MMG March 12 2007

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For the week of Mar 12, 2007 --- Vol. 5, Issue 11

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Last Week in Review

"I DON'T KNOW WHY SOMETIMES I GET FRIGHTENED" are lyrics from the '80s hit "I Got You" by the Split Enz, and market traders could be using this for a theme song of late. Adding cause for market worries was the Ole Maestro himself, Alan Greenspan. He recently celebrated his 81st birthday by stating that the there is a 33% chance of a recession later this year. And if that weren't enough to get frightened over, a meltdown of sub-prime mortgage lenders grabbed most of the headlines. Although 97,000 new jobs created in February is not a scary number, it was less than expectations from the Department of Labor. The Unemployment Rate did fall to 4.5%, and Average Hourly Earnings rose more than anticipated to $17.16, but fears of inflation from these numbers spooked bonds into a Friday sell-off. Mortgage Bonds and home loan rates had been improving earlier in the week, but the overall strong economic tone of Friday's Jobs Report erased the gains that had been made, leaving rates at essentially the same place they started on Monday. Bonds started the week off to the plus side due to investor fears about the economy, which caused money to be parked over in the "safe haven" of low-risk Bonds...thereby benefiting home loan rates. The fears were broader than the sub-prime headlines and Greenspan warning. They included evidence of economic slowdown in the US as well as China. Additionally, an early candidate for quote of the year came from the CEO of homebuilding giant DR Horton, Donald Tomnitz, who said that "2007 is going to suck". Hmm...talk about telling it like it is. BUT ONE PLACE NOT TO TELL IT AT ALL IS WHEN YOU GET A PARTICULAR KIND OF CALL FROM THE FRONT DESK OF THE HOTEL YOU'RE STAYING IN. DON'T FALL FOR THIS SNEAKY PLOY BY READING THIS WEEK'S MORTGAGE MARKET VIEW.

Forecast for the Week

Lying in wait this week is a full calendar of economic reports for Traders to chew on, including a look at retail sales and inflation. As a rule of thumb, remember that weak or negative economic news tends to drive money out of Stocks and into Bonds, which helps home loan rates improve. Positive or strong news tends to cause investors to move money into Stocks and out of Bonds, which can cause home loan rates to worsen. The chart below shows that unless the news of the week is very Bond-friendly, home loan rates may get worse before they get better. The light blue line shows the improving trend that Bond prices have enjoyed of late, which has meant an improvement in home loan rates. But Friday's action drove Bond prices below this trendline...so Bond prices and home loan rates could now continue to worsen, unless the news goes their way this week. Chart: Fannie Mae 5.5% Mortgage Bond (Friday Mar 09, 2007)

The Mortgage Market View...

When you're traveling for business or pleasure...how safe is your credit card while you're in your hotel room? Most would answer "very safe" because the card is right there with you, either tucked securely in a wallet or locked in the safe. But beware...it might not be as protected as you think. There is a new scam lurking about hotels, and it's not coming from hotel employees - it's from people outside the hotel altogether. Here's how it works: The phone in your room rings and the individual on the other end identifies themselves as someone from the front desk. They say there is a problem with your credit card and the number needs to be verified. You cooperatively pass along the information, and don't think about it again until the monthly statement arrives with a slew of charges that are not yours. Suddenly you realize while on vacation or caught up in an important business trip, you were scammed! So how do these individuals get to your room if they do not know your name? They simply call the hotel and randomly ask for room numbers until they can get through to a person in the room, or they ask for a hotel guest with a common last name like "Smith" until the connection is made. One way or another, they get through and scam hotel guests. If a call is ever made to your hotel room requesting credit card information, taking just one precautionary step will confirm whether or not the call is a legitimate one. Simply ask for the hotel employee's name and tell them you will come down to the front desk and provide the credit card information. Asking for the name may cause the scammer to panic and hang up - but even if a name is given, take the time to go to the front desk and confirm the call. According to the American Hotel and Lodging Association, hotels never ask for credit card information over the phone. So, chances are good that receiving a call like this is a scam, and taking the time to walk down to the front desk will confirm whether there really is a problem with your card. Be on guard for anyone asking for your credit card number over the phone, and ensure that you can enjoy your vacation or focus on that business trip with the peace of mind that you are not getting scammed.

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 March 12 – March 16 Date ET Economic Report For Estimate Actual Prior Impact

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.

Great tip on the credit card scam. Thanks!