Texas Mortgage Market Update – For the week of January 14, 2013

For the week of January 14, 2013 – Vol. 11, Issue 2

>> Texas Mortgage Market Update

QUOTE OF THE WEEK… “It is wise to keep in mind that neither success nor failure is ever final.”–Roger Babson, American entrepreneur and business theorist

INFO THAT HITS US WHERE WE LIVE… That’s a good thought as we watch the housing market, once doomed to failure, turn into a more successful enterprise. A national online real estate site surveyed more than 100 professional forecasters — economists, real estate experts, and investment and market strategists. They see growing optimism in the housing market, expecting home prices to rise 3.1% in 2013, after ending 2012 UP more than 4.6%. The site’s chief economist commented, “An organic recovery in the housing market really took hold in the latter half of 2012.”

He added: “Record levels of affordability and an improving overall economic picture… have us well positioned for continued growth, albeit slightly slower, in 2013 and beyond.” Case-Shiller’s chief economist offered, “It is clear the housing recovery is gathering strength… that housing is now contributing to the economy.” Finally, in their latest forecast, Fannie Mae economists expect 2013 existing home sales UP 9.6%, new home sales UP 19.5%, and rates on 30-year fixed-rate mortgages to stay near historical lows.

BUSINESS TIP OF THE WEEK… Success breeds success. Spend time with other successful people. Review last year’s successes, then focus on repeating them. Ditch any negativity and seek out the positive.

>> Review of Last Week

GOOD VIBRATIONS… Good feelings left over from the prior week’s fiscal cliff settlement in Washington kept investors in a positive mood last week, as evidenced by all three major market indexes still heading up and the S&P 500 near a five-year high. It’s no secret that there will be more political fights coming over the spending cuts that didn’t happen and the raising of the debt ceiling, which present spending levels will soon be knocking on. For the moment, Wall Street is content to stay upbeat, hoping that earnings season will get 2013 off to a decent start.

Fourth quarter earnings reports will begin in earnest this week, but they started off quite nicely last Wednesday, when Alcoa disclosed top line revenues that beat estimates. Friday’s news revealed the trade deficit grew nearly 16% in November, but exports were up, just not as much as imports, so no one got too upset. Initial weekly unemployment claims were up by 4,000, still uncomfortably high at 371,000. But continuing claims dipped to 3.11 million, their lowest level since July 2008.

For the week, the Dow ended up 0.4%, at 13488; the S&P 500 was up 0.4%, at 1472; and the Nasdaq was up 0.8%, at 3126.

The good vibes around stocks weren’t quite strong enough to cause a mass exodus from the bond market. That safe haven continued to appeal, as Treasuries saw modest weekly gains. The FNMA 3.5% bond we watch ended the week down just .02, at $106.03. Following the report of 155,000 new jobs in December, national average mortgage rates edged up slightly in Freddie Mac’s weekly survey. The Mortgage Bankers Association reported applications for purchase loans UP 10% for the week.

DID YOU KNOW?… Earnings season is the period when a large percentage of corporations report the previous quarter’s earnings. It often moves markets up or down depending on overall results and future guidance given by individual companies.

>> This Week’s Forecast

RETAIL, INFLATION, MANUFACTURING, HOME BUILDING… This week provides us with a nice range of economic data that will paint a pretty clear picture of the economy. No surprises, as slow growth continues but, hey, it IS growth! December Retail Sales are expected up, not a holiday blowout, but a gain nonetheless. Inflation should stay under control, both wholesale PPI prices and, more importantly, the CPI prices we all pay.

Manufacturing is forecast to continue its crawl upward, with the NY Empire Index and the Philadelphia Fed Index both showing mild expansion in those regions. Thursday we’ll see how home builders are doing, with December Housing Starts and Building Permits predicted to keep moving up.

>> 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 Jan 14 – Jan 18

 Date Time (ET) Release For Consensus Prior Impact
Tu
Jan 15
08:30 Retail Sales Dec 0.2% 0.3% HIGH
Tu
Jan 15
08:30 Retail Sales ex-auto Dec 0.3% 0.0% HIGH
Tu
Jan 15
08:30 Producer Price Index (PPI) Dec 0.0% –0.8% Moderate
Tu
Jan 15
08:30 Core PPI Dec 0.2% 0.1% Moderate
Tu
Jan 15
08:30 NY Empire Manufacturing Index Jan 2.0 –8.1 Moderate
Tu
Jan 15
10:00 Business Inventories Nov 0.3% 0.4% Moderate
W
Jan 16
08:30 Consumer Price Index (CPI) Dec 0.0% –0.3% HIGH
W
Jan 16
08:30 Core CPI Dec 0.1% 0.1% HIGH
W
Jan 16
09:15 Industrial Production Dec 0.2% 1.1% Moderate
W
Jan 16
09:15 Capacity Utilization Dec 78.5% 78.4% Moderate
W
Jan 16
10:30 Crude Inventories 1/12 NA 1.314M Moderate
W
Jan 16
14:00 Fed’s Beige Book Jan NA NA Moderate
Th
Jan 17
08:30 Initial Unemployment Claims 1/12 370K 371K Moderate
Th
Jan 17
08:30 Continuing Unemployment Claims 1/5 3.100M 3.109M Moderate
Th
Jan 17
08:30 Housing Starts Dec 889K 861K Moderate
Th
Jan 17
08:30 Building Permits Dec 905K 899K Moderate
Th
Jan 17
10:00 Philadelphia Fed Manufacturing Index Jan 5.2 4.6 HIGH
F
Jan 18
09:55 Univ. of Michigan Consumer Sentiment Jan 75.0 72.9 Moderate

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… The Fed intends to keep the Funds Rate super low for quite a while, but some members want to end the bond buying program by the end of this year, which could send rates 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
Jan 30 0%–0.25%
Mar 20 0%–0.25%
May 1 0%–0.25%

Probability of change from current policy:

After FOMC meeting on: Consensus
Jan 30      <1%
Mar 20      <1%
May 1      <1%

About Max Leaman Austin Mortgage

GREAT RATES, LOW FEES, CLOSE ON TIME™ ---- 2012 Ranked #1 Austin Residential Mortgage Lender (Austin Business Journal) 2010, 2011 & 2012 Five Star Professional (Texas Monthly) 2009, 2010, 2011, 2012, 2013 PrimeLending Chairman's Circle Award 2009, 2010, 2011, 2012 Scotsman Guide Top Originator (Top 200 Mortgage Professionals in U.S.A.) Better Business Bureau "A+ Rating" National Lender Rankings (Scotsman Guide): Top Purchase Volume (No. 10) Most Loans Closed (No. 32) Top Dollar Volume (No. 88)

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