Market Commentary for the Week of August 29th

This week brings us the release of seven pieces of economic data for the markets to digest, including a couple of extremely important reports. There is relevant data being posted each day of the week, but the most important stuff comes during the latter days.

Unlike many Mondays, this one does bring us one of those reports. July’s Personal Income and Outlays report will be released early Monday morning, giving us a measurement of consumer ability to spend and current spending habits. It is expected to show an increase of 0.4% in income and a 0.3% increase in spending. Since consumer spending makes up over two-thirds of the U.S. economy, weaker than expected numbers would be considered good news for the bond market and mortgage rates.

The Conference Board will post their Consumer Confidence Index (CCI) for August late Tuesday morning. This index measures consumer sentiment about their personal financial and employment situations, giving us a measurement of consumer willingness to spend. A decline in confidence would indicate that surveyed consumers probably will not make a large purchase in the immediate future. That would be a sign of economic weakness and should drive bond prices higher, leading to lower mortgage rates Tuesday. It is expected to show a reading of 97.0, which would be a small decline from July’s 97.3. The lower the reading, the better the news for bonds and mortgage pricing.

Wednesday’s only data worth watching is the ADP Employment report before the markets open. This release has the potential to cause some movement in the markets if it shows much stronger or weaker numbers. It report tracks changes in private-sector jobs of the company’s clients that use them for payroll processing. I don’t have much faith in the data but the markets do react to it, so we watch it. It is expected to show 170,000 new private-sector jobs were added last month. A higher number would be negative news for mortgage rates while a much smaller than expected increase would be favorable.

There are two reports scheduled for Thursday. The first is the revised 2nd Quarter Productivity numbers that measure employee productivity in the workplace. Strong levels of productivity allow the economy to expand without inflation concerns. It is expected to show a downward change from the previous estimate of a 0.5% decline. Forecasts are currently calling for a 0.6% decrease, meaning productivity was weaker than previously thought. This would be negative news for the bond market and mortgage rates, but the markets will be more focused on the day’s next release than this data.

Thursday’s big news will be the release of the Institute for Supply Management’s (ISM) manufacturing index at10:00 AM ET. This index measures manufacturer sentiment and is expected to show 52.2, slipping from last month’s reading of 52.6. A reading below 50 is considered a recessionary sign because it means that more surveyed manufacturers felt business worsened during the month than those who felt it had improved. A larger than expected decline in the index would likely cause selling in the stock markets and lead to an improvement in mortgage rates Thursday.

The biggest news of the week comes Friday morning. The Labor Department will post the unemployment rate, number of new jobs added or lost and average hourly earnings for August early Friday morning. The ideal scenario for the bond market and mortgage rates is rising unemployment, a drop in payrolls and earnings to fall slightly. Analysts are expecting to see that the unemployment rate fell 0.1% to 4.8% and that 180,000 jobs were added during the month. Weaker than expected readings would signal employment sector weakness and would be very good news for bonds and mortgage rates Friday. However, if we get stronger than expected numbers, mortgage rates will probably spike higher Friday as it would give the Fed a good reason to raise key short-term interest rates sooner than later.

July’s Factory Orders data will close out this week's calendar late Friday morning. This report measures manufacturing sector strength and is similar to last week’s Durable Goods Orders, but includes orders for both durable and non-durable goods. It is expected to show a 2.0% increase in new orders. A smaller than expected rise would be favorable for bonds, but I don’t see this data causing much movement in rates unless its results vary greatly from forecasts since the big-ticket products portion of the report was released last week and the monthly Employment report is considered to be a key release.

Overall, Friday is likely to be the most important day for mortgage rates but Thursday could also be pretty active. The best candidate for calmest day is Wednesday, assuming that the ADP release shows no surprises. Tuesday also carries the possibility of being one of the calmer days of the week. However, I believe we are in for an active week in the financial and mortgage markets. Therefore, please proceed carefully if still floating an interest rate and closing in the near future.

Market Commentary for the Week of July 25th

    
This week brings us the release of six economic reports that may impact mortgage rates, one of which is considered to be highly influential. In addition to the economic data, there is also another FOMC meeting that certainly has the potential to cause chaos in the markets and a couple of Treasury auctions mid-week. There is at least one event set for every day except Monday, so there is a strong likelihood of seeing noticeable mortgage rate movement and possibly multiple intra-day revisions this week.

June’s New Home Sales report will kick off this week's calendar at 10:00 AM ET Tuesday. This Commerce Department report gives us another measurement of housing sector strength. Analysts are expecting it to show an increase in sales of newly constructed homes, indicating that the new home portion of the housing sector strengthened a little last month. That would be considered negative news for bonds, but since this data tracks only a small percentage of all home sales it usually has little impact on the bond market and mortgage rates unless it varies greatly from forecasts. Last week's Existing Home Sales report covers most of the home sales in the U.S.

Late Tuesday morning the Conference Board will release their Consumer Confidence Index (CCI) for July. This index measures consumer sentiment, giving us an idea of consumer willingness to spend. If consumers are more confident in their own financial and employment situations, they are apt to make large purchases in the near future. This is important because consumer spending makes up such a large portion of our economy. If the CCI reading is weaker than expected, meaning that consumers were less confident than thought and likely will delay making a large personal purchase, we may see bond prices rise and mortgage rates dropTuesday morning. Current forecasts are calling for a reading of 96.0 which would be a weaker reading than June’s 98.0 and indicate consumers are a little less comfortable with their finances than they were last month.

The Commerce Department will post June’s Durable Goods Orders at 8:30 AM ET Wednesday. Current forecasts are calling for a decline in new orders of 1.0% from May to June. This data gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items, or products that are expected to last three or more years. A much stronger than expected number may lead to higher mortgage rates Wednesday morning because it would point towards economic strength. If it reveals a considerably larger decline in new orders, mortgage rates should move lower. It should be noted though that this data is known to be extremely volatile from month to month, so a minor difference between forecasts and the actual reading may not move the markets or mortgage rates.

Wednesday afternoon has the adjournment of the FOMC meeting that begins Tuesday. This is not a meeting that will be followed by a press conference with Fed Chair Yellen nor is it expected to yield a change to key interest rates. Many analysts believe the Fed will make their next increase to key short-term interest rates late this year, not this week. Anything in the post-meeting statement that either confirms or contradicts that theory will cause volatility in the markets. The meeting will adjourn at 2:00 PM ET, so any reaction will come during mid-afternoon hours.

There are also two Treasury auctions that are worth watching this week. 5-year Notes will be sold Tuesday and 7-year Notes on Thursday. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. On the other hand, strong sales usually make bonds more attractive to investors, bringing more funds into the bond market. The buying of bonds that follows translates into lower mortgage rates. Results of the sales will be posted at 1:00 PM ET each auction day, so look for any reaction to come during afternoon hours Wednesday and Thursday.

