FHFA Report Still Points to Short Sales

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is happening in the Real Estate Market with
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FHFA Report Still Points to Short Sales

Markets React to QE3

In This Issue

Last Week in Review: QE3 is in full swing. How did home loan rates respond? Forecast for the Week: A full week of economic data is ahead, with news on the housing market, inflation, consumer confidence and more. View: September is National Preparedness Month. Be sure to pass on this important disaster tip to your clients and colleagues.

Last Week in Review

Actions speak louder than words. And last week, we saw a whole lot of action in the volatile financial markets thanks in large part to the Fed’s announcement of another round of Bond buying (known as Quantitative Easing or QE3). Here's what you need to know...and what happened to home loan rates.  If you've been wondering what Quantitative Easing actually is, it's the concept of the Fed becoming a buyer of Treasuries and Bonds to try and stimulate the economy. The Fed announced QE3 because our economy is still struggling (especially our housing and labor markets) and inflation has appeared tame. Evidence that our economy is still struggling was especially noticeable in the manufacturing sector last week. The New York State Manufacturing Index registered -10.41 in September (its lowest level since April 2009), while the Philly Fed Index showed that manufacturing in that region contracted for a fifth straight month in a row. The news wasn’t good on the labor front either, as last week’s stubbornly high Initial Jobless Claims reading of 382,000 was above expectations. However, there was some positive news on the housing front last week, as Existing Home Sales for August rose to a two-year high.  So what does all of this mean for home loan rates? Remember that negative economic news normally causes investors to move their money out of risky investments like Stocks and into safer investments like Bonds, including Mortgage Bonds (which home loan rates are based on). That’s why home loan rates often improve when our economy is struggling. Investors also tend to move their money into safe investments like our Bonds during times of global uncertainty, such as last week’s turmoil in the Middle East. These two factors, combined with the Fed’s QE3 Mortgage Bond purchases, all benefitted Bonds and home loan rates last week. It’s important to keep in mind that one of the goals and consequences of QE3 could be inflation. And inflation is the arch enemy of Bonds and home loan rates, as it reduces the value of fixed investments like Bonds. This will be an important development to watch for in the coming weeks and months.  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

Chart: Fannie Mae 3.0% Mortgage Bond (Friday Sep 21, 2012) Temperatures may be cooling in much of the country, but this week’s economic calendar is heating up. Housing data from the S&P Case/Shiller Home Price Index, New Home Sales, and Pending Home Sales will be released on Tuesday, Wednesday, and Thursday respectively. The reports come after last week's positive housing numbers. We’ll get a sense of how the consumer is feeling with the Consumer Confidence Report on Tuesday and Consumer Sentiment on Friday. Durable Orders and the third and final reading on 2Q Gross Domestic Product will be released on Thursday. Also on Thursday, weekly Initial Jobless Claims will be released. Rounding out the week, manufacturing figures from the Chicago PMI will be reported on Friday along with Personal Income and Spending. The Core Personal Consumption Expenditure (PCE), the Fed's best gauge on inflation, will also be reported on Friday. In addition to these reports, all eyes will continue to watch how the markets and home loan rates respond to QE3. 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 and home loan rates have responded favorably to QE3. I’ll be watching closely to see if this continues.

The Mortgage Market Guide View...

Are You Prepared? September is National Preparedness Month. Hopefully, neither you nor your clients will ever be faced with an emergency situation. But if it does happen, the following information can help you or a client stay safe.  The first thing to know is that one of the most important elements to have on hand is an emergency kit. Unfortunately, determining the right items to include in that kit can be a confusing process.  To help, FEMA has developed a user-friendly website that allows you to download and print all of the items that you will need to gather for an Emergency Kit. Visit the special Emergency Kit webpage for a quick list of the basic emergency items you need to have on hand, as well as additional items you should consider adding to your kit.  Take a few minutes to visit the site, and forward the information on to your clients and colleagues. Economic Calendar for the Week of September 24 - September 28 Date ET Economic Report For Estimate Actual Prior Impact Tue. September 25 10:00 Consumer Confidence Sept 63.0 60.6 Moderate Tue. September 25 09:00 S&P/Case-Shiller Home Price Index Jul 0.8% 0.5% Moderate Wed. September 26 10:00 New Home Sales Aug 380K 372K Moderate Thu. September 27 08:30 Jobless Claims (Initial) 9/22 380K 382K Moderate Thu. September 27 08:30 Gross Domestic Product (GDP) Q2 1.7% 1.7% Moderate Thu. September 27 08:30 GDP Chain Deflator Q2 1.6% 1.6% Moderate Thu. September 27 10:00 Pending Home Sales Aug 1.0% 2.4% Moderate Thu. September 27 08:30 Durable Goods Orders Aug -5.1% 4.1% Moderate Fri. September 28 10:00 Consumer Sentiment Index (UoM) Sept 79.0 79.2 Moderate Fri. September 28 09:45 Chicago PMI Sept 52.8 53.0 HIGH Fri. September 28 08:30 Personal Consumption Expenditures and Core PCE YOY NA 1.6% HIGH Fri. September 28 08:30 Personal Consumption Expenditures and Core PCE Aug 0.1% 0.0% HIGH Fri. September 28 08:30 Personal Income Aug 0.2% 0.3% Moderate Fri. September 28 08:30 Personal Spending Aug 0.5% 0.4% 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.

