Market Commentary for December 29th The Last Week of 2014

Week two of the year-end holiday season has only two monthly economic reports scheduled for release that are relevant to mortgage rates. One of those two is considered to be highly important to the bond and mortgage markets. There is nothing of importance Monday, but we still may see some movement in the markets and mortgage pricing as traders return from the extended holiday weekend.

The Conference Board will post their Consumer Confidence Index (CCI) for December late Tuesday morning. This is a fairly important release because it measures consumer willingness to spend. If consumers are more confident about their personal financial and employment situations, they are more apt to make a large purchase in the near future. Since consumer spending makes up over two-thirds of the U.S. economy, any related data is watched closely by market participants and can affect mortgage rate direction. Current forecasts are calling for a large increase in confidence from November’s reading of 88.7. Analysts are expecting Tuesday’s release to show a reading of 93.5, meaning consumers felt much better about their own financial situation than they did in November. The lower the reading, the better the news it is for bonds and mortgage pricing.

The bond market will close at 2:00 PM ET Wednesday ahead of the New Year’s Day holiday, but the stock markets are scheduled to be open for a full day of trading. All banks and major U.S. financial markets will be closed Thursday for the holiday and will reopen Friday morning for regular hours. As a result of the holiday schedule, we should see another round of lighter than normal trading a couple days. However, I don’t believe it will be as thin as we saw last week. That should help prevent larger moves in bonds on days with little or no news to justify the move like we saw last week.

After the holiday, the Institute for Supply Management (ISM) will post their manufacturing index for December late Friday morning. This highly important index measures manufacturer sentiment. A reading above 50 means that more surveyed manufacturing executives felt that business improved during the month than those who felt it had worsened. That indicates manufacturing sector strength rather than contraction. Analysts are currently expecting to see a 57.7 reading in this month’s release, meaning that sentiment softened from November’s 58.7. A smaller reading will be good news for the bond market and mortgage shoppers, while a higher than expected reading could lead to higher mortgage rates Friday morning as it would point towards a stronger manufacturing sector.

Overall, I am expecting to see Friday be the most active day for mortgage rates, although Wednesday morning could also be fairly busy as the year comes to an end. It is difficult to label any day as the calmest because even Monday that doesn’t have anything scheduled to be posted could also be relatively busy following last week’s light holiday trading. Therefore, please maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.

Market Commentary for the Week of December 22nd - Happy Holidays!

