Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – March 12, 2010

YOU DON’T WANT TO MISS THIS EVENT!!!

Scott St. John will be speaking at The Big Room At Sierra Nevada, Friday, March 26, 2010.  Scott is a 3rd-Term Governing Board Member of Freddie Mac.  You’ll have an opportunity to inquire into expected economic future of the United States, Real Estate and its REO future, and what’s happening behind the scenes that is making closing loans to more timely and difficult, these days.   REGISTER AT THE CHICO OR PARADISE BOARD OFFICES.  $10 includes appetizers.  $15.00 AT THE DOOR!

We're All Over The Place, This Morning

Stocks Battling Resistance

Just like Bonds have Trend Lines that are tough to crack, so do stocks.  The S & P 500 had a difficult time breaking through a tough line of resistance at the 1,150 level.  This helped Mortgage-Backed Securities push back up after tail-spinning down 28 Basis Points, early in the morning.  Then, the Consumer Sentiment report came out weaker than expected.  However, as you dissect the particulars of Consumer Sentiment, it shows that One-year inflation expectations rose to 2.8% in March from 2.7% in February.  So, Bonds are now struggling and Stocks are taking more of a bullish attitude.

What The Appointment of Janet Yellen Means

This is, of course, speculation, however, history shows us that Janet Yellen favors lower rates, even at the risk of higher inflation.  President Obama has slated her for the Vice-Chairman position.  The concern, here, is that the world is watching.  With inflation risks looming in the air, investors will tread lightly about investing in fixed mortgage security instruments, and this could cause rates to climb, quickly.

Retail Sales Surprise

That’s right.  Even in light of the horrible, icy storms all over the country, Retail Sales rose 0.3% in February.  Yesterday, we commented on how this would effect rates, particularly when we expected a -0.2% drop.  When stripping out automobile sales we climbed a remarkable 0.8%, while only expecting a modest 0.1% increase.  This is truly news.

Consumer Sentiment

As mentioned above, Consumer Sentiment was a dismal figure, however, when breaking down the particulars, the market noted that inflation expectations are steadily increasing.  Coupled with today’s other inflation concerns, and knowing from reading this article that inflation is the nemesis of interest rates…you see the writing on the wall?

We've Bounced Off of The 200-Day 2 X's Already

Locking Advice

If you haven’t taken advantage of locking, you may as well float, today, to see how the market plays out.  Knowing when to lock is key to financial security when purchasing a home.  I have some of the lowest interest rates on the planet, with over 65 banks to choose from, including Access Real Estate Lending’s own Bank with plenty of lenders in my warehouse line.  Call me for sound real estate financing advice.  Have a great weekend!

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Freddie Mac Announcement Regarding Loan Limits for 2010

Fannie Mae & Freddie Mac Loan Limits Extended to 2010

Freddie Mac Maximum Loan Limits Are Unchanged for 2010

On November 12, Freddie Mac announced that our base conforming loan limits will be maintained at their current 2009 levels for 2010, with the maximum loan limit for a 1-unit single-family property remaining at $417,000. The temporary high-cost loan limits for properties located in designated high-cost areas will remain unchanged for 2010 as well.

- High-Cost Loan Limits

As a reminder, the loan limits in designated high-cost areas are the higher of the temporary limits established by the Economic Stimulus Act of 2008 (maximum of $729,750 for 1-unit single-family properties) and the permanent limits established by the Housing and Economic Recovery Act of 2008 (maximum of $625,500 for 1-unit single-family properties).

Actual loan limits for a specific high-cost area may be lower than the maximum permitted loan limit. It is important that you review the 2010 loan limits permitted for a specific county, which the Federal Housing Finance Agency (FHFA) determines and makes available on its Web site <http://www.fhfa.gov/Default.aspx?Page=185>.

- Super Conforming Mortgages

The recently enacted extension of the high-cost loan limits through year-end 2010 applies to all super conforming mortgages with note dates on or after October 1, 2008, and on or before December 31, 2010. There are no changes to our super conforming mortgage requirements as a result of the extension.

- Operational Impacts

Because the 2010 loan limits are unchanged from 2009, there are no impacts to Loan Prospector or the selling system.

The Single-Family Seller/Servicer Guide (Guide) <http://www.freddiemac.com/sell/guide/> will be updated in an upcoming Guide Bulletin to reflect the extension of our current loan limits through 2010, as well as the eligible note dates for super conforming mortgages.

For More Information

- Review the 2010 base conforming loan limits <http://www.freddiemac.com/sell/selbultn/limit.htm> and the higher loan limits in designated high-cost areas <http://www.freddiemac.com/sell/selbultn/limit.htm> as permitted under ARRA.

