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.

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.

Rates at 2014 Lows – Mortgage Time

MORTGAGE TIME Mortgage Market News for the week of Jan. 10, 2014

Compliments of: Patrick Gardner Mortgage Loan Officer NMLS ID: 378888 415-423-1424 Email me Visit my website   JOB GAINS FALL SHORT Investors were focused on the strength of the labor market this week. A strong reading for job gains in Wednesday’s ADP report caused mortgage rates to move a little higher. The ADP data turned out to be a poor indicator for Friday’s weaker than expected Employment report, however, and mortgage rates ended the week lower. Against a consensus forecast of 200K, the economy added just 74K jobs in November. This was the smallest monthly increase in jobs since January 2011. Given that several other labor market indicators showed greater strength in December, many investors were skeptical about how accurately the data reflects the strength of the labor market. For one thing, bad weather likely was a factor in the shortfall, as the construction sector was particularly weak. Upward revisions to the November data also partly offset the December results, leaving average gains of about 160K over the last two months. Bottom line, though, the report fell short of expectations, causing mortgage rates to move lower after the news. In another twist, the Unemployment Rate unexpectedly declined from 7.0% to 6.7%, the lowest level since October 2008. Looking below the surface, reported job gains accounted for just 0.1% of the decline, while a large group of people leaving the labor force was responsible for the remaining 0.2% decline. While the headline Employment report is based on data collected from just large employers, the Unemployment Rate is derived from a separate survey of individual households. According to this survey, there were job gains of about 150K in December, while roughly 350K people were no longer seeking work and thus were removed from the labor force. Since the Unemployment Rate is simply the number people in the labor force seeking work divided by the total labor force, it counts equally whether a person stops seeking work by finding a job, giving up on the job search, or retiring. ALSO NOTABLE • The Trade Deficit declined to the lowest level since October 2009 • The European Central Bank (ECB) made no change in rates • Mel Watt was sworn in for a five-year term as Director of the FHFA • Janet Yellen was confirmed to be the next Chair of the Fed WEEK AHEAD The most significant economic data next week will be the Retail Sales data and the monthly inflation reports. Retail Sales account for about 70% of economic activity and will be released 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 Wednesday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Thursday. CPI looks at the price change for finished goods which are sold to consumers. Housing Starts and Industrial Production will come out on Friday. Import Prices, Philly Fed, Empire State, Consumer Sentiment, and the Fed’s Beige Book will round out a busy schedule.

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.

Mortgage Market News for the week of Dec. 6, 2013

MORTGAGE TIME Mortgage Market News for the week of Dec. 6, 2013

Compliments of: Patrick Gardner Mortgage Loan Officer NMLS ID: 378888 415-423-1424 Email me Visit my website LABOR MARKET IMPROVING A wide range of major economic data released this week revealed an unexpectedly strong level of improvement in the labor market and other areas. This is good news for the economy, but it is negative for mortgage rates. As a result, mortgage rates ended the week higher. The data released earlier in the week hinted at healthy improvement in the labor market, and Friday’s Employment report confirmed the gains. Against a consensus forecast of 180K, the economy added 203K jobs in November. The Unemployment Rate declined from 7.3% to 7.0%, the lowest level since November 2008. The economy has added an average of 193K jobs over the past three months. Several Fed officials have suggested that they would like to see sustainable job gains around 200K per month to confirm that the labor market is back on more stable ground before scaling back on monetary stimulus. This data brings the Fed closer to tapering its bond purchase program. This week’s economic data revealed that the strength in the labor market is consistent with improvement in the overall economy as well. Third quarter GDP was revised substantially higher to 3.6% from 2.8%, well above the consensus of 3.0%. This was the fastest pace of growth since the first quarter of 2012. The ISM national manufacturing index rose to the highest level since April 2011. October New Home Sales increased 25%, but this was from a somewhat depressed level in September. Finally, Consumer Sentiment jumped to the highest level since July. ALSO NOTABLE • Core PCE inflation was just 1.1% higher than one year ago • Weekly Jobless Claims declined below the 300K level • The European Central Bank made no change in rates • Gold prices declined to the lowest level since July WEEK AHEAD The most significant economic data next week will be the Retail Sales data and the PPI inflation report. Retail Sales account for about 70% of economic activity and will be released on Thursday. 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. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday. The next Fed meeting will take place on December 18.

