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Monday, July 19, 2010

Inside Lending Newsletter From Theron Wall

 

Inside Lending from Theron Wall

visit my website     email me now

Theron Wall

Theron Wall
Branch Manager
3615 Crossings Dr, Suite A
Prescott, AZ 86305
Phone: (928) 778-7167
Mobile: (928) 533-7473
Fax: (928) 445-5308

Wallick & Volk Mortgage

For the week of July 19, 2010 – Vol. 8, Issue 29

>> Market Update 

INFO THAT HITS US WHERE WE LIVE  Some analysts feel the homebuyer tax credits artificially boosted the housing market by pushing forward home sales that would have happened later. Others feel most buyers would have bought anyway. In any case, there's now concern about a coming drop in sales. Well, June sales figures should still benefit from activity spurred on by the tax credits. And tax credit sales should even help monthly reports through September, now that buyers in contract on April 30 have been given until September 30 to close. 

Nonetheless, we ought to keep an eye on monthly Pending Home Sales, which track signed contracts that turn into sales a few months out. Even though we may have a sales dip after the tax credit, the fact remains that near historic low mortgage interest rates are getting people back into the market. These rates, combined with today's prices, have made homes more affordable than they've been in years, letting many buyers move up to better neighborhoods with more choices.

But buyers shouldn't wait. The National Association of Realtors chief economist sees the median home price rising nationally 2% to 3% this year. The NAR's CEO feels sales will pick up in the fall and that the down-cycle has run its course. The chief economist at Moody's Economy.com also believes the housing crash is nearly over. And we all know mortgage rates won't stay at their current levels indefinitely. In other words, this could be one of the best times to buy a home in decades.

>> Review of Last Week

UP AND DOWN... The stock market indexes were up nicely through Wednesday, continuing last week's rally, then slipped slightly on Thursday before plunging more than 261 points Friday. For the week, the declines hovered around 1%, not too bad considering the volatile atmosphere of the proceedings on Wall Street.

The problems Friday centered on a drop in the University of Michigan Consumer Sentiment number and soft top-line Q2 revenues from Bank of America, Citigroup, and GE, even though bottom-line earnings from these behemoths beat expectations. The big disappointment came from Google, which missed earnings estimates even though revenue grew a faster than expected 25% for the quarter. But Google was the ONLY major company reporting last week that did not BEAT earnings forecasts.

We also heard complaints about some of the economic data. The trade deficit increased in May, but exports are UP 21.0% in the past year. Yes, May retail sales were off half a percent, but the annual growth rate for retail in the last nine months remains a respectable 6.7%. The Producer Price Index (PPI) and Consumer Price Index (CPI) showed wholesale and consumer inflation down a tad in June. This got analysts fretting about deflation, but both PPI and CPI are actually up from a year ago.

Nonetheless, negative feelings prevailed, so for the week, the Dow ended down 1.0%, to 10097.90; the S&P 500 was down 1.2%, to 1064.88; and the Nasdaq was down 0.8%, to 2179.05.


As stocks slid, the bond market attracted a slew of investors on the proverbial flight to safety. Prices headed north, as the FNMA 30-year 4.0% bond we follow cruised UP 41 basis points for the week, ending at $101.91. Freddie Mac's weekly survey reported that national average rates for conforming mortgages remain at record low levels.

>> This Week’s Forecast

BACK TO HOUSING... Last week's tsunami of economic data lacked any info on the housing market. This week's reports make up for that, beginning with June Housing Starts and Building Permits on Tuesday. Starts are expected to be down slightly, with permits virtually flat. Thursday we'll see June Existing Home Sales, which may be down a bit. We'll also look at the Leading Economic Indicators (LEI) Index, which could be a tad off for the month.

Q2 corporate earnings reports continue, including: Amazon.com, AT&T, Caterpillar, Coca-Cola, Goldman Sachs, IBM, PepsiCo, and Texas Instruments.