This week brings us the release of six pieces of monthly and quarterly economic data that are considered relevant to mortgage rates. It is a holiday-shortened week with the financial markets closing early Wednesday and remaining closed Thursday in observance of Christmas. None of the week’s data is considered key, but some of it does carry enough importance to affect mortgage pricing. All the reports come before the holiday, so the busiest part of the week will be the first couple days.
The first of this week’s releases will be November’s Existing Home Sales figures from the National Association of Realtors late tomorrow morning. It will give us a measurement of housing sector strength and mortgage credit demand and is expected to show a decline in sales, indicating a slowing housing sector. A sizable decline in sales would be considered positive for bonds and mortgage rates because a softening housing market makes broader economic growth more difficult. But unless the actual sales figures vary greatly from forecasts, the results will probably have a minor impact on tomorrow’s mortgage rates.
Tuesday has most of this week’s reports plus the first of two Treasury auctions. There are five pieces of economic data being posted Tuesday morning. It starts with November’s Durable Goods Orders at 8:30 AM ET. This data gives us an important measurement of manufacturing sector strength by tracking orders for big-ticket items or products that are expected to last at least three years such as appliances, airplanes and electronics. Analysts are expecting the report to show a 2.9% rise in new orders. A decline in new orders would indicate that the manufacturing sector was weaker than many had thought. This would be good news for the bond market and should help push mortgage rates lower. However, a much larger jump in orders could lead to mortgage rates moving higher early Tuesday morning. This data is known to be quite volatile from month-to-month though, so it is not unusual to see large headline numbers in this report.
Also at 8:30 AM ET Tuesday is the final revision to the 3rd Quarter Gross Domestic Product (GDP). I don’t think this data will have an impact on mortgage rates unless it varies greatly from its expected reading. Last month’s first revision showed that the economy expanded at a 3.9% annual pace during the quarter and this month’s final revision is expected to show a 4.2% growth rate. A revision higher than that would be considered bad news for bonds. But since this data is quite aged at this point and 4th quarter numbers will be posted next month, I am not expecting this release to affect rates Tuesday.
There are three reports being released late morning Tuesday. The first of that group is the revised University of Michigan Index of Consumer Sentiment for December just before 10:00 AM ET. Current forecasts are calling for no change from the preliminary reading of 93.8. This is a fairly important index because rising consumer confidence indicates that consumers feel better about their own financial and employment situations, meaning they be more apt to make large purchases in the near future. A reading above forecasts would be negative for bonds and mortgage rates while a large decline would be favorable.
Next up is November’s Personal Income and Outlays data at 10:00 AM ET. It will give us an important measurement of consumer ability to spend and current spending habits. Since consumer spending makes up over two-thirds of the U.S. economy, any related data usually has a noticeable impact on the financial markets and mortgage rates. Current forecasts are calling for a 0.5% increase in income and a 0.5% increase in spending. If this report reveals weaker than expected readings, we could see the bond market improve and mortgage rates drop slightly late Tuesday morning, especially if the Durable Goods Orders report gives us favorable results also.
November’s New Home Sales data is the final economic report of the week. This report gives us another measurement of housing sector strength and mortgage credit demand. It is the sister report of Monday’s Existing Home Sales report, but covers a much smaller portion of the housing market than that one does. A weakening housing sector is considered good news for the bond market and mortgage rates because broader economic growth is less likely in the immediate future. Since bonds tend to thrive in weaker economic conditions, a large decline would be considered favorable for bond prices and mortgage rates. Current forecasts are calling for a slight increase in sales of newly constructed homes. Ideally, we would like to see a large drop in sales.
In addition to this week’s economic data, we also have 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, bond prices may rise enough to lead to improvements in mortgage rates shortly after the results are posted. They will be announced at 1:00 PM Tuesday and 11:30 AM Wednesday. But a lackluster investor demand may create bond selling and upward revisions to mortgage rates Tuesday and/or Wednesday.
We also have early closings this week that sometimes influence trading. The stock and bond markets will both close early Wednesday ahead of the Christmas Day holiday and will reopen for regular trading hours Friday. Trading will likely be thin Wednesday, particularly during late morning and early afternoon hours as traders head home for the holiday and again Friday. It is fairly common for some traders to sell small portions of their holdings before a holiday or long weekend to protect themselves from unforeseen events that may take place while U.S. markets are closed. That is more common on 3-day weekends than just a day-and-a-half holiday, especially when the geo-political and international financial issues seem to be calm. However, the possibility does exist, so minor losses in trading Wednesday morning will not be of much concern.
Overall, labeling Tuesday as the key day of the week for mortgage rates is an easy call with five report releases and one auction all taking place. Friday should be the calmest day due to the expected light trading and nothing of importance scheduled for release. After Tuesday, I don’t think we have much to be concerned about regarding mortgage rate movement. However, it still would be prudent to watch the markets and maintain contact with your mortgage professional if still floating an interest rate.

Happy Hanukkah – Some Trivia to Start Off the Holiday

This year, Hanukkah (sometimes written Chanukah) starts at sundown on Tuesday, December 16th. It will continue until the evening of Wednesday, December 24th. In Hebrew, the word “hanukkah” means “dedication,” and this holiday celebrates the rededication of the holy Temple in Jerusalem following the victory of a small band of Jewish rebels (called the Maccabees) over the Syrian-Greeks in 165 BCE.

The story is that there was only enough oil to last one night, and the lamps were able to be lit for 8 nights.

The food

Because this is the festival of the oil, traditional foods are fried. You might think the most common one would be the latkes or potato pancakes, but it’s actually the sufganiyot which is a fried donut filled with jelly.

Eating dairy food, especially cheese, is another tradition. Its story is in honor of Judith who, according to legend, saved her village from Syrian attackers. She fed the general Holofernes so much wine and cheese until he passed out. Judith took the general’s sword and chopped off his head which she brought back to her village in a basket. The next morning, the Syrian soldiers were so frightened by seeing the headless body of their leader that they headed for the hills.

The fun

The dreidel is played with and you can win gilt which are chocolate coins. In ye really olden times, the Syrians forbade people from learning the Torah. So the students kept the dreidels around, and pretended to gamble when the Syrians popped by. Outside of Israel, a dreidel has the Hebrew letters “nun,” “gimel,” “hay,” and “shin” on its four sides. These letters stand for “Nes gadol haya sham,” which means, “A great miracle happened there,” referring to Israel. An Israeli dreidel has the letter “pay” rather than “shin.” This stands for “poh,” meaning “here”a great miracle happened here.”

