News for Prescott AZ - AmericanTowns.com

Tuesday, December 29, 2009

Weekly Rate Lock Advisory

Rate Lock Advisory - Sunday Dec. 27th



This week brings us the release of only one piece of economic data that is considered important to mortgage rates in addition to two important Treasury auctions. It is another holiday-shortened week with the New Years Day holiday Friday, so the data may have a heavier impact on trading than usual if it varies from forecasts by much. The bond market will close early Thursday and remain closed Friday as it did last week. With that type of schedule, many traders will not be working the latter part of the week, so any unexpected news or data may lead to a larger than usual reaction in the markets.

There is no relevant news scheduled for release tomorrow. Look for any significant changes in stocks to drive bond trading and mortgage rates. If the major stock indexes remain fairly calm, it is possible that bond prices and mortgage rates may follow suit.

The first important release comes late Tuesday morning when the Conference Board will post its Consumer Confidence Index (CCI) for December. This is a pretty important release because it measures consumer willingness to spend. If consumers are more confident in their personal financial situations, they are more apt to make large purchases. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely by market participants and can have a significant influence on mortgage rate direction. Current forecasts are calling for an increase in confidence from November's reading of 49.5. Analysts are expecting Tuesday's release to show a reading of 53.0. The lower the reading, the better the news for bonds and mortgage pricing.

This week also has Treasury auctions scheduled the first three days. The two that are most likely to influence mortgage rates are Tuesday's 5-year and Wednesday's 7-year Note sales. If those sales are met with a strong demand, particularly Wednesday's auction, bond prices may rise during afternoon trading. This could lead to improvements to mortgage rates shortly after the results of the sales are posted at 1:00 PM ET each day. But a lackluster investor demand may create bond selling and upward revisions to mortgage rates.

The bond market will close at 2:00 PM ET Thursday and all of the U.S. financial markets will be closed Friday in observance of the New Year's Day holiday. They will reopen for regular hours next Monday morning.

Overall, as we saw last week, a shortened trading week by no means translates into calmness. The thin trading often creates larger than usual fluctuations in the major indexes. Despite last week's shortened schedule, we saw plenty of movement in mortgage rates. This week likely will be the same as investors look to make year-end adjustments to their portfolios. Accordingly, I recommend keeping in contact with your mortgage professional if still floating an interest rate and closing in the immediate future.

If I were c onsidering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

 

This is not the opinion of Brad Bergamini, Realty Executives Northern Arizona or any of its affiliates.  This post is for informational purpose only and is not guaranteed and does not render as legal advice.  Buying and selling Real Estate in Arizona or Prescott Arizona is a serious task and should be consulted with personally with Realtor or Real Estate Attorney.  Please visit my website for contact information

http://bradbergamini.com

 

 

>> Market Update

 



 

>> Market Update 

INFO THAT HITS US WHERE WE LIVE  Last week presented us with divergent housing news. First, November Existing Home Sales came in UP 7.4%, at an annual rate of 6.54 million. This was way ahead of estimates and a 44.1% sales jump over a year ago. We had increases in all regions of the country, all due to single-family homes.

The median price went up to $172,600, down 4.3% from a year ago, but a big improvement from January, when prices were off 17.5% from the prior year. The supply declined to 6.5 months, as inventories fell to 3.52 million, their lowest level since December 2006. In the past three months, Existing Home Sales are up 28.5%. One more sign of housing market recovery came in a report that prices for homes financed with conforming mortgages increased 0.6% in October.

Now for the news in the other direction. November New Home Sales fell 11.3%, to an annual rate of 355,000. But November was an unusual month, with uncertainty over the tax credit slowing things down. New Home Sales are still UP 7.9% from January and inventories dropped in November to 235,000. This is the lowest level since 1971 and a 58.9% decline from the mid-2006 inventory peak. So even at this slower sales pace, experts feel home building will have to increase over the next few months to meet the demand that's out there.

>> Review of Last Week

UP WE GO... Four days of trading saw gains in the Dow of 85, 50, 1.5 and 53 points. These amounted to a weekly gain of almost 2%, a strong move up. The other major indexes went up even more and all hit new 52-week highs, so some observers think we may be off on another bull run. Inspiring investor confidence were some good economic data points. 