>> 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 July 19 – July 23

 Date

Time (ET)

Release

For

Consensus

Prior

Impact

Tu
Jul 20

08:30

Housing Starts

Jun

570K

593K

Moderate

Tu
Jul 20

08:30

Building Permits

Jun

575K

574K

Moderate

W
Jul 21

10:30

Crude Inventories

7/17

NA

–5.06M

Moderate

Th
Jul 22

08:30

Initial Unemployment Claims

7/17

445K

429K

Moderate

Th
Jul 22

08:30

Continuing Unemployment Claims

7/10

4.600M

4.681M

Moderate

Th
Jul 22

10:00

Existing Home Sales

Jun

5.04M

5.66M

Moderate

Th
Jul 22

10:00

Leading Economic Indicators (LEI) Index

Jun

–0.4%

0.4%

Moderate

 

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months  According to just about every economist out there, the Fed will probably keep rates at super-low levels for the rest of the year, as inflation is expected to remain benign during that time. 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

Aug 10

0%–0.25%

Sep 21

0%–0.25%

Nov 3

0%–0.25%


Probability of change from current policy:

After FOMC meeting on:

Consensus

Aug 10

     <1%

Sep 21

     <1%

Nov 3

     2%

 

This e-mail is an advertisement for Theron Wall. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice, or a commitment to lend. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in the newsletter is the property ofWallick & Volk Mortgage and cannot be reproduced for any use without prior written consent. It is designed for real estate and other financial professionals only. It is not intended for consumer distribution. The material does not represent the opinion of Wallick & Volk Mortgage. BK 0018295


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Equal Housing Lender  

 

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 or http://everythingprescott.com

 

 

Smart Mortgage Update

 

"Refreshed Credit Reports" Required at Closing

 

Fannie Mae's new Loan Quality Initiative now requires that all lenders "Refresh" a borrower's credit report within 10 days of funding.  In the past, some lenders did this check and some did not.  A "refreshed" credit report will not count as an inquiry against the borrower's credit score but it will show new accounts, increased credit card balances, as well any new credit inquiries.  If any new items appear, the borrower will be required to provide written explanation and documentation before the loan may proceed.  If a new late payment or collection appears, the credit needs to be re-scored with the underwriting decision based on the new credit score.  Fannie Mae also requires that all lenders verify the borrowers employment within 10 days of funding. 

 

Interest Rates as of 7/16/2010

 

Rates based on a 200k Primary Residence Purchase (or a no cash out refinance), 720+ Credit, Full Doc Income Verification, paying one "point."  Please note, this information is intended for Real Estate Professionals.

 

80% 30 year Fixed = 4.375%
95% 30 Year Fixed = 4.375% (Requires PMI)
80% 15 Year Fixed = 3.875%
96.5% FHA 30 Year Fixed = 4.5% (Requires MI)
100% USDA/Rural 30 Year Fixed = 5.25% (No PMI required)
100% VA 30 Year Fixed = 4.75% (No PMI required)
80% 5 Yr ARM = 3.25%
70% 5 Yr Jumbo ARM up to $1M = 4.875%
80% 30 Year Fixed Jumbo up to $1M = 5.75%
Refinances up to 105% of appraised value are available

 

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

Economic Roundup: July 19, 2010

 

 


In the News

Retail sales saw a drop for June, according to advance estimates released by the Census Bureau last week. June retail sales, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $360.2 billion, the bureau said. This represented a 0.5 percent decrease from May, but was still 4.8 percent above June 2009 sales.
 
June's retail decline, the second consecutive monthly drop, was largely attributed to automotive sales, which were down 2.3 percent, and gasoline sales, which dropped 2 percent for the month.
 
"There looks to be sort of mild deceleration even into the month of July," Steven Wieting, managing director of economic and market analysis for Citigroup told the Washington Post. "All told, this is slowdown material."
 
That said, a drop in gas sales helped fuel respectable increases in some other retail categories. June enjoyed a 1.3 percent increase in electronics and appliance sales, and a 0.6 percent increase in clothing spending.
 