The Hebrew letters also represent Yiddish words that tell how to play the dreidel game. Each player starts with the same amount of candies, chocolate coins (gelt), or other tokens, and puts one in a pot. Players take turns spinning the dreidel, waiting to see which letter lands face up. Nun is for “nisht,” do nothing. Gimel is for “gants,” take the whole pot. Hay is for “halb,” take half. Shin is for “shtel,” add to the pot. The game ends when a single player wins all the tokens.

Thanks to: Hanukkah — Infoplease.com http://www.infoplease.com/spot/hanukkah.html#ixzz2ENeUj7cn for this information.

Eight Things You Didn’t Know About Hanukkah

1. This is actually a minor holiday, but because of its proximity to Christmas, it has become a large, family-centered celebration. (some claim it happened in the late 1800s.)
2. One additional candle is lit on the Menorah (also called the ‘hanukkiyah’) until all nine candles are lit. The tradition is to start on the left, and move the candles one spot to the right so the newest candle is in the far left position.
3. The original Menorah had room for 7 wicks, and after the miracle of having oil to light the lamp for eight days, they added in two more branches to the lamp.
4. The ninth candle is an “attendant candle” and used to light all the others.
5. The dates (to us) always seem to be different. But if you had a Hebrew calendar, you’d note that Hanukkah always starts on the 25th day of the Jewish month of Kislev. This corresponds to beginning four days before the new moon which is the darkest night of the Kislev month symbolizing bringing light in the darkest time of the year.
6. The candles are supposed to burn for at least a half an hour after the stars come out.
7. The menorah should be placed in a window to share the miracle and celebration with passers-by.
8. Gift giving wasn’t a part of the original holiday (lucky for the kids, this got changed)

What’s your favorite holiday? Post it in the comments so we can post trivia and share it with our readers.

Should You Remodel or List Your Home For Sale?

by Blanche Evans

If you’ve been watching a lot of HGTV, you may be in the mood to make changes. Is it time to remodel? Or is it time to sell? Just like anything that gets a lot of use, homes show wear and tear after a few years. Certain color schemes and decorative styles begin to look outdated. And there are some improvements that you may have put off as a new homeowner that you can afford to do now.

Some market conditions are in your favor — interest rates are still extremely low and below where they were a year ago and the economy is improving, so you’ll likely get much of what you spend to improve your home back when it comes time to sell.

The question to answer is this: If you improved your home the way you want, would you want to stay in it for a few more years, or are you ready for a complete change?

Home improvements can be substantial, such as adding a bedroom and bath to the existing footprint of your home or outfitting a kitchen with new countertops, cabinets and appliances. You want your home to support the standards set by your neighborhood, but you also don’t want to end up with the most lavish house on the block.

To get started, put together the right team. If you’ aren’t moving walls or pouring a new foundation, you probably won’t need an architect, but you will need the right contractors, kitchen planners and interior designers to help you put it all together.

You’ll also need to talk to your lender to learn how much you can borrow and whether the current market value will support the facelift.

As you’re putting together bids, you may find more work is required that you weren’t expecting. Plan for problems to come up, change orders and delays on materials, so you won’t get upside down with expenses or sideways with your contractor.

Before you make a decision on remodeling, make sure you are going to get what you want at the price you want to pay and that you’ll be happy with the results for at least several years to come.

If you’re not sure the remodel is the way to go, you can talk to your real estate professional. Be honest with your agent that you are considering remodeling, but that you are also open to finding another home. Your agent might know of homes for sale that have the size, features and finishes you’re wanting. After you view a few homes, you should have a better idea of what you want and what you like.

You and your agent will also discuss selling your home. He or she will create a comparative market analysis of similar homes to yours that have sold recently and are currently for sale so you’ll know what you can reasonably expect to net from the sale of your home. From these homes, you’ll learn how long homes are staying on the market and if other sellers are getting their asking prices. Together you and your real estate professional can discuss a price range for your home, based on its location and condition.

Keep in mind that all markets have ups and downs so what your agent can show you is only a snapshot of what’s true today. If you’re happy with where your home ranks amid the competition, then it should be a good time to list your home for sale.

Change is an evolution, and will bring some upheaval to your life. You’ll either have to open your home to workers or to buyers. But if you come out on the other side with what you and your household desire, it will all be worth it.

