In This Issue 
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| Last Week in Review:There was some surprising good news last week. Find out how that impacted home loan rates.Forecast for the Week: A full week of news is ahead, with reports on consumer spending, manufacturing, inflation, housing and jobless claims.
View: Don’t be a statistic this flu season—and don’t let your clients or colleagues be one either. Share these tips below. |
| Last Week in Review |
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They say that no news is good news.But last week, several reports brought some surprising good news to the markets. Read on for details and what they mean for home loan rates. There was good news on the labor front, as last week’s Initial Jobless Claims fell to 339,000, the lowest level in over four years. This news came on the heels of the surprising drop in the unemployment rate to 7.8% in September. This is encouraging news and could ease fears of slowing growth.
Also encouraging was the news from RealtyTrac that foreclosure activity declined to a five-year low in September, falling 7% from August and 16% from the same period last year. Housing has already improved substantially in certain parts of the country and this news bodes well for those states and areas that struggled with high foreclosure activity. Rounding out the week was some of the most surprising news of all: Consumer Sentiment surged to 83.1 in October, the highest level in five years. Tempering this good news was a report from the International Monetary Fund (IMF), which said that the world economy will grow by 3.3% this year, the slowest since 2009. The IMF said that unless Europe and the U.S. address the financial threats to their respective economies, growth will continue to slow. So what does all of this mean for home loan rates? Remember that good economic news normally causes investors to move their money out of safer investments like Bonds—including Mortgage Bonds, which home loan rates are based on—and into riskier investments like Stocks to try and take advantage of gains. However, the Fed’s continued Mortgage Bond purchases as part of their third round of Quantitative Easing (QE3) and tame wholesale inflation data helped Bonds and home loan rates remain near record lows last week. The bottom line is that now is a great time to consider a home purchase or refinance, as home loan rates remain near historic lows. Let me know if I can answer any questions at all for you or your clients. |
| Forecast for the Week |
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Economic data is in abundance this week and will give investors clues as to whether or not the economy is progressing now that QE3 is in full swing.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on. When you see these Bond prices moving higher, it means home loan rates are improving — and when they are moving lower, home loan rates are getting worse. To go one step further — a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning. As you can see in the chart below, Bonds rebounded late last week, helping home loan rates remain near record lows. I will continue to monitor this situation closely. Chart: Fannie Mae 3.0% Mortgage Bond (Friday Oct 12, 2012)
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| The Mortgage Market Guide View… |
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| Avoid These Alarming Statistics This Flu SeasonBetween November and March, your chances of contracting the flu increase by as much as 80%, according to the Centers for Disease Control (CDC). In fact, anywhere from 5% to 20% of our country’s population contracts the flu every year. But that’s not the worst part. More than 200,000 of us are hospitalized because of it, and roughly 36,000 people actually die from it. That means lost work time and even lost medical expenses.
But there are some things you can do to keep yourself healthy. Be sure to share these tips with your coworkers, colleagues, and family members to help them avoid those alarming numbers and stay healthy this flu season. Wash your hands: The flu is a contagious respiratory illness that is caused by the influenza virus. It is most commonly transmitted in one of two ways. The first is by inhaling saliva particles left behind by a sneeze or a cough from someone who is infected. The second, more common way is via hand-to-hand (or hand-to-object) contact. That’s why it is so important to regularly wash your hands, especially during flu season. Keep your body hydrated by drinking plenty of water. The average adult needs to drink a minimum of eight, 8-ounce glasses a day to achieve the proper level of hydration. Doing so will help to keep your system flushed of various toxins. Get your exercise. Aside from the obvious reasons, aerobic exercise causes your heart to pump larger quantities of blood at a faster rate. In turn, your breathing rate increases in order to transfer oxygen from the lungs to your blood. The end result is that you sweat. This process has been shown to increase virus-killing cells within the body. Eat a balanced and healthy diet. Regular consumption of certain food items has actually been shown to reduce colds and flu. Yogurt and garlic are two in particular. Any vegetables or fruits that are dark green, red, or yellow in color should also be a part of your normal repertoire, as they are chock full of phytochemicals, natural plant chemicals that boost the potency of the vitamins that are in the food you ingest. Get a flu shot every fall. The CDC recommends this type of shot for anyone who wants to avoid the flu, but you should consult with your doctor to see if it’s right for you. Economic Calendar for the Week of October 15 – October 19
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The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.
As your mortgage professional, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.
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