Meanwhile, the producer price index (PPI) for finished goods fell 0.5 percent in June, seasonally adjusted, the Bureau of Labor Statistics reported last week. June's decrease followed declines of 0.3 percent in May and 0.1 percent in April.
 
Prices paid by producers for intermediate materials, supplies and components decreased 0.9 percent in June, the first decline since July 2009, while crude goods dropped 2.4 percent.
 
Another notable drop was food prices, which fell 2.2 percent, marking the category's third straight decline. More than half of the June decrease can be attributed to prices for fresh and dry vegetables, which dropped 21.8 percent.
 
This week, watch the headlines for news on building permits (July 20) and housing starts (July 20) from the Census Bureau; initial jobless benefits claims (July 22) from the Employment and Training Administration; sales of existing homes (July 22) from the National Association of Realtors; and leading economic indicators (July 22) from the Conference Board.
 
 


Mark Ott

Loan Officer

W.J. Bradley Mortgage Capital Corp.

Office: 928-775-9330

NMLS: 189552

mark.ott@wjbradley.com

www.wjbradleyaz.com


Building a
Secure Future

 

Equal Housing Lender. 2010 W.J. Bradley Mortgage Capital Corp., 201 Columbine Street Suite 300, Denver, CO 80206. Phone #303-825-5670. Trade/service marks are the property of W.J. Bradley Mortgage Capital Corp. This is not a commitment to lend. Restrictions apply. All rights reserved. Some products may not be available in all states.

AZ License # BK-0903998; Licensed by the Department of Corporations under the California Residential Mortgage Lending Act RML# 4131002; To check the license status of your CO Mortgage Broker, visit www.dora.state.co.us/real-estate/index.htm; Florida Mortgage Lender license #ML.100000098; Georgia Residential Mortgage Licensee, License No. 20233; ID Mortgage Broker License No. MBL-2803; IL Residential Mortgage Licensee – License #MB.6760738, 201 Columbine Street, Suite 300, Denver, CO 80206; MI First Mortgage License No. FL0011392; Mississippi Mortgage Lender License #4298/2009; MN Residential Mortgage Originator License No. 20447094; NV Mortgage Banker License No. 2061; NV Mortgage Broker License No. 504; NM Mortgage Loan Company and Loan Broker Act Reg. No. 01856; OK Mortgage Broker- License No. MB001365; OR Mortgage Lender License No. ML-776; TN Mortgage Company Registration Certificate No. 3629; TX Mortgage Banker Reg. No. 74182; UT Mortgage Lender Company License No. 5495659-MLCO; Vermont Broker License #0995MB; Vermont Lender License #6141; WA Consumer Loan License No. CL-3233; Wisconsin Mortgage Banker License No. 699991..

 

 

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 - Solar Natural gas and Credit!

Well some really interesting news from AAR last week. Apparently solar panels are becoming a big problem in Phoenix! A very interesting issue is arising in Phoenix with homes that installed solar panels using a lease. As people dashed to take advantage of the government rebate for installing solar panels, many found that the install runs upward of $50,000 for an average home. So companies not wanting to miss out, came to the rescue offering lease options for solar panels.

The problem stems arises when these leases are placed as a lien ahead of the mortgage. This is a major no-no in financing. When the home is sold there are three options. The new owners can try and qualify to take over the lease. The sellers can take the panels with them, which would require major roofing repair. Or the lease can be paid off which would eat up a lot of equity(if there is any) from the sale.

Unfortunately, it may never get that far because Fannie Mae and Freddie Mac have decided not to accept loans with Solar panel leases. This means that should you own a home with leased solar panels, there may not be financing available home. There are roughly 1000 homes in Phoenix currently stuck in this situation. This will be an upcoming conversation.

 

New information for June on Credit. Twenty five percent of Americans have a credit score below 600. Many lenders currently will not look at credit scores below 620. As of June the average credit score for Americans was 668. There will be a credit crisis in business in the future. I can only see two possible outcomes. Either credit score acceptance is altered to accept lower credit(seems like we have been down that road already), or businesses will extend less offers for credit. My concern is the number of people continuing to slide into this category. This greatly reduces the number of people who will qualify to buy  homes. Finish this sentence for me, If a person does not have the credit or money to buy a home………

Ok, how many answered…”then they should not buy a home”? Well that was not the answer in 2006 and we are now paying for it. But keep an eye on banks as they need to sell off foreclosures and government as it needs to keep pushing the economy. This credit issue is on the rise!

