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Money Market Recap and Forecast

July 26th, 2010

Written by Frost Mortgage

In spite of the U.S. Homebuilders confidence index falling to 14 from 16 — the lowest it’s been since April 2009 — last Monday was a tough one for U.S. Treasuries.  The prospect of upbeat earnings sent stocks up and money left bonds, but they made up for it on Tuesday.

The report on housing starts and building permits for June came in far below forecasts.  Starts fell 5.0% to an annual rate of 549,000 — the lowest in eight months.  Building permits actually rose 2.1% due to a 20% surge for multi-family units.  But single family permits plunged 3.4% to an annual rate of 421,000 — the worst since April 2009.

This kept buying in Treasuries heavy in the morning, but Wall Street recovered from an early pounding, taking some allure from bonds.  Nevertheless, the 10-year yield, which moves inversely to price, closed at 2.93%.

Fed Chairman Ben Bernanke’s testimony on monetary policy before Congress on Wednesday ignited strong buying in bonds.  His glum assessment of the economy included phrases stating that risks for growth are “weighted to the downside,” financial conditions are better but “less supportive of economic growth,” and his use of the term “unusually uncertain” to describe the economy kept bond pits active.

Thursday’s reports should have supported buying in Treasuries, but they couldn’t compete with a 200-point gain in the Dow Jones.  First-time jobless claims for the week ended July 17 rose by a stronger-than-forecast 37,000 to 464,000. 

Existing home sales in June fell by 5.1% to an annual rate of 5.37 million units from 5.66 million in May.  These numbers, however, beat expectations, which made them acceptable to Wall Street.  There was good news; year-over-year sales rose 9.8%, but so did inventories.  They climbed 2.5% to an 8.9-month supply.

Separately, the index of leading economic indicators, which assesses economic conditions six to nine months ahead, fell by a weaker-than-expected 0.2% versus May’s 0.5% gain.  This report is not much of a market mover.

There were no reports released Friday.  Treasuries opened under slight selling pressure, while Wall Street was mixed but holding close to unchanged.

The Mortgage Bankers Association finally had some good news.  For the week ended July 16, refinances were up 8.6%, the highest the index has been since May 2009.  And purchase apps rose 3.4%, with the MBA citing the drop in mortgage rates as responsible for the increases.

This week has at least one influential report scheduled every day, beginning with new home sales on Monday.  Analysts are expecting sales for June to have risen to an annual rate of 325,000 units — up from 300,000.

Tuesday the Conference Board releases its consumer confidence index for July.  It is expected to continue its recent slide to 51.5 from 52.9.  This is good news for bonds, as worried consumers do not spend.

Durable goods orders for June is out Wednesday, and it’s expected to show a big improvement.  Forecasters have it rising 1.25% from May’s 0.6% decline.  In the afternoon the Fed beige book, which looks at economic conditions in the nation’s 12 federal districts, will be released.  An improving picture has been known to cause selling in bonds, while slow or no growth could ignite buying.  Only the Fed knows which way it will go.

Three economic releases Friday could influence trading.  First, we get the advance look at 2^ndquarter GDP.  It’s expected to show economic growth at 2.5%, which would be slightly below the 1^stquarter’s 2.7% final.  But the advance number is subject to two revisions, which could change the outcome — or not.

The Chicago PMI index on July manufacturing conditions is also predicted to fall.  Economists see it dropping to 57.9 from 59.1.  Any number over 50, however, indicates sector expansion.

The economic seers are expecting the final July consumer sentiment survey from the University of Michigan to rebound — a little.  Two weeks ago it fell to an all-time low of 66.5.  They see it rising to 67.5, which could put slight selling pressure on Treasuries.

With more earnings reports due out next week, there’s no way to tell what effect they will have on bonds.  But they will wield influence — one way or the other.

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Freddie Mac: Mortgage rates fall to new lows

July 22nd, 2010

Written by Frost Mortgage

Long-term mortgage rates fell again this week, with both 30-year and 15-year fixed-rate mortgages at the lowest levels since McLean, Va.-based Freddie Mac began keeping track.

The average rate on a 30-year fixed-rate mortgage in the week ending July 22 was 4.56 percent, down from 4.57 percent last week, the lowest since at least 1971. A 15-year fixed-rate mortgage averaged 4.03 percent, the lowest since at least 1991.

A one-year, adjustable-rate mortgage averaged 3.70 percent, down from 3.74 percent last week.

“The decline in mortgage rates over the past few weeks echoes the recent signs of weakening confidence in the strength of the economy, particularly the housing and consumer sectors,” said Freddie Mac (OTC: FMCC) chief economist Frank Nothaft.

