Mortgage Report for the week of 12/29/2013

This holiday-shortened week has only two monthly economic reports scheduled for release that are relevant to mortgage rates. One of those two is considered to be highly important to the bond and mortgage markets. There is nothing of importance tomorrow, but every other day does have at least one event scheduled that could have an impact on the financial markets and mortgage rates.

The Conference Board will post their Consumer Confidence Index (CCI) for December late Tuesday morning. This is a fairly important release because it measures consumer willingness to spend. If consumers are more confident about their personal financial and employment situations, they are more apt to make large purchases. Since consumer spending makes up over two-thirds of the U.S. economy, any related data is watched closely by market participants and can affect mortgage rate direction. Current forecasts are calling for a large increase in confidence from November's reading of 70.4. Analysts are expecting Tuesday's release to show a reading of 77.1, meaning consumers felt much better about their own financial situation than they did in November. The lower the reading, the better the news it is for bonds and mortgage pricing.

The bond market will close at 2:00 PM ET Tuesday ahead of the New Year's Day holiday, but the stock markets are scheduled to be open for a full day of trading. All banks and major U.S. financial markets will be closed Wednesday for the holiday and will reopen Thursday morning for regular hours. As a result of the holiday schedule, we should see lighter than normal trading a couple days. However, I don’t believe it will be as thin as we saw last week. That should help prevent larger moves in bonds on days with little or no news to justify the move like we saw last week.

After the holiday, the Institute for Supply Management (ISM) will post their manufacturing index for December late Thursday morning. This highly important index measures manufacturer sentiment. A reading above 50 means that more surveyed manufacturing executives felt that business improved during the month than those who felt it had worsened. That indicates manufacturing sector strength rather than contraction. Analysts are currently expecting to see a 56.9 reading in this month's release, meaning that sentiment softened from November's 57.3. A smaller reading will be good news for the bond market and mortgage shoppers, while a higher than expected reading could lead to higher mortgage rates Thursday morning as it would point towards stronger economic growth.

Also worth noting are a handful of Fed member speaking engagements all scheduled for Friday afternoon, including one by Chairman Bernanke. None of them are considered to be highly important or likely to be market-moving, but whenever they speak publicly, particularly the Fed Chairman, their words have the potential to influence the markets. There are five set for Friday with the first scheduled for 12:45 PM ET and the last at 5:00 PM ET. Chairman Bernanke is expected to speak in Philadelphia at 2:30 PM ET. This means any reaction to their speeches will come during afternoon trading.

Overall, I am expecting to see Thursday be the most active day for mortgage rates, although Tuesday morning could also be fairly busy as the year comes to an end. It is difficult to label any day as the calmest because even tomorrow that doesn’t have anything scheduled to be posted, could also be relatively busy following last week’s light holiday trading. The benchmark 10-year Treasury Note yield closed the week at 3.00% Friday, which is above the previous key level of 2.95%. Due to last week’s extremely light trading volume, I am not too concerned about it closing at that level. However, I am looking for it to move back below nearly immediately or we could be in for a sizable upward move in mortgage rates very soon. Therefore, please maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.

Jenny's Guide to Home Loans: Dallas Morning News - D-FW foreclosure filings dow...

Jenny's Guide to Home Loans: Dallas Morning News - D-FW foreclosure filings dow...: Dallas Morning News Wednesday, October 20, 2013 "total foreclosure filings for the D-FW area so far in 2013 are at the lowest level i...

Dallas Morning News - D-FW foreclosure filings down 49% over last year

Dallas Morning News
Wednesday, October 20, 2013

"Total foreclosure filings for the D-FW area so far in 2013 are at the lowest level in almost a decade."
Foreclosure Listing Service CEO, George Roddy said this week "I think we are now running at normal numbers.  I can't think of anything that will bring it back up high."

Here are area postings on residential properties scheduled for foreclosure auction in November and change from a year  ago:

• Dallas County: -46%
• Tarrant County:  -49%
• Collin County:  -55%
• Denton Coutny: -53%
• D-FW area:  -49%

(Source: Foreclosure Listing Service)

This shows the strength of the economy in D-FW and surrounding areas.  Great time to be a Realtor!

Time Magazine Cover: THE UNITED STATES OF TEXAS

Front Cover of Time Magazine Oct. 28 Issue:  THE UNITED STATES OF TEXAS, Why the Lone Star State is America’s Future.

This article is an excellent reference for all Realtors in Texas.  Here are a few pointers from the article that are worth mentioning:

“The real reason Americans are headed to Texas is much simpler.  Migrants are being pushed (and pulled) by the major economic forces that are reshaping the American economy as a whole: the hollowing out of the middle class, the increased costs of living in the U.S.’s established population centers and the resulting search by many Americans for a radically cheaper way to live and do business."

“Along with the affordable housing and a warm climate, newcomers are drawn by the notion that in the case of Texas, jobs are plentiful.  Texas’ unemployment rate is currently 6.4% - high for Texas but below the national rate of 7.3%.”

