Danny Salas

Welcome to Access Real Estate Lending

Welcome, Real Estate Agents & New Readers, to AccessLoans.net  Our top two articles, Industry Updatesand Interest Rate Updates, are updated regularly.  Industry Updates is primarily a Real Estate Agent’s Informative site, educating Real Estate Agents as to current changes in the Real Estate Lending Industry.  Interest Rate Updates are for all readers to follow.  It helps understand what makes rates move up and down and what drives that market.  Scroll below to enjoy the most recent articles from similar topics.

Chico Real Estate Loan Industry Updates

Chico Real Estate Interest Rates Updates

Chico, CA Interest Rates Market Report – Economic Influences – March 11, 2010

We Have Some Support

30-Year Treasury Note Auction

Investors are lost, not knowing what to do with their funds, until the results of the 30-Year Treasury Note Auction is in, which will be at about 10:00 a.m. PST.  The two earlier auctions, this week, went quite well.  However, as I write, we’re currently down 16 basis points.  Most banks will have a re-price for the worse for about .125% Point in cost.

Jobless Claims Better, But…

The number of people filing new unemployment claims, fell 6,000, this week, to a seasonally adjusted 462,000.  We won’t see the labor market correcting itself until we see less than 400,000 claims on a week-over-week basis.  However, there is some positiveness in these numbers, as a 159,000 decrease in Unemployment Compensation Claims and a 15,000 decrease in extended benefits programs, can hopefully set a pace for a labor recovery, somewhere down the line, however, we still have a long way to go.

China’s Impact On US

“My little China Girl, you should mess with me.  I’ll ruin everything you are!”  David Bowie’s famous line from “China Girl.”  Words to reflect on…China’s inflation numbers are getting close to scary.  China reported that their Consumer Prices rose 2.7%.  They had anticipated a 2.5% increase and feel as though 3.0% is quite inflationary.  Keep in mind that the United States comfort level, with their own inflation measures, is closer to 2.0%.  The problem, here, is that if China starts to feel their own inflationary concerns, they could curb that by not participating in purchasing US Bonds and Mortgage-Backed Securities.  This, of course, would cause interest rates to increase, as there wouldn’t be another large player in the Bond Market.

Retail Sales Released Tomorrow

With today’s Jobless Claims Numbers not really effecting rates too much, the auctions, China’s news, and tomorrow’s Retail Sales Numbers are what have moved rates, up and down, this week.  We’re expecting a 0.2% decrease in Retail Sales, for last month.  It could be a rate mover.

We've Broken Through Two Lines Of Support

Locking Advice

Since we have broken through the 100-Day Moving Average, and opened up the day, so far, below the 25-Day and 40-Day Moving Average, there seems to be a little support at the 50-Day Moving Average.  We may want to see if the 50-Day holds a little support, into tomorrow’s Retail Sales numbers.  So, I’d float, into the day, if we break below the 50-Day, Lock…if not…we may have an opportunity, first thing tomorrow.

Related Must Reads

China’s Credit Tightening
The Real Unemployment Numbers
Trend Lines / Moving Averages…What Do They Mean?

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Carry Trade…The Investment Opportunity of a Lifetime…

Loss of The Carry Trade...Why Rates Will Go Up This Year

More Writing On The Wall

So, we’ve been talking about interest rates, inevitably, moving up; that the writing’s on the wall.  What are some of the writings on the wall, and how do we know?  We’ve talked about the Government’s Mortgage-Backed Security Purchase Program drying up in March.  We’ve talked about some of the financial troubles occruing in Greece, and throughout the world;  that the safe-haven for US Treasuries and Mortgage-Backed Securities will eventually reverse.  But what’s the Carry Trade?  How does it work, and how will it effect rates?

The Fed Funds Rate

So, remember that the Fed Funds Rate has been significanly lower, for quite some time.  The Fed increased the Discount Rate, however, has been mentioning that the Fed Funds Rate will remain low, “for an extended period,” of time.  This “extended period” quote was lost, at a more recent meeting.  However, Good ‘Ole Ben Bernanke brought it up again, with his talk to Congress and the Senate, last week.  Why is this back and forth mentioning of “extended period” so important?

The Writing On The Wall

The Fed’s not in the business of tricking people.  They’re significantly more transparent than that!  They want you to get the writing on the wall comments.  Here’s what’s being said:  We’ve mentioned Kansas City Fed President Thomas Hoenig, recently.  ”Fiscal policy is on an unsustainable course…”  Also, the Fed’s own Vice Chairman, Donald Kohn, has recently dissented from the Fed’s Policy, actually warning banks to be prepared for interest rate changes.

The Carry Trade Phenomenon

Think of it like this…You have $1 Million to invest and you’re interested in the 4.5% Mortgage Backed Security (which is currently being used to measure 30 Year Fixed Rate Mortgages).  4.5% on $1 Million is $45,000.  The Government Allows you to only put 10% Down on your investment.  So you only have to write a check for $100,000.  So, you can borrow the other $900,000 at the current Fed Funds Rate, plus .25%.  That equates to 2.25% or $20,250.  So, $45,000 minus $20,250 is a profit of $24,750.  Or a 24.75% return on your investment.  Now, when the Fed Funds Rate Increases…even just 0.5%, think of this;  your profit is significantly jeopardized.  That 1/2 percent alone can cost you $27,000 cost, from $45,000 earnings, is only a profit of $18,000.  So your rate of return is leveraged down to an 18% gain.  Still significant, however, quite a loss, for just 0.5% in rate increases.

Come On People, Now…

So, with the MBS Purchase Program ending, dissenting Fed Members and Presidents warning of higher rates, Greece on the Path to a financial rescue, I just don’t see how much writing can be on the wall, before everyone understands that rates are moving up.  The temporary fixes WILL NOT LAST!