Friday starts with the key data of the week, the preliminary reading of the 2nd Quarter Gross Domestic Product (GDP) at 8:30 AM ET. This index is considered to be the benchmark indicator of economic growth or weakness. It is the total of all goods and services that are produced in the U.S. and usually has a great deal of influence on the financial markets. This reading is arguably the single most important report we get regularly. Current forecasts are estimating that the economy grew at a 2.6% annual rate during the second quarter, rebounding from the first quarter’s 1.1% annual rate. A stronger rate of growth should hurt bond prices, leading to higher mortgage rates Friday. But a much smaller than expected reading will likely fuel a bond market rally and push mortgage pricing lower since it would indicate the economy was not as strong as many had thought.

Also at 8:30 AM will be the 2nd Quarter Employment Cost Index (ECI) that tracks employer costs for wages and benefits. This release will give us a measurement of wage-inflation. If it shows a large increase, we may see wage inflation concerns rise as employers will need to pass those increases into the pricing of their products and services. That would be bad news for bonds and mortgage shoppers. A smaller than expected increase would be good news for the bond market and mortgage pricing. Current forecasts are showing a rise of 0.6%.

The week's calendar closes with July’s University of Michigan Index of Consumer Sentiment just before 10:00 AM ET that will help us measure consumer optimism about their own financial situations. This data is considered relevant because rising consumer confidence usually translates into higher levels of spending that adds fuel to economic growth and is looked at as bad news for bonds. Friday’s release is an update to the preliminary reading we saw two weeks ago, so unless we see a drastic revision to the preliminary estimate of 89.5, I think the markets will probably shrug off this news.

Overall, I am expecting to see a very active week in the financial and mortgage markets. The calmest day for rates may be Monday. The most active will probably be Wednesday due to the Durable Goods report and FOMC meeting, but it is worth noting that Friday's GDP report can also cause plenty of volatility in the markets itself. There is little doubt that this is going to be an important week for mortgage rates, so it would be prudent to maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.

Market Commentary for the Week of June 20th

      
This week brings us the release of five economic reports for the markets to digest in addition to two Treasury auctions that have the potential to come into play. The week's calendar begins Tuesday morning though when Fed Chair Janet Yellen will start her semi-annual update about the economy and monetary policy before Congress. She will speak before the Senate Banking Committee Tuesday and the House Financial Services Committee Wednesday, each at 10:00am ET. Her testimony will be broadcast and watched very closely. Analysts and traders will be looking for the Fed’s opinion on the status of the economy and their expectations of future growth, inflation and unemployment concerns that will lead to the Fed’s next monetary policy move. These topics should create a great deal of volatility in the markets during the prepared testimony and the question and answer session that follows. If she indicates that inflation may become a point of concern or anything that hints at rapid economic growth, we can expect to see the bond market fall and mortgage rates rise Tuesday.

We usually see the most movement in the markets and mortgage rates during the first day of this testimony as the speaker’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.

Also worth noting about Tuesday is the Fed will be selling debt this week that could affect mortgage rates. These sales may influence broader bond trading enough to affect mortgage rates if they show strong or weak investor demand. There are sales several days but the two most likely to have an impact on rates areTuesday’s 5-year Note sale and Wednesday’s 7-year Note auction. If they are met with a strong demand, we could see bond prices rise during afternoon trading. This could lead to afternoon improvements to mortgage rates also. On the other hand, if the sales draw a lackluster interest from investors, mortgage rates may move slightly higher during afternoon trading those days.

The first of this week’s economic reports comes late Wednesday morning when the National Association of Realtors posts May’s Existing Home Sales. This report tracks resales of existing homes, giving us a measurement of housing sector strength. It is considered to be moderately important to the markets, but can influence mortgage rates if it shows a sizable difference between forecasts and actual results. Analysts are currently expecting to see a small increase in sales, pointing towards a slightly strengthening housing sector. That would be bad news for the bond market and mortgage rates. A weaker housing sector makes overall economic growth more difficult, so a sizable decline would be ideal for the bond market and mortgage shoppers.

Thursday has two monthly reports scheduled to be posted at 10:00 AM ET. May’s New Home Sales report is the first. It helps us measure housing sector strength by tracking sales of newly constructed homes. This report is similar to Wednesday’s Existing Home Sales report, but covers a much smaller portion of sales than that report does. It is expected to show a relatively large drop in sales, but will likely not have much of an impact on mortgage rates because this data gives such a small snapshot of the housing sector. I believe it will take a large rise in sales or a sizable decline for this data to influence mortgage rates.

Also late Thursday morning will be the release of May’s Leading Economic Indicators (LEI). The Conference Board, who is a New York-based business research group, produces this data. The LEI attempts to predict economic activity over the next three to six months. Good news for mortgage rates would be a decline in this index, but it is expected to show a 0.2% increase from April’s reading. This means it is predicting a minor increase in economic growth over the next several months. Since this report is not considered to be of high importance, I don’t see it causing too much movement in rates regardless if it shows a particularly strong or weak reading.

Friday has the two remaining releases, one of which is the most important report of the week. This would be May’s Durable Goods Orders from the Commerce Department early morning, giving us an indication of manufacturing sector strength. It tracks orders at U.S. factories for big-ticket items, or products that are expected to last three or more years such as electronics, appliances and airplanes. This data is known to be quite volatile from month to month and is expected to show a decline of 0.6% in new orders from April to May. A large decline would be the ideal scenario for the bond market and would hopefully lead to an improvement in mortgage pricing as it would indicate manufacturing sector weakness.

The University of Michigan will close out this week’s data when they update their Index of Consumer Sentiment for May late Friday morning. This index measures consumer willingness to spend. If consumers are more comfortable with their own financial and employment situations, they are more apt to make large purchases in the near future, fueling economic growth. Accordingly, any consumer spending related data has the potential to affect bond trading and mortgage rates. A downward revision would be considered good news for bonds and rates. Forecasts are calling for little change from this month’s preliminary reading of 94.3.

Overall, I see Tuesday as the most important day of the week solely because of the semi-annual Fed testimony. Friday may also be pretty active also with the most important economic data of the week. Monday could end up being the calmest day for rates, assuming nothing unexpected happens. We are likely to see a fair amount of movement in the financial and mortgage markets this week. Therefore, it would be prudent to maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.

Market Commentary for the Week of May 9th

     
This week brings us the release of only three economic reports that have the potential to influence mortgage rates. All of the week’s relevant events will take place the middle and latter days, with nothing of importance set for Monday or Tuesday. Two of the reports are considered to be of elevated importance to the bond market and therefore mortgage rates. This raises the possibility of seeing noticeable movement in rates multiple days this week.

Before we get to the week's economic reports, we have to deal with a couple of Treasury auctions. The Treasury will hold a 10-year Note sale Wednesday and a 30-year Bond sale Thursday. Results of the auctions will be posted at 1:00 PM ET each day. If they are met with a strong demand from investors, we could see bond prices rise enough during afternoon trading to cause downward revisions to mortgage rates. However, lackluster bidding in the sales, meaning longer-term securities are losing their appeal, could lead to higher mortgage pricing those afternoons.

