Danny Salas

Archive for the 'Loan Qualification' Category

Chico, CA Interest Rates Market Report – Economic Influences – September 15, 2009

Cash for Clunkers”

Retail Sales jumped 2.7% last month, primarily due to the $4,000 gift to consumers to purchase a new vehicle, as opposed to continuing to drive their gas guzzling hunk ‘o junks.  More help was given to Sales numbers when retailers discounted their “back-to-school” items.  This information was, obviously, pretty hot, keep in mind…we’d have to see a few months of reports like this.  Not just one, to really impact the economy, and let’s face it…the jobs numbers are more important than this information.

Producer Price Index

August also show us an “on fire” Producer Price Index.  This was primarily sparked by the biggest surge in gas prices in TEN YEARS!  We’re hoping to see this cool down a bit, and perhaps we’ll see more information in tomorrow’s Consumer Price Index.  The Producer Price Index shows inflation at the wholesale level, like manufacturing.  Something to consider, here, is that during the recession, many manufacturers were slow, because the consumer wasn’t buying.  So, stores left items on their shelves, for longer periods of time.  Now that those items need to be replaced, it looks like manufacturing is way up…but is the consumer really buying?  Tomorrow will help point us in the right direction.

Locking?

Over the short term, it would make sense to lock.  Our earlier talk of lower interest rates, due to third quarter earnings from corporations, has been somewhat swept under the rug by the Chinese Tariff on Tires.  There’s always something in the mix, that can shake up markets.  But if you’re happy in the low 5 percentage rates…I might take advantage of what’s available today.

Chico, CA Interest Rates Market Report – Economic Influences – September 8, 2009

Big News This Week:  Bonds

That’s right.  Treasury Auctions are the big news of the week.  By the time you read this, $38 Billion in 3-Year Treasury Notes will have started their Auction.  Tomorrow $20 Billion in 10-Year Notes and Thursday’s $12 Billion in 30 Year Notes will definitely have an effect on the market.  Expect Today’s bid to go quite well.  The rest of the week, however, be a little concerned.

Why Be Concerned

If you read the link above, that explains why longer terms are more risky regarding these Bond Auctions.  So, again, it makes sense to float into the week, with an itchy finger on the lock button, as the 10-Year & 30-Year Treasury Auctions occur.

No Cost Loans…Que Paso?

The Good ‘Ole Days

Remember the true, no cost loan?  The rate was almost as low as the full cost loan…Well, those days are gone.  Anyone offering a no cost loan, these days, is just using an old marketing tactic that might make the phone ring, but is it really a smart thing for a home owner to entertain?  Let’s take a look…

Plenty Of Business To Make $ On The Next Loan

Before the Mortgage Credit Crisis, banks could afford to offer loans, like “no cost loans,” because there was so much business, that if the home owner happened to pay off the loan by refinancing or selling, nobody cared…there were, simply, plenty of other loans out there to make the bank more money. 

$?  No Mas

These days, things are different.  After the colossal losses to lending institutions in the United States and world wide, banks just cannot afford structuring a loan, paying people to process the loan and set it up for monthly payments, to not have an opportunity to make interest on that loandue to an early pay off.  So, instead of no cost loans being closely priced the same in interest rate as full cost loans, that spread has grown exponentially.

What To Do

Probably the best scenario, is to actually pay a point, to get the market’s best rate.  If you’re in a purchase transaction, take advantage of the opportunity, in today’s buyer’s market, and have the seller contribute to your cost of purchasing the home.  It completely makes “cents.”

Chico, CA Interest Rates Market Report – Economic Influences – September 1, 2009

September Stock Blues

Calm Before The Storm

Mortgage-Backed Securities are bouncing back and forth, between the 100-Day and 200-Day Moving Averages.  I think they’re poised move in a higher direction, making rates lower for September and October.  Here’s why!

Stock Market

To put it simply, Stocks are overbought, we’re heading for September, AND we’re getting ready to receive the 3rd Quarter Earnings Reports from U.S. Corporations.  As I have been saying to a lot of my clients and agents, I think it’s going to be ugly.  The good news…interest rates will benefit. September stock months have, traditionally, been bad since 1959.  So, if tradition has anything to do with anything…

July Pending Sales

Pending Homes Sales for July increased by 3.2%.  They only expected a 1.5% increase, not to mention that we’ve experienced six months of increases.  Don’t get too overly excited.  Remember, many first time home buyers are moving their purchases up to take advantage of the tax benefits this year.

Read Between the Lines

The Institute for Supply Management Index (ISM) came in at a very strong 52.9%.  Generally, a reading over 50% indicates strong economic growth, because it measures manufacturing output.  But reading between the lines, you’ll take notice that Manufacturing has been slow.  Since 2007, corporations have depleted their supply of goods, as opposed to the cost manufacturing new ones.  So, since the supply has depleted, manufacturing has to go up.  So, watch this carefully.  It could be misleading!

Continue to Float

So, I would continue to float, very cautiously, into the third quarter.  It’s benefited numerous of my clients this past few weeks.