 

Washington was taking a look at T. Boone Pickens natural gas bill last week. This could be a smart move for our country. We have an over 100 year supply of natural gas in this country. To put into perspective, if our natural gas reserves were measured and compared to barrels of oil, we have seven hundred billion barrels which is about 2.5 times more than Saudi Arabia has oil in their reserves. As some of you may know, I used to manage at Frito Lay. My entire area of Florida was using propane fueled delivery vehicles back in the late 80’s. From personal experience I can tell you, it works and works well. Motors took regular maintenance and the truck drove well. This is the solution to a lot of issues. Most of all putting Americans to work in the US! Working Americans equal home sales for you and I.

I hope you all have a great week and should you need help with a loan, please give me a call.

 

 

Dan Shaw

 

Peoples

 

928.710.9146 cell

928.441.6023  fax

dshaw@peoplesmortgage.com

LO-0914346

 

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

 

 

Weekly Rate Lock Advisory

 

Rate Lock Advisory - Sunday Jul. 18th



This week may be quite interesting for the bond market and mortgage rates. There are only three economic reports scheduled for the financial and mortgage markets to digest and none of them are considered to be of high importance to the markets. But in addition to the minimal economic data, we have two days of semi-annual congressional testimony by Fed Chairman Bernanke. The first day of testimony has the potential to influence changes to mortgage rates more than many of the monthly or quarterly pieces of economic data that we see regularly. Add in the fact that the 10-year Treasury Note again fell below, and closed under the benchmark 3.00% last week and we have bond market yields at a point of potential downward movement or an upward spike. This could be the week that we get that direction decided.

The first economic report of the week comes Tuesday morning with the release of June's Housing Starts. This data gives us an indication of housing sector strengt h, but is not considered to be of high importance. Analysts are currently expecting to see a decline in new home construction starts. However, I don't see this data having much of an impact on mortgage rates Tuesday unless it varies greatly from forecasts.

Fed Chairman Bernanke will speak before the Senate Banking Committee Wednesday and the House Financial Services Committee Thursday mornings at 10:00am ET. His testimony will be broadcast and watched very closely. Analysts and traders will be looking for the status of the economy and his expectations of future growth, particularly inflation concerns that will lead to changes in key short-term interest rates. This should create a great deal of volatility in the markets during the prepared testimony and the question and answer session that follows. If he indicates that inflation may become a point of concern, we will likely see the bond market fall and mortgage rates rise.




We usually see the most movement in rates during the first day of this testimony as the Chairman's prepared words for both appearances are quite similar to each other, meaning that the second day of testimony rarely gives us anything we did not hear during the first day. The general exception is something asked or answered during the Q&A portion of the second day's appearance.

The National Association of Realtors will post June's Existing Home Sales figures during late morning hours Thursday. This report gives us a measurement of housing sector strength and mortgage credit demand, but as with all of this week's data it is not considered highly important. Current forecasts are calling for a decline in sales from May's totals. A larger than expected drop in sales would be considered good news for bonds and mortgage rates because a weak housing sector would make it difficult for the economy to recover anytime soon. However, unless this data varies greatly from forecasts it pro bably will not cause much of a change in mortgage rates.

June's Leading Economic Indicators (LEI) at 10:00 AM will also be posted late Thursday. This Conference Board index attempts to measure economic activity over the next three to six months. While it is not a factual report, it still is considered to be of moderate importance to the bond market. It is expected to show a 0.4% decrease, meaning that we may see noticeable pullback in economic activity over the next few months. A larger decline in the index would be good news for the bond and mortgage markets.

