The financial situation that the world is facing these days many people are trying to find a way to save, save, save. To save more money it is a great idea to make your home energy efficient. Your monthly hydro bill will be decreased if you make your home energy efficient.

Insulation is a key to maintain the comfort of your house inside. If you have the right insulation put into your home you will see your power bills drop. But to have your home insulated well you must also have your floors, ceiling, basement walls, overhangs, and interior walls insulated. When air can leak in it is costing you money. Make certain that all of the cracks and the crevices are sealed.

You can help make your home energy efficient by replacing your lighting fixtures with energy efficient models. You should make use of your dimmer switches also because this saves energy and money. Another great way to save on your power bill and make you home energy efficient is to open up your curtians and blinds and let some natural light pour in.

When you are using your home appliances you are using a lot of energy. The best way to save energy here is to shop for new appliances that have the energy star. The expense of these appliances might be more but in the end you will be saving.

One of the best ways to make your home energy efficient is to install solar panels. They use natural resources to create energy. Solar panels can come in the form of a solar thermal collectors that help the suns energy heat water. What a great way to use the suns energy.

Josh manages an Austin Real Estate website, where users can learn about the Austin market and check out all active listings, including Allandale Houses For Sale.

2010 was a mortgage banking year synonymous with the “perfect storm.”

• Double-dip recession fears,
• European debt crisis,
• rising unemployment, etc. etc. took the 10-year treasury note from 3.75% in January to 2.39% in October.

Texas mortgage rates dropped into the high 3’s to low 4’s and everyone and their brother wanted to refinance Austin mortgages. Those people that had a job and remained confident with their personal balance sheets, took a leap of faith and bought a new home at the highest affordability levels in history.  The Fed started operation “Quantitative Easing” and put 8k in every first time home buyers pot.  Life was good and it still is.

Investor sentiment changed course in late October, feeling more confident the economy, which was once in recession, is now making the transition from recovery to expansion. That sentiment, coupled with a fickle and illiquid holiday market, took the 10 year note on a ride to finish the year at 3.31% after printing 3.54% in December.

So what’s ahead in 2011? No one knows for sure.  We do know that treasury and mortgage pricing will be looking for clues.  Clues as to whether or not the economy is really expanding or needs more time to clear the mine fields.  Will the debt crisis in Euro land heal or blow up?  Will the employment picture in our country start to improve?  Answers to both will unfold as we move into the first quarter.  Our big picture outlook tends to follow the thinking of expansion within the economy but will be two steps forward and one step back.

Keep in mind that we have come though a time period that has seen historic financial devastation and the consequences that go with it. Think Fed and governmental regulation.  Getting back to even will take a lot longer than in previous recessions.  Patience will be a virtue, something few of us have.  The future will create opportunity.  Once the expansion can be trusted, consumer confidence will improve, employment will gain strength, and with 11 million housing units available to purchase (homeowners selling, foreclosures, etc), affordability will be great and consumers will start to see that they are not alone when making an offer on a home.

Time table on this recovery is optimistically 3^rdquarter 2011. Realistically, early 2012.  In the meantime, many mortgage lenders will struggle with changes in compliance and regulatory issues. Their costs will become a bigger concern as Uncle Sam forces them to conform.  Loan officer compensation will affect everyone and most certainly mortgage company balance sheets.  Fortunately, I work for PrimeLending, A PlainsCapital Company. PrimeLending is at the forefront of the mortgage industry and quite simply: PrimeLending allows me to provide the best rates, loan products, customer service, 30-day closings and more to my clients. This mortgage company enables me to make promises to clients and realtors and KEEP them.

As far as the market is concerned, the tactical bias is neutral to start the year. We feel with a new set of books, investors and traders alike will see yields have moved a little too far a little too fast.  This should give us a New Year’s rally or at least some stability in mortgage pricing.  10 year note yields should produce a short term range of 3.30% to 3.39% (currently at 3.35%).  Longer term will depend on a number of factors, the biggest being employment or the lack thereof.  We’ll get that party started with this Friday’s release of December 2010 figures.

Details on Tax Deductibility for MI:

• MI is deductable for purchase and refinance loans;
• Your loan must close by December 31, 2011;
• For a full premium deduction, your household income must be at or below $100,000;
• For each $1,000 of income over $100,000, your premium deduction is reduced 10%;
• In the first year, your premium deduction is prorated based on which month your loan closes;
• You can apply your premium reduction to your primary residence and one other residence purchased for personal use;
• Monthly, annual, and single MI premiums are eligible for preimum deduction.

Please note: PrimeLending does not provide tax advice. Consult your tax advisor for questions about your eligibility for this tax deduction.

