Austin Mortgage Blog

Archive for October, 2009

Record Auctions Produce Mixed Results

While daily volatility was high this week, Austin mortgage rates ended just slightly lower than last week. The primary factors influencing Austin mortgage rates were offsetting. The economic growth data released this week was stronger than expected, but inflation remained low. While the first two Treasury auctions produced impressive results, the final one was relatively weak.

Demand was extremely strong for this week’s 2-yr and 5-yr Treasury auctions, but it slacked off considerably for the 7-yr securities. When demand is low, higher yields are required to attract investors. In addition, the Treasury is interested in shifting its issuance toward a greater percentage of longer-term securities relative to shorter-term securities to lock in currently low rates. For mortgage markets, though, a move in this direction would add to the supply of competing investments. The Fed is already in the process of winding down its purchases of mortgage-backed securities, removing demand from the market. Higher supply of long-term investments and lower demand would pressure  Austin mortgage rates higher.

Government influence on mortgage markets has been substantial. It has pushed Austin mortgage rates to historically low levels and has made credit available where it might not be otherwise. Two important programs, the first-time homebuyer tax credit and the extended conforming loan limits, were set to expire soon. Fortunately, both programs received strong support from lawmakers this week and are likely to be extended.

Week Ahead The biggest economic event next week will be the Fed meeting on Wednesday. While no change in rates is expected, the Fed may indicate future changes in monetary policy. The important Employment report will come out on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Early estimates are for a loss of about 165K jobs in October. In addition, the ISM Manufacturing index and Pending Home Sales will come out on Monday. ISM Services will be released on Wednesday. Productivity, Construction Spending, and Factory Orders will round out the busy schedule. The Treasury will announce the size of upcoming auctions on Wednesday as well.

To learn more about news impacting interest rates and mortgage markets, go to www.mbsquoteline.com

Google Maps Announces Real Estate Search

“Google Maps now has additional info when you search for an address. It added a new “More” button to enable layers for photos and Wikipedia articles.

There’s a new option to search for real estate: click on “show search options” and select “real estate” from the drop-down. The search results come from Google Base. Google shows structured information about houses and lets you refine the results by price, number of bedrooms and bathrooms.”

Click here to read the original blog post.

Our bias will lean towards a range trade with follow through in either direction (better or worsening mortgage pricing) doubtful

Stocks had a great day, breaking a four day S & P losing streak.  The Dow finished up 199 points and the Naz gained nearly 38 points on the day.  Given the stock market trade, any gains in mortgage pricing will be more difficult to come by.  That said, the market profile neutralized yesterday’s bullish structure but did not turn it negative.  The extreme low (yield of 3.52% –  going into the close at 3.49%) held with fast money buyers taking it off the lows, not to be revisited into the close.  Downside trading was mixed but we did close above the session mode, a net positive.  Into the end of the week/month, our bias will lean towards a range trade with follow through in either direction (better or worsening mortgage pricing) doubtful.

Watch stocks, any close up 100 plus will keep the heat on MBS

Fast market conditions exist as traders have gone palms out (selling) on the heels of strong stocks and a weak 7 year note auction.  The auction deserves no better than a C with the yield at 3.141%, 59.3% indirect bidders, and a 2.65 to 1 bid to cover ratio.  Both the indirect bidders and bid to cover were below average.

This one had the tail of a German Shepherd (2.3 bps) versus that of a Rottweiler, adding to the lack of interest.  Both the 10 year and MBS took it on the nose post auction.  At one time, the note was down 1 point and MBS off 10/32’s.

Watch stocks, any close up 100 plus will keep the heat on MBS.

Update from the National Association of Realtors: Extending and Expanding the Tax Credit

Yesterday’s Update from the National Association of Realtors:

Senate leaders of both parties, key Senate Finance Committee members and staff, and the homebuyer tax credit sponsors Sen. Chris Dodd (D-CT), Sen. Joe Lieberman (I-CT, and Sen. Johnny Isakson (R-GA), have reached an agreement on extending and expanding the housing tax credit.  However, right now, there is no agreement on how to attach this tax credit to the pending Unemployment Insurance bill, or whether to offer the tax credit agreement as an amendment to another bill, or whether to bring the agreement to the Senate floor and vote upon it as a separate, stand alone bill.

After Senate action – if passed – the legislation must still go to the House of Representatives for consideration.  There are still a number of steps to take before anything is final.  We will continue to keep you updated as we receive additional information.

Senators extend $8K tax credit for first-time homebuyers & offer $6,500 tax credit to buyers who have owned their current homes for at least 5 years

According to the Associated Press, Senators have agreed to extend the tax credit for first-time homebuyers and to offer a reduced credit to some repeat buyers.

