Weekly Update - Inflation Heats UP!

In This Issue

Last Week in Review: The Fed made headlines, plus inflation is heating up! Forecast for the Week: Some key reports on housing, plus the Fed’s favorite  gauge of inflation and news from Europe could move the markets. View: Ever feel like you ramble when you leave voicemails? Check out these tips for surefire ways to leave effective messages.

Last Week in Review

When the Fed talks, people listen. And last week, the Fed made headlines when Fed Governor Daniel Tarullo called for the Fed to engage in  another round of Mortgage Bond purchases…or in other words, another  round of Quantitative Easing (QE3). Read on to find out what this could mean for the housing market and home loan rates. In order to really have an impact on housing,  the Fed would  have to  announce something  significant  to get  people to  buy a home. Why?  Because  even now, with rates at historically low levels and incredible affordability levels, the sales pace in housing is tepid, due to structural problems in the labor market, which the Fed  can't fix.   In fact, there is a lot to consider before the Fed starts expanding their balance  sheet, and the biggest concern is rising inflation. Contrary to what the Fed  has said about it moderating, year-over-year inflation is on the rise. The headline Producer Price Index (PPI) rose by a whopping 0.8% in the  month of September, elevating year-over-year wholesale prices by a hot 6.9%. Meanwhile, the Consumer Price Index (CPI) for September rose by 0.3%, and while this was inline with estimates it pushed the year-over-year  number to 3.9%. This is significant because the year-over-year figure was  just 1.6% in January.  Remember, inflation is the arch enemy of Bonds and home loan rates. The concept is very simple: If inflation rises, investors in Bonds demand a higher yield to offset the lost buying power inflation imposes on  a fixed payment. And as home loan rates are tied to Mortgage Bonds,  this would mean home loan rates move higher. And let’s not forget the ongoing drama out of Europe. French and German leaders will hold two summits in the span of four days to come up with a resolution to the European debt crisis. Whichever way this news goes  could have a real effect on the markets, including Bonds and home loan rates.  With all the news to come this week, it’s still important to remember that now remains a great time to purchase or refinance a home, as home loan rates are still near historic lows. Let me know if I can  answer any questions at all for you or your clients.

Forecast for the Week

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Oct 21, 2011) Look for some key reports on the housing market, which come after last week’s better-than-expected Housing Starts and the softer numbers from Existing Home Sales. New Home Sales are set to be delivered on Wednesday. That number has been hovering near record lows, so the markets will be anxious to see if there’s any indication of an improvement. Also this week, Pending Home Sales will be released Thursday. Also on Thursday, Initial Jobless Claims will be released as usual. Plus, the first reading on Gross Domestic Product (GDP) for the 3rd quarter will be released. Overall, the estimates don’t appear as if the economy is hitting on all cylinders yet. The markets will see how the American people are holding up in this economy with Consumer Confidence and Consumer Sentiment on Tuesday and Friday, respectively.  Ending the week, Friday’s Core Personal Consumption Expenditure (PCE), the Fed’s favored inflation measure, is sure to garner some attention. In addition to those reports, keep an eye on the news. One story that could gain some attention is news that the Federal Housing Finance Agency (FHFA) and the Obama administration will submit proposals to Congress to help the housing market for those homeowners who are underwater. 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. As you can see in the chart below, Bonds and home loan rates stayed in a tight range last week. I’ll be watching closely to see how the markets react to Fed Governor Tarullo’s call for QE3, the news out of Europe, and the economic reports of the week.

The Mortgage Market Guide View...