If you have questions about your home financing, get answers! Please contact us as soon as possible for expert mortgage advice. Call (512) 293-1239 or email maxl@primelending.com.

Technically, market profile structure is bearish  following Monday/ Tuesday price action.  Sellers are in control of the market with additional downside (higher yield/worsening Austin mortgage pricing )  a high probability.

Best bet for Austin mortgage borrowers is to be defensive in this market!

In an effort to boost the economy, the Fed is expected to begin to purchase additional Treasury securities soon. The big question is how large the program will be. Investors expect the Fed to reveal the details of the program at its next FOMC meeting on November 3. Comments from Fed officials during the week indicated that they are still discussing what approach to take. The Fed may decide on a fixed quantity over a set time frame, or they may select a more flexible program in which they decide at each meeting how much to purchase. Austin mortgage rates have already benefitted from investor expectations for the program, and they likely will remain highly sensitive to changes in the outlook for the Fed’s plans.

While foreclosure issues were in the spotlight, this week’s housing sector data generally showed modest improvement. September Housing Starts increased to the highest level since April. The October NAHB Home Builder confidence index rose to 16 from 13 in September, which was the first increase in five months. “Builders are starting to see some flickers of interest among potential buyers,” according to the NAHB.

Stocks have been in the driver’s seat today, slipping by over 100 points as Big Blue (IBM) and Apple disappointed the market with weak results. China, raising its lending rate by .25%, helped the dollar but put additional pressure on stocks. You would think that note and mortgage back pricing would have gotten a boost from all this equity punishment. Not to be. Currently, the 10 year note is off 8/32’s. Good news is that mortgage backed securities have tightened to treasuries.

Overall, trading today has been a range-bound affair with prices above yesterday’s lows and below yesterday’s highs. Traders call this an “inside day” which is simply a neutral pattern. Expecting mortgage pricing to hold steady is a pretty good bet.

The New York Fed (Empire State) Manufacturing report was also released, jumping 12 points to 15.7.  Both new shipments and orders improved at the fastest pace since June.  Overall, the factory sector in NY seems to be on the mend.

Last but not least, we got a look at the University of Michigan Sentiment Survey which declined from 68.2 to 67.9.  Current conditions did the damage, falling 5.4 points.  Future expectations did a little better, up 4 points for the month.  Big Ben, printing press supervisor for the Federal Reserve was speaking in bean town this morning.  He all but assured the market of QE2 coming with details most likely presented at their November 2^nd/3^rd meeting.

The 10 year note, 30 year bond, and mortgage backs have been taking a beating.  The note is currently of 18/32’s.  Mortgage backs continue to slide, now off 7/32’s.  Stocks are a mixed bag and no help to bonds.  Dow off 46 points, Naz up 21 points on Google’s earnings.  That stock is up 58 bucks!

From our perspective, the market has fully priced in QE2 and has shifted the focus to a weak dollar and indigestion from 66 billion of auction paper that is now underwater.  Call the market neutral/bearish with good support nearby.  As we have preached all week, defense is your friend, Austin mortgage borrowers, and the exclusive float down option from Max Leaman is a no brainer.  We’ll try to wrap it up later today.

For the week of October 11, 2010 – Vol. 8, Issue 41

INFO THAT HITS US WHERE WE LIVE With all the conflicting opinions about the housing market, we found this recently published article in the Wall Street Journal to be quite helpful. It’s title says it all, “10 Reasons to Buy a Home”.

Last Monday, the National Association of Realtors (NAR) reported its August Pending Home Sales index UP 4.3% over the prior month. But this measure of signed contracts on existing homes was down 20.1% compared to a year ago. The NAR’s current economic forecast looks to a 6.4% drop in existing home sales for 2010 compared to 2009, putting the volume at 4.82 million, and the median existing home price UP 0.2%, to $172,900. This is a smaller drop and a greater price rise than previously predicted.

On the new homes front, the NAR projects sales off 13.4% for the year to 325,000, although housing starts will be UP 11.3% while the new home median price will dip 0.4% to $215,000. But the NAR projects new home sales UP a whopping 28.9% for 2011 and 28% in 2012, with the median price UP 2.4% next year and 4.9% the year after that. Finally, the President last week signed a bill that keeps in place today’s higher loan limits for Fannie Mae and Freddie Mac guaranteed loans and FHA multifamily programs.

>> Review of Last Week

DOW AT 11 THOU… Stocks went up and down all week as investors on Wall Street tried to figure out if it was smarter to be betting on the economy or against it. The economic data coming from the government and corporations pointed opposite ways, but UP was the direction that ultimately prevailed. As a result, the Dow crossed over the 11,000 threshold for the first time since May, as all three major market indexes showed gains for the week and were up from 4.5% to almost 6% for the year.

