Week of 11/23/09 MMG Week in Review

      What a week-CPI, Core CPI, Housing Starts, and Mortgage Applications were all reported this past week. And, let’s not forget what is most needed, jobs. Though Initial Jobless Claims went down, this weeks MMG looks deeper into the numbers. 

      This coming week will be short but busy! We start the week off with Existing Home Sales and end on Wednesday with New Home Sales. This will show whether homebuyers are jumping in to receive the HomeBuyers Tax Credit. Don’t know if you are a First Time Homebuyer or a Move-up Buyer? Check out my Home Buyer Tax Credit fact sheet.

      Also this week, the Treasury will  be holding auctions each day, $44B 2-Year Notes on Monday, $42B in 5-Year Notes on Tuesday and $32B in 7-Year Notes. Can the market digest this enormous amount of supply? We will report on this on twitter @mmtgsolutions .

     Besides going deeper into the Initial Jobless Claims, this week’s MMG Week in Review has a great article on Thanksgiving.

     You can also check out the Daily Rate Lock Advisory each day. This report normally comes out around 10am.

    And as always, I will report daily on twitter @mmtgsolutions on the mortgage interest rates and what to expect for the day.If one of these reports moves the market in a significant manner, I’ll write about it here.

     Please remember, I welcome your comments to this and my other posts. Have an inspired week and a great Thanksgiving weekend.

     Betsy Moore

     206-331-2749

Breaking Down the News

     CPI, Core CPI, Housing Starts, Mortgage Applications. All of these came in today. What do they mean?

     Consumer Price Index or more commonly knows as CPI is a basket of consumer goods. The Federal government basically keeps the same items in the basket. The cost of those goods to the consumer, us,  is what determines the CPI. The Core CPI takes out energy and auto purchases as they feel those prices are too volatile.  

     October’s CPI came in at 0.3% whereas the Core CPI came in at 0.2%. And if you take a look at what the overall last 12 months has been, the Core CPI is now at 1.7%. So what does this mean? It means that over the last twelve months, it is costing us more to buy those goods. Translated the higher the cost, the more concern we are trending towards inflation. Bernanke and Company prefers that the rate of inflation to be below 2.0% year over year. This raises concerns that the market is heating up. And with the Federal government printing money, that is and will be a major concern down the line. 

     Housing Starts in October plunged 11.0%. Housing Starts is considered new construction-builders building new homes. Now there is probably a good reason for this. As a new home builder, without knowing if the First Time HomeBuyers Tax Credit was going to be extended, you certainly wouldn’t be building homes in a sluggish economy. 

     So it only makes sense that if Housing Starts fell, Mortgage Applications would fall as well especially for home purchase applications. We should see improvement in applications for purchases over the next few weeks since President Obama signed into law the extension of the First Time Homebuyers Tax Credit and added in the Move-up Buyers Tax Credit.

     What does this mean to you? Yes, it is costing a bit more to purchase your basic goods. And yes, it is still a good time to  buy a  home or refinance your home. Home values are down  but you don’t want to wait until inventories get so low that pricesjump up. And with Bernanke and Company slowing down and ending the purchasing of Mortgage-backed Securities by the end of 1st Quarter 2010, mortgage interest rates will start going up.

      Don’t get caught in a double-whammy–higher values and higher mortgage interest rates as you may price yourself out of the market or have to settle for a lesser valued and/or smaller home than you wanted.

      If you aren’t sure if you qualify for the First Time Homebuyer Tax Credit or the Move-up Homebuyer Tax Credit, I created this Home Buyer Tax Credit fact sheet.

      And please feel free to contact me with your questions or concerns. I am here to assist you in any way I can.

      As always, I will report daily on twitter @mmtgsolutions on the mortgage interest rates and what to expect for the day.If one of these reports moves the market in a significant manner, I’ll write about it here.

     Please remember, I welcome your comments to this and my other posts.

     Have an inspired week.

     Betsy Moore

In the News

     As I have indicated in my Monday morning’s post, this week will be a busy one.

     Yesterday, we had the October Retail Sales which at first blush rose 1.4% exceeding the expectations of 0.9%. But if you take away the more volatile car sales, retail sales rose only 0.2%!

      Today’s reports, Producer Price Index (PPI) and Industrial Production Data also showed weaker numbers than expected. PPI only rose 0.3%. And when you exclude food and energy, the number actually fell by 0.6%-the lowest since July 2006. The Industrial Production rose 0.1% compared to what was expected at 0.4%. Both of these numbers show us that inflation is still not an issue though you can be sure that Bernanke and Company are watching for any signs of inflation.

      Tomorrow brings us October’s Consumer Price Index (CPI) and October’s Housing Starts. The CPI can more the market if it comes in higher than expected. Housing Starts gives us a feel for how well the housing industry is doing.  

      The bond market has been holding its own throughout these reports. Therefore, mortgage interest rates are doing well. If you are almost ready to close on your mortgage and haven’t locked in your rate yet, I do advise doing so in the very near future. If you aren’t ready to close, you can still float.

      If you want a more detailed report, you can read the Daily Lock Advisory.

       And as always, I will report daily on twitter @mmtgsolutions on the mortgage interest rates and what to expect for the day.If one of these reports moves the market in a significant manner, I’ll write about it here.

     Please remember, I welcome your comments to this and my other posts.

     Have an inspired week.