The first piece of economic data this week is April’s Retail Sales at 8:30 AM ET Friday morning. This is an extremely important report for the financial markets since it measures consumer spending. Consumer spending makes up over two-thirds of the U.S. economy, so this data can have a pretty significant impact on the markets. Current forecasts are calling for a 0.8% increase in sales from March to April. A weaker than expected level of sales should push bond prices higher and mortgage rates lower Friday morning as it would signal that economic activity may not be as strong as thought. However, an unexpected increase could fuel concerns of economic growth that would lead to stock buying and bond selling, pushing mortgage rates higher.

April’s Producer Price Index (PPI) will also be released at 8:30 AM ET Friday. It helps us track inflationary pressures at the producer level of the economy. If this report reveals weaker than expected readings, indicating inflation is not a concern at the manufacturing level, we should see the bond market improve. The overall index is expected to rise 0.3%, while the core data that excludes more volatile food and energy prices has been forecasted to rise 0.1%. A decline in the core data will be ideal for mortgage shoppers because inflation is the number one nemesis for long-term securities such as mortgage-related bonds. As inflation rises, longer-term securities become less appealing to investors since inflation erodes the value of those securities’ future fixed interest payments. That is one of the reasons why the bond market tends to thrive in weaker economic conditions with low levels of inflation.

May’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment will close out the week’s calendar just before 10:00 AM ET Friday. This index measures consumer willingness to spend, which relates to consumer spending. If consumers are more confident in their own financial situations, they are more apt to make large purchases in the near future. This report usually has a moderate impact on the financial markets though, because it is not exactly factual data. It is expected to show a reading of 89.7, which would be an increase from April’s final reading of 89.0, indicating consumers are more confident than last month. If it shows a large decline in consumer confidence, bond prices could rise and mortgage rates would move slightly lower because waning confidence means consumers are less apt to make a large purchase in the near future. I suspect that the earlier reports will draw the most attention Friday and have the bigger impact on mortgage rates.

Overall, the calmest day for mortgage rates will likely be Tuesday while the best candidate for most active day is Friday. We also need to watch stocks for mortgage rate movement. Generally speaking, stock weakness usually makes bonds more attractive while stock gains tend to draw funds from bonds, leading to higher mortgage rates.

Market Commentary for the Week of May 2nd

      
This week brings us the release of five pieces of economic data that are likely to influence mortgage rates. While that's not an overly large number of reports, it is worth noting that two of them are extremely important and they all come over only three days. That leads me to believe it is going to be a very active week for the financial and mortgage markets.

The week’s calendar begins Monday with the release of April's Institute for Supply Management's (ISM) manufacturing index at 10:00 AM ET. This is usually the first important economic report released each month and gives us an indication of manufacturer sentiment. A reading above 50 means that more surveyed trade executives felt business improved during the month than those who felt it had worsened. This points toward more manufacturing activity and could hurt bond prices, pushing mortgage rates higher. Analysts are expecting to see a reading of 51.4, down slightly from March’s 51.8. Ideally, bond traders would like to see a reading below 50.0 as it would hint at contraction in the manufacturing sector rather than growth, but a decline from March’s level would still be good news for mortgage shoppers.

Tuesday has nothing in terms of economic reports that we need to be concerned with, but Wednesday has three. The ADP Employment report is set for release early 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 ADP’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 accurate in predicting results of the monthly government report that usually follows a couple days later. Still, because we do often see a reaction to the report, we should be watching it. Analysts are expecting it to show that 196,000 new payrolls were added. The lower the number of jobs, the better the news it is for mortgage rates.

The second report of the day will come from the Labor Department, who will release its 1st Quarter Productivity and Costs data during early morning hours. This information helps us measure employee productivity in the workplace. High levels of productivity help allow low-inflationary economic growth. If employee productivity is rapidly rising, the bond market should react favorably. However, a sizable decline could cause bond prices to drop and mortgage rates to rise slightly Wednesday morning. It is expected to show a 1.4% drop in worker productivity during the first three months of the year.

Wednesday's final report will be February’s Factory Orders at 10:00 AM ET. This data is similar to the Durable Goods Orders report that was posted last week, except it includes orders for both durable and non-durable goods. It will give us another measurement of manufacturing sector strength. It is considered to be only moderately important to the bond and mortgage markets, so unless it varies greatly from forecasts of a 0.5% increase, I suspect that the data will have a minimal impact on Wednesday’s mortgage rates.

The biggest news of the week will come early Friday morning when the Labor Department posts March’s Employment report, revealing the U.S. unemployment rate and the number of jobs added or lost during the month. This is an extremely important report to the financial and mortgage markets. It is expected to show that the unemployment rate was unchanged at 5.0% and that approximately 207,000 payrolls were added to the economy during the month. A higher unemployment rate and a much smaller than expected payroll number would be good news for bonds and would likely push mortgage rates lower Friday morning because it would indicate weaker than thought conditions in the employment sector of the economy. However, stronger than expected results would probably fuel a stock rally and bond selling that leads to a sizable increase in mortgage pricing.

Overall, Friday is the single most important day of the week due to the significance of the monthly Employment report, but Monday’s ISM report is considered highly important also. Tuesday is the best candidate for lightest day because traders will probably be making adjustments Thursday before Friday's key economic release. Due to the significance of some of this week's data, I highly recommend maintaining contact with your mortgage professional this week if still floating an interest rate.

What You Need to Know About PMI

  
If you are looking into buying a home, you may have come across the acronym PMI, which stands for private mortgage insurance. While PMI results in additional monthly or annual payments, it may be financially beneficial to consider a mortgage with a PMI plan. Consult with your real estate agent or mortgage loan officer to determine whether PMI is appropriate for your financial situation.

What PMI Is

If your down payment is less than 20% of your home's value, the lender may want you to purchase PMI to cover its losses in case you default on the payments. Typically, you will pay a PMI monthly along with each month’s mortgage payment. Your PMI can be canceled at your request, in writing, when you reach 20% equity in your home based on your original purchase price if your mortgage payments are current and you have a good payment history. By federal law your PMI payments will automatically stop when you acquire 22% equity in your home based on the original appraised value of the house as long as your mortgage payments are current.

What PMI Isn’t

PMI is different than FHA. Recent FHA-insured loans require payment of mortgage insurance premiums for the life of the loan. The mortgage insurance premiums can’t be canceled. Instead, you have to refinance the loan.
PMI is also different from homeowner’s insurance. Homeowner’s insurance protects the owner of the home, who also pays the insurance premiums. Private mortgage insurance, on the other hand, is paid by the homeowner monthly but protects the mortgage lender.



According to Bankrate.com, PMI usually costs between .5 and 1 percent of the total loan amount. This figure is the annual premium, which is divided into monthly payments. According to Allie Mae, average monthly costs tend to run between $50 and $80 per month. However, prices also vary based on down payment amounts and the type of mortgage. So talk with your loan professional if it’s required for you, and how much it will add to your monthly costs.

So, if your home increases dramatically in value, then it’s time to look into canceling your PMI. In general, on a 30 year fixed rate mortgage, it takes approximately 15 years to build up to 22% equity. This may seem a little astonishing, but it’s in the nature of an amortized loan. You pay mostly interest in the beginning and slowly chip away at the principal. This is why it’s great to pay even a few extra dollars a month towards the principal of the loan. So your next step would be to pay for an appraisal. If your equity is 20% or greater, request that your PMI be canceled in writing. (And put the money that went towards PMI directly to your loan. You will pay it down even faster, and you’ve already learned you can live without that extra money each month.)

