August 7 2006

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For the week of Aug 07, 2006 --- Vol. 4, Issue 32

Last Week in Review

IT'S GOING…IT'S GOING…IT'S GONE!!! At least that's how many analysts and economists are now feeling about the chances of one more Fed Funds Rate hike hitting us next Tuesday afternoon. Why? Because the economic news last week confirmed Bernanke's recent comment that the US economy appears to be "cooling". And because Bonds and home loan rates benefit from weak economic news, they put on their rally caps and found some improvement over the course of last week. What was the big news last week? The real heavy hitter was Friday's Jobs number, showing slower job growth and a higher unemployment rate. This means the Fed now has very good grounds for finally taking a pause in raising interest rates. In fact, the markets are now anticipating just a 16% chance of another hike to the Fed Funds Rate, down sharply from about a 50% chance just over a week ago and down from a 90% chance two weeks ago, before Bernanke's comments about the slowing economy. And although a pause seems to be in store, Home Equity Lines of Credit and Adjustable Rate home loans have been impacted greatly by the string of seventeen straight hikes. This is a great time to take a look at your own current financing situation, and give me a call or email to see if another strategy may make sense in light of current events. SPEAKING OF YOUR OWN FINANCIAL SITUATION…YOU MIGHT HAVE SOME MONEY COMING TO YOU, AND I WANT TO HELP YOU FIND IT! LITERALLY MILLIONS OF AMERICANS HAVE ANYWERE FROM A FEW HUNDRED TO THOUSANDS OF DOLLARS THAT BELONG TO THEM…BUT THEY JUST DON'T KNOW IT. READ THIS WEEK'S MORTGAGE MARKET VIEW, AND RIGHT OFF THE BAT, FIND OUT IF YOU'RE OWED SOME MISSING MONEY.

Forecast for the Week

For the week ahead…the excitement is already mounting, and there's a buzz in the air. Is it a hot new summer movie opening? The hottest band in the US coming to your town? The latest thrilling showdown on the baseball field? No, no…it's that Fed meeting and Policy Statement scheduled for release on Tuesday!! Doesn't sound very interesting? Well, everyone in the financial world in the US and around the globe will be on the edge of their seat, watching and listening very carefully at 2:15pm ET to see what the Fed's decision will be. And since the Fed Funds Rate impacts most other banking rates, anyone that has or owes money - that's all of us - should be pretty interested too. The stage appears set for the Fed to pause in their long cycle of rate hikes which began back in June 2004. The Fed hikes to control inflation, knowing that higher interest rates will make purchasing goods and services more costly. More costly purchases will slow down demand, which in turn helps prices stay lower and inflation controlled. So if the Fed deems inflation to be "controlled", this will be good news for Bonds, since inflation erodes the value of their fixed return to the Bond holder over time. Bonds and home loan rates go hand in hand…so good news for Bonds will be good news for home loan rates, which should stabilize and perhaps slightly improve over the next week - in the absence of any surprises. When Bond pricing improves or gets higher, home loan rates head lower. So you can see in the chart below that Bonds are already sitting pretty after last weeks missed Jobs number. In fact, they overcame a strong technical ceiling and helped home loan rates improve. So if the Fed does indeed confirm the market's anticipation of a pause on Tuesday, Bonds will likely stabilize or improve above this level, so long as there aren't any startling comments within the Policy Statement. Chart: Fannie Mae 6.5% Mortgage Bond (Friday Aug 04, 2006)

The Mortgage Market View...

MISSING: $24 Billion Dollars! Remember as a kid, you'd work on that loose tooth and get it out fast…just so the Tooth Fairy would arrive early with some cash under your pillow? There may be a much less painful way to find a pile of cash…that's rightfully yours in the first place. Most people stash a few bucks away here and there, forget where the cash is stashed, and over time find it in odd places like between sofa cushions and in coat pockets. But what about the money you put on deposit with a utility company or the little bank account you set up for a rainy day? These funds can be easily forgotten too, especially if you are caught up in the details of a move…and once you have moved, you may not receive the notices reminding you of your refund due, or the current statement for that rainy day account. But would you be surprised to learn there is over $24 Billion Dollars of this type of missing money…just waiting to be found by its rightful owner? That's a whole lot of greenbacks gone missing…and some of them might belong to you. What happens to this money, and how can you get it back? Good news - it's easier and less painful than working out a loose tooth. Here is the scoop. When individuals move, forget to change their address, and companies or banking institutions cannot contact them, their property is turned over to the state as "unclaimed property". The state then acts as a custodian of the property until the rightful owner claims it. Unclaimed property includes financial items such as bank accounts, utility refunds, un-cashed checks, certificates of deposit or even escrow accounts on home loans. To determine if you have any unclaimed property with the state, jump on the web and visit www.unclaimed.org. Click on the state that you live in, and you will be directed to the appropriate website. You will either be able to perform a quick immediate search online, or a few states give you the information on how to just contact them directly to inquire. If you have lived in several states, do a quick search for each, since the funds will be held in the state they originated. And be cautious of solicitations by mail or email that require you to pay a fee to obtain information about unclaimed property. You may end up paying a fee and receiving no information about unclaimed property, just the contact information for the state. Any unclaimed property information can be obtained free of charge by visiting the above listed website. What about money in Canada, or Federal money such as IRS returns, Savings Bonds, or Federally insured Credit Union accounts? While you're on www.unclaimed.org, just hit "links" at the top of the page to search these resources as well. Last year over 1.3 million claims were paid, totaling around $1.2 Billion Dollars. That's nearly $1000 per person of "found money". So by taking a minute to do a quick search, you may find out that you are a bit richer than you think. And pass this article on to your friends, family members, or colleagues…but be sure to remind them to include you in their celebration when they find their missing "cash stash"!

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 August 07 – August 11 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.