Read more: Freddie Mac: Mortgage rates fall to new lows – New Mexico Business Weekly

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Latest Housing Scorecard shows continued affordability in U.S. market

July 21st, 2010

Written by Frost Mortgage

The U.S. Department of Housing & Urban Development (HUD) and the U.S. Department of the Treasury have jointly released the second edition of the Administration’s Housing Scorecard showing that, thanks in part to interest rates continuing at all-time lows, home affordability in the U.S. remains near the most attractive levels in 10 years. In addition, for the first time, the report now tracks the impact of HUD’s Neighborhood Stabilization Program (NSP), which has spurred local investment and is beginning to make affordably-priced homes available to consumers. The Housing Scorecard is the Administration’s comprehensive report on the nation’s housing market.

http://nationalmortgageprofessional.com

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Dodd-Frank Wall Street Reform passes Senate and heads to White House

July 15th, 2010

Written by Frost Mortgage

“The U.S. Senate has announced the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (HR 4173) by a vote of 60-39. The 2,300-plus-page bill, HR 4173, is intended to address the problems that led to our nation’s economic collapse, will add new regulators to analyze any potential economic crisis situations in the future; create a federal bureau in charge of consumer protection; and adopt new regulations designed to end the practices that contributed to the American economic downturn.”

http://nationalmortgageprofessional.com/

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Regulatory Reform Set to Clear Senate

July 15th, 2010

Written by Frost Mortgage

As National Mortgage news online reports www.nationalmortgagenews.com The Senate Thursday morning voted 60-38 to break a filibuster on the Dodd-Frank Wall Street Reform bill, clearing the way for final passage in the afternoon. Senate majority leader Harry Reid said the landmark financial services regulatory reform bill will help restore trust in the U.S. financial system. “We’re going to give consumers and investors the strongest protections they’ve ever had against abusive banks, mortgage companies, credit card companies and credit-rating agencies,” Reid said. Financial Services Roundtable president and chief executive Steve Bartlett said there are parts of the bill the banking industry likes, but noted that some sections are problematic. “The bottom line is this: the Dodd-Frank bill soon will be the law of the land. As an industry, we will make it work—working closely with regulators, who will implement the new law—in the best interests of the American people and the economy,” Bartlett said in a speech at the National Press Club.

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Money Market Recap & Forecast for July 12th

July 12th, 2010

Written by Frost Mortgage

MMRecap for July 12

Even though trading was light and economic news was scarce last week, U.S. Treasuries had a tough go of it.

On Tuesday, stocks rallied as bargain hunters moved in, apparently taking advantage of the 15% slide that has taken place over the past two months.  Stocks also reacted well to booming European markets.

Treasuries sold, sending yields, which move inversely to price, up.  But Wall Street lost steam in the afternoon, and bonds recouped some losses.  The benchmark 10-year yield closed at 2.93% after hitting a mid-morning high of 2.98%.

The ISM index on the service industry for June fell more sharply than expected.  It dropped to 53.8 from 55.4, but it still indicates expansion in the sector.

Bonds never recovered from Wednesday’s huge rally on Wall Street.  A pre-announcement of much stronger-than-expected earnings by State Street bank provided hope for the earnings season, which starts this week.  Money flew into equities, and Treasuries suffered.

The suffering continued Thursday.  A decline of 21,000 first-time unemployment claims to 454,000 for the week ended July 3 set the tone.  In addition, the four-week average, which eliminates volatility, fell to 455,000.

Retail stores also released same-store sales, which were stronger than expected, and positive news regarding the European banks encouraged more buying in stocks as Treasuries sold.  At the end of the session the 10-year yield hit 3.02% — the first time it’s been above 3% since June 28.

The week ended with wholesale inventories for May, which rose 0.5%.  Treasuries sold on upcoming auction news and suspicion that global recovery is on the way, sending the 10-year yield to 3.05%.

Refinancers continued to rule during the week ended July 2.  According to the Mortgage Bankers Association, refis rose 9.2% with the index hitting a 13-month high.  Purchase apps fell 2% and are down 34.7% from one year ago.

As promised, this week is loaded with economic reports, but it doesn’t get going until Wednesday when retail sales for June are due.  Analysts expect sales to fall 0.3%, which would better than May’s 1.2% decline.  Excluding transportation, sales could edge down 0.1%, which also beats the previous 0.8% loss.  If on target, these numbers shouldn’t excite the stock market nor cause buying in Treasuries.

The other reports scheduled — import and export price indices for June and business inventories for May — won’t make a ripple.

The minutes from the Fed’s June 22-23 meeting, to be released Wednesday afternoon, could provide information regarding the economic outlook and clues regarding rate hikes.  This always interests bond traders and could move the markets.  But no one knows what was said.