Don’t Say Another Word! 5 Secrets to Leaving More Effective Voice Messages People are busy. That means, even with the wide variety of technical products developed to keep us in touch, it’s sometimes hard to get a hold of people. In those instances, we find ourselves transported back to the tried-and-true technology of the 1980s—that is, leaving a message after the beep. Same Old, Same Old While the technology has changed from tapes to megabytes, the basic concept of a voice message remains the same. You talk; it records; people listen. Sadly, that’s not the only thing that’s the same. Many people still don’t know how to leave a message that provides information but also establishes a compelling reason for the listener to call back. Use These Tips Today! The following tips can help you be more effective and get better results with voice messages: 1. Don’t Talk So Much. You have a limited window to make your point. That means you can’t provide a lot of background information or cover multiple topics. Before you call, make sure you have a singular focus to mention if you get the person’s voicemail. Then, highlight that important point, and leave the rest of your points for the actual follow-up discussion. 2. Focus on a Problem. To put it bluntly: People don’t want to hear about you; they want to hear about themselves. So before you call, make sure you’ve thought about the person on the other end—including what she cares about, what she spends her time on, as well as what she wishes she could spend her time on instead. You could even try to imagine why she was busy and couldn’t answer the phone. Or imagine where she’s about to rush off to as soon as your message ends. Based on those ideas, craft a simple, focused message that hits on ONE major problem or issue that the listener has. 3. Everyone Likes a Good Mystery. Once you’ve focused on a single overriding problem, resist the temptation to go into your sales pitch about solving it. For one thing, the listener probably doesn’t have time (or want) to listen to your pitch. For another, if you give your pitch, what reason do they have to call you back? Instead, only allude to the idea that a solution does exist…but don’t go into detail. Leave some mystery. That’s your hook for getting them to actually call you back…because now they actually have a reason to! Finally, state a number the person can reach you at and say you’d like to tell/give them some information by chatting for a couple of minutes. You can even give them a time frame (such as saying they can call you back by a certain day or time) to help create a sense of urgency about solving the mystery you’ve established in your message. 4. Energy and Enthusiasm. Nobody wants to listen to a person who’s boring or sounds bored. The same is true with voice messages. After all, if you don’t have energy when talking about something, why should the listener have the energy to call you back? So before you call, take a second to raise your energy level. Some experts recommend standing up when making a call or smiling while talking on the phone, as a way to subtly convey a pleasant, energetic tone. 5. Phone Home. It’s not enough to practice in your head. It’s not even enough to practice out loud. You need to actually leave some practice messages. So here’s what you do: call your home phone and leave some test messages. You can even try a few different approaches. When you get home, take notes about what worked and what you want to improve. Then, try the same process the next day or even every couple of months to make sure you’re still effective. Remember: If you don’t want to listen to yourself or don’t feel compelled to call back, then why would anyone else? By following these tips and constantly working to improve your voice message skills, you can help increase your productivity and the number of responses you receive. Economic Calendar for the Week of October 24 - October 28 Date ET Economic Report For Estimate Actual Prior Impact Tue. October 25 10:00 Consumer Confidence Oct 46.0 45.4 Moderate Wed. October 26 08:30 Durable Goods Orders Sept -1.0% -0.1% Moderate Wed. October 26 10:00 New Home Sales Sept 300K 295K Moderate Thu. October 27 08:30 Pending Home Sales Aug -1.0% -1.2% Moderate Thu. October 27 08:30 GDP Chain Deflator Q3 2.5% 2.5% Moderate Thu. October 27 08:30 Gross Domestic Product (GDP) Q3 2.2% 1.3% Moderate Thu. October 27 08:30 Jobless Claims (Initial) 10/22 403K 403K Moderate Fri. October 28 08:30 Personal Income Sept 0.3% -0.1% Moderate Fri. October 28 08:30 Personal Spending Sept 0.6% 0.2% Moderate Fri. October 28 08:30 Personal Consumption Expenditures and Core PCE Sept 0.1% 0.1% HIGH Fri. October 28 08:30 Personal Consumption Expenditures and Core PCE YOY NA 1.6% HIGH Fri. October 28 08:30 Employment Cost Index (ECI) Q3 0.6% 0.7% HIGH Fri. October 28 10:00 Consumer Sentiment Index (UoM) Oct 57.5 57.5 Moderate

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. 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. Mortgage Success Source, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated.   Mortgage Success Source, LLC does not grant to you a license to any content, features or materials in this email.   You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.

In This Issue

Last Week in Review: The Jobs Report for September is in...was it full of good  surprises or bad ones? Forecast for the Week: A holiday-shortened week is ahead, with two important reports coming on Friday. View: Stress is no laughing matter...or is it? Read on to find the answer.