Fed Announces Quantitative Easing #3!!

In This Issue

Last Week in Review: The Fed announced another round of Quantitative Easing. What does this mean for home loan rates? Forecast for the Week: A double dose of manufacturing news and a triple dose of housing news are ahead. Plus, how will the markets react to QE3? View: Webcams are being used more and more in business these days. Don’t miss these tips for making the right impression.

Last Week in Review

Here we go again! Last week, the Fed announced another round of Quantitative Easing (QE3). Read on to learn what QE is, why the Fed announced QE3…and what this means for home loan rates.  What is Quantitative Easing? Quantitative Easing is the concept of the Fed becoming a buyer of Treasuries and Bonds to try and stimulate the economy. Oftentimes, the Fed does Quantitative Easing when they are hoping to (1) create inflation and avoid a deflationary economy, (2) lower the unemployment rate, and (3) boost Stock prices.  Why did the Fed announce QE3? With our economy still struggling (especially our housing and labor markets) and inflation appearing tame, QE3 was widely expected. But what caught the markets by surprise was the aggressiveness of the Fed's action. Over the next several months, at the very least the Fed will be buying Mortgage Bonds at an annual rate of nearly $800 Billion.  The Fed also noted that QE3 will continue until there is a self-sustainable recovery in our economy, as long as inflation doesn’t rise too high or quickly. Supporting the Fed's action was August’s tame inflation data at the consumer level. It is important to note that the Producer Price Index (PPI), which measures inflation at the wholesale level, rose to three year highs in August due to the spike in fuel costs and food prices. Rest assured, the Fed will be watching inflation levels carefully over the coming months.  What does QE3 mean for home loan rates? The Fed is buying such large amounts of Mortgage Bonds each month to keep home loan rates (which are tied to Mortgage Bonds) near record lows, which they hope will help strengthen our housing market and economy overall. However, as the economy starts to improve and if inflation heats up, Bonds could face some selling pressure…which could impact home loan rates negatively as a result.  The bottom line is that home loan rates remain near historic lows and now is a great time to consider a home purchase or refinance. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week

Chart: Fannie Mae 3.0% Mortgage Bond (Friday Sep 14, 2012) Manufacturing and housing news dominate the economic report calendar this week. Manufacturing data from the New York State Index and the Philadelphia Fed Index will be released on Monday and Thursday, respectively. Housing Starts, Building Permits and Existing Home Sales will all be released on Wednesday. Thursday also brings the usual Weekly Initial Jobless Claims data. In addition to these reports, all eyes will be watching to see how the markets and home loan rates respond to QE3. 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 and home loan rates reacted favorably to the Fed’s announcement of QE3. I’ll be watching closely to see how the markets respond this week.

The Mortgage Market Guide View...

Webcam Tips for Business Webcams have steadily grown in popularity in businesses across the country. More and more companies are embracing the technology as a cost-effective, timesaving way to record videos for a company website or to conduct meetings.  Regardless of how you’re using a webcam in your career, the following information can help you be more successful.  1. Eliminate distractions. When you’re on a webcam, you can be interrupted by the phone ringing, people knocking on your door, and so on. To make sure that doesn’t happen, find a quiet place where you can avoid any distractions.  2. Remove the clutter. A webcam doesn’t just allow people to see you; they can also see into your office. If the background setting looks messy, cluttered, or less than professional, it may taint how you are perceived. So, clean up everything that will be in the background, including those things that are off in the distance. The best advice is to have a clean, simple background setting where only one or two major pieces of office furniture can be seen.  3. Check the lighting. Anyone who’s ever used a webcam realizes that you can sometimes appear pale or tired in an online video. To overcome this problem, you can simply check the lighting. You’ll want the room to be bright, but not so bright that your face is washed out. If you need additional lighting, bring a lamp or two into the room.  4. Maintain eye contact. To make sure you maintain eye contact, look directly at your webcam – rather than another person’s image or a script on your monitor. It may feel awkward at first, but it will appear natural and professional to the person on the other end.  5. Send the right body language. Like in face-to-face communication, your posture and body language are important online. So sit up straight, use simple hand gestures as you talk, and resist the urge to fidget or make a lot of unnecessary movements (like scratching your head or constantly readjusting your seating position).  Following those simple steps can help you be more successful the next time you find yourself sitting across from a webcam at your office.   Economic Calendar for the Week of September 17 - September 21 Date ET Economic Report For Estimate Actual Prior Impact Mon. September 17 08:30 Empire State Index Sept NA -5.9 HIGH Wed. September 19 08:30 Building Permits Aug NA 812K Moderate Wed. September 19 08:30 Housing Starts Aug NA 746K Moderate Wed. September 19 10:00 Existing Home Sales Aug NA 4.47M Moderate Thu. September 20 08:30 Jobless Claims (Initial) 9/15 NA 382K Moderate Thu. September 20 10:00 Philadelphia Fed Index Sept NA -7.1 HIGH

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.