Tuesday, real growth in Q3 GDP was revised to a +2.2% annual rate from the previous +2.8% estimate. This was fine with investors, who saw that most of the downward revision was from lower inventory figures, which they feel should boost growth estimates for Q4. Hey, last January, the consensus forecast was only a +1.2% growth rate for Q3 GDP and +2% for Q4. And the odds were still 45% that the recession would last through the end of the year.

Wednesday, November Personal Income was up for the eighth month in a row, while the PCE inflation reading was up less than expected. The personal saving rate is at 4.7%, averaging 4.6% for the last 12 months. (It was less than 1% in early 2008!) The short week ended with an early Christmas present for the economy. Core capital goods shipments were up three months in a row, after October's 0.3% decline was revised to a strong 1.5% rise. Some economists now feel real GDP growth may come in at a +5% annual rate for Q4!

For the week, the Dow was UP 1.9%, to 10520.10; the S&P 500 was UP 2.2%, to 1126.48; while the Nasdaq was UP 3.3%, to 2285.69.


As stocks continued their upward moves, bonds prices dropped for the week. Adding to the downward price pressure, investors are feeling the economic recovery is taking hold and now worry about longer-term inflation. The FNMA 30-year 4.5% bond we watch ended the week down 141 basis points, closing at $99.81. Mortgage rates inched up for the third straight week, but still remain at historically low levels.

>> This Week’s Forecast

A QUIET WEEK FOR SANTA CLAUS... The four days leading up to New Year's are slim on economic news. Consumer Confidence looks at our mindset and the Chicago PMI gauges manufacturing, on the mend for several months now. The big thing to look for is a "Santa Claus Rally" sending stocks northward to finish the year. Stock and bond markets will be closed Friday for the holiday.

May you and yours enjoy a healthy, prosperous and Happy New Year!

>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of December 28 – January 1

 Date

Time (ET)

Release

For

Consensus

Prior

Impact

Tu
Dec 29

10:00

Consumer Confidence

Dec

53.0

49.5

Moderate

W
Dec 30

09:45

Chicago PMI

Dec

55.1

56.1

HIGH

W
Dec 30

10:30

Crude Inventories

12/25

NA

–4.84M

Moderate

Th
Dec 31

08:30

Initial Unemployment Claims

12/26

465K

452K

Moderate

Th
Dec 31

08:30

Continuing Unemployment Claims

12/19

NA

5.076M

Moderate

 

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months. With last week's benign inflation readings and revised Q3 GDP growth, experts feel the Fed will hold to their commitment to keep rates low for an extended period. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

After FOMC meeting on:

Consensus

Jan 27

0%–0.25%

Mar 16

0%–0.25%

Apr 28

0%–0.25%


Probability of change from current policy:

After FOMC meeting on:

Consensus

Jan 27

     1%

Mar 16

     5%

Apr 28

    11%

 

 

This is not the opinion of Brad Bergamini, Realty Executives Northern Arizona or any of its affiliates.  This post is for informational purpose only and is not guaranteed and does not render as legal advice.  Buying and selling Real Estate in Arizona or Prescott Arizona is a serious task and should be consulted with personally with Realtor or Real Estate Attorney.  Please visit my website for contact information

http://bradbergamini.com

 

 

Monday, December 07, 2009

Smart Mortgage Update

 

Effective December 12, Fannie Mae is lowering their maximum allowable debt to income ratio for borrowers.  Their current 55% maximum will be lowered to 45%.  A debt to income ratio is determined by taking a borrowers monthly debt (PITI mortgage payment + Auto Payments + Student Loan payments + Minimum payment on credit cards) divided by their Pre-Tax monthly income.  A borrowers monthly income is still determined by underwriting rules.  Bonus/Commission/Overtime require a 2 year average and Self Employed/1099 borrowers base income on their tax returns (usually the Adjusted Gross Income).  Also, Fannie will no longer allow fico scores under 620 regardless of any other loan factors.

 

 

This is not the opinion of Brad Bergamini, Realty Executives Northern Arizona or any of its affiliates.  This post is for informational purpose only and is not guaranteed and does not render as legal advice.  Buying and selling Real Estate in Arizona or Prescott Arizona is a serious task and should be consulted with personally with Realtor or Real Estate Attorney.  Please visit my website for contact information

http://bradbergamini.com

 

 

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