July 3 2006

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For the week of Jul 03, 2006 --- Vol. 4, Issue 27

Last Week in Review

HAPPY BIRTHDAY TO THE USA…230 YEARS OLD AND LOOKING BETTER THAN EVER! Just think about the past few years - a market crash, recession, terrorist activity and war - yet the US economy still marches onward and upward. In fact, the Fed is watching the economy continue to cook forward, and seems to think it may be too hot. So they did it again, hiking rates for the 17th consecutive time within two years, bringing the Fed Funds Rate to 5.25%. Since the .25% hike was so widely expected, it wasn't much of a market mover on its own - but what was important was the wording of the Policy Statement, saying that "economic growth is moderating...and inflation expectations remain contained...yet the Committee judges that some inflation risks remain." Translation of the Fed Speak is that inflation remains relatively tame, which was good news for Bonds and therefore home loan rates, improving slightly for the first time in a month. But the Fed definitely left an open door to more hikes down the road, saying "additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information." So much for the "plain speech" that Fed Chair Bernanke promised! The Fed is definitely saying they are not on autopilot, but watching all the releases and reports very closely as they make upcoming decisions. Because the Fed Funds Rate impacts so many other lending rates, take a minute now to call or email me - let's look at your existing debt structure and determine if another strategy might make sense at this time. Last week also brought news on the Housing Sector, with both New and Existing homes showing better than anticipated sales. The inventory supply for new home sales improved to 5.5 months, down from the 5.8 months reported previously, while existing home inventories rose slightly to 6.5 month supply. Another interesting note from the report…the current median sales price of an existing home in the US rose $230,000, up 6% year-over-year. SUMMER IS HERE, AND ARE THE GO-GO'S SINGING YOUR SONG? "VACATION, ALL I EVER WANTED - VACATION, HAVE TO GET AWAY!" IF YOU ARE LIKE 200 MILLION AMERICANS WHO PLAN TO FLY AWAY THIS SUMMER, YOU CAN TAKE A FEW SIMPLE STEPS TO MAKE SURE YOUR PLANS ARE SMOOTH, AND YOU KEEP GO-GOING TO YOUR DESTINATION WITH NO DELAYS. READ THIS WEEK'S MORTGAGE MARKET VIEW, AND PASS IT ON TO ANY OTHER TRAVELERS YOU KNOW AS WELL!

Forecast for the Week

The week ahead should be interesting…mainly quiet as the first part of the week will have an early market close on Monday and a complete close on Tuesday to observe the Independence Day holiday. But after the holiday, the economic fireworks will begin, as Friday brings the highly anticipated monthly Jobs Report. The report is a good measure on the state of the economy, both for consumers and businesses, as employment numbers are analyzed in full detail. On the heels of the most recent Fed decision, it will come under special scrutiny as "Monday Morning Quarterbacks" will look at the data and debate if the Fed did the right thing. The Jobs Report can be a real market mover, and the good news is that Mortgage Bonds appear primed for more improvement. The chart below shows how Bonds have moved higher lately, helping home loan rates improve. Because Bonds and home loan rates respond positively to weak or negative economic news, a missed Jobs number would likely help Bonds move higher and help home loan rates improve further still. Chart: Fannie Mae 6.5% Mortgage Bond (Friday Jun 30, 2006)

The Mortgage Market View...

SUMMER VACATION TIME IS HERE But let's admit it, nothing puts a bigger damper on the fun than leaving for the airport with ample time to check in and board your flight, only to arrive and find out that your flight is delayed…or worse yet, cancelled. And this summer, flight delays and cancellations are inevitable. According to the Air Transport Association, this summer will be the busiest summer travel season in more than five years as an estimated 200 million people are expected to take flights this summer. So combine the increase in travel demand with the decrease in available aircraft, due to airlines trimming the fat and cutting back on scheduled flights, mix in a few thunderstorms…and you get lots of delays and cancellations. But doing a little planning in advance could help minimize the turbulence with your summer flight plans. Here are a few tips: Reservations: Just as the old saying goes, "the early bird catches the worm". When it comes to air travel, the early bird catches the flight. Booking an early morning flight may decrease the chance of dealing with flight delays or potential cancellations. Most summer thunderstorms happen in the afternoon, and booking early flights will help you avoid being stuck in the airport waiting for a storm to pass. And if your morning flight is cancelled, you will still have the afternoon to try and reschedule your flight plans. Additionally, if your flight schedule requires a connection to another flight, be sure and leave enough time in between flights to make your connections, factoring in the possibility of a short delay. Check In: Save yourself some time by obtaining your boarding pass online. Simply log onto the airline's website and print your boarding pass before leaving your home or office, up to 24 hours in advance. You will improve your chances of getting a better seat by checking in early, plus save time and hassle at the airport by avoiding the kiosk or check in lines. Even if you are checking luggage, most airlines have a designated area that you can check in luggage only and avoid the boarding pass lines…or check your luggage curbside, and you're ready to head to your gate with no lines at all! Luggage: But where luggage is concerned, try to travel light and carry on all of your luggage if possible. Carrying on your luggage will save you time hanging around baggage claim when you land, and avoid the headache of trying to retrieve luggage if it is lost. When you are carrying luggage on, be sure to be in line to board as quickly as you can - as overhead space can fill up quickly, and you might be forced to check bags anyways. Airport / Flight Status: While you're printing that boarding pass out, you can also obtain information about airport delays by hitting www.fly.faa.gov. Or another great site to obtain information about airport delays or to check flight status is www.FlightStats.com. You can even sign up for FlightStats electronic alerts, and receive notifications about flight delays or cancellations via email or text message. Most airlines have flight status on their websites as well, which can also be very handy if a friend or family member is picking you up at the airport. Weather: Log onto www.weather.com to check the weather in the city you are departing from as well as in the city you will be arriving at, to help determine any potential travel delays due to weather conditions. It's also helpful to know weather conditions for your destination, so you can pack appropriately. Security: Even if your flight is on time and there are no delays, long lines at security checkpoints could delay you enough to cause you to miss your flight. To find out how long it may take you to get through security, visit http://waittime.tsa.dhs.gov/index.html. And a few hints on getting through security quickly - be prepared. Before you step up to the security table, remove your belt, shoes, cell phone, jewelry, keys and change from your pockets. Remove your outer jacket and place in a bin with your other belongings. Make sure your laptop computer is out of its case, and lying flat and unobstructed in its own bin before sending it on the conveyor belt through security. Keep your boarding pass in hand for the TSA agent to review - don't put it on the conveyer belt. Be aware that if your boarding pass is marked with "S's", you have been randomly selected for a full screening, and should allow more time. As you pass through the metal detector, be sure not to brush against the sides, as this will set off the alarm. Metal detectors work by measuring the aggregate amount of metal you are carrying as you pass through, and some machines have higher sensitivity than others. If your metal content exceeds the limit, the machine will beep and you'll get one more chance through. This time, be careful in trying to remove as much metal as possible, because if the alarm goes off a second time, you will have to go through the full body screening, which could delay you further. And if you do get selected for "special screening", be cooperative with the agent. They are just doing their job and working to keep passengers everywhere safe. Taking the above steps will not eliminate delays all together, but will certainly help you avoid having to spend a good part of your summer vacation in a terminal. Bon Voyage!

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 July 03 – July 07 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.