Hey there - Happy Friday! Another reminder Monday brings about the changes in FHA - please contact me with any questions - hopefully if you have an fha loan it will have the case number issued today; otherwise the mtg ins will be different and the qualification guidelines will also be different come Monday. Please contact me with any questions on this.
Also - I'm creating a page on Facebook entitled "Oregon Lending Resources". My objective will be to provide insightful resources that will help educate and enlighten you on residential lending. I would appreciate it if you could go to the page and "Like" it----
In the meantime have a great weekend - might be the last one in a while with actual sunshine and warm temperatures. Make it a great one!
Mary T
From Think Big, Work Small
Treasuries and mortgages opened weaker this morning ahead of a flurry of economic data. First out of the gate; August personal income and spending at 8:30, income up 0.5% while spending was up 0.4% both generally in line with forecasts and didn't generate any movement in the markets. The stock index futures early on were pointing to a better open with the DJIA trading +54 points at 9:00 am.
Wm. Dudley a member of the FOMC was out speaking this morning and added more conviction that another QE is coming. Dudley, known as a dove on the FOMC, actually mentioned a number for the easing at $500B over a six month period. The Fed has been canvassing primary dealers on an easing move and CNBC has run its own poll of economists and dealers, according to the CNBC poll dealers are looking for what Dudley suggested, $500B. Not as much as markets were thinking so now we have QE Light. Dudley isn't Bernanke so his comments need to be taken with some grain of salt; however, the Feds likes to "leak" out what it is thinking at times to test the waters.
Taking it chronologically this morning; over night China's manufacturing expanded at the fastest pace in four months in September, adding to signs that economic growth is stabilizing. The purchasing managers' index rose to 53.8 from 51.7 in August, according to China's logistics federation and statistics bureau, like the US manufacturing indexes, over 50 is expansion. At 9:00 the 10 yr note traded off 13/32 at 2.56% up 4 bp, mortgages -4/32 (.12 bp) and the DJIA +53 on the China news, Dudley's comments and the August income and spending. At 9:30 the 10 yr -14/32 2.56% +4 bp and mortgage prices -7/32 (.22 bp) on 30 yr FNMA's.
Next up this morning, at 9:55 the U. of Michigan consumer sentiment index was expected at 67.0 frm 66.6, as released sentiment increased to 68.2; the 12 month outlook on expectations at 61.0 frm 59.0. The initial reaction added a little to the DJIA but the bond and mortgage markets held steady. While a better index reading it is still on the historically low end. With the ISM hitting five minutes later markets were generally steady but weaker in rates and stronger in equities.
At 10:00, August construction spending, expected down 0.4%, was up 0.4%; July spending however was revised lower, from -1.0% to -1.4%.
Also at 10:00 the Sept ISM manufacturing index, expected at 54.5 frm 56.3, was right on at 54.4. New orders index at 51.1 frm 53.1, employment index at 56.5 frm 60.4 and prices pd at 70.5 frm 61.5. The ISM report overall was weaker than thought with declines in employment and new orders. The initial reaction dropped the DJIA from +66 to +27 and falling; the 10 yr note was -14/32, the knee jerk at -6/32; mortgage prices improved a little. On the margin the ISM was a disappointment for equity markets and should support the bond and mortgage markets through the session.
Technically; that the 10 yr note has failed to push into new low yields after testing them the last three days, isn't encouraging in the near term. The 10 yr low at 2.42% on an intraday trade is seen by investors as a level that must be violated to keep the interest rate rally moving forward. That it is running into selling suggests the note may increase in yield and pull mortgage rates up a little along with it. Support for the 10 yr if it continues to increase will come at the 2.65% area
From Freddie Mac
For Immediate Release September 30, 2010
McLean, VA - Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®). The 30-year fixed-rate mortgage rate dropped to tie the survey's all-time low and the 15-year fixed-rate set another record low.
Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.
•· "Confidence in the state of the economy fell among consumers and businesses, which led to a decline in long-term bond yields and brought many mortgage rates to record lows this week. The September Consumer Confidence Index by the Conference Board fell to the lowest level since February of this year, while the Business Roundtable CEO Business Outlook for the third quarter was the weakest in the past four quarters. Consequently, rates for the 15-year fixed mortgage and the 5-year hybrid ARM reached new all-time lows and rates for 30-year fixed mortgages tied its record set just four weeks ago.
