264208 NMLS # 252973