Overall, this is a moderately significant week for the bond market and mortgage rates. If we get weaker than expected economic results and Chairman Bernanke's words do not negatively surprise the markets, we may see mortgage rates move lower for the week. However, if Mr. Bernanke's testimony raises concerns about rapid economic growth or inflation, rates may move higher on the week. I suspect we will see them move noticeably from current levels, which could be the base for more movement in the same direction over the next couple of weeks. Therefore, even though there is not a large number of relevant reports scheduled for release, don't underestimate the importance of this particularly week. This is especially true if still floating an interest rate.

If I were considering financing/refinancing a home, I would.... Float 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.

©Mortgage Commentary 2010

 

 

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, July 12, 2010

Weekly Rate Lock Advisory

Rate Lock Advisory - Sunday Jul. 11th



This week brings us the release of six important economic reports for the bond market to digest in addition to the minutes from the last FOMC meeting and two relevant Treasury auctions. Several of the economic reports are considered to be of high importance, meaning we will likely see volatility in the financial markets and mortgage pricing over the next several days. There are also some heavily watched corporate earnings releases scheduled for the stock markets this week that can influence bond trading and therefore, mortgage pricing.





The first data of the week is May's Goods and Services Trade Balance report early Tuesday morning, which measures the size of the U.S. trade deficit. This data is not considered to be of high importance to the bond market and will not likely have an impact on mortgage rates. However, if it does vary greatly from analysts' forecasts of a $39.5 billion deficit, we may see some movement in bond prices and possi bly a slight change in mortgage pricing.

The first of the two important Treasury auctions will be held Tuesday when 10-year Notes will be sold. That sale will be followed by a 30-year Bond auction Wednesday. These sales can influence market trading in bonds and possibly affect mortgage rates. If the sales are met with a strong demand from investors, particularly Tuesday's sale, we should see afternoon improvements in bonds that could lead to downward revisions to mortgage rates. However, if concern about the amount of debt that is being sold keeps buyers on the sidelines, we may see bonds fall after results are posted at 1:00 PM ET and mortgage rates move higher those days.

June's Retail Sales report will be posted early Wednesday morning. This data is considered to be of high importance because it measures consumer spending. Consumer spending makes up two-thirds of the U.S. economy, so any related data is watched closely. The Commerce Department is expected to say that sales at retail establishments fell 0.2% last month. A larger than expected decline in sales could help fuel a bond rally and lead to lower mortgage rates because it would mean that the economy is likely not as strong as thought.





Also worth noting about Wednesday is the afternoon release of the minutes from the last FOMC meeting. There is a possibility of the markets reacting to them following their 2:00 PM ET release, especially if they show some divisiveness by its members during discussion and voting at the last meeting or give any indication of the Fed's possible next move with monetary policy.

There are two relevant reports scheduled for Thursday. The first is June's Producer Price Index (PPI). It is a very important release because it measures inflationary pressures at the producer level of the economy. It is expected to show a 0.1% decline in the overall reading and a 0.1% increase in the core data readi ng. The core reading is the more important of the two because it excludes more volatile food and energy prices. The bond market should react quite favorably if we get weaker than expected readings, but a larger than expected rise in the core reading could send mortgage rates higher Thursday.





June's Industrial Production data is the second report of the day. This data measures output at U.S. factories, mines and utilities, giving us an indication of manufacturing sector strength. It is expected to show no change in the level of production, indicating that the manufacturing sector remained stable during the month. That would basically be good news for bonds, however, an unexpected decline would likely help improve rates if the PPI showed favorable results.

The remaining two reports will come Friday morning, one of which is arguably the single most important monthly report for the bond market. That one is June's Consumer Price Index (CPI) during early morning trading, which is a mirror of Thursday's PPI with the exception that the CPI measures inflation at the more important consumer level of the economy. Analysts have forecasted no change in the overall index and a 0.1% rise in the core data. The core data is considered to be the key reading because it gives us a more stable measure of inflation. Higher than expected readings could raise inflation fears and push mortgage rates higher Friday, while readings that fall short of forecasts could lead to lower rates Friday.