It was nice to see Pending Homes Sales ahead for the month, but the 20% drop year-over-year indicates that the housing market still awaits real recovery. Then the week ended with a disappointing September employment report showing payrolls down by 95,000 for the month. This was all due to heavy layoffs in government jobs, as the private sector showed a gain of 64,000 jobs, which was OK, but a bit less than expected. The unemployment rate held at 9.6%

On the good news side, the ISM Services index rose above expectations in September, showing slow but still steady expansion in the non-manufacturing sector of the economy. There were also better-than-expected earnings reports from Alcoa, Yum! Brands, and Costco, with PepsiCo’s Q3 numbers in line with expectations. But some observers felt the biggest push to the upside was investors’ increasing certainty that the Fed will move soon to stimulate the economy with QE-2, its second round of quantitative easing. Of course, negative economic numbers increase chances that the Fed will act sooner.

For the week, the Dow ended UP 1.6%, to 1106.48; the S&P 500 was also UP 1.6%, to 1165.15; and the Nasdaq was UP 1.3%, to 2401.91.

Prices were strong in the bond market and held up, even with some profit-taking at the end of the week. The FNMA 30-year 4.0% bond we watch ended UP 79 basis points for the week, closing at $103.06. National average mortgage rates for most mortgages tracked in Freddie Mac’s weekly survey remain at historically low levels. 

>> This Week’s Forecast

THE FED’S THOUGHTS, INFLATION, RETAIL… Tuesday we have the minutes from the Fed’s last FOMC meeting a few weeks ago. The economic experts are sure to pore over the dialogue to see when the central bank may go for another round of quantitative easing (“QE-2″). This will keep rates low, but could lead to more inflation later on, which could drive more people into the housing market.

Wholesale inflation for September is measured with Thursday’s Producer Price Index (PPI), but more important are Friday’s CPI readings on consumer inflation. These are all expected to remain in benign territory, where they’ve resided for some time. Friday’s Retail Sales numbers will tell us more about the consumer’s contribution to the recovery, but they’re expected to show more modest gains than previously reported. All this indicates a slowing of the recovery, but at least we’re not falling back into recession.

>> 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 11 – October 15

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months There’s more talk about the Fed helping the economy along with a second round of quantitative easing (QE-2). Consequently, economists expect the Fed Funds Rate to stay at its rock bottom level well into next year. 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%

Probability of change from current policy:

While the private sector performed relatively well, Friday’s Employment data revealed net job losses and stagnant wage growth in September. Against a consensus forecast for a loss of 5K jobs, the economy lost 95K jobs. The weakness was seen mostly in the government sector, as state and local governments continued to shed jobs. The private sector actually added 64K, which was close to expectations. The Unemployment Rate remained at 9.6%. A broader measure, which also includes the underemployed, rose from 16.7% in August to 17.1%, matching the high reached in April. Average Hourly Earnings, a proxy for wage growth, was unchanged from August.

The Fed’s recent announcement that it may purchase additional Treasury securities (quantitative easing) to stimulate the economy has magnified the importance of economic news and increased daily volatility. Investors now evaluate each fresh piece of data in terms of its expected impact on Fed policy, and mortgage rates receive an extra benefit from weaker than expected data. In general, weaker economic growth leads to lower future inflation, which is favorable for mortgage rates. In addition, investors now expect higher levels of bond purchases by the Fed after weak data, and the increased demand also would be positive for mortgage rates. Of course, stronger than expected economic news will have the opposite effect and will push rates higher more quickly than usual.

During the week, a series of Fed officials shared differing viewpoints on the possibility of additional Fed purchases of Treasury securities. While the officials are divided about both the need and the effectiveness of buying bonds to stimulate the economy, the majority view appears to be that the Fed should undertake this action unless the pace of the economic recovery improves soon. A flexible program to purchase smaller quantities of Treasury securities has emerged as an appealing middle ground for Fed officials.

Overall, a new Treasury purchase program would be favorable for Austin mortgage rates. Increased Fed demand for Treasury securities would also increase demand for similar investments including mortgage-backed securities (MBS), which would push Austin mortgage rates lower. Investors have already priced in the likelihood that more purchases will take place. There may be a downside, though. In contrast to the recent MBS purchase program, which involved a relatively steady, well defined level of weekly buying, the new program may be geared to allow the Fed to adjust its purchases based on changing economic conditions. By its nature, a program that is more flexible will be less predictable. The uncertainty will likely lead to increased volatility for Austin mortgage rates, as investors amplify their reaction to each piece of economic news.