Danny Salas

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Chico, CA Interest Rates Market Report – Economic Influences – November 6, 2009

Another Perfect Day To Lock

How’d I Do?

Well, The Labor Department reported that we lost 190,000 jobs last month.  We were expecting to lose only 175,000.  The other fact that I prognosticated was, “others are heeding my advice to, what I think will pan out to be, about a .25% Point Savings on their loan costs.”  Unemployment rolling in at 10.2%.  Yesterday, I was stating that many analysts were expecting a 9.9% reading, but that it didn’t make sense, with all of the new claims.  Well, now the results have been presented.

The “Real” Unemployment Numbers

I’ve mentioned the “real” unemployment numbers before.  Remember, we’re in the worst economic crisis since The Great Depression.  Unemployment benefits only last for a specified amount of time, when those benefits run out, you’re no longer a statistic on the “Unemployment Numbers.”  Also, keep in mind that so many people have had to take part-time jobs to feed their families, that they no longer hit the Unemployment statistics, either.  So, things are ugly, is what I’m trying to say.  The worst numbers since 1983.

Dialed In!

The Average Work Week came in at a record low 33 hours.  Yesterday’s article touched base on this, as well.  And, just as mentioned regarding rates, Mortgage-Backed Securities moved up exactly 25 basis points, bounced right off of the 25-Day Moving Average, and came right back down to where they ended yesterday afternoon.  So, your interest rate will cost about .25% Points less, today, compared to yesterday morning.  Now THAT is healthy prognostication!  And, by following this blog, you and your clients were Dialed In!

House Passes Tax Extension

So the Senate version of the Tax Extension was passed by the House.  The only thing left is for President Obama to sign it.  Here’s the Scoop:  $8,000 for couples, $4,000 for Singles.  Cannot have owned a home in the last three years.  Income restrictions of $125,000 for singles and $225,000 for married couples.  If you’re a current homeowner, for five of the last eight years, than you’d qualify for a $3,250 Credit for Singles and a $6,500 for Married Couples.  Your application must be dated by April 30, 2010, and the escrow must close by June 30, 2010.

Military Exceptions

If you’re in the military, servicing our country out of the country on official duty for 90 days, from January 1, 2009 until May 1, 2010, you’re eligibility is extended to May 1, 2011, as a contract date, and  July 1, 2011, as the close date.

Locking Advice

I think we’ve reached another pinnacle and it will be very difficult to break through the 25-Day Moving Average.  So, if you float, or lock when the market changes, it may not get any better than it is right now, anyway.  Until Next Week…

Related Must Reads

Yesterday’s Article Was Right On!
The REAL Unemployment Numbers
Tax Credit FAX

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Chico, CA Interest Rates Market Report – Economic Influences – November 2, 2009

Friday Was A Good Lock Day

One Year Extension of Loan Limits

The House and Senate approved an extension of the Federally backed FHA, Fannie Mae & Freddie Mac Loan Limits.  This is huge, and helps the secondary market purchase more loans to help home buyers qualify for lower interest rates.  The only concern will be the market’s liquidity.  Also expected this week is a vote on the $8,000 Tax Credit, or a rendition of that credit.

FOMC Meeting

The Federal Open Market Committee meets this week.  Expect potential market moving statements to be provided on Wednesday, by the Monetary Policy Statement that Good ‘Ole Ben Bernanke will report.  What The Fed says regarding the economy and when they may need to increase overnight interest rates, to stave off inflation, will be watched quite closely by the markets.

Jobs Numbers

Friday will also be an interesting day, when the unemployment figures are released.  Many experts expect the unemployment rate to move below 10%.  It will be interesting to see, as the true unemployment numbers are higher than this.  Also, with the government extension of unemployment benefits these numbers could skyrocket.  Keep posted…

Pending Home Sales Increase

The $8,000 Tax Credit probably helped these numbers increase 6.1%.  Things to keep in mind, even if the extension of the Tax Credit occurs, the Mortgage Backed Security Purchase Program is ending soon.  This will push interest rates up, unquestionably.  Therefore, any buyers sitting on the fence, should move now.  It won’t get much better than this.