If you’re applying for a VA loan, you should never be required to pay PMI. If it looks like it’s added in, double check with your loan officer that the loan is a VA specific loan or perhaps the fees are for something else.

5 Smart Strategies to Win Sellers Over

  In a tight market, you want your offer to be the winner. Often, buyers will fixate on purchase price and mortgage size overlooking opportunities to save money on both.

Usually, the lower the purchase price, the smaller the mortgage a buyer must borrow. We’re not suggesting that buyers buy less or resort to trickery or pressure to arrive at an attractive lower purchase price. Nor, are we suggesting a price chopped by tens of thousands. Instead, by adding value to the components of an offer, a lower purchase price may be acceptable to the seller.

Market value is not one price, but is represented by a price range. This means a property can sell at market value at any price across this range, especially when the offer is taken as a sum total of value for the seller, not just at its stated price.

By planning ahead and being prepared, you can significantly improve your bargaining position with sellers. Here are five smart value strategies to ensure the entire offer to purchase has value to the seller beyond the purchase price.

#1 Match Seller Closing Date

Prepare for home buying by becoming as flexible as possible about when the transaction closes. If you offer to match the seller’s best closing date, you may be saving them from incurring significant cost. Even the difference between popular moving dates and lower-fee moving dates can represent value for sellers. This savings may be reflected in a lower selling price.

Check out your lease options if you’re a tenant, so you know exactly how much it will cost you to close in 30 days, 6 months, or whenever suits seller needs. If you have a home to sell, consult your real estate salesperson to determine whether to sell or buy first. If the latter makes more sense in your market, get numbers on bridge financing, that is, the cost of owning two homes at once, so you know, in advance, exactly how much closing-date flexibility you have and what’s at risk. Obviously, if family or friends can help with temporary housing, furniture storage, and/or financing, you may have an advantage over other buyers.

#2 No Conditions

When faced with a firm, no-conditions offer to purchase, a seller may be tempted to accept a lower purchase price than if the offer is full of “ifs” and “maybes.” Conditions for financing, home inspection, and other significant concerns beyond buyer’s control cannot always prudently be removed, but when they can, buyers benefit. Paying for a home inspection before making an offer or arranging lender commitment in advance can provide a buyer with bargaining leverage.

#3 Don’t Ask for More

Avoid including appliances, light fixtures, furniture, or other items not automatically and legally considered part of the house, townhome, or condominium. Since appliances no longer last the decades they used to, its crazy to purchase them, or any other furnishings, second-hand through your offer. By including them in the purchase price, buyers may end up paying mortgage interest on these furnishings for decades. On the other hand, selling used appliances and furnishings online is easy for sellers who end up with cash in hand.

#4 Personalize the Offer

Sellers who love their home see value in buyers who “get” the property and who may even plan to realize a dream sellers had, but did not complete. Providing details in a letter, short video, or photos about why purchasing the seller’s home is important can also add weight to your offer. Personalize the offer and emphasize why buyers can and will close as promised. Sometimes, sellers can be won over by offering something of value to them that is uniquely available to the buyer. For instance, one experienced restauranteur/buyer offered to cook and serve at a dinner party hosted by the seller. Your real estate professional may have suggestions about what would sway sellers and add value without overly complicating the real estate transaction. Which service, experience, or convenience do you have access to that would represent value and savings to a seller?

#5 Negotiation Prowess

Market value is represented by a price range, which means a property can sell at market value, and be sold at any price across this range. Further, when the offer is taken as a sum total of value for the seller, emphasis is taken off the purchase price. Explaining these concepts, calculating full offer value, and convincing the seller of the unique opportunity provided by the buyer employs the skills of the real estate professional representing the buyer. Take time to engage a strong professional negotiator who can convince sellers how the buyer’s lower purchase price represents full value to the seller.

Prepare, in advance, to present multi-pronged value in your offer to purchase, and you may benefit with an accepted offer and perhaps a smaller mortgage which carries lower overall mortgage interest cost.

Written by PJ Wade

Market Commentary for the Week of April 25th

      
This week brings us the release of seven economic reports that may affect mortgage rates in addition to an FOMC meeting and a couple Treasury auctions. One those reports is considered to be extremely important to the financial and mortgage markets and can cause a great deal of volatility. Throw in the FOMC meeting and we have the makings of a highly important week, not only for mortgage rates but also for the broader financial markets.

The week kicks off late Monday morning when March’s New Home Sales numbers are posted. This Commerce Department report tracks a much smaller portion of all home sales than last week's Existing Home Sales report did. It also gives us an indication of housing sector strength and future mortgage credit demand, however, unless it varies greatly from analysts’ forecasts I am not expecting the data to cause much movement in mortgage rates. Analysts are currently forecasting an increase in sales of newly constructed homes. Good news for mortgage rates would be a sizable decline in sales.

Tuesday has two reports scheduled that we need to watch. The first of those two is the more important and comes at 8:30 AM ET. That is when March’s Durable Goods Orders will be released. This report gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. These are products that are expected to last three or more years, such as appliances, electronics and airplanes. Current forecasts are calling for an increase in new orders of 1.7%. This would be a sign of manufacturing sector strength, but this data can be quite volatile from month-to-month. Therefore, a small variance between forecasts and the actual results will not heavily influence the markets or mortgage rates. A large decline would be considered good news for bonds and mortgage pricing, while a large rise would indicate strength in the sector. A sign of solid manufacturing growth could lead to higher mortgage rates Tuesday.

April’s Consumer Confidence Index (CCI) will be posted at 10:00 AM ET Tuesday. This index is considered to be an indicator of future spending by consumers. The Conference Board surveys 5,000 consumers from across the country about their personal financial situations. If sentiment is strong or rising, it is believed that consumers are more apt to make large purchases in the near future. However, if they are concerned about issues such as job security and savings, they will probably delay making large purchases. The latter is better for the bond market and mortgage rates because the expected slowdown in spending would keep inflation and economic growth to a minimum. On the other hand, a sizable increase could hurt the bond market, pushing mortgage rates higher Tuesday. It is expected to show a reading of 96.0, which would be a small decline from March’s 96.2 reading. The lower the reading, the better the news it is for mortgage rates.

This week’s FOMC meeting will begin Tuesday and adjourn Wednesday afternoon. It will likely adjourn with an announcement of no change to key short-term interest rates, but we may see some volatility in the markets following the post-meeting statement. If the statement gives any hint of change in their current forecasts on when they expect to adjust key short-term interest rates again, we could see a sizable change to mortgage rates Wednesday afternoon. This meeting will not be followed by a Fed press conference or economic projections.