•· "Homeowners have regained $1.0 trillion in home equity as of the second quarter of 2010 after losing more than $7.5 trillion over the three-year period ending in the first quarter of 2009, the Federal Reserve Board reported. This, in part, strengthened household balance sheets and reduced serious mortgage delinquencies. For instance, first mortgages 90-days delinquent or worse fell to 3.16 percent in August from 4.76 percent a year prior and was the lowest rate since June 2008, according to the S&P/Experian Consumer Credit Default Indices."
ServicesFrom Dick Lepre, San Francisco
Fundamentals
The Consumer Metrics Daily Grow Index declined to its lowest level of the year on 9/29. It is likely forming a bottom but it is also clear that this new downturn is going to last much longer than the previous one. There is little discussion of this in financial media.
Personal Income: Actual 0.5%, expectation 0.3%, previous 0.2%
Personal Spending: Actual 0.4%, expectation 0.3%, previous 0.4%
PCE Prices - Core: Actual 0.1%, expectation 0.1%, previous 0.1%
Construction Spending: Actual 0.4%, expectation -0.5%, previous -1.0%
U Michigan Consumer Sentiment - Final: Actual 68.2, expectation 67.0, previous 66.6
Initial Jobless Claims were 453,000 last week. 2ndQ GDP was revised upward to +1.7%. (Changes to GDP reveal the difficult in measuring data. What changes most from revision to revision are imports and exports.) GDP Deflator (a weighted measure of inflation) was +1.9%. If you are really, really bored you can peruse H8 the Fed report on the assets and liabilities of banks. One encouraging number is line 10 which shows the annual % change in commercial and industrial lending. This number turned positive in July and increased in August. The Case-Schiller index of property values was +3.2% in July year-over-year. This index is for May, June and July and thus was boosted by first time homebuyer tax credits. Consumer Confidence fell to 48.5. Chicago PMI was 60.4.
We have banks and businesses expressing confidence but the consumer not yet going along. There is a developing "reality gap" here.
The Technicals
The daily is bullish, the weekly is bearish, and the monthly is bullish. While those might comprise a mixed message I don't see mortgage rates moving sharply any time soon.
Analysis
Mortgage rates appear as if they will continue flat. The economy is in much worse shape that most folks realize. As discussed last week, part of the fault is that we continue to use 1930's metrics, Industrial Production and Capacity Utilization simply are not that important.
NYT has an article about TARP. There has been a ton of anti-TARP sentiment. It would serve well to look at some numbers. TARP authorized $700 billion. Treasury committed $470 billion and actually distributed $387 billion. Except for Chase, most large banks have completely repaid their TARP money. At present, Treasury estimates that the losses from TARP will be less than $50 billion. Final results will depend on want A.I.G. Chrysler and GM equity owned by Treasury eventually nets. The lesson should be that the costs and benefits from TARP were rarely discussed sensibly. Once things such as TARP get tossed into the political arena objectivity becomes minimized.
News from my friends at Oregon Housing & Community Services
FOR IMMEDIATE RELEASE
September 30, 2010
Contact: Michael Kaplan, Oregon Homeownership Stabilization Initiative Division Administrator,
503-986-2079, mike.kaplan@state.or.us
Lisa Joyce, Policy and Communication Manager
503-986-0951, lisa.joyce@state.or.us
Oregon Receives Additional $82.7 Million for Foreclosure Prevention Programs
(Salem) The U.S. Department of Treasury has announced that Oregon will receive another $82.7 million
in Hardest Hit funding for foreclosure prevention activities. Oregon's allotment is part of an additional
$3.5 billion Treasury has released for the 18 states and the District of Columbia that currently participate
in the Hardest Hit Fund to help stabilize their housing markets.
The Obama Administration has been considering making additional Hardest Hit Funds available as the
housing market has not shown improvement. The new funding allows the states receiving Hardest Hit
dollars to expand their foreclosure prevention programs to reach more struggling homeowners.
Oregon will add the funds to its already approved Oregon Homeownership Stabilization Initiative
programs to be implemented beginning early next year.
For information on the Oregon Homeownership Stabilization Initiative, see
http://www.oregonhomeownerhelp.org/
Where to go for help
Homeowners who need help immediately should call 1-800-SAFE NET. (1-800-723-3638)
Any person who wants to receive updates about the state's foreclosure prevention activities can sign up
for email alerts at http://ohcs.state.or.us/eNews/signup_enews.html or call 1-800-453-5511.
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