Market Commentary for the Week of December 15th

This week has only four monthly economic reports scheduled for release in addition to some key Fed events that could potentially affect mortgage rates. There is data set for release four of the five days, but the more important events will take place the middle of the week. We also need to watch stocks for influence on bond trading and mortgage rates following the recent slide in oil that negatively impacted stocks last week. Generally speaking, stock weakness should be good news for the bond and mortgage markets.
The week opens with November’s Industrial Production report mid-morning Monday. This report gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. Forecasts are calling for a 0.7% increase in output, indicating manufacturing growth. A smaller than expected rise would be good news for bonds, while a stronger reading may result in slightly higher mortgage pricing.
Next up is November’s Housing Starts at 8:30 AM ET Tuesday morning. This data isn’t known to be highly influential on bonds or mortgage pricing, but it does give us an indication of housing sector strength by tracking new home groundbreakings, so it is worth watching. Analysts are expecting to see an increase in new starts, indicating strength in the new home portion of the housing sector. Slowing starts would be favorable for the bond market, although a wide variance is likely needed for the data to cause noticeable movement in the markets or mortgage rates Tuesday.
November’s Consumer Price Index (CPI) will be released at 8:30 AM ET Wednesday. It is similar to last Friday’s Producer Price Index, except it tracks inflationary pressures at the more important consumer level of the economy. Current forecasts show a decline of 0.1% in the overall reading and an increase of 0.1% in the core data that excludes more volatile food and energy prices. This data is one of the most watched inflation indexes, which is extremely important to long-term securities such as mortgage related bonds. Rising inflation erodes the value of a bond’s future fixed interest payments, making them less appealing to investors. That translates into falling bond prices and rising mortgage rates. Therefore, weak readings would be favorable for the bond market and mortgage shoppers.
Wednesday also has some significant FOMC events that can be highly influential on the financial and mortgage markets. The two-day FOMC meeting that began Tuesday will adjourn at 2:00 PM ET Wednesday. It is widely expected that Ms. Yellen and company will not change key short-term interest rates at this meeting, but traders and analysts are anxious to get the Fed’s current economic forecasts and any indication of when they will make their first increase to key short-term rates. Also worth noting is that the meeting is ending earlier than the traditional 2:15 PM because it is one that will be followed by a press conference hosted by Fed Chair Yellen. The meeting will adjourn at 2:00 PM, forecasts will be posted at 2:00 PM and the press conference will begin at 2:30 PM. It is fairly safe to assume that all of that will lead to afternoon volatility in the markets and mortgage rates Wednesday.
The Conference Board will release their Leading Economic Indicators (LEI) for the month of November late Thursday morning. This release attempts to measure or predict economic activity over the next three to six months. It is expected to show a 0.5% increase, meaning that it is predicting economic growth over the next several months. This probably will not have much influence on bond prices or affect mortgage rates unless it shows a much stronger reading than forecasts. The weaker the reading, the better the news it is for bonds and mortgage pricing.
Overall, Wednesday is the key day of the week due to the CPI and the afternoon Fed schedule. The rest of the week’s data and events are considered to be only moderately important, so unless stocks make a major move higher or lower, we should see only minor changes to rates each day. I believe Friday is the best candidate for calmest day. Despite the lack of a lot of highly important data, please maintain contact with your mortgage professional if still floating an interest rate and closing in the near future as the markets can get crazy at any time.

What to Do When Your Identity Is Stolen

What if you were sitting down to review your mortgage paperwork, and were given a poor rate because of bad credit? And you knew you paid everything on time. You should have a score over 750! But you don’t because someone stole your identity, opened up a number of credit lines in your name, and never paid. If you think you should know because they would call, or you’d receive a bill at your address, you’d be mistaken. They can often use a different address and phone number claiming that you just moved. And unfortunately, it happens more often than you’d think, especially during the Holiday Season when you’re using credit cards a lot both in person and online.

Large companies like Home Depot, Toys R Us, and Kohl’s are often the target of identity thieves. It’s easy to open up a credit card, and they can buy items like gift cards. But because the actual amount is usually under $2000, the corporation doesn’t want to spend the time or money to prosecute. But your credit report shows you in default of $10,000.

So What Do I Do?

If your identity was stolen, you need to report it to your local police. A crime was committed, and it needs to be reported. Then you will use that report when you contact the major companies letting them know that a card was opened without your permission. They will be responsible for closing out the account and removing it from your credit file. You also need to put an alert on all three credit bureaus that you were a victim of identity theft. They will lock down your file and work with you and the corporations to remove the false items.

Unfortunately, it doesn’t always end there. Some companies will open up a line of credit, or will sign someone up for a cell phone without checking the report. They’ll just note if there is a credit score. Additionally, the thief might use your information to obtain health care benefits that could come back to you if the bills are unpaid. So even when you think you have things cleaned up, something new could show up even with a locked credit report. Therefore, you need to check regularly.