Thursday has the most important report, not only this week but arguably in general. At 8:30 AM ET, the preliminary version of the 1st Quarter Gross Domestic Product (GDP) will be released. There is a strong argument to be made that this is the single most important report that we see on a regular basis. The GDP is the sum of all products and services produced in the U.S. and is considered to be the best measure of economic growth or contraction. I expect this report to cause sizable movement in the financial marketsThursday and therefore the mortgage market also. Analysts are expecting it to show that the economy grew at an annual rate of 0.8% during the first three months of this year. That would be a much slower pace than the 1.4% pace of the final quarter of last year. A weaker rate of growth would be considered good news for mortgage rates. But a stronger than expected reading would almost certainly cause stock prices to rise and bond prices to fall, leading to higher mortgage rates Thursday morning.

Friday has the final three economic reports, starting with March’s Personal Income and Outlays data at 8:30 AM ET. It helps us measure consumers’ ability to spend and current spending habits. This information is important to the mortgage market due to the influence that consumer spending-related data has on the financial markets. If a consumer’s income is rising, they have the ability to make additional purchases in the near future, fueling economic growth. This raises inflation concerns and has a negative impact on the bond market and mortgage rates. Current forecasts are calling for a 0.3% increase in the income reading and a 0.2% rise in spending. If we see smaller than expected readings, the bond market should open higher Fridaymorning.

Also early Friday is the 1st Quarter Employment Cost Index (ECI). This index tracks employer costs for wages and benefits, giving us a measurement of wage-inflation. If it shows a large increase, we may see wage inflation concerns rise as employers will need to pass those increases into the pricing of their products and services. That would cause the bond market to fall and mortgage rates to rise. A smaller than expected increase would be good news for the bond market and mortgage pricing although I doubt this report will affect mortgage rates. Current forecasts are showing a rise of 0.6%.

The week closes with the University of Michigan's revised Index of Consumer Sentiment for April just before10:00 AM ET Friday. This report gives us an indication of consumer sentiment and their willingness to spend. Current forecasts are calling for a rise from the preliminary reading of 89.7. This means that surveyed consumers were a little more optimistic about their own financial situations as they were earlier this month. This data is relevant because if consumers feel better about their own financial and employment situations, they are more apt to make a large purchase in the near future, fueling economic growth. I don’t expect this report to have a significant impact on bonds and mortgage pricing unless it shows a noticeable revision.

In addition to this week’s economic reports, there are two relatively important Treasury auctions that may also influence bond trading enough to affect mortgage rates. There will be an auction of 5-year Treasury NotesTuesday and 7-year Notes on Thursday. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. On the other hand, strong sales usually make government securities more attractive to investors and bring more funds into bonds. The buying of bonds that follows usually translates into lower mortgage rates. Results of the sales will be posted at 1:00 PM ET each auction day, so look for any reaction to come during afternoon hours.

Overall, I am expecting it to be a pretty active week for the markets and mortgage rates. We have several days that appear likely to be particularly volatile. Wednesday looks to be the best candidate for most important due to the FOMC meeting but Thursday's GDP reading can easily be a market-mover. The calmest day could be Monday, although I would not be surprised to still see some movement as investors prepare for this week’s activities. If floating an interest rate and closing in the near future, I strongly recommend maintaining contact with your mortgage professional this week.

Market Commentary for the Week of April 18th - Tax Day!

     
This week has only three pieces of economic data scheduled for release that have the potential to influence mortgage rates, none of which are considered to be key or highly important reports. All of them are set to be posted the middle days, so we could see the most movement in rates mid-week. We also need to watch stocks since we are still in corporate earnings season. There is nothing of importance scheduled for Monday, meaning we can look towards stocks to help determine bond and mortgage rate direction early in the week.

March’s Housing Starts will start the week's releases early Tuesday morning. This report tracks groundbreakings of new home construction, giving us a measurement of housing sector strength and future demand for mortgage credit. It is not considered to be highly important to the markets but does draw enough attention to influence trading if it reveals surprisingly strong or weak numbers. The report will be posted at8:30 AM ET and is expected to show a small decline in starts from February to March. Good news for mortgage rates would be a sizable decline in starts that points toward housing sector weakness.

Next up is March’s Existing Homes Sales numbers from the National Association of Realtors at 10:00 AM ETWednesday. This report gives us an indication of housing sector strength and mortgage credit demand. It is considered to be moderately important to the markets, but can influence mortgage pricing if it shows a sizable variance from forecasts. Ideally, the bond market would like to see a drop in home resales because a soft housing sector makes broader economic growth more difficult. Analysts are expecting to see an increase in sales between February and March. The larger the increase, the worse the news it is for bonds and mortgage rates.

The third and final monthly release will come from the Conference Board late Thursday morning when they post their Leading Economic Indicators (LEI) for March. This data attempts to predict economic activity over the next three to six months. It is also considered to be only a moderately important report, so at best we can expect to see a slight movement in rates as a result of this data. It is expected to show a 0.4% increase from February’s reading, meaning it is predicting moderate growth in economic activity over the next several months. A decline would be considered good news for the bond market and could lead to slightly lower mortgage rates.

Overall, there is nothing scheduled this week that is expected to create much volatility or be a market mover. Chances are decent that we will see a fairly calm week for mortgage rates unless stocks make a significant move or something unexpected happens. I don't see any particular day as a good candidate for most important of the week. Still, despite the lack of key economic data, it would still be prudent to maintain contact with your mortgage professional if floating an interest rate and market conditions can change at any time.

Market Commentary for the Week of April 11th

      
This week brings us the release of six economic reports that have the potential to affect mortgage rates in addition to a couple of Treasury auctions. We also have the start of corporate earnings season that can significantly impact the stock markets and help direct funds into or away from bonds.

There is nothing of importance set for Monday or Tuesday. That leaves stocks as the most likely cause of a noticeable move in mortgage rates. Strong earnings reports should fuel a stock rally that pressures bonds and leads to higher mortgage rates. On the other hand, disappointing earnings news should make bonds more attractive to investors and lead to rate improvements.

The Commerce Department will start this week’s activities with the release of March’s Retail Sales data at8:30 AM ET Wednesday morning. This piece of data gives us a measurement of consumer spending, which is very important because consumer spending makes up over two-thirds of the U.S. economy. Forecasts are calling for a 0.1% increase in sales from February to March. If we see a larger increase in spending, the bond market will likely fall and mortgage rates will rise as it would indicate consumers are spending more than thought, fueling economic growth. However, a weaker than expected level of sales could push bond prices higher and mortgage rates lower Wednesday.

Also early Wednesday morning, the Labor Department will post March’s Producer Price Index (PPI). It will give us an important measurement of inflationary pressures at the producer level of the economy. There are two portions of the report that analysts watch- the overall reading and the core data. The core data is more important to market participants because it excludes more volatile food and energy prices. If it shows rapidly rising prices, inflation fears may hurt bond prices since it erodes the value of a bond’s future fixed interest payments and cause the Fed to raise key short-term rates sooner. A good size decline in prices would be good news for the bond market and mortgage rates. Current forecasts are calling for a 0.3% increase in the overall reading and a 0.2% rise in the core data.

The Federal Reserve’s Beige Book report will be posted Wednesday afternoon. This report is named simply after the color of its cover but details economic conditions throughout the U.S. by Fed region. Since the Fed relies heavily on the contents of this report during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any significant surprises. Generally speaking, signs of strong economic growth or inflation rising from the last update would be considered negative for bonds and mortgage rates. Slowing economic conditions with little sign of inflationary pressures would be ideal for mortgage rates. The report will be released at 2:00 PM ET, so any reaction will come during mid-afternoon trading.