Thursday is major as far as reports go, starting off with first-time unemployment claims for the week ended July 10.  The producer price index (PPI) for June, which checks for price inflation at the wholesale level, is also due.  It’s expected to rise 0.1% versus a 0.3% decline in May.  But that’s well within acceptable guidelines.  The core rate, which is the one the Fed watches, could also rise by an acceptable 0.1% — down from a 0.2% gain in May.  The core rate excludes volatile food and energy prices.  The lack of inflation indicators should sit well with traders.

The remaining reports focus on manufacturing, starting out with industrial production and capacity utilization for June.  Production is expected to rise 0.2% — down from May’s’ 1.3% increase.  Capacity utilization, which is less important, should edge up to 74.2% from74.1%.  These numbers could foster light buying in Treasuries.

Traders might like the NY Empire State index on July manufacturing conditions.  It’s expected to decline to 18.5 from 19.57.  The more influential Philly Fed index for July should tick up to 8.6 from 8.0.

On Friday the June consumer price index, which is THE index on inflation, should come in flat after falling 0.2% in May.  The core rate is expected to rise 0.1%, the same as in May.  These data should calm inflation watchers.

The reports end with what could be bond-friendly news from the University of Michigan.  Analysts expect the preliminary consumer sentiment survey for July to show a significant drop to 72 from 76.  This could stir up buying in bonds.

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Thanking Local Heroes: Frost Will BBQ for APD

July 9th, 2010

Written by Frost Mortgage

Frost Mortgage proudly supports the people who make our country and our communities great–especially those who selflessly protect us.

On Tuesday, July 13, from 1 to 3 p.m., at 2051 Wyoming Blvd. NE in Albuquerque (map), we will be grilling free Nathan’s Hot Dogs for members of the Albuquerque Police Department.

These men and women are heroes–they work daily to make our communities safe and they aren’t thanked enough. Please help us spread the word to these public servants–lunch is on us!

The aroma of grilled hot dogs and fresh donuts will be in the air in our neighborhood that week, as Albuquerque’s second Krispy Kreme donut shop opens the same day at 5:30 a.m. across the street from the Frost Mortgage national headquarters across from the Wyoming Mall. The Krispy Kreme team will be joining us in honoring the Albuquerque Police Department. Beginning at 1 p.m. and continuing through 3 p.m., officers can stop by the Wyoming Frost Mortgage office, located directly across from the new Krispy Kreme location for free donuts.

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Rates are even lower and tax credits may be extended

July 1st, 2010

Written by Frost Mortgage

It’s a busy week in the news for potential homebuyers.

First, both 15-year and 30-year loans hit record lows for the second week in a row.

Second, as Reuters reports, the tax credit extension has passed a key hurdle:

The House backed by a vote of 409-5 a measure to extend the closing deadline to September 30 for buyers who already met the April 30 deadline to have a signed contract. The current deadline requires those buyers to close the transaction by June 30 to receive the $8,000 tax credit for first-time homebuyers.

The measure must also go before the Senate for approval.

Rates are dropping and home sales are also down.

What this means is an exceptional window of opportunity for those looking for a new home. Please contact one of our loan officers today and allow us to help you find out what is available to you. We think you’ll be glad you did.

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FHA: A range of creative options for borrowers

June 30th, 2010

Written by Frost Mortgage

The Federal Housing Administration (FHA) helps prospective borrowers in a wide range of ways. Frost Mortgage is a huge fan of the FHA program; in 2009, for instance, we were named No. 2 in America for FHA fundings by Mortgage Originator Magazine, and we’ve consistently been the top FHA lender in our home state of New Mexico.

CreditLoan.com has a great article on some of FHA’s main programs, including loans for

• First homes,
• Fixer-uppers,
• Reverse mortgages,
• Energy efficiency, and
• Manufactured or mobile housing.

We can help you with any of these needs–we’re FHA experts. Please call one of our experienced loan officers today for more information on how FHA programs can help you fund your next move.

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Great news for FHA lenders from Congress

June 29th, 2010

Written by Frost Mortgage

Federal Housing Administration (FHA) lenders will be exempted from new “risk retention” rules, which is great news for companies who issue loans insured by the government.

National Mortgage News reports that

[t]he legislation finalized by the conference committee late last week would require originators to retain at least 5% of the credit risk in loans they securitize unless the assets meet a “qualified mortgage” test. All loans backed by the FHA, the Department of Veterans Affairs or the Rural Housing Service will automatically meet that test.

This is a complex time to be in the FHA-backed mortgage business, but the opportunities are huge for those who are eager to learn to succeed as branch partners or loan officers.

Frost Mortgage has been a leader in FHA lending since 1991. If you’re looking to step up, take a look at our mortgage partner offering–we think you’ll find it’s the best in the business.

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