Related Must Reads

March of 2008, When Loan Limits Increased
The Senate Version of the Tax Credit Extension
Unemployment Benefits Ignored

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Chico, CA Interest Rates Market Report – Economic Influences – October 29, 2009

GDP is HOT, BUT...

Technical Difficulties

I was, somewhat, out of commission since Saturday Night.  My laptop crashed out, and on Tuesday Night, my cell phone froze up on me.  Made for many more hours in the office, however, that’s why the Market UPdates were delayed until today.

What’s Going On?

In the words of Marvin Gaye, here’s what’s been happening.  Treasury Auctions have, so far, fared quite well.  Tuesday’s $44 Billion auction of 2-Year Notes, and yesterday’s auction of $41 Billion in 5-Year Notes were well received by foreign markets.  This pleasant surprise helped keep interest rates stable, however, keep in mind that there is nowhere for rates to go…but up!

Don’t Be Foolish

If you think that by waiting for the “bottom” of the real estate market, that you will somehow benefit from that, a heeded warning:  Don’t be foolish!  Higher interest rates will substantially influence your buying power more than declining values.  IF the government extends the tax credit for first-time home buyers, I recommend getting off of the fence and buying, as soon as you’re able.

Important Side Notes

Durable Goods Orders were reported exactly where the market expected them to be.  Consumer Confidence is down, particularly due to the labor situation.  The government is considering an expansion of unemployment benefits.  If this occurs, expect the number of claims to SKYROCKET, as unemployment numbers only report for a certain amount of time, before you’re ineligible for benefits, and drop off the statistics automatically.  Inventory Levels for New Home Sales were reported at 7.5 months.  This is a little higher than the 7.3 Months that we saw last month, however, it’s still promising, considering inventory was at 12.4 Months in January.

“Advanced” GDP is HOT, BUT…

Gross Domestic Product numbers (so far) for the 3rd Quarter were reported at a 3.5% increase.  Much hotter than the 3.2% expected, AND the first gain in a year, coupled with the greatest gain in two years.  Now, the media has gone hog wild with this news.  Bonds are reacting negatively, the stock market is going nuts, and everyone seems to be partying and celebrating that the recession is over.  Sorry to be the bearer of bad news but is everyone forgetting the “Cash for Clunkers” government refund program?  Is everyone forgetting the $8,000 First Time Home Buyer Tax Credit?  Without these subsidized government programs the real GDP is growth of 1.9%.  Nothing to get too excited about, I think.  The market will figure this out, but in the meantime, interest rates will suffer.

Jobless Claims Are Cool, BUT…

Again, we’re looking at Initial Jobless Claims of $531,000.  And claims that “only” 5.8 Million people are out of work.  The media is spinning this as good news.  Well, I don’t see the joy and happiness regarding these numbers, but I guess I’m in the minority.

Today, $31 Billion in 7-Year Treasury Notes will be auctioned off.  Will foreign appetite gobble up these notes, or will they shy from the longer termed risk?  We’ll see, but if foreign interest is bleak, prepare for rates to plummet this afternoon, coupled with these other media hyped “lies.”

Senate Approved Tax Credit Extension

Not only did the Senate approve an extension of this credit, however, they proposed a $6,500 tax credit for any primary home purchase, not just first time home buyers.  Also, increased, was the income limits for qualification for these credits.  $75,000 for a single person was raised to $125,000 a year in income.  Also, a married couple’s income was increased from $175,000 to $250,000 per year.  You have to have a contract dated by April 30, 2010 to qualify, and the transaction MUST close by June 30, 2010.  This still has to be negotiated between the House and Senate, so expect changes, but it is encouraging news, nonetheless.

Related Must Reads

How Foreign Interest in US Bonds Helps Interest Rates
Tax Credit “FAX”

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