Here are some resources with checklists and links:

• NoLo Press
• FTC (Federal Trade Commission)
• BBB

Maybe your identity wasn’t fully stolen. But thieves can still draw on your checking or savings or charge against your credit card leaving you with no money and a huge bill.

Can I Prevent This From Happening?

It’s not fool-proof, but there are definitely things you can do to lessen the possibility of having your identity stolen.

1. Lock your credit reports down. It will cost you about $5-10 depending upon where you live and the fees vary by the reporting agency. The good news is that it will cut down on the junk mail you get. Secondly, it will cut down on your impulse purchases because you won’t be able to open up a credit card on the spot. You will need to plan ahead when you make purchases like a home or an automobile.
2. Shred, Shred, Shred. Any item that has personal and identifying information should be shredded before you recycle. This includes your medical statements, credit card statements, bank statements,
3. Change your passwords often. Don’t have them written down. This includes your PINs as well.
4. Review your statements carefully when they arrive. Yes, it’s easy to toss it into the “I’ll get to it later” pile, but the sooner you find something, the easier it is to fix it.
5. Never give your credit card number over the phone to an unsolicited caller. You may genuinely believe in their cause, but it’s best to have them send you a statement, and you can validate the address before you send it.
6. Avoid writing personal checks to people you don’t know. They can use all of the routing and banking information to print checks, and then write checks against your account.
7. Ask your credit card companies to stop sending you promotional checks against your account. Unlike checking accounts, credit card companies don’t keep a signature card, and these are easily used to draw money against your credit card.
8. When purchasing online, make sure you’re buying from a reputable place, and that it’s a secure transaction. You can verify that by looking up at the URL area and seeing if it tells you that it’s secure, or https.
9. Write “Please Ask for Photo ID” on the back of your credit cards in permanent ink. Some people recommend putting tape over it to prevent it from being modified. And then make sure you bring your photo ID with you. Some people recommend signing, but then the thief can practice your signature and use it for other things.
10. Get your credit reports annually and review them carefully.

We hope you never need to use this blog post! Have you ever known anyone who was the victim of identity theft?

Start Building Your Home’s Equity Now

by Blanche Evans

There are two ways to build equity, or ownership, in your home. One is to pay what you owe your lender which reduces the principle owed on your mortgage, and the other is to take advantage of market upswings which increase the value of your home. One way to build equity is to put more money down on the home you want to buy. Lenders have returned to tried and true models of income-to-debt ratios, requiring that borrowers put more money down when they purchase a home. While it’s still possible to get zero-down loans, such as those offered by the VA, most loans with low down payments require mortgage insurance.

For a conventional loan, one eligible for purchase on the secondary market by Fannie Mae or Freddie Mac, requirements are stricter, but there is also more leeway on eligibility. The minimum down payment required is as little as 3% to 5%, under special circumstances, including excellent credit and the willingness to pay private mortgage insurance. But to make sure the loan goes through, most borrowers are putting down as much as 20%.

The more you put down, the more equity you will instantly have. This is important because you need equity in order to sell your home one day so you don’t need to come up with additional cash at settlement.

As you make your house payments, you build equity slowly. The longer you own your home, the less you’ll pay in interest and a greater share will go toward ownership, or building equity.

For example, if you borrow $250,000 at 5%, your monthly payment is $1,342.05. Over 30 years, you’ll pay an additional $233,139 in interest for a total of $483,139.

The first month of paying your mortgage, you’ll pay $1041.67 in interest, and only $300.39 toward reducing your principal. At that rate, building equity may seem like it will take forever. But only two years later, your interest payment lowers to $1011.52 and $330.53 goes toward reducing what you owe your lender.

In five years, $383.91 goes toward reducing principal. To learn more, you can go online and look for mortgage calculators with amortization.

You can build equity faster by adding a little more to your payment, which can remove hundreds of dollars in interest from your payments and allows you to own your home in full much faster. You don’t have to refinance to do this — simply allow more to be deducted from your checking account to be applied to principle, or add an additional payment onto your payment coupon.

The second way to build equity is to allow the market to do it for you. Home values historically beat inflation by one to two percentage points, but the last decade has been anything but typical. However, all markets return to the norm, so assuming a normal market is on the way, your home should appreciate at least one percent annually.