The second report Friday morning and the final of the week is the University of Michigan's Index of Consumer Sentiment. This index is released in a preliminary form each month and then followed up two weeks later with a final reading. The preliminary reading for July will be posted late Friday morning and is expected to fall from June's final reading of 76.0. This would indicate that consumers were less co mfortable with their own financial situations this month than last month. It is believed that if consumers are confident in their own finances, they are more apt to make large purchases in the near future. And with consumer spending making up two-thirds of our economy, investors pay close attention to reports such as these.

Also worth noting is the fact that Monday kicks off the corporate earning reporting season when Alcoa posts their quarterly results. Market participants are anxiously waiting for these earnings reports to see just how the economy is affecting earnings. Just as important as this past quarter's results are their forward-looking estimates. If revenue, earnings and projections from the big-named companies exceed expectations, stocks will likely rally. This would make bonds less appealing to investors and lead to bond selling. But if results are weaker than expected, indicating that the economy is stifling earnings, bonds will be more attractive to investors as stocks slide. That could help boost bond prices and help lower mortgage rates.





Overall, it is difficult to try to label one particular day as the most important this week. It is easy to say the least important will likely be Monday, but every other day has important data or other events that can cause significant movement in the markets and mortgage rates. The single most important report for the bond market is the CPI Friday morning, but the data on Wednesday and Thursday are not far behind. The week's corporate earnings also have the potential to heavily influence bond trading and mortgage rates via stock market swings. Therefore, it is highly recommended to maintain fairly constant contact with your mortgage professional this week if still floating an interest rate.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking pla ce 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.

©Mortgage Commentary 2010

 

 

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

Http://everythingprescott.com

 

 

Inside Lending Newsletter From Theron Wall

 

 

Inside Lending from Theron Wall

visit my website     email me now

Theron Wall

Theron Wall
Branch Manager
3615 Crossings Dr, Suite A
Prescott, AZ 86305
Phone: (928) 778-7167
Mobile: (928) 533-7473
Fax: (928) 445-5308

Wallick & Volk Mortgage

For the week of July 12, 2010 – Vol. 8, Issue 28

>> Market Update 

INFO THAT HITS US WHERE WE LIVE  Last week's Inside Lending reported that on Friday, the President signed into law a bill that extends to September 30 the closing deadline for claiming the federal homebuyer tax credit. We want to add he signed a second bill that retroactively reinstates the National Flood Insurance program, which expired May 31, until September 30. This news is important for home buyers who are shopping in areas where flood insurance is necessary to get a mortgage. It would obviously behoove these buyers to close before September 30.

National average mortgage rates hit new lows again last week, as reported in Freddie Mac's weekly Primary Mortgage Market Survey. However, the Mortgage Bankers Association revealed that it was refinancing homeowners who were principally taking advantage of these rates, making up the lion's share of last week's loan applications. Incidentally, with these heightened levels of refi activity, the effective rate of all outstanding mortgages was just under 6% in the first quarter of 2010, the lowest on record since 1977.

>> Review of Last Week

DOUBLE DIP DOUBLE TALK... Lately it's been hard to ignore all the talk about threats of a "double-dip" recession. So last week it was refreshing to see The Wall Street Journal identify all this talk as "exaggerated fears of a double-dip recession." They pointed out: "Growth may be slowing from its first-quarter peak...but most indicators point to continued global growth." Investors quickly came to their senses, stopping the recent stock market slide and sending all major indexes up for the week by 5% and more!

There certainly was adequate support for a more positive economic outlook. The "continued global growth" the Journal mentioned was backed by the latest forecast from the International Monetary Fund. The IMF increased its estimate of 2010 GDP growth from 4.2% to 4.6%. Some fretted that the ISM Services Index dropped a tad from its May reading. But levels above 50 signal expansion, so June's 53.8 shows our non-manufacturing sectors are still experiencing healthy economic growth.