“Over the past 20 years, more than 4 million Californians have moved to Texas, according to Weinstein.  “That’s two cities the size of Houston,” he notes.

“Jed Kolko, chief economist for San Francisco – based real estate website Trulia, says that from 2005 to 2011, 183 Californians moved to Texas for every 100 Texans who moved to California. “Home prices, more than any other factor, cause people to leave,” Kolko says.

“IT’S NOT JUST CHEAP LIVING that draws people to Texas.  It’s also jobs.  In the past 12 months, Texas has added 274,700 new jobs – that’s 12% of all jobs added nationwide and 51,000 more than California added.   In a Moody’s Analytics study, seven of the top 10 cities for projected job growth through 2015 will be in Texas.   Four Texas cities topped the list:  Austin, McAllen, Houston and Fort Worth.”

“In fact, from 2002 to 2011, with 8% of the U.S. population, Texas created nearly one-third of the country’s highest paying jobs.”

“From 2001 to 2012, the number of lower-middle-income jobs in Texas grew by 14.4%, and the number of upper-middle-income jobs grew by 24.2%.  If you look at the U.S. without Texas over the same period, the number of lower-middle jobs grew by an anemic 0.1%, and the number of upper-middle jobs shrank by 6%.  …… If you pull Texas out of the puzzle of the United States, the rest of the country falls down!”

My parents and I are originally from Taiwan.  They moved to Texas in the 80’s to seek better opportunities and a better future for me and my brother.  Although I love being Chinese and fortunate enough to experience dual cultures, I know my parents made the right choice.  I am able to give my children the kind of opportunities and education my parents worked so hard for.  

Reference: Time Magazine / October 28, 2013

Article by: Tyler Cowen

THIS WEEK'S ECONOMIC REVIEW / Why is the mortgage interest rate going up?

Economy Review This Week 09/12/2013

Employment figures were a key newsmaker last week, and whether or not the news was favorable depended on the eye of the beholder. Specifically, the economy added 169,000 in August, which put the unemployment rate at 7.3 percent, the Bureau of Labor Statistics reported last week. This was little changed form July, but the lowest since December 2008. On the face of things, that’s good news, but it skirts the issue of people who have given up looking for work, which is described by the labor-force participation rate. For August, the percentage of working-age people either working or looking for work, dropped to 63.2 percent from 63.4 percent in July. This was its lowest rate since 1978. Ignoring the participation rate and going by the 7.3 percent rate, the number of unemployed Americans totaled 11.3 in August, the number of long-term unemployed (those jobless for 27 weeks or longer) hovered at 4.3 million. The long-term unemployed accounted for 37.9 percent of the total unemployed population. The number of Americans involuntarily employed part time for economic reasons, such as their hours were cut or they were unable to find full-time work dropped by 334,000 to 7.9 million in August. While the monthly unemployment scenario’s progress was unclear at best, more recent employment scores were more upbeat, with first-time claims for jobless benefits remaining at a five-year low. First-time claims for unemployment insurance filed during the week ending Aug. 31 dipped to 323,000, a decline of 9,000 from the previous week's revised figure of 332,000, according to last week’s report from the Employment and Training Administration. The four-week moving average was 328,500, a drop of 3,000 from the prior week's revised average of 331,500. The total number of unemployed Americans covered by jobless benefits during the week ending Aug. 24 dropped to 2,951,000, a loss of 43,000 from the previous week's revised level of 2,994,000, the Administration also reported. The four-week moving average was 2,979,500, a decrease of 18,000 from the previous week's revised average of 2,997,500. Switching gears to real estate news, construction spending during July notched up 0.6 percent over June’s revised rate of $895.7 billion to hit an annual rate of $900.8 billion, the Census Bureau reported last week. Compared to last year, July’s rate was 5.2 percent over July 2012’s rate of $856.3 billion. Spending on private construction hit an annual rate of $631.4 billion in July, which was 0.9 percent higher than June’s revised June estimate of $625.6 billion. Residential construction hit an annual rate of $334.6 billion in July, which was 0.6 percent over June’s revised estimate of $332.7 billion. Finally, in international trade, the trade gap widened in July with exports of $189.4 billion and imports of $228.6 billion creating a trade deficit of $39.1 billion, which was up from $34.5 billion in June, the Census Bureau and the Bureau of Economic Analysis jointly reported last week. July exports were down $1.1 billion from June’s exports of $190.5 billion, while July’s imports were $3.5 billion higher than June’s imports of $225.1 billion. This increase in imports was due to a combination of increased crude oil prices as well as consumer spending on goods from overseas, which could point to an improving economy, according to some analysts. This week, we can expect: Monday — Consumer credit for July from the Federal Reserve. Wednesday — July wholesale inventories from the Census Bureau. Thursday — Initial jobless claims for last week from the Employment and Training Administration; August import and export prices from the Census Bureau; and August budget from the Treasury Department. Friday — August retail sales totals and July business inventories from the Census Bureau; and August producer price index from the Bureau of Labor Statistics.