If you purchased your home for $300,000, (hence the $250,000 mortgage), your home’s value should grow $3000 in one year. The next year, your $303,000 home is worth $306,030, and so on. This is all providing that your home’s condition remains exemplary, the jobs outlook continues to be positive, and other market variables go your way.

But one thing is certain, you can’t build equity unless you’re invested. If you want to take advantage of the recovering housing market to build equity, it’s time to invest in a home.

Market Commentary for the Week of December 8th

This week has only three pieces of monthly economic data scheduled for release in addition to a couple of Treasury auctions that have the potential to influence mortgage rates. Two of the economic releases are considered highly important though and the Treasury auctions are the more important set of auctions we regularly deal with, so despite the lack of a busy calendar we still should see noticeable movement in rates this week.
The first events we need to deal with are the two Treasury auctions. Wednesday’s 10-year Note auction is the more important one and will likely have a bigger influence on mortgage rates. Results of the sales will be posted at 1:00 PM ET each day. If they are met with a strong demand from investors, particularly international buyers, we should see strength in the broader bond market and improvements to mortgage pricing during afternoon hours those days. On the other hand, a weak interest in the auctions could lead to upward revisions to mortgage rates.
November’s Retail Sales report is scheduled for release Thursday at 8:30 AM ET. This report will give us a key measurement of consumer spending by tracking sales at retail level establishments. This data is highly important to the markets because consumer spending makes up over two-thirds of the U.S. economy. Rapidly rising consumer spending raises the possibility of seeing solid economic growth. Since long-term securities such as mortgage bonds are usually more appealing to investors during weaker economic conditions, a large increase in retail sales will likely drive bond prices lower and mortgage rates higher Thursday. Current forecasts are calling for an increase of 0.4% in November’s sales.
The second relevant report of the week will be November’s Producer Price Index (PPI) early Friday morning. It measures inflationary pressures at the producer level of the economy. There are two portions of the index that are used- the overall reading and the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices, giving a more stable reading for analysts to consider. If Friday’s release reveals stronger than expected readings, indicating that inflationary pressures are rising, the bond market will probably react negatively and drive mortgage rates higher. If we see in-line or weaker than expected numbers, the bond market should respond well and mortgage rates could fall. Current forecasts are showing a 0.1% decline in the overall index and a 0.1% rise in the core data.
The final report of the week is the release of December’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment late Friday morning. This index measures consumer willingness to spend and can usually have enough of an impact on the financial markets to change mortgage rates slightly if it shows a sizable miss from forecasts. Consumer sentiment or confidence is tracked because the more comfortable consumers are about their own financial situations, the more likely they are to make a large purchase in the near future. Since consumer spending makes up such a large part of our economy, any related data is watched closely. Friday’s release is expected to show a reading of 89.5, which would be a small rise from last month’s final reading of 88.8. A large decline in confidence would be considered good news for the bond market and mortgage rates.
Overall, I suspect Thursday will be the most active day of the week with the consumer spending data and 30-year Bond auction, but Friday’s data can also cause movement in rates. The calmest day will likely be Tuesday. It will probably be a calmer week than last week in terms of mortgage rate movement although we still should see rate changes multiple days. Accordingly, maintaining contact with your mortgage professional is still strongly recommended if still floating an interest rate.

What to Buy In December

Is your credit card fresh as a daisy or worn out after this past weekend with Black Friday and Cyber Monday?

Unlike May and June (wedding and graduation season), you can’t avoid buying stuff in December. There’s always some gift exchange or a deal you can not resist.

So what’s the best way to get more for your money? Read on!

If you’re buying toys, wait until closer to the middle of the month, but not much later. Prices will slowly decline until it reaches a point midway and then it will go up sharply. Retailers believe that if you’re searching for toys close to Christmas, you’re desperate and will pay a premium (and they may be right…)

Look for gift card promotions. Companies like Target will offer gift cards with certain purchases. Other retailers offer gift cards with certain levels (In prior years, we saw Outback and Chili’s advertise that if you bought a gift card for $100, you’d get a bonus gift card worth $25). Some places like iTunes are offering discounted gift cards ($50 card for $40)

Many airlines recently increased their fees for checked baggage, so pack lightly if you’re traveling.

It’s still a good time to buy tools and hardware. Look for significant discounts on drills, wrenches, general tool sets, lawn-care items, and more.

It’s also a great time for kitchenware and small appliances. Check Amazon for lightening deals as well as major retailers.

If you can stand the wait, many places start discounting fresh Christmas trees after the 20th of December. To get the best deal on Christmas decorations, though, you’ll have to wait until December 26th.