     Betsy Moore

     206-331-2749

Week of 11/16/09 MMG Week in Review

      Just when you think the bond market and, consequently, mortgage interest rates would have a quiet week, it wasn’t meant to be. Though there were few economic reports released, by the time we got to the auctioning of the longer term bonds, the market got nervous. The bond market did some bouncing up and down. This resulted in some movement in the mortgage interest rates though rates are still at historic lows.

     This upcoming week will be front loaded with a slew of economic reports. We kick the week off on Monday with the October’s Retail Sales. This measures consumer spending and traders will be looking at this closely to project what this holiday season will bring in spending. Will we as consumers spend as much as normal for gifts or will we still be in the “tighten the belt mode?”

     We also have two inflationary reports being released this week, the Producer’s Price Index (PPI) and Consumer Price Index (CPI). Both of these reports can move the market signficantly especially if they show increases as increases mean inflation. And that, in turn, will raise mortgage interest rates. These two reports will be release Tuesday and Wednesday, respectively.

     Also in this week’s MMG Week in Review is a great video on 5 Secrets to a Great Interview plus how this week’s economic reports can affect the market.

     You can also check out the Daily Rate Lock Advisory each day. This has a bit more conservative look at locking in your interest rates.

    And as always, I will report daily on twitter @mmtgsolutions on the mortgage interest rates and what to expect for the day.If one of these reports moves the market in a significant manner, I’ll write about it here.

     Please remember, I welcome your comments to this and my other posts. Have an inspired week.

     Betsy Moore

     206-331-2749

Fannie Mae Lowers Debt to Income Ratios

     As I posted on October 8, 2009, Fannie Mae announced that it would be lowering their required debt to income to 45%. As of this post, lenders are starting to email us to state that on November 16, 2009, they will no longer accept loan packages with a higher ratio on debt to income.

     Though this is only a Fannie Mae guideline change, the lines tend to blur between Fannie and Freddie Mac as most lenders sell their loans to both.  I suspect that most lenders will adhere to this guideline for all of their conforming and jumbo conforming loans even for FHA.

     So what does this 45% debt to income ratio mean and how is it calculated? Very simply it means that your total debt–credit cards, installment payments, even student loans that are in deferred mode, and your mortgage payment–can’t be above 45% of your total monthly gross income.

     To calculate your debt to income, add up all of your minimum payments then divide by your total monthly income. Here’s an example:

Total monthly gross income:                                                                                $5000.00

Total monthly debt without mortgage payment:                                         $1500.00

Plus mortgage payment (principle, interest, taxes and insurance):   $2250.00

Total monthly debt:                                                                                                  $3750.00

 Divide $3750.00/$5000.00 =                                                                                   45.00%

     To make this calculation easier, you use this calculator to find out what you can qualify for. Or if you would like, please call or email me and I’ll be happy to assist you.

    And as always, I report daily on twitter  @mmtgsolutions on the mortgage interest rates and what to expect for the day. If one of these reports moves the market in a significant manner, I’ll write about it here.

     Please remember, I welcome your comments to this and my other posts. Have an inspired week.

     Betsy Moore

     www.mooremortgagesolutions.com

     206-331-2749

Week of 11/09/09 MMG Week in Review

     While President Obama signed into law the extension on the First Time Homebuyer Tax Credit, the Unemployment numbers came in higher than expected. A whooping 10.2% compared to the expected number of 9.8%. We did have some good news…Home Sales were up, most likely due to the First Time Homebuyer Tax Credit.

     This week is a fairly quiet week. A time to breathe. We do have the Treasury Auctions and this time it will be a larger amount than normal. If these auctions move the bond market, I’ll write about it here.

     Also in this week’s MMG Week in Review is more information on the First Time Homebuyer and Move-up Homebuyer Tax Credits plus how this week’s economic reports will affect the market.

    And as always, I will report daily on twitter @mmtgsolutions on the mortgage interest rates and what to expect for the day.If one of these reports moves the market in a significant manner, I’ll write about it here.

     Please remember, I welcome your comments to this and my other posts. Have an inspired week.

     Betsy Moore

     206-331-2749

First Time Homebuyers Tax Credit Extended and More

      The First Time Homebuyers Tax Credit has been passed and signed into law today. Some of the guidelines have changed.

      Here are the top changes:

1. First Time Homebuyers have until April 30, 2010 to be in a signed purchased and sale agreement and close by June 30, 2010.
2. Income for single buyers goes from $75,000 to $125,000 and for married buyers from $125,000 to $250,000.
3. Homeowners who have lived in their home for 5+ years can now take advantage and move up.
4. Homeowners will have to be in contract also by April 30, 2010 and close by June 30, 2010.
5. Homeowners will receive $6,500 in tax credit for moving up.
6. There is a $800,000 home purchase cap for move up buyers.

      Remember, first time home buyers are people who have not owned a home for the last 3 years. And move up homeowners have to have lived in their homes for the last five plus years.

     Great news for the housing industry as it slowly pulls out of this recession.

      If you are a first time home buyer, the time is now. And for move-up buyers, what a great time to purchase that bigger home for your family. Home values are starting to bottom out in most parts of the country and housing inventories are starting to come down. Added to that, mortgage interest rates are still at historically low rates.

    I am here to assist you in any way I can. Please do not hesitate to contact me.

    As always, I will report daily on twitter @mmtgsolutions on the mortgage interest rates and what to expect for the day.If one of these reports moves the market in a significant manner, I’ll write about it here.

     Please remember, I welcome your comments to this and my other posts. Have an inspired week.

     Betsy Moore

     206-331-2749