MORTGAGE TIME Mortgage Market News for the week of Jan. 3, 2014

Compliments of: Patrick Gardner Mortgage Loan Officer NMLS ID: 378888 415-423-1424 Email me Visit my website IMPROVING ECONOMIC ACTIVITY The economic data released this week reflected continued improvement in the economy, but there was little market reaction. While some volatility was seen during the final days of 2013, mortgage rates ended the week with little net change. Heading into the new year, recent economic data has provided many reasons to be optimistic about the performance of the economy. The US has added an average of nearly 200K jobs over the past three months, and the Unemployment Rate has declined to 7.0%, the lowest level since November 2008. The ISM national manufacturing index held near the highest level since April 2011. Consumer Sentiment jumped to the highest level since July. Finally, Housing Starts were 30% higher than one year ago, at the highest level since February 2008. The Fed’s recent decision to taper its bond purchases reflects its confidence in the sustainability of the economic recovery. Mel Watt is scheduled to be sworn in on January 6 as the new Director of the Federal Housing Finance Agency (FHFA). The FHFA is the agency that oversees the operations of Fannie Mae and Freddie Mac. Since a large percentage of mortgage loans made today are eventually sold to or insured by Fannie Mae and Freddie Mac, Watt will have a very significant influence over mortgage lending. Watt has not made public much of what he will do differently from outgoing Acting Director Edward DeMarco, but his policies are expected to be more accommodating to housing finance. Watt has stated that he will delay the recently announced guarantee fee increases that Fannie Mae and Freddie Mac had planned to begin charging in March. ALSO NOTABLE • November Pending Home Sales increased slightly from October • Construction Spending rose to the highest level since March 2009 • 2013 was the best year for the Dow stock index since 1995 • The Treasury will auction $64 billion in 3-yr, 10-yr, and 30-yr securities WEEK AHEAD The important monthly Employment report will come out on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Before that, ISM Services and Factory Orders will come out on Monday. The Trade Balance will be released on Tuesday. The Minutes from the December 18 Fed Meeting will be released on Wednesday. These detailed Minutes provide additional insight into the debate between Fed officials, and it will be interesting to see the degree of support behind the decision to taper. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday.

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