Reportedly, Senators agreed to extend the existing tax credit for first-time homebuyers while offering a reduced credit of up to $6,500 to buyers who have owned their current homes for at least five years.

The tax credits would be available to buyers who sign sales agreements by the end of April 2010. They would have until the end of June to close on their new homes.
This is a preliminary report, details and conditions may change as the legislation becomes finalized. We will give more details as they become available.

Thank you and please call if we can be of service (512) 293-1239.

This blog entry is an advertisement for Max Leaman. 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 of its accuracy. The material contained in the newsletter is copyrighted by PrimeLending, A PlainsCapital Company and cannot be reproduced for any use without prior written consent. It is designed for real estate and other financial professionals only. It is not intended for consumer distribution. The material does not represent the opinion of PrimeLending, A PlainsCapital Company. © 2009 PrimeLending, a PlainsCapital Company. Trade/service marks are the property of PlainsCapital Corporation, PlainsCapital Bank, or their respective affiliates and/or subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved. PrimeLending, a PlainsCapital Company is exempt from licensing in the following states: AL, AK, AR, CO, DE, FL, GA, HI, ID, IA, KS, KY, LA, MN, MS, MO, MT, NC, NE, NV, NY, OH, OK, OR, PA, SC, SD, TX, UT, VA, WV, WY. Arizona Mortgage Banker Number License Number 0907334; California Department of Real Estate License Number 01857468; Connecticut Mortgage Lender License Number ML-13649; Illinois Mortgage banker License number MB.6760635; Maine Supervised Lender License Number SLM8285; Maryland Mortgage Lender License number 11058; Michigan First Mortgage Registrant License Number FR 0010163 and Second Mortgage Registrant License Number SR 0012527; New Jersey Licensed Lender Number 083659; New Mexico Mortgage Loan Company License Number 01890; North Dakota Money Broker License number MB101786; Tennessee Mortgage Registrant Number 4023; Texas Regulated Loan License Number 7293; Vermont Mortgage Banker license Number 6127; Vermont Mortgage Broker license Number 0964MB; Washington Consumer Loan License Number 520-CL-49075; Wisconsin Mortgage banker License number 214170. NMLS# 151263

Stocks will hold the key as to where Austin mortgage rates go next

Advanced 3^rd Quarter GDP hit the tape better than expected at plus 3.5%.  Economists were looking for a 3.3% print while Goldman Sachs revised their number (yesterday) to plus 2.7%.  The better than expected number was driven by durable goods (plus 3.4%) and personal consumption (plus 2.36%).  In reality, this number caught at least ½ of its gain from Cash for Clunkers and inventory rebuilding.  Although important, they are in the rear view mirror, making the road ahead still full of hairpin turns.

Weekly Claims dropped 1K to 530K and Continuing Claims fell a staggering 148K to 5.797 million.  The number to focus on here is the Weekly Claims, still maintaining a 500K plus per week average layoff run rate.  This is 500,000 people per week losing their jobs.  Not the makings of a healthy consumer.  Wouldn’t it nice if the White House would move this to the front burner.  Instead we have the Treasury Secretary testifying on Capitol Hill, endorsing Barney Frank’s bill for “a strong framework for achieving a safer, more stable financial system.”  Trouble is they want to give the Treasury Secretary the power to approve or not to approve the Fed’s decisions on systemic risk.  Sounds a little too political for me.

All of the above has put a little volatility back into the market.  Currently, the 10 year note is down 20/32’s (yield 3.49%), MBS down 6/32’s, and stocks up 75 points on the big board.  Stocks will hold the key as to where Austin mortgage rates go next.  The current pattern (stocks) has been for sellers to lean on the market when it rallies (5 out of the last 7 days).  We will want to watch the late afternoon trade (from 2:00 to 3:00 cst) to see if they can hold today’s gains.  Failure to do so will improve mortgage pricing while a positive close, especially 50 points or more, will put additional pressure on our stuff.

Technically, the selling today has pushed hourly charts into new sell signals (bearish) yet daily time frames remain neutral.  Overall, the charts point to another ½ point of weakness on the 10 year note but will take a back seat to the stock market trade.  We also have 31 billion of 7 year notes on the auction block.  We’re expecting this to go off without a hitch.

I’d like to wish you a frightening day tomorrow and the best sugar high Halloween ever.

Austin, TX: Record Home Affordability – Near Highest Level In 18 Years

Housing Affordability Near Highest Level In 18 Years Houses are the cheapest they’ve been since 1991. Bolstered by affordable interest rates and low prices, nationwide housing affordability during the second quarter of 2009 continued to hover near its highest level since the series began 18 years ago, according to the National Association of Home Builders (Aug. 19, 2009). You have the financial opportunity of a lifetime.