What to wait on? Calendars, electronics and jewelry. The Consumer Electronics Show in January is the official launch for many 2015 models, which means that all the goods from 2014 will begin to see a round of discounts. Waiting to buy a calendar is dicey if you really use your calendars, but if you wait until the end of January, you’ll get it for a lot less. Also, beware of gym membership deals. There will be better ones in a few months.

The lowest prices for televisions tend to be around the SuperBowl followed by Black Friday. However, that doesn’t mean there aren’t some really good deals out there now. Many retailers are pushing the plasma televisions since they’ve been end of life’d. Smart HDTVs are also seeing a big push.

Premium laptops will also be on sale this month. Budget and ultraportable were their cheapest last month.

Lifehacker is suggesting that now is the best time to sign up for golf clubs, have a pool installed, and stock up on champagne for that spring or summer wedding.

This is also a great time to buy wedding dresses and real estate, if you’re looking for a new home.

There are rumors abound that many retailers this Black Friday shopping season raised their prices, and then said that the sale price was half off. If the widget normally sold for $25, and they raised the price to $50 and gave you 50% off, you’d not be getting a bargain, now would you. And if you stayed out late, you’d have missed out on important things like sleep.

Thankfully for you, we’re looking out for tools that will help you save money. Here’s an article from CNET on 20+ tools for price watching. It includes a few for Amazon, one specifically for clothes, and others that send alerts when a price drops.

Who do you still have to buy presents for?

9 Reasons to Buy a House Right Now

by Jaymi Naciri

Buying a house is like having a baby: there’s no absolute perfect time to do either. The down payment-interest rate-economic factors-qualification quadrangle can be so confusing. Rising rates, loosening requirements, down payment options, buyer’s markets, seller’s markets – what does it all mean to you if you want to buy a home? The truth is that while the banks might have a magical formula to determine your mortgage-worthiness, determining if the time is right really comes down to three main questions:

• Do you want to buy a home?
• Are you financially prepared?
• Is your credit where it needs to be?

If yes, then go for it. Here are nine reasons to do it now.

1. Prices are good. According to the latest S&P/Case-Shiller report, home prices are still gaining, but have slowed. “The 10-City Composite gained 5.5% year-over-year and the 20-City 5.6%, both down from the 6.7% reported for July,” they said. “The National Index gained 5.1% annually in August compared to 5.6% in July.” This is good news if you were afraid that big price gains would put homeownership out of reach and also bodes well for your long-term equity once you purchase.

2. Rates are low. “Imagine paying over 18% interest on a 30-year fixed mortgage. It’s almost unthinkable. But that was the reality for home buyers in October 1981 — a year when the average rate was almost 17%,” said Yahoo Finance. “The average rate has been 5.18% since the start of this country’s history,” making today’s rates, which hover around historic lows at 4%, sound even better.

3. Loan requirements are softening. They’re not approaching the look-the-other-way-and-stamp-it-approved levels that led to the market crash, but the overly tough restrictions that followed have loosened. “Major lenders are making adjustments,” said The Street. “Wells Fargo has lowered the minimum FICO score for borrowers applying for loans insured by the Federal Housing Administration to 600 from 640.” They also count JPMorgan Chase’s lowered loan-to-value “standards in certain markets for both jumbos and conforming mortgages.” For buyers that can mean an easier road to loan approval, even without a ton of money upfront and perfect credit.

4. FHA loans make it even easier for first-time buyers. If your credit is less than stellar and you don’t have a large down payment, an FHA loan can get you in the door. Credit scores can be as low as 620 to qualify and only 3.5% down is required. Whether you’ve never bought before or have been out of the market for a few years, an FHA loan can be your answer.

5. Fewer buyers around the holidays means less competition for you and more negotiating power. “Sellers who are actively looking to sell their homes during the holiday months — namely, October through December — are serious about shedding the weight of their residences,” said US News. “This often works in favor of savvy buyers looking to get a deal on discounted homes. Having less competition on the buyer’s side can mean lower prices on homes, in addition to fewer counter-offers to compete against.”

6. Rates are predicted to rise. “The Mortgage Bankers Association expects the average rate on a 30-year, fixed rate mortgage to rise slowly to 5.1 percent by the end of 2015,” said the Washington Post. If you want to take advantage of low rates, now is the time.