- View the 2010 loan limits <http://www.fhfa.gov/Default.aspx?Page=185> in designated high-cost areas as published by FHFA.

- Learn more about our super conforming mortgage requirements <http://www.freddiemac.com/singlefamily/mortgages/super_conforming.html>.

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Chico, CA Interest Rates Market Report – Economic Influences – November 10, 2009

We Bounced Right Off The 25-Day Moving Average

President Obama Signs Extension of Loan Limits

Conforming loan limits, as well as FHA loan limits, will remain at their higher levels through 2010.  This will help keep some liquidity in the markets as Fannie Mae and Freddie Mac may still purchase loans with amounts up to $417,000 in most areas of the United States.  Other “high cost” areas will allow the Guaranteed Security Enterprises to purchase loans with amounts up to $725, 750.00.  And FHA loan limits will remain at $400,000 in Butte County.

$40 Billion 3-Year Treasury Note Auction

Wow…$40 Billion!  The Auction fared quite well, actually.  It helped keep rates really low.  My concern would be with the longer termed Treasuries and the riskier investment those can pose.  It will be interesting to see how the rest of the Auction throughout the week will fare.  Foreign participation has been fairly respectable.  It’s understood that the more the foreign market participates, the stronger the dollar will remain.  The stronger the dollar, the more we can purchase foreigners’ exports.

Locking Advice

It’s a great time to lock.  We’ve seen Mortgage-Backed Securities touch the 25-Day Moving Average.  Actually, later this morning, we were above that level of resistance, however, we come back down and are sitting on it, as I write this blog.  If you don’t lock, and float into the week, you had better be prepared to lock, quickly.  I don’t see a lot of economic data that will push us up, over this 25-Day Moving Average level of resistance.

Related Must Reads

What Lead To Higher Conforming and FHA Loan Limits?
Why Be Leery of Yesterday’s Treasury Auction
How Levels of Resistance Effect Rates

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

Inflation Rearing Its Ugly Head?

Rates On The Move?

We’ve broken through the 200-Day Moving Average and the 25-Day Moving average.  Not good!  We, actually, broke through the 50-Day Moving average, early this morning, but have managed to bounce off of that, and settle just above it…for the time being.  The 50-Day is significant, because we have bounced off of that trend line three times, since mid-August, saving interest rates.  If we break through today, we are risking another 60 basis points (about .625% Points in Cost) to the next layer of support.  Remember, when Bond Values move down, interest rates move up.

Interest Rates Nemesis

The Core Consumer Price Index (CPI) rose 0.2% in September, while only expecting to move 0.1%.  This is a little concerning, as mentioned in the article yesterday, that the creative accounting, established by our government to stave off inflation in the Cash for Clunkers Program, was supposed to keep inflation down.  Well, a higher than expected reading in the CPI has inflationary fears hovering all around it.  Particularly when this creative accounting structure should have lowered inflation fears.  Remember, inflation is interest rates’ nemesis. 

 Jobless Claims Lower

Initial Jobless Claims came in 10,000 lower than the week before, at a 514,000 new claim level.  Lower than the 520,000 expected, but still as ugly as Phyliss Diller’s less attractive younger sister.  Continuing claims fell to 5.99 Million, but not due to people getting new jobs, just people running out of time to claim their unemployment benefits. 

Manufacturing’s Hot

Another inflationary number was the New York State Manufacturing Index.  It completely surpassed expected reading of 17.25 and roared in at 34.57.  This is the highest improvement in five years.  Was it due to economic growth, or re-stalking of shelves that had finally run dry for the worst economic recession since the Great Depression?  It will be interesting to see…

You Know What Really Chaps My Hide?

Freddie Mac reported interest rates were 4.92%, yesterday, at a cost of .7% Points.  Well, it takes time for Freddie’s comments to circulate to the media.  That was, actually, last week’s pricing.  We’re very close to those rates, however, it’s tough when the media gets its spin on things and reports on interest rates, when it takes time to relay the information, AND normally, the pricing on a loan like that is passed on from Freddie, to the banks, at a cost.  Generally, it translates into more like an ad that would read 4.92% with zero points.  Which is a legal ad, but when broken down on the final closing statement in escrow would read like this:  1.25% Origination Fee (or discount fee…it’s the same thing) for 4.92% with an APR of 5.021%.  The ad makes the phone ring, but is it fair to the client when true rates are quoted from an honest banker! 

Related Must Reads

Remember Pong? A Little Paragraph About Bonds and Rates
March of ’08’s Take On Jobless Numbers

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