Mortgage Rates Remain at 37-Year Lows The average rate for a 30-year-fixed mortgage has dropped to the lowest levels in 37 years – since Freddie Mac started surveying interest rates in 1971!

Less Homebuyers = More Negotiating Power Real estate agents need to sell homes. With low competition for homes, you have an opportunity to negotiate for big savings. The struggling market gives you the upper hand, but make sure your realtor is a tough negotiator.

My consultation is always free and I want to make sure your questions are answered. Please call me today to discuss your home financing: 512-293-1239 (Cell) and 512-617-5636 (Office). Click to open PDF flyer

Although the home price numbers are good, uncertainty with the 8K stimulus plan and continued high unemployment will need to be monitored

Meant to post this yesterday!

Hey what do you know, a little green on the screen!  Case Shiller Home Price Index painted the screen with an improvement of 1.2% while the year on year figure was down 11.3%.  The number were a bit better than consensus, showing signs of stability creeping back into the housing market.  17 of the 20 market surveyed showed positive price improvement with Charlotte, Las Vegas, and Cleveland the only decliners.  Although the numbers are good, uncertainty with the 8K stimulus plan and continued high unemployment will need to be monitored.

Consumer Confidence was also released, down nearly 7 points to 47.7, well below the 53.1 economists were expecting.  The devil was in the present situation component which fell 2.3 points, its lowest level in 26 years.  Consumers and their view on hard to get jobs provided an addition drag.  Even with Consumer Confidence being a volatile index, the future of our economic recovery depends on a healthy consumer, one that has a job and a little “ching” in their pocket.

Just out, the 44 billion 2 year note auction was “dead solid perfect” ( Randy Quaid 1988).  Bullet yield of 1.02%, 44.5% taken by the indirect bidders, and a 3.63% bid to cover gives this one a grade of A.  Bonds like it, stocks don’t.  Currently, the 10 year note has returned from the abyss, up 18/32’s to yield 3.48%.  MBS has widen a touch to treasuries but have gone along for the ride, up 6/32’s.  Stocks have given up their gains, currently off a point or two.

Technically, the chart has taken out the down trend line, putting at least a temporary bottom in the market.  However, we view this as a counter trend rally in a longer term bear market.  In other words, until the market can prove itself, this is a correction and should be sold.