7. Pent-up demand could zap affordability. “The housing market is about to get even more competitive,” said Yahoo. “The pent-up demand of younger professionals, who moved back in with their parents during the recession, is about to explode. This eager subset of buyers will create some steep competition for homes, especially if they have been saving up to make larger down payments or high ticket offers. If the current homes on the market have more potential buyers, bidding wars develop, and the purchase prices are driven up.

8. “Buying is cheaper than renting in most markets,” said Housingwire. With a little knowledge of loan options and low down payment programs, you can easily flip the switch from renter to homeowner.

9. Because you want to buy a home. There really is no more compelling reason than that. You want it. So make it happen.

Market Commentary for the Week of December 1st

This week has six economic reports set for release, including two that are considered to be highly important to the markets and mortgage rates. November’s manufacturing index from the Institute for Supply Management (ISM) is the first, coming at 10:00 AM ET Monday. This index measures manufacturer sentiment and can have a considerable impact on the financial markets and mortgage rates. Current forecasts call for a decline in sentiment from October to November. October’s reading was previously announced as 59.0. A weaker reading than the expected 58.0 would be good news for the bond market and mortgage rates. A reading above 50 means that more surveyed business executives felt business improved during the month than those who felt it had worsened. The lower the reading the better the news it is for bonds because waning sentiment indicates a slowing manufacturing sector and makes broader economic growth less likely.
Tuesday has nothing of importance scheduled, but Wednesday has three. The first is the ADP Employment report before the markets open Wednesday morning, which has the potential to cause some movement in the markets if it shows much stronger or weaker numbers. This report tracks changes in private-sector jobs of the company’s clients that use them for payroll processing. While it does draw attention, it is my opinion that it is overrated and is not a true reflection of the broader employment picture. It also is not very accurate in predicting results of the monthly government report that follows a couple days later. Still, because we sometimes see a noticeable reaction to the report, it is on this week’s calendar. Analysts are expecting to see 228,000 new private-sector payrolls for November.
The next piece of data that we need to be concerned with also comes early Wednesday morning when revised 3rd Quarter Productivity numbers are posted. This index is expected to show a small upward revision from the preliminary reading of worker productivity. Higher levels of productivity are thought to allow the economy to expand without inflationary pressures rising. This is good news for the bond market because economic growth itself isn’t necessarily bad for the bond market. It’s the conditions around an expanding economy, such as inflation, that hurt bond prices and mortgage rates. Current forecasts are calling for an annual rate of 2.2%, up from the previous estimate of 2.0%. The higher the reading, the better the news for the bond market. Although, this report generally does not have a noticeable impact on mortgage pricing, so it will take a wide variance to draw much attention.
Later Wednesday, the Federal Reserve will release their Beige Book at 2:00 PM ET. This report is named simply after the color of its cover and details economic conditions by Fed region. That information is relied upon heavily during the FOMC meetings when determining monetary policy, so its results can influence bond trading and mortgage rates if it shows any noticeable changes from the last update. More times than not though, this report will not influence the markets enough to cause intra-day changes to mortgage rates, but the potential to do so does exist.
The biggest news of the week comes early Friday morning when the Labor Department posts November’s Employment figures. This is arguably the most important monthly report we see, so its impact on the markets and mortgage rates is often significant. It is comprised of many statistics and readings, but the most watched ones are the unemployment rate, the number of news jobs added or lost during the month and average hourly earnings. Current forecasts call for no change in the unemployment rate of 5.8% while 225,000 new jobs were added to the economy. The income reading is forecasted to show an increase of 0.2%. An ideal scenario for mortgage shoppers would be a higher unemployment rate, a much smaller increase in payrolls (or a decline) and no change in the earnings reading. If we are fortunate enough to hit the trifecta with all three, we should see the stock markets fall, bond prices rise and mortgage rates move much lower Friday. However, stronger than expected readings would likely fuel a stock rally and bond sell-off that would lead to higher mortgage rates.
October’s Factory Orders report will close the week’s calendar late Friday morning. This report is similar to the Durable Goods Orders report that was released last week, except this one includes manufacturing orders for both durable and non-durable goods. This data usually doesn’t have a significant influence on bond trading, particularly when following a major event such as the Employment report. Analysts are expecting to see a 0.2% increase in new orders. The weaker the number, the better the news for bond prices and mortgage rates because it would signal manufacturing sector weakness.
Overall, look for Friday to be the most active day of the week but we could see noticeable movement in rates Monday also. The best candidate for calmest is Tuesday with nothing in terms of relevant economic data set for release. With so much on tap this week, there is plenty of opportunity to see large swings in the major market indexes and mortgage rates multiple days. Accordingly, it would be prudent to maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.