The two Treasury auctions are scheduled for Wednesday and Thursday. There is a 10-year Treasury Note sale Wednesday and a 30-year Bond sale Thursday. We could see some weakness in bonds ahead of the sales as participating firms sell current holdings to prepare for them. This weakness is usually only temporary if the sales are met with a decent demand. The results of the auctions will be posted at 1:00 PM ET each day. If the demand from investors was strong, the bond market could rally during afternoon trading, leading to lower mortgage rates. If the sales were met with a poor demand, the afternoon weakness may cause upward revisions to mortgage pricing Wednesday and/or Thursday afternoon.

Thursday’s only monthly data is March’s Consumer Price Index (CPI), coming at 8:30 AM ET. This index is one of the more important pieces of data the bond market gets each month. It is similar to Wednesday’s PPI but measures inflationary pressures at the consumer level of the economy. If inflation is rapidly rising, bonds become less appealing to investors, leading to bond selling and higher mortgage rates. As with the PPI, there are two readings in the index that traders watch- the overall and the core data. Analysts are expecting to see a 0.3% rise in the overall readings and a 0.1% increase in the core reading. The core data is the more important reading, which ideally would show a decline in prices at the consumer level, keeping inflation concerns subdued.

Friday has two pieces of economic data worth watching. The first of the day will be March’s Industrial Production data at 9:15 AM ET. It tracks output at U.S. factories, mines and utilities, translating into an indication of manufacturing sector strength. Current forecasts are calling for no change in the level of production from February's level. This data is considered to be only moderately important to rates, so it will take more than just a slight variance to influence bond trading and mortgage pricing. Signs of manufacturing sector strength are considered negative news for mortgage rates, while a large decline in output would be favorable news for the bond market and mortgage shoppers.

The week's calendar will close with the release of the University of Michigan’s Index of Consumer Sentiment at 9:55 AM ET Friday. This index will give us an indication of consumer confidence, which hints at consumers’ willingness to spend. If confidence is rising, consumers are more apt to make large purchases. But, if they are growing more concerned of their personal financial or employment situations, they probably will delay making that purchase. This influences future consumer spending data and can have a moderate impact on the financial markets. Good news would be a sizable decline from March’s 91.0 reading. Current forecasts are calling for a reading of approximately 92.0.

Overall, look for Wednesday to be the key day of the week with a couple of important economic releases and the 10-year Treasury Note auction. The calmest day could be Monday or possibly Tuesday. Because we also have earnings reports to watch this week in addition to the economic releases, there is a high probability of seeing an active week in the financial and mortgage markets. 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 April 4th

This week has little in terms of economic data scheduled that is expected to influence mortgage rates with only one relevant monthly report and the minutes from the most recent FOMC meeting on the calendar. This means stocks may have a bigger impact on bonds and mortgage pricing than they usually do and makes it harder to predict which day(s) will be the most active.

February’s Factory Orders will be released late Monday morning. This data is similar to the Durable Goods Orders report, except it includes orders for both durable and non-durable goods. It will give us another measurement of manufacturing sector strength. This report is considered to be only moderately important to the bond and mortgage markets, so unless it varies greatly from forecasts of a 1.6% decline, I suspect that the data will have a minimal impact on Thursday’s mortgage rates.

The biggest event of the week will come Wednesday afternoon when the minutes from the last FOMC meeting will be released. Market participants will be looking at them closely as they give us insight to the Fed’s current thought process and individual Fed member opinions. Any surprises in the 2:00 PM ET release, particularly about inflation, economic conditions or when the next rate hike will take place, could cause afternoon volatility in the markets Wednesday and possible changes in mortgage pricing.

Overall, look for the most movement in rates the mid part of the week. Wednesday could be the most active day of the week if the FOMC minutes reveal any surprises. If not, the best bet would be Monday. Tuesday appears to be the lightest and will probably be the calmest day for mortgage rates. Look for the stock markets to also influence bond trading and mortgage rates a good part of the week due to the light economic release schedule. I am expecting it to be a relatively calm week for the mortgage market, but that can change at any time so please maintain contact with your mortgage professional if still floating an interest rate.

What to Buy April 2016

      
We’re a few days early, but here’s all the things to buy and to avoid in April. And we found freebies for this month.

What’s Free?

Some fast-food outlets and nationwide chains will be offering free items on April 15 aka Tax Day. If it’s anything like last year, then you should be on the lookout for opportunities to get a free cup of coffee, free breakfast foods, or free side orders or desserts with the purchase of an entr?e.

What’s A Great Deal?

If you’ve been wanting to buy an Apple Watch, do not buy from Apple. While they may have slashed the price by $50, you can find better prices from Target and Best Buy. You will have to regularly monitor the ads. Look for prices around $249. And DealNews is predicting it could drop to $199 at Target since they consistently offer $100 off the cost of the Apple Watch.

Generally the rule of thumb is to wait about two months after a new season of apparel hits retail stores before you’ll see sizable discounts. So retailers begain debuting Spring clothing in February. April is that two month sweet spot. Look for 15-30% off on Spring apparel and clearance discounts on Winter wear.

Planning ahead for Mother’s Day? There are some good deals out on jewelry right now, and the prices should stay reasonable throughout April. Expect the prices to increase in May the closer you get to Mother’s Day.

If you have the time, now is a great time for a Canadian vacation. The US dollar is rallying and the Canadian loonie’s valued at a 12-year low. Even airfares have dropped 15% in the last two years. If you’re traveling domestically, American and Southwest are both offering some bargains. Spend some time poking around and book that flight.

For TV sets, the best deals are still on name-brand 55″ HDTVs. The price has dropped below $500. Even 4K TVs have some really good deals from $700. Look at the price of last year’s models as they will be discounted to clear room for the new 2016 models.

What to Avoid?

Wait two more months for deals on the new iPad Pro. They’re normally introduced in October right before Black Friday. Then Apple offers modest deals on the iPad about two months after the release of the product. So, DealNews is anticipating seeing the 9.7″ iPad Pro for about $527 by the end of May. If you can wait another two more months, you can expect to see the tablet starting at around $467.

Hold off on laptops until the Back to School deals start this summer.

Spring cleaning fever hitting hard? Hold off on a new vacuum. The prices are better in November. Black Friday seems to have the best prices for vacuums for the entire year.

Ready to replace your mattress? Wait until the big Memorial Day sales.

What’s In Season?

Cooking with the seasons means choosing fruits and vegetables that are at the peak of freshness and flavor. Buying locally grown produce is the best: local produce is less likely to be damaged, uses less energy to transport, ripens more naturally and you support your local economy.

