January 22 2007

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For the week of Jan 22, 2007 --- Vol. 5, Issue 4 Last Week in Review "DON'T JUST STAND THERE, BUST A MOVE" Young MC. Last week's economic news should have been enough to make bonds and home loan rates "bust a move", but they didn't. "You want it, you got it", and a flurry of stronger than expected economic reports hit the wires, indicating a resilient economy. Strong economic news usually spells good things for US businesses - which tends to push money out of Bonds and into the Stock market. We also know that strong economic data can point to higher inflation, which is the arch enemy of bonds. So when money flows out of the Bond market, the value of Bonds fall - and since home loan rates are tied to Bonds, this in turn causes home loan rates to rise. Here's a rundown of the headlines...the inflation measuring Consumer and Producer Price Indexes (CPI and PPI) both were hotter than expected, showing some lingering inflation in the economy; Housing Starts and Building Permits were both reported as better than anticipated; Initial Jobless Claims were lower than expected, indicating a strong labor market; the Philadelphia Fed Manufacturing Index was higher than estimated; and to top off the week, the Consumer Sentiment Index came in very strong - a three year high! But a closer look at the inflation numbers showed that prices are only increasing at a slightly higher pace than desired by the Fed, which keeps inflation as a concern, but not a reason to panic. Whew! With all this strong economic news, it's surprising that Bond prices and home loan rates just stood there. Despite some midweek bouncing around on the news, Bonds and home loan rates ended up the week only slightly worse than where they started. AND WHILE BONDS MAY NOT HAVE MOVED MUCH, YOU OR SOMEONE YOU KNOW MAY BE ABOUT TO BUST YOUR OWN MOVE. A CHANGE OF RESIDENCE IS SURE EXCITING, BUT THERE IS ALSO MUCH TO DO. READ THIS WEEK'S MORTGAGE MARKET VIEW FOR SOME TIPS ON HOW TO MOVE ON UP WITH A LOT LESS STRESS. Forecast for the Week This week will be a slow news week in terms of economic reports...but remember that anytime the planned economic news calendar is thin, Traders will pay more attention to other types of news and headlines, trends from other markets, and technical factors often step up to play a larger role as well. The chart below shows that on a glut of positive economic news, Bond prices moved slightly lower, but enough to fall through a "floor of support" last week - and if the trend continues this week, it could cause home loan rates to rise. Of most interest on this week's calendar will be New and Existing Home Sales data. From all recent reports, it appears that the housing market at large is stabilizing, so the numbers on average sale prices, inventory and volume of sales will be closely analyzed and dissected. Most feel that the housing market hit a bottom in August of 2006, and home loan rates remain very low - so if you or someone you know has been considering the purchase of a home, now may be an excellent time to make a move forward. Contact me for questions or to learn how to get this process started right away. Chart: Fannie Mae 5.5% Mortgage Bond (Friday Jan 19, 2007) Japanese Candlestick Chart The Mortgage Market View... Moving can be very exciting...but it can also be a bit of a pain as well. Besides packing and unpacking, there is a long list of details to be handled. Things like choosing a mover, connecting utilities, getting Internet and cable service, or subscribing to newspapers or magazines in a new area can be quite a chore. And if you forget to connect one of the utilities you could be stuck in your new home for several days without that much needed service. To ease the stress of moving and schedule new connections for all of the utilities in one convenient location, simply logon to www.whitefence.com. You can quickly compare prices for movers, phone, electricity, television, or high-speed Internet. Just select the service you wish to compare (e.g., phone, cable, electric, etc.) or enter your address on the home page, hit search, and within seconds a list of services and prices available in that area will appear. Next, click on the service of your choice to view details and pricing or comparison shop by choosing three providers. Once you determine the provider, select the service plan, complete the requested information, enter the connection date, and within minutes a confirmation will be sent to you. If you want to change your current provider, simply hit the icon for phone, cable, or internet, select "switch provider", complete the requested information and a list of providers in the local area will appear. Choose the new provider and the service will be changed. Additionally, on the site you can complete a change of address form, subscribe to local newspapers, and order magazine subscriptions. Moving to a new home should be enjoyable and exciting. Using this tool can help remove a bit of the stress of moving and will also help save valuable time. The Week's Economic Indicator Calendar Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise. Economic Calendar for the Week of January 22 – January 26 Date ET Economic Report For Estimate Actual Prior Impact Tue. January 23 10:00 Index of Leading Econ Ind (LEI) Dec 0.2% 0.1% Low Wed. January 24 10:30 Crude Inventories 1/19 NA 6768K Moderate Thu. January 25 08:30 Jobless Claims (Initial) 1/19 310K 290K Moderate Thu. January 25 10:00 Existing Home Sales Dec 6.30M 6.28M Moderate Fri. January 26 08:30 Durable Goods Orders Dec 1.0% 1.9% Moderate Fri. January 26 10:00 New Home Sales Dec 1053K 1047K Moderate The material contained in this newsletter has been prepared by an independent third-party provider. The content is provided for use by real estate, financial services and other professionals only and is not intended for consumer distribution. 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, there is no guarantee it is not without errors. As your trusted advisor, 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.