Austin Mortgage Market Update For the week of October 26, 2009

For the week of October 26, 2009 – Vol. 7, Issue 43

>> Austin Mortgage Market Update INFO THAT HITS US WHERE WE LIVE The week ended with the terrific news that Existing Home Sales shot UP 9.4% in September to a 5.57 million annual rate. This was almost twice the increase the consensus expected and a nice boost coming off the slight drop we saw in August. Best of all, the inventory is now down to a 7.8 month supply, getting us closer and closer to the 6-month level of a normal housing market. Earlier in the week, Housing Starts for September were UP 0.5% to an annual rate of 590,000 units. The consensus expected more, but the drag on the number all came from a drop in those volatile multi-unit starts. Single-family starts were up a strong 3.9%, their sixth gain in the last seven months and UP 40.3% since the January-February bottom. The rate of building is well below underlying demand, which some put at about 1.6 million units per year, based on population growth and the need for replacement because of fires, disasters and knock-downs. The Mortgage Bankers Association reported that for 30-year fixed-rate mortgages, the average contract interest rate was 5.07% with 1.13 points (including the origination fee) for 80% loan-to-value ratio loans to borrowers with good credit. First time buyers have just five weeks to get in on these still great rates AND the $8,000 tax credit set to go away at the end of November. >> Review of Last Week CAN’T STAY ABOVE 10,000… It was a strange week in the stock markets, as the Dow shot past the “magic” 10,000 mark two days in a row, but a freaky Friday hammered that benchmark back down below 10,000. All three major indexes saw modest drops for the week. Some analysts said the seven-month rise in stock prices made us ready for a dive. Even analysts who are bullish long-term hinted we were due for a temporary pullback. We can be grateful these experts’ wishes were fulfilled in such a modest way. The negative yak was extra strange because Q3 corporate earnings continued to impress investors. We saw what some called “blowout results” from Apple and Amazon.com, while a long list of companies had very nice upside surprises — outfits like American Express, AT&T, Capital One, Caterpillar, McDonald’s, Texas Instruments, UPS and Yahoo! And let’s not forget the strong single-family Housing Starts and very strong Existing Home Sales that show the housing recovery is moving along. Initial Unemployment Claims inched up a bit last week, but Continuing Claims continue to fall, now down to 5.9 million. Gloomy pundits say this just shows people’s unemployment benefits are expiring, but a few folks surely must be getting jobs to support the now recovering and growing economy! These pundits might want to consider Treasury Secretary Tim Geithner’s prediction that we’ll see “…positive growth in 2010 at a level that will begin to gradually bring down the unemployment rate.” For the week, the Dow ended down 0.2%, to 9972.18; the S&P 500 was down 0.7%, to 1079.60; while the Nasdaq fell just 0.1%, to 2154.47. It was an up-and-down week in the bond market, which ultimately ended down. Friday, investors were anticipating this week’s record auctions, which could squeeze prices some more. The FNMA 30-year 4.5% bond we watch fell again from the previous week’s close, ending at $100.59. Still, mortgage rates stay in historically low territory. >> This Week’s Forecast HOUSING? GDP? INFLATION?… We’ll have new answers to all three questions, beginning Wednesday with New Home Sales, then Thursday we get our initial look at GDP for Q3, the first quarter that’s expected to show the economy expanding again. Friday we get numbers for PCE and Core PCE, which are the Fed’s favorite inflation indicators. >> The Week’s Economic Indicator Calendar Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates. Economic Calendar for the Week of October 26 – October 30 Date Time (ET) Release For Consensus Prior Impact Tu Oct 27 09:00 Consumer Confidence Oct 53.5 53.1 Moderate W Oct 28 08:30 Durable Goods Orders Sep 1.0% -2.4% Moderate W Oct 28 08:30 New Home Sales Sep 440K 429K Moderate W Oct 28 10:30 Crude Inventories 10/23 NA 1.31M Moderate Th Oct 29 08:30 Initial Unemployment Claims 10/24 525K 531K Moderate Th Oct 29 08:30 Continuing Unemployment Claims 10/10 5.915K 5.923M Moderate Th Oct 29 08:30 GDP-Advanced Q3 3.2% –0.7% Moderate Th Oct 29 08:30 GDP Chain Deflator-Advanced Q3 1.3% 0.0% Moderate F Oct 30 08:30 Personal Income Sep 0.0% 0.2% Moderate F Oct 30 08:30 Personal Consumption Expenditures (PCE) Sep –0.5% –0.5% HIGH F Oct 30 08:30 Core PCE Sep 0.2% 0.1% HIGH F Oct 30 09:45 Chicago PMI Oct 48.7 46.1 HIGH F Oct 30 09:55 Univ of Michigan Consumer Sentiment–Revised Oct 70.0 69.4 Moderate F Oct 30 10:00 Employment Cost Index Q3 0.4% 0.4% HIGH >> Federal Reserve Watch Forecasting Federal Reserve policy changes in coming months. Last week the Producer Price Index (PPI) fell 0.6% for September. This tells the Fed that wholesale prices appear to be safe from inflation for now. As the recovery builds, rates should stay down unless inflation bubbles up. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same. Current Fed Funds Rate: 0%–0.25% After FOMC meeting on: Consensus Nov 4 0%–0.25% Dec 15 0%–0.25% Jan 27 0%–0.25% Probability of change from current policy: After FOMC meeting on: Consensus Nov 4 1% Dec 15 3% Jan 27 11% This blog entry is an advertisement for Max Leaman. 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 of its accuracy. The material contained in the newsletter is copyrighted by PrimeLending, A PlainsCapital Company and cannot be reproduced for any use without prior written consent. It is designed for real estate and other financial professionals only. It is not intended for consumer distribution. The material does not represent the opinion of PrimeLending, A PlainsCapital Company. Š 2009 PrimeLending, a PlainsCapital Company. Trade/service marks are the property of PlainsCapital Corporation, PlainsCapital Bank, or their respective affiliates and/or subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved. PrimeLending, a PlainsCapital Company is exempt from licensing in the following states: AL, AK, AR, CO, DE, FL, GA, HI, ID, IA, KS, KY, LA, MN, MS, MO, MT, NC, NE, NV, NY, OH, OK, OR, PA, SC, SD, TX, UT, VA, WV, WY. Arizona Mortgage Banker Number License Number 0907334; California Department of Real Estate License Number 01857468; Connecticut Mortgage Lender License Number ML-13649; Illinois Mortgage banker License number MB.6760635; Maine Supervised Lender License Number SLM8285; Maryland Mortgage Lender License number 11058; Michigan First Mortgage Registrant License Number FR 0010163 and Second Mortgage Registrant License Number SR 0012527; New Jersey Licensed Lender Number 083659; New Mexico Mortgage Loan Company License Number 01890; North Dakota Money Broker License number MB101786; Tennessee Mortgage Registrant Number 4023; Texas Regulated Loan License Number 7293; Vermont Mortgage Banker license Number 6127; Vermont Mortgage Broker license Number 0964MB; Washington Consumer Loan License Number 520-CL-49075; Wisconsin Mortgage banker License number 214170. NMLS# 151263