Some of the fruits and vegetables that are in season for April include:

• Artichokes
• Arugula (Rocket)
• Asparagus
• Beans
• Beets
• Chicory
• Chives
• Dandelion greens
• Fava Beans
• Fiddlehead Fern
• Horseradish
• Leeks (end of season)
• Lettuce (leaf and head)
• Limes
• Morel Mushrooms
• Oranges
• Papayas
• Peas
• Ramps
• Rhubarb
• Shallots
• Strawberries
• Sweet Onions
• Turnips
• Watercress

Market Commentary for the Week of March 21st

     
This week brings us the release of only four pieces of relevant economic data for the markets to digest. However, there are only three and a half trading days for it to be posted due to the Good Friday holiday. Most of the reports can influence mortgage rates if they show surprises, but none of them are considered extremely important or key data.

The first will come later this morning when February’s Existing Home Sales report is posted by the National Association of Realtors. It will give us a measurement of housing sector strength and mortgage credit demand. It is expected to reveal a decline in home resales, meaning the housing sector softened last month. Ideally, bond traders would prefer to see a large decline in sales, pointing towards a rapidly weakening housing sector. Bad news would be a sizable increase in sales, indicating that the housing sector is gaining momentum. That could be troublesome for the bond market and mortgage rates because housing strength makes broader economic growth more likely.

Tomorrow has nothing of importance scheduled to be posted. Wednesday's sole report is February’s New Home Sales figures. The Commerce Department is expected to announce an increase in sales of newly constructed homes. This report tracks a much smaller percentage of home sales than Monday’s Existing Home Sales report covered, so it should have a much weaker influence on the markets and mortgage pricing. A large increase in sales would be negative for the bond market and mortgage pricing because it would point towards economic strength.

February’s Durable Goods Orders will be released Thursday at 8:30 AM ET. This Commerce Department report gives us a measurement of manufacturing sector strength by tracking new orders for big-ticket items, or products that are expected to last three or more years such as electronics, appliances and airplanes. This data is known to be volatile from month to month but is still considered to be of fairly high importance to the markets. Analysts are expecting it to show a decline in new orders of approximately 2.9%. An increase in orders would be considered negative for bonds as it would indicate economic strength and could lead to higher mortgage rates Thursday morning. Since these orders are volatile, it will take a wider variance from forecasts for it to move mortgage rates than other data requires.

Friday has the last piece of data this week. The final revision to the 4th Quarter GDP will at 8:30 AM ET. This is the second and final revision to January’s preliminary reading of the U.S. Gross Domestic Product, or the sum of all goods and services produced in the U.S. The GDP is the benchmark measurement of economic activity. It is expected to show that the economy grew at an annual pace of 1.0% last quarter, unchanged from the previous estimate that was released last month. Analysts are now more concerned with next month’s preliminary reading of the 1st quarter than data from three to six months ago. Because the markets are closed Friday, we won't see a reaction to this report until they reopen next Monday.

The bond market is expected to close early Thursday ahead of the Good Friday holiday. The stock and bond markets will be closed all day Friday and will reopen for regular trading Monday. It is common to see some pressure in bonds as investors make moves to protect themselves over the long holiday, so don't be surprised if bonds weaken slightly early Thursday afternoon before closing. The data itself isn't of much concern but the benchmark 10-year Treasury Note yield closed at 1.87% Friday. Anything above 1.90% is a big concern, in my opinion, as it makes a move about 2.00% likely. Since it slipped below 1.90%, a move downward is more of a possibility than it was the past two weeks. There is potential gains by floating a rate currently. Unfortunately, there is also an elevated risk of a quick upward move in yields and mortgage rates. Therefore, if still floating, please maintain contact with your mortgage professional.

4 Main Ways Your Location Can Affect Your Home Value

      
Have you heard of “the Starbucks effect?” It was coined a few years ago to describe the higher real estate values associated with living close to the coffee house. But being within easy striking distance of a Grande Skinny Vanilla Latte isn’t the only thing that can help boost your home value. Then again, not every location can help build equity. Chose incorrectly, and you could see your value drop – even if your house is great.

1. Being close to schools

The good: Families seek out neighborhoods with good schools for obvious reasons. Living close to a quality elementary school is especially desirable for parents who envision walking with their young children in the morning.

From a value standpoint, a location close to well-performing schools can be a smart decision for buyers regardless of their family status. “Living near a high-scoring school can increase your home’s value by over $200,000, according to the Brookings Institution,” said AOL.

The not so good: But, being too close to a school – no matter how good it might be – may be a deterrent for some buyers, which could end up hurting your bottom line. If you’re in the path of the school pickup and drop-off, which creates considerable traffic, or directly across the street from a playground, which means there is noise throughout the day, you could have trouble when it comes time to sell. A location that is close enough to be easily accessible but out of range of the daily inconveniences is often the best option.

2. Being close to conveniences

The good: “The Starbucks effect” is tangible: Data has shown that, “Between 1997 and 2013, homes closer to the coffee shop increased in value by 96%, compared to 65% for all U.S. homes,” said CNN Money.

Now Starbucks has company, with a new report that shows that proximity to a high-end grocery store – namely Trader Joe’s or Whole Foods – can also raise home values considerably.

“Between 1997 and 2014, homes near the two grocery chains were consistently worth more than the median U.S. home,” said Business Insider. “By the end of 2014, homes within a mile of either store were worth more than twice as much as the median home in the rest of the country. The analysis found that 2 years after a new Trader Joe’s opened, home values within one mile went up by 10 percentage points more than homes in the rest of the city.

The not so good: But, that doesn’t mean all area amenities boost home value. Adult entertainment spots, industrial businesses, a nearby airport that puts the home in the path of flights, and small businesses like tattoo parlors, check cashing, cash advance, or pawn shops that can be indicators of a lower-income or high-crime area can drive people away.

3. Being convenient to freeways

The good: A location close to major thoroughfares can be a selling point since it helps homeowners cut down on the dreaded daily commute. Many suburbs require an additional 10 to 20 minutes in the car after exiting the highway. Promoting the convenience of a home closer in can help it stand apart.

The not so good: Having a car fly off the freeway onto your roof is not ideal. Neither is having to endure the daily noise, congestion, and pollution of living right next to the freeway. If it bothers you, it’s going to bother buyers when you sell. Being close – but not TOO close – is key.

4. Quiet location

The good: A home that’s in a peaceful area surrounded by nature may be a benefit to buyers seeking a serene setting. A house that backs up to nature or is close to hiking trails can sell for more than a house in the same neighborhood that’s only surrounded by other houses.

The not so good There is such a thing as too quiet…

Written by Jaymi Naciri

Market Commentary for the Week of March 14th

      
This week brings us the release of seven monthly reports for the bond market to digest in addition to a Fed-filled day in the middle part of the week. The most important reports and Fed events take place the middle days, so we may see the most movement in mortgage rates those days.

Today starts the week's activities with the release of February’s Retail Sales data and Producer Price Index. The sales report will come from the Commerce Department at 8:30 AM ET Tuesday morning. This data is extremely important to the financial markets because it measures consumer spending strength. Since consumer spending makes up over two-thirds of the U.S. economy, data that is related usually has a big impact on the markets. This month’s report is expected to show a decline in sales of approximately 0.1%. If it reveals an unexpected increase, the bond market will likely fall and mortgage rates will move higher as it would indicate a stronger level of economic growth than many had thought. If it reveals a much weaker level of spending, I expect to see bond prices rise and mortgage rates improve Tuesday morning.