Initial jobless claims came in better than expected for the week, dropping by 21,000. Retailers reported June same store sales, which weren't the debacle some had predicted, with Macy's and Nordstrom actually coming in with some pretty good numbers. Finally, the Q2 corporate earnings season begins this week and first estimates are that profits will be up 34% overall vs. last year. Does any of this sound like a dip to you?

For the week, the Dow ended UP 5.3%, to 10198.03; the S&P 500 was UP 5.4%, to 1077.96; and the Nasdaq was UP 5.0%, to 2196.45.


With stocks rallying, the bond market didn't have such a great time of it. Nonetheless, the FNMA 30-year 4.0% bond we follow was actually UP 22 basis points for the week, ending at $101.50. As noted above, national average mortgage rates tracked by Freddie Mac's weekly survey reached record low levels.

>> This Week’s Forecast

A DEEP LOOK INTO THE ECONOMY... Economically speaking, this week promises to tell all, except for the housing market. Tuesday's May Trade Balance should stay pretty even, still showing nice export activity. Wednesday's June Retail Sales are forecast to improve on May's readings, a good indication of consumer health. We'll also see if the Minutes of the FOMC Meeting on June 23 reveal anything new about the Fed's economic outlook.

Inflation should remain benign as tracked by the Thursday's wholesale PPI and Friday's consumer CPI. Thursday will also be a big day for manufacturing, expected to stay in recovery mode as measured by the Empire and Philadelphia Fed Indexes, plus Industrial Production and Capacity Utilization. Q2 earnings will come from Alcoa, Intel, JPMorgan Chase, Bank of America, Citigroup, and GE.

>> 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 July 12 – July 16

 Date

Time (ET)

Release

For

Consensus

Prior

Impact

Tu
Jul 13

08:30

Trade Balance

May

–$39.5B

–$40.3B

Moderate

W
Jul 14

08:30

Retail Sales

Jun

–0.2%

–1.2%

HIGH

W
Jul 14

08:30

Retail Sales ex-auto

Jun

0.0%

–0.8%

HIGH

W
Jul 14

10:00

Business Inventories

May

0.2%

0.4%

Moderate

W
Jul 14

10:30

Crude Inventories

7/10

NA

–4.96M

Moderate

W
Jul 14

14:00

Minutes of the FOMC Meeting

6/23

NA

NA

HIGH

Th
Jul 15

08:30

Initial Unemployment Claims

7/10

449K

454K

Moderate

Th
Jul 15

08:30

Continuing Unemployment Claims

7/3

4.425M

4.413M

Moderate

Th
Jul 15

08:30

Producer Price Index (PPI)

Jun

–0.1%

–0.3%

Moderate

Th
Jul 15

08:30

Core PPI

Jun

0.1%

0.2%

Moderate

Th
Jul 15

08:30

NY Fed Empire Mfg Index

Jul

18.0

19.57

Moderate

Th
Jul 15

09:15

Industrial Production

Jun

0.0%

1.3%

Moderate

Th
Jul 15

09:15

Capacity Utilization

Jun

74.2%

74.1%

Moderate

Th
Jul 15

10:00

Philadelphia Fed Mfg Index

Jul

10

8.0

HIGH

F
Jul 16

08:30

Consumer Price Index (CPI)

Jun

0.0%

–0.2%

HIGH

F
Jul 16

08:30

Core CPI

Jun

0.1%

0.1%

HIGH

F
Jul 16

09:55

Univ. of Michigan Consumer Sentiment

Jul

74.5

76.0

Moderate

 

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months  Economists are still virtually unanimous in forecasting the Fed will keep rates at present super-low levels through the FOMC meeting in November. 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

Aug 10

0%–0.25%

Sep 21

0%–0.25%

Nov 3

0%–0.25%


Probability of change from current policy:

After FOMC meeting on:

Consensus

Aug 10

     <1%

Sep 21

     2%

Nov 3

     5%

 

This e-mail is an advertisement for Theron Wall. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice, or a commitment to lend. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in the newsletter is the property ofWallick & Volk Mortgage and cannot be reproduced for any use without prior written consent.. The material does not represent the opinion of Wallick & Volk Mortgage. BK 0018295



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