Last Week in Review

People say that “life is full of surprises.” And indeed, last week’s Jobs Report contained several surprises. Read on to find out if they were good or bad...and what they meant for home loan rates. Overall,  the Jobs  Report wasn’t great, but  it did surprise by being  better than  anticipated.  One thing  that wasn’t a surprise was the  unemployment  rate which held  steady at  9.1%. But the  headline number came in at 103,000 jobs created, which was better than expectations of 60,000 and  even higher than some of the more frothy expectations. In addition, 137,000 jobs were created in the private sector, which offset more government job losses and which was a lot better than the 83,000 private job gains expected.  Another surprise in the report was the significant upward revisions, which added 99,000 jobs to what was previously reported in prior months, and this added  to the positive tone of the report. These upward revisions really change a very  pessimistic jobs picture to something a bit more optimistic. For instance, last month  the Jobs Report showed zero job creations and now that figure has been  revised to show 57,000 jobs created. Once again, these aren't great numbers—but  they are better than bad, and they tell us that the economy is not in a recession…at  least for now. So, what did all of this mean for home loan rates? It’s important to remember that when our economy is struggling, our Bond Market usually benefits as investors  seek a safe haven for their money. And since home loan rates are tied to  Mortgage Bonds, our home loan rates are sometimes at their best when our  economy is struggling. In a way it makes sense...in times of economic struggle, good home loan rates can help kick start our economy in other areas.  Yet, when good or better than expected economic news hits the wires, like it did  with Friday’s Jobs Report, investors often move their money out of Bonds and into  Stocks in an attempt to take advantage of these gains. And that’s a big reason  why we saw Bonds and home loan rates worsen late last week. The most important thing to remember is that now is still a great time to  purchase or refinance a home, 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

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Oct 07, 2011) There aren’t a lot of economic reports in this holiday-shortened week, with the Bond Market closed Monday for Columbus Day (Stocks are open for a regular session). Be sure to look for: On Tuesday, the Meeting Minutes from the September Federal Open Market Committee (FOMC) meeting will be released and it could garner some attention.  The usual weekly Initial Jobless Claims report will be released on Thursday. Last week’s initial jobless claims crept back up to just above 400,000 so it will be important to see which way this week’s numbers move. Investors will also be focusing in on the Retail Sales report for September, which is due out on Friday. Last Thursday it was reported that September sales for retailers, which is a separate report, were solid—showing a 5.1% year-over-year gain from the 23 largest retailers due to back-to-school sales.  Also on Friday is the Consumer Sentiment Index, so we’ll get an idea about how consumers are feeling about the economy. 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. As you can see in the chart below, Bonds and home loan rates worsened last week due to several factors. I’ll be keeping a close eye on which way they move this week.

The Mortgage Market Guide View...

Anxiety and Stress Are No Match for a Good Laugh Whether you’re stressed about a deal at work, anxious about an upcoming meeting with a client, or just feeling under the weather, laughter can be the best medicine. But why? What really happens that makes laughing so beneficial? Doctors and scientists have some ideas about the benefits of laugher: Stress—There’s actually a physical reason that laughter reduces stress. In addition to being a great emotional release, laughter reduces the number of stress hormones (such as cortisol and epinephrine) in your body and helps boost good hormones like endorphins. Blood Flow—Scientists have found that blood vessels function healthily when people watch comedies, which means they expand and contract more easily and help blood flow normally. This is in stark contrast to the tightened blood vessels that were found in people after watching a drama. In short, laughter improves blood flow, which helps prevent heart attack and heart disease. Cholesterol Levels—Recently, researchers have found that people with Type 2 Diabetes who watched funny videos for at least 30 minutes each day had better “good cholesterol” levels after just two months. Heart and Abs—It turns out that laughing is a lot like exercising. A good laugh can increase your heart rate, exercise your diaphragm, and even contract your stomach muscles. Calories—With the similarities between laughter and exercise, it shouldn’t come as a surprise that laughing helps you burn calories. In fact, one study found that 50 calories are burned in 10 to 15 minutes of laughter. Immune System—There’s also evidence that laughter helps boost antibodies, making your system better prepared to fight viruses. So, a little laughter not only makes you feel better in the short term, but also can help you remain healthier in the long term. In addition to all of these physical reactions and benefits, laughing is beneficial for your mental health too. It’s a great anti-depressant… not to mention a great way to interact with friends, family, and even clients while you strengthen your social relationships. Economic Calendar for the Week of October 10 - October 14 Date ET Economic Report For Estimate Actual Prior Impact Tue. October 11 02:00 FOMC Minutes Sept NA NA HIGH Thu. October 13 08:30 Jobless Claims (Initial) 10/8 406K 401K Moderate Thu. October 13 08:30 Balance of Trade Aug -$46.1B -$44.8B Moderate Fri. October 14 08:30 Retail Sales Sept 0.6% 0.0% HIGH Fri. October 14 08:30 Retail Sales ex-auto Sept 0.3% 0.1% HIGH Fri. October 14 10:00 Consumer Sentiment Index (UoM) Oct 60.0 59.4 Moderate

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. 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. Mortgage Success Source, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated.   Mortgage Success Source, LLC does not grant to you a license to any content, features or materials in this email.   You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.