The Labor Department will post February’s Producer Price Index (PPI), also this morning. This important index measures inflationary pressures at the producer level of the economy. There are two portions of the index- the overall reading and the core data. The core data is more important and watched more closely because it excludes more volatile food and energy (such as gasoline) prices. If the index shows a large increase, inflation concerns will rise, making long-term investments such as mortgage-related bonds less attractive to investors. This could possibly lead to higher mortgage rates this morning. Current forecasts are calling for a 0.2% drop in the overall reading and a 0.1% increase in the core data. The weaker the core reading, the better the news it is for mortgage rates.

Tomorrow morning has three reports being released. The most important of the batch is February’s Consumer Price Index (CPI) at 8:30 AM ET. It is the sister release to Tuesday's PPI but measures inflationary pressures at the very important consumer level of the economy. The CPI is expected to show a 0.2% increase in the overall index and a 0.1% rise in the more important core data. As with the PPI, weaker than expected readings would be good news for bonds and mortgage rates.

Also early tomorrow morning, February’s Housing Starts data will be released. This report tracks construction starts of new housing. It doesn’t usually cause much movement in mortgage rates and is considered one of the less important reports we see each month. It is expected to show an increase in housing starts, indicating growth in the housing sector. Good news for the bond market and mortgage rates would be a sizable decline in new starts, but unless we see a large variance from forecasts the data likely will not lead to a noticeable move in mortgage pricing.

The third and final morning release of the day will be February’s Industrial Production report at 9:15 AM ET. This report measures manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is expected to show a 0.3% decline from January’s level. A larger decline would be considered favorable news for bonds and mortgage rates because it would indicate manufacturing sector weakness and broader economic growth would be more difficult if manufacturing activity is slipping.

Wednesday also has several Fed events scheduled. They start with the 2:00 PM ET adjournment of the two-day FOMC meeting that began Tuesday. The general consensus is that Fed Chairman Yellen and company will not raise key short-term interest rates at this meeting, although some market participants feel it is possible. Even if no move is made, we will be closely watching the post-meeting statement for changes in verbiage that could indicate when their next move is likely to take place. Any surprises could heavily influence the markets and mortgage rates Wednesday afternoon.

The FOMC meeting is ending a little earlier than the traditional 2:15 PM because it is one of the meetings that will be followed by a press conference with Chairman Yellen (her first as Chairman). The meeting will adjourn at 2:00 PM, which is also when the Fed will update their economic projections. They will be followed by a press conference at 2:30 PM. These events will probably lead to afternoon volatility in the markets and mortgage rates Wednesday.

The Conference Board will post its Leading Economic Indicators (LEI) for February late Thursday morning also. This index attempts to measure economic activity over the next three to six months. It is considered to be moderately important, but likely will not have a significant impact on mortgage rates. Current forecasts are calling for a 0.2% increase, meaning it is predicting that economic activity will likely expand modestly in the coming months. A smaller than forecasted rise, or better yet a decline would be considered good news for the bond market and mortgage rates.

Friday closes the week's calendar with the University of Michigan’s Index of Consumer Sentiment for March just before 10:00 AM ET. This index gives us a measurement of consumer willingness to spend. If consumers are more confident in their own financial and employment situations, then they are more apt to make large purchases in the near future. This helps fuel consumer spending levels and economic growth. A drop in confidence will probably hurt the stock markets and boost bond prices, leading to lower mortgage rates. Bad news for bonds and mortgage rates would be rapidly rising confidence. It is expected to show a reading of 92.2 which would be an increase from February’s final reading 91.7.

Overall, I am considering Wednesday as the key day of the week with the Fed events scheduled but Tuesday's data can also cause volatility in the markets. The least important day will probably be Monday or Friday. The benchmark 10-year Treasury Note yield closed Friday at 1.98%. This is dangerously close to 2.00%, which I believe if broken will cause another noticeable move higher. Because mortgage rates tend to track bond yields, this would be bad news for mortgage shoppers. Therefore, I am holding the conservative stance towards locking or floating an interest rate at this time. If closing in the near future, it may be prudent to consider locking or at least maintain contact with your mortgage professional if still floating an interest rate. At least until it is clear whether yields will move lower or higher from this level.

Improve Your Chances of Obtaining a Home Mortgage

  Securing financing to purchase a new home is one of the most important, exciting, and nerve-wracking financial steps most people will ever take.

During the housing boom, mortgage requirements were relaxed to unsustainable levels, and it seemed just about anyone could approach a lender and walk away with financing. But in an effort to recover from a record increase in foreclosures and loan defaults, lenders have become more stringent; loan applicants must now meet more demanding requirements to obtain a mortgage.

Does this mean that you won’t be able to get the financing you need? In a word, no. Here are a few tips to follow for a smoother path to home ownership.

Shore up your credit!

If there is one thing you can do to increase your chance of obtaining a mortgage loan, it is to take careful stock of your credit situation and address any issues that are lowering your credit score. The first thing to do is to order a copy of your credit record from all three major credit reporting agencies: TransUnion, Equifax, and Experian. Look over this information carefully to make sure that all three agencies are aligned in their rating of your credit. If you see any errors, dispute them with the company in question. If your credit is too low to obtain an attractive interest rate on a mortgage (680 or higher is considered good; 720 will put your in very good position to secure financing), take a few months to increase it. One way to do this is to take out a credit card, use it to make regular purchases, and pay off the balance monthly.

Reduce your debt.

By paying down your debt, you will not only show a lender that you are a good risk for making regular payments, you will end up with fewer outstanding payments or accounts to factor into your debt-to-income ratio. Simply put, the fewer static payments you have on your financial record, the better. While it might not be feasible for you to pay off your car or student loans quickly, you should be sure that credit card and store balances are low or nonexistent.

Don’t splurge.

If you can put off making any large purchases until after your home sale has closed, do so. This isn’t the time to run out and buy a luxury car or take a lavish vacation. The rule of the day is to be conservative with your spending – meaning more cash in hand for that down payment and reserve cash in the bank to fall back on once you need to start making your monthly mortgage payments.

Save. Save more. And then save more.

The amount of money you have in the bank is going to be important when you need to prove to a lender that you can offer up a healthy down payment. While 20% down is the conventional rule of thumb, there are mortgages available that require less cash up front. Your loan officer can point you in the right direction to take advantage of any low- or no-cost down payment programs for which you might qualify. But wherever possible, add to your savings – more money in the bank can only help you qualify for a loan.

Stability is key.

Maintaining steady employment or income is an absolute must when you apply for a mortgage. This isn’t the time to try a new career path on a lark or risk taking a new position without a lot of job security. Lenders are going to want to see that you have a proven, stable source of income, that you make regular payments on your rent or existing mortgage, and that you seem like a good risk for financing.

Obtaining a mortgage loan may seem like a challenge, but with a little diligence, a little financial restraint, and the aid of an experienced loan officer, you’ll have all the tools you need to secure the financing you need. If you can prove your commitment to the cause, you’ll be on the path to home ownership in no time.

Written by Chip Poli