It’s that time again!….Mortgage Time

MORTGAGE TIME Mortgage Market News for the week of Nov. 8, 2013

Compliments of Patrick Gardner Mortgage Loan Officer NMLS ID: 378888 415-423-1424 Email me Visit my website JOB GAINS SURGE This week was packed with major economic reports and a Fed meeting. With investors looking for hints about when the Fed will begin to taper its bond purchases, the data caused a great deal of volatility. Because the economic news was roughly neutral overall, though, mortgage rates ended the week just slightly higher. A shockingly strong Employment report caused a swift increase in mortgage rates on Friday. Against a consensus forecast of 120K, the economy added 204K jobs in October, and the figures from the prior two months were revised higher by 60K. The Unemployment Rate, however, rose from 7.2% to 7.3%. The increase in the Unemployment Rate was influenced by the government shutdown during the first half of October. The headline figure of 204K jobs is based on a survey which counts furloughed government workers as employed, while the Unemployment Rate is based on a different survey which counts them as unemployed. Before the data, most investors had expected that the Fed would begin to taper its bonds purchases in March or April. If the pace of job creation continues at this level, though, the Fed could begin to scale back sooner. In similar fashion, the Gross Domestic Product (GDP) report, the broadest measure of economic growth, was much better than expected. Third quarter GDP rose to 2.8%, well above the consensus of 2.0%. The reaction in mortgage markets was somewhat limited, though, since the details did not quite indicate the same strength as the headline number. Part of the outperformance was due to an unexpectedly large increase in inventories, which means that some growth was “pulled forward” from the fourth quarter. The extra goods produced during the third quarter which caused inventories to expand will reduce production in the fourth quarter. ALSO NOTABLE • Core PCE inflation was just 1.2% higher than one year ago • Consumer Sentiment declined to the lowest level since Dec. 2011 • The Treasury will auction $70 billion in securities next week • The European Central Bank (ECB) cut rates WEEK AHEAD Next week, the Trade Balance and Productivity will be released on Thursday. Industrial Production, Empire State, and Import Prices will come out on Friday. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday. Mortgage markets will be closed on Monday in observance of Veterans Day.

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MORTGAGE TIME Mortgage Market News for the week of Oct. 25, 2013

Patrick Gardner Mortgage Loan Officer 415-423-1424 Patrick.Gardner@EverBank.com NMLS ID: 378888 Visit my website JOBS FALL SHORT With the end of the government shutdown, investors turned their attention to the economic data. The September Employment report was weaker than expected, while the rest of the data released this week was mixed. As a result, mortgage rates ended the week a little lower. Delayed by the shutdown, the September Employment data was released on Tuesday. Against a consensus forecast of 180K, the economy added just 148K jobs. The Unemployment Rate unexpectedly dropped from 7.3% to 7.2%, the lowest level since November 2008. The decline was mixed news, though, since it was due to both job gains and to people who left the labor force, meaning that they stopped trying to find a job. Bottom line, the results were weaker than what Fed officials would like to see. Between the ongoing uncertainty about future fiscal policy and the slow pace of improvement in the labor market, investors now expect that the Fed will not begin to taper until at least the March Fed meeting. While the labor market data disappointed investors, the housing market continued to perform well. September Existing Home Sales were just slightly down from the four-year high reached in August, and they were 11% higher than one year ago. Total inventory of existing homes available for sale was unchanged at a five-month supply. Since the Existing Home Sales data is produced by the National Association of Realtors, it was unaffected by the government shutdown. The New Home Sales report, which is produced by the government, is delayed. ALSO NOTABLE • FHFA said Fannie/Freddie loan limits won’t be reduced for at least 6 months • Consumer Sentiment declined to the lowest level since December 2012 • Oil prices dropped below $100 per barrel for the first time since early July • The Treasury will auction $96 billion in 2-yr, 5-yr, and 7-yr securities next week WEEK AHEAD Next week will be packed with economic news, as the calendar includes many reports that were delayed by the shutdown. Wednesday will be the biggest day due to the Fed meeting. Investors will be looking for indications that Fed policy will not change any time soon. The crowded calendar includes Industrial Production and Pending Home Sales on Monday, PPI and Retail Sales on Tuesday, CPI on Wednesday, Chicago PMI on Thursday, and ISM Manufacturing on Friday. And that’s not all, as there will be Treasury auctions on Monday, Tuesday, and Wednesday.