not always early, but ALWAYS on time….MORTGAGE TIME!

MORTGAGE TIME Mortgage Market News for the week of March 7, 2014

Compliments of: Patrick Gardner Mortgage Loan Officer NMLS ID: 378888 415-423-1424 Email me Visit my website   JOBS DATA AND UKRAINE It was a volatile week in mortgage markets. Early in the week, rapidly changing conditions in Ukraine caused a great deal of movement in mortgage rates, but there was little net impact. Later in the week, stronger than expected labor market data was negative for mortgage rates, and rates ended the week higher. Against a consensus forecast of 140K, the economy added 175K jobs in February, and the figures for the prior two months were revised a little higher. This took place, according to the Bureau of Labor Statistics, despite the largest weather related disruption since 1996. The Unemployment Rate unexpectedly rose from 6.6% to 6.7%, but this was due to an increase in the number of people that entered the labor force. The solid jobs report exceeded expectations nearly across the board. Since stronger economic growth raises future inflationary pressures, this was unfavorable news for mortgage rates. After Russia moved troops into Ukraine, the threat of an escalating conflict caused a “flight to safety” in financial markets on Monday. This involved a shift by investors to relatively safer assets, resulting in a large decline in stocks and significant improvement in bonds, including mortgage-backed securities (MBS). A complete reversal took place on Tuesday, however, after the Russian President said that Russia would not use military force in Ukraine. ALSO NOTABLE • ISM Services declined to the lowest level since February 2010 • The Treasury will auction $64 billion in securities next week • The European Central Bank (ECB) made no change in rates • Chinese manufacturing data fell to the lowest level in 8 months WEEK AHEAD The most significant economic report next week will be the Retail Sales data on Thursday. Retail Sales account for about 70% of economic activity. Before that, the JOLTS report, measuring job openings and labor turnover, will come out on Tuesday. The Producer Price Index (PPI) focuses on the increase in prices of “intermediate” goods used by companies to produce finished products and will come out on Friday. Import Prices and Consumer Sentiment will round out the schedule. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday. Changes in the situation in Ukraine also could have an impact on mortgage rates.

it’s a little late…yet still on time! MORTGAGE TIME

MORTGAGE TIME Mortgage Market News for the week of Feb. 21, 2014

Compliments of:   Patrick Gardner Mortgage Loan Officer NMLS ID: 378888 415-423-1424 Email me Visit my website   RATES HIGHER AFTER FED MINUTES The positive momentum in mortgage rates shifted direction after the release of the Fed Minutes on Wednesday. Investors viewed the Minutes as somewhat positive for stocks and negative for bonds. As a result, mortgage rates ended the week a little higher. The Minutes from the January 29 Fed Meeting revealed that Fed officials remained very divided as to the appropriate path for future policy. Overall, though, the perception of investors was that the position of the hawks remained solid, while the views of the doves may have weakened a little. As a reminder, “hawks” tend to favor less stimulus to help keep inflation low, while “doves” prefer more stimulus to boost economic growth. The Minutes stated that “a few participants” considered the possibility that it “might be appropriate” to raise the fed funds rate sooner than many expect. The Minutes also reinforced Fed Chair Yellen’s recent comments that there is a high hurdle for the Fed to pause in reducing its bond purchase program. The Fed’s bond purchases have helped keep mortgage rates low, and the Minutes reduced the likelihood that the program could be stretched out for a longer period of time. The economic data released this week continued to be affected by the unusually severe weather this winter. In particular, the housing reports all fell short of expectations. January Existing Home Sales declined 5% from December to the lowest level since July 2012. They were 15% below the peak levels seen last summer. On the plus side, total housing inventory available for sale increased. The results for January Housing Starts fell even farther below expectations with a decline of 16% from December. Building Permits declined as well. Finally, the February NAHB/ Wells Fargo Housing Market index showed that builder confidence dropped sharply. Both the National Association of Realtors (NAR) and the National Association of Home Builders (NAHB) attributed the weakness in recent data to a combination of bad weather, limited supply, and tight credit conditions. ALSO NOTABLE • Core CPI inflation was just 1.6% higher than one year ago • The Philly Fed index dropped to the lowest level since February 2013 • The Treasury will auction $96 billion in securities next week • Chinese PMI manufacturing data was weaker than expected   WEEK AHEAD Next week, New Home Sales will be released on Wednesday. Durable Orders, an important indicator of economic activity, will come out on Thursday. Pending Home Sales, Chicago PMI Manufacturing, and revisions to fourth quarter GDP will be released on Friday. Consumer Confidence and Consumer Sentiment will round out the schedule. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday.

What time is it? It’s Mortgage Time.

MORTGAGE TIME Mortgage Market News for the week of Feb. 7, 2014

Compliments of:   Patrick Gardner Mortgage Loan Officer NMLS ID: 378888 415-423-1424 Email me Visit my website   JOBS AND MANUFACTURING FALL SHORT This week’s key economic data showed that the performance of the economy in January was weaker than expected. The shortfalls caused stocks to decline and mortgage rates to improve, but the impact was surprisingly small. Both the Employment report and the ISM Manufacturing data saw big misses. Against a consensus forecast of 185K, the economy added just 113K jobs in January. Also disappointing, many investors had hoped to see a large upward revision to the weak December reading, but it was little changed. The ISM national manufacturing index declined sharply to 51.3, far below the consensus of 56.0. For perspective, the increase in jobs reflects improvement in the labor market, and readings above 50.0 indicate an expansion in the manufacturing sector. The issue is that the pace of economic growth has slowed. The relatively minor impact of this week’s data must be considered in light of the performance of the stock and mortgage markets so far this year. Entering the week, stocks had experienced significant losses, as the Dow was down roughly 5% in January. Similarly, mortgage rates have seen significant improvement since the start of the year. To some degree, investors were already positioned for weak data this week. In addition, questions about the effect of unusually severe weather caused some investors to question how accurately recent data reflects the underlying strength of the economy. ALSO NOTABLE • The Unemployment Rate fell to the lowest level since October 2008 • The 2013 Trade Deficit was the smallest since 2009 • The Treasury will auction $70 billion in securities next week • The European Central Bank (ECB) made no change in rates   WEEK AHEAD Next week, Janet Yellen, the new Fed chair, will testify before Congress on Tuesday and Thursday, and her comments could influence mortgage rates. The most significant economic report will be the Retail Sales data on Thursday. Retail Sales account for about 70% of economic activity. Before that, the JOLTS report, measuring job openings and labor turnover, will come out on Tuesday. Industrial Production, Import Prices, and Consumer Sentiment will be released on Friday. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday.