Multiline Mortgage

2009-09-25T12:23:00.001-07:00

Fed Extends MBS Purchase Program
Favorable news from the Fed, weaker than expected economic data, and strong demand for a record $112 billion in Treasury auctions helped mortgage markets this week. While the daily price movements were often large, mortgage rates ended the week just a little lower.
As expected, the Fed made no change in the fed funds rate on Wednesday. Although there was much disagreement about what the statement would say, in general it contained the minimum number of surprises. The Fed offered its most optimistic view on the economy since the recession began, yet officials believe that slack in the economy will keep inflation low. Fed officials continue to expect the fed funds rate to remain at exceptionally low levels "for an extended period."
Of particular significance for the mortgage industry, the end date for the $1.25 trillion mortgage-backed securities (MBS) purchase program was moved from the end of this year to the end of the first quarter of next year. The total quantity of purchases will not change, and the Fed will gradually scale back the level of weekly purchases to minimize disruptions to mortgage markets. Investors had been concerned that the Fed statement might contain less favorable news, and mortgage rates improved after its release. Longer-term, the decrease in demand from the Fed is expected to move mortgage rates higher, and it might lead to greater daily volatility.
This week's housing data was mixed. After four months of increases, August Existing Home Sales fell 3%. Inventories of unsold homes fell to an 8.5-month supply from a 9.3-month supply in July. First-time homebuyers accounted for 30% of total sales. August New Home Sales rose slightly, and inventories dropped moderately.

2009-09-11T10:44:00.000-07:00

Mortgage Time
Mortgage Market News for the week ending September 11, 2009

Compliments of
Joe Powers
Multiline Mortgage Services

PHONE:
(770) 998-8220

joe@multilinemortgage.com

110 Weedon Court

Alpharetta, GA 30022

Events This Week:

Jobless Claims Fell

Trade Deficit Up

Import Prices Rose

Sentiment Higher

Events Next Week:

Tues 9/15
PPI
Retail Sales

Wed 9/16
CPI
Industrial Prod.

Thur 9/17
Housing Starts
Treasury Ann.

Strong Demand for Treasury Auctions

In a light week for economic data, the Treasury auctions had the greatest influence on mortgage markets. Strong auction results, particularly for the 30-yr Treasuries, helped mortgage rates move lower during the week.

In recent months, mortgage rates have been heavily influenced by concerns about the enormous amount of debt the government needs to issue to fund the budget deficit. While recent Treasury auctions have seen stronger than average demand, investors remained cautious ahead of this week's large supply of government debt. The risk is that investors will require higher yields to continue purchasing an expanding supply of bonds. Longer-term Treasuries are comparable investments to mortgage-backed securities (MBS), which largely determine mortgage rates, so the results from 10-yr and 30-yr auctions are particularly important. Strong demand from both domestic and foreign investors at this week's Treasury auctions eased the concerns.

The data from the housing sector remained encouraging this week. The Mortgage Bankers Association (MBA) weekly purchase activity index rose by 10% to the highest level since early January. Combined with last week's strong reading in the Pending Home Sales index, which showed its sixth straight monthly increase, the MBA data supports an improving outlook for new and existing home sales.

2009-08-28T10:18:00.001-07:00

Mortgage Rates Hold Steady

There were few surprises in the economic data released this week, and the record $109 billion in Treasury auctions went smoothly. As a result, it was a quiet week for mortgage markets. This week's economic data showed signs that the economy is gradually improving, while inflation is not a concern right now. Demand remained solid for the Treasury auctions. Mortgage rates ended the week nearly unchanged.

Last week, the Fed increased its weekly mortgage-backed securities (MBS) purchases to about $25 billion, and it maintained that level this week. Prior to that, the Fed had purchased roughly $20 billion per week for a couple of months. The current pace would lead to total purchases of the authorized $1.25 trillion by the end of the year, which is when the program is scheduled to expire. Mortgage rates are largely determined by MBS prices, and the added demand from the Fed has helped to keep mortgage rates low. In a speech this week, the Fed's Lacker suggested that with the economy improving the Fed may not need to purchase the entire $1.25 trillion of MBS. Lacker's comments caused little reaction, as his views are often contrary to those of the other Fed officials, but if that were to happen, then mortgage rates would almost certainly move higher. Mortgage investors will be closely watching the Fed's plans for this program.

The housing data released this week was again positive. July New Home Sales rose 10% from June to the highest level since September. Inventories dropped to a 7.5-month supply, which was the lowest level since April 2007. This data follows a similar rise in July Existing Home Sales announced last week.

Mortgage Interest Rates Push Higher

2009-08-07T09:20:00.000-07:00

Strong Economic Data Pushes Mortgage Rates Higher
With just minor exceptions, all of the economic data released this week beat the consensus forecast, indicating that the economy is improving more quickly than expected. While current inflation levels remain low, faster economic growth generally leads to higher future inflation, which is negative for mortgage rates. As a result, mortgage rates ended the week higher.
Early in the week, stronger than expected manufacturing and housing data convinced economists to revise higher their forecasts for economic growth, and Friday's Employment data supported the improved economic outlook. Against a consensus forecast for a loss of -300K jobs, the economy lost -247K jobs in July, and the May and June data was revised to show fewer job losses as well. This was the 19th straight month of job declines, but it was the smallest level of losses since August 2008. The July Unemployment Rate fell to 9.4% from 9.5% in June, its first decline in 15 months. In addition, wages and the length of the average workweek increased. Overall, this report revealed unexpected improvement in nearly every area.
This week's housing market data also came in stronger than expected. June Pending Home Sales rose 4%, the fifth consecutive monthly increase. Pending Home Sales are a leading indicator for future housing market activity, meaning that Existing and New Home Sales reports may show improvement in coming months. According to the chief economist of the National Association of Realtors (NAR), affordable home prices, low mortgage rates, and a rush to take advantage of the $8,000 first-time homebuyer tax credit have helped increase home sales.
Also Notable:
The Core PCE price index rose at a tame 1.5% annual rate
The Treasury announced that next week's auctions will be for $75 billion
The European Central Bank (ECB) held rates steady, as expected
The Fed purchased $19 billion in agency MBS during the week ending 8/5

Joe shares some of new pitfalls for refinance and purchase

2009-07-17T13:16:00.000-07:00

On May 1, 2009, new rules went into effect governing appraisals on loans sold to Fannie Mae and Freddie Mac which are the majority of loans now being done, either for purchase or refinance. This rule is the result of a consent decree obtained by Attorney General Cuomo of the state of New York in exchance for dropping his suit against the 2 mortgage giants. This is the most egregious boondoggle pulled off for special interest groups in the history of mortgages.

The rule is call the HVCC which stands for Home Valuation Code of Conduct which prohibits Mortgage Brokers and lenders from speaking with appraiser or holding them accountable, in any way for accuracy, competance or service. This was supposedly accomplished by creating AMCs or Appraisal Management Companies who would be the fraud firewall against bad or inflated appraisals.

Guess who owns these AVMs. THE BANKS OWN THEM!!! TALK ABOUT PUTTING THE FOX IN CHARGE OF THE HENHOUSE. If Cuomo wasnt paid to do this in cash or political capital, he is just a fool. There is a bill in congress to suspend this abomination and I suggest that you call your congressman supporting the repeal of HVCC.

Since May 1, 2009, it is estimated that 1.5 trillion in home equity has disappeared due to bad valuations of real estate, Sales are not closing because the appraiser will not call the market price on a property what a bona fide buyer is ready to pay, but something less based on his desire to please the lenders who give him business. Legitimate appraisers have to go along with this or not work. Lenders do NOT ACCEPT EACH OTHER APPRAISALS SO IF YOU HAVE A PROBLEM WITH ONE LENDER YOU HAVE TO PAY FOR ANOTHER APPRAISAL!!!!

WHEN IT COMES TO REFINANCE THE AMCs AND THEIR STOOGE APPRAISERS ARE KILLING MANY DEALS WITH UNFAIRLY LOW VALUATIONS.

FHA still makes it possible to choose an appraiser directly but why would you go FHA if you could qualify for a cheaper loan.

STAY TUNED!!

Weekly Mortgage News July 17, 2009

2009-07-17T10:00:00.000-07:00

Stock Rally Pushes Mortgage Rates Higher

While the economic data released during the week generally matched expectations, the outlook for future economic growth improved due to strong earnings reports, tame inflation data, and a revised forecast from the Fed. Stronger economic growth was good news for the stock market, and the Dow rose over 500 points. It was unfavorable for the bond market, however, and mortgage rates ended the week moderately higher.

On Wednesday, the Fed released its minutes from the June 24 FOMC meeting, and most of the news was negative for mortgage rates. The minutes revealed an upward revision to the Fed's forecast for economic growth and inflation in 2009 and 2010. In addition, Fed officials expressed a strong reluctance to increase any further the program to purchase mortgage-backed securities (MBS). Mortgage rates are largely determined by MBS prices. When the Fed initially announced its MBS purchase program in November, mortgage rates immediately dropped, and they dropped again significantly when the Fed announced an increase in the program in March. The Fed has a substantial involvement in MBS markets, and any change in this program would have a major impact on mortgage rates.

The housing sector data released during the week showed improvement. June Housing Starts rose 4% to the highest level in seven months. Building Permits, a leading indicator, jumped 9%. The national Association of Home Builders (NAHB) sentiment index increased to the highest level since September 2008. According to the NAHB, the first-time homebuyer tax credit, low mortgage rates, and "attractive" home prices are helping home sales.

Also Notable:
June Core CPI inflation rose at a low 1.7% annual rate
Capacity Utilization fell to a record low reading in June
After falling below $60 per barrel, oil prices rose back to $63 per barrel
The Fed purchased $22 billion in agency MBS during the week ending 7/15

A word from Joe about the company

2009-07-14T11:00:00.000-07:00

Multiline Mortgage has been around for over 20 years, starting as a discount insurance brokerage and then transitioned to originating mortgages in 1998. We have an excellent reputation for honesty,competence and results for our clients. We don't employ telemarketers or sales associates but work with our clients on a very direct,"hands on", personal basis.
We solve problems and try to give correct and honest information to our clients about their particular situation.
If you want the best deal with THE SAME DEAL THAT WE QUOTE FROM THE BEGINNING BEING THE DEAL YOU GET AT THE END, WE ARE YOUR COMPANY.
My name is Joe Powers and I am always pleased to answer your questions and explain alternatives.
Give us a try! You wont be disappointed!!!

Weekly Mortgage News: July 12th, 2009

2009-07-12T08:05:00.000-07:00

Sunday, July 12, 2009
Market Commentary Report

This week brings us the release of five important economic reports for the bond market to digest. Several of these reports are considered to be of high importance, meaning we will likely see volatility in the financial markets and mortgage pricing over the next several days. There are also plenty of corporate earnings releases scheduled for the stock markets this week along with the minutes from the last FOMC meeting.

The first piece of data comes Tuesday morning with the release of June’s Producer Price Index (PPI). The PPI is very important because it measures inflationary pressures at the producer level of the economy. It is expected to show a 0.8% increase in the overall reading and a 0.1% rise in the core data reading. The core reading is the more important of the two because it excludes more volatile food and energy prices. The bond market should react quite favorably if we get weaker than expected readings, but a larger than expected jump in the core reading could send mortgage rates higher Tuesday. June’s Retail Sales report will also be posted Tuesday. The Commerce Department is expected to say that sales at retail establishments rose 0.5% last month. This data is considered to be of high importance because it measures consumer spending. Consumer spending makes up two-thirds of the U.S. economy, so any related data is watched closely. A smaller than expected increase in sales could help fuel a bond rally and lead to lower mortgage rates, depending on the results of the PPI report.

Next on tap is Wednesday’s release of June’s Consumer Price Index (CPI). It is a mirror of Tuesday’s PPI with the exception that the CPI measures inflation at the more important consumer level of the economy. Analysts have forecasted a 0.6% increase in the overall index and a 0.1% rise in the core data. The core data is also considered to be the key reading because it gives us a more stable measure of inflation. Higher than expected readings could raise inflation fears and push mortgage rates higher both days. June’s Industrial Production data will also be posted Wednesday morning. This data measures output and U.S. factories, mines and utilities, giving us an indication of manufacturing sector strength. It is expected to show a 0.6% decline in production, indicating that the manufacturing sector showed weakening conditions during the month. That is basically good news for bonds, however, with seasonal shutdowns and auto-related weakness likely included, a sizable decline should not surprise many.

Also worth noting about Wednesday is the release of the minutes from the last FOMC meeting. There is a possibility of the markets reacting to them following their 2:00 PM ET release, especially if they show some divisiveness by its members during discussion and voting at the last meeting or give any indication of the Fed’s possible next move with monetary policy.

There is no relevant monthly or quarterly data scheduled for release Thursday. Friday’s only relevant data is June’s Housing Starts report. This data gives us an indication of housing sector strength, but is not considered to be of high importance. Analysts are currently expecting to see a small decline in new starts of housing projects. However, I don’t see this data having much of an impact on mortgage rates Friday unless it varies greatly from forecasts.

Overall, I think we will probably see the most movement in mortgage pricing Tuesday or Wednesday due to the importance of the economic releases those days. The week’s corporate earnings also have the potential to heavily influence bond trading and mortgage rates via stock market swings. If the major earnings reports show better than expected results, we can expect to see the major stock indexes rally. This would lead to a shift of funds from bonds to stocks and in the process bonds will fall. The results would be higher mortgage rates. The other possibility is weaker than expected results from the key companies that would lead to stock selling and a bond market rally. One thing is safe bet though- it will likely be an active week for the markets and mortgage rates. Accordingly, please proceed cautiously if still floating an interest rate.

Weekly Market Report for the July 10th

2009-07-10T12:46:00.000-07:00

Strong Treasury Auctions Lower Mortgage Rates

With a light schedule for economic data, Treasury auctions had the greatest impact on mortgage rates during the week. Strong demand for the auctions and declines in the stock market helped mortgage rates end the week lower.

In recent months, mortgage rates have been heavily influenced by concerns about the enormous amount of debt the government needs to issue to pay for all the stimulus programs. The risk is that investors will require significantly higher yields to continue purchasing an expanding supply of bonds. Strong demand from both domestic and foreign investors at this week's 3-yr, 10-yr, and 30-yr Treasury auctions eased those concerns. Longer-term Treasuries are comparable investments to mortgage-backed securities (MBS), which are the basis for the level of mortgage rates, so the results from 10-yr and 30-yr auctions are particularly important. The willingness of investors to purchase longer-term bonds (including Treasuries and MBS) at the current low rates is very encouraging.

Also this week, there was mounting speculation about the passage of a second round of fiscal stimulus before the end of the year. Given the weaker than expected June Employment data, the political pressure is increasing to take additional steps to create jobs. If another stimulus package is passed, the increase in the supply of debt required to pay for it could pressure mortgage rates higher.

Weekly Mortgage News: July 10th, 2009

2009-07-10T07:06:00.000-07:00

Friday, July 10, 2009
Mortgage Market News for the week ending July 10, 2009

Strong Treasury Auctions Lower Mortgage Rates

With a light schedule for economic data, Treasury auctions had the greatest impact on mortgage rates during the week. Strong demand for the auctions and declines in the stock market helped mortgage rates end the week lower.

In recent months, mortgage rates have been heavily influenced by concerns about the enormous amount of debt the government needs to issue to pay for all the stimulus programs. The risk is that investors will require significantly higher yields to continue purchasing an expanding supply of bonds. Strong demand from both domestic and foreign investors at this week's 3-yr, 10-yr, and 30-yr Treasury auctions eased those concerns. Longer-term Treasuries are comparable investments to mortgage-backed securities (MBS), which are the basis for the level of mortgage rates, so the results from 10-yr and 30-yr auctions are particularly important. The willingness of investors to purchase longer-term bonds (including Treasuries and MBS) at the current low rates is very encouraging.

Also this week, there was mounting speculation about the passage of a second round of fiscal stimulus before the end of the year. Given the weaker than expected June Employment data, the political pressure is increasing to take additional steps to create jobs. If another stimulus package is passed, the increase in the supply of debt required to pay for it could pressure mortgage rates higher.

Weekly Mortgage News: July 2nd, 2009

2009-07-02T06:07:00.000-07:00

Mortgage Rates Hold Steady

There was very little daily movement in mortgage rates during the holiday-shortened week, and they ended the week nearly unchanged. The economic news during the week contained few surprises.

Following better than expected results for May, investors were closely watching the June Employment report for clues about the timing of any economic recovery. Thursday's data showed that the economy lost -467K jobs in June, and the Unemployment Rate rose to 9.5% from 9.4% in May. Average Hourly Earnings, a proxy for wage growth, rose at a slim 2.7% annual rate. High unemployment and slow wage growth have caused consumers to save more and spend less. Since consumer spending accounts for about 70% of economic activity, the slowdown in spending has had a large impact on economic growth. For mortgage rates, however, low wage inflation and slow economic growth are favorable.

While the Employment report may have captured the most attention, the week began with a significant announcement from Chinese officials. According to the head of China's central bank, there will be no sudden changes to China's foreign reserve policy, meaning that China will not pull back from buying US bonds. Over recent months, investors have been concerned that foreign central banks would decide to scale back their purchases of US bonds, so this was very welcome news. Recent Treasury auctions have confirmed that foreign demand remains strong.

Weekly Mortgage News: June 26th, 2009

2009-06-26T09:07:00.000-07:00

Demand Strong for Treasury Debt

With major economic data, large Treasury auctions, and a Fed meeting on the schedule, it was a busy week for mortgage markets. In the end, it was the Treasury auctions which had the greatest impact on mortgage rates. Demand was very strong at the auctions, which pushed mortgage rates lower. Wednesday's Fed announcement and mixed economic data were roughly neutral for mortgage rates.

Much of the rise in interest rates we saw in late May and early June was due to concern about the enormous supply of debt the government needs to issue to pay for all the stimulus programs. The question was whether investors would require significantly higher yields to continue purchasing bonds. Strong demand from both domestic and foreign investors at this week's Treasury auctions eased those concerns for now and helped mortgage rates to reverse some of their recent increases.

As expected, the Fed made no change in the fed funds rate. However, investor expectations varied widely for the Fed's statement, but the statement revealed no significant shifts in policy. In particular, there was no change in the timing or the quantity of future MBS and Treasury purchases. In addition, the statement contained no discussion about exit strategies to eventually unwind Fed stimulus programs. Overall, the Fed simply held the course, and mortgage rates were nearly unchanged after the news.

In the housing sector, May Existing Home Sales rose 2.4%. It was the first time since September 2005 that Existing Home Sales increased for two months in a row. The inventory of unsold homes declined to a 9.6-month supply from a 10.1-month supply in April. A NAR survey revealed that 29% of sales were to first-time homebuyers, helped by the $8,000 tax credit, low mortgage rates, and favorable affordability levels.

The Week Ahead
Next week, the important Employment report will come out on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Early estimates are for a loss of about 370K jobs in June. Before the Employment data, the Chicago PMI and ISM national manufacturing indexes will come out on Tuesday and Wednesday. Pending Home Sales, a leading indicator for the housing market, will be released on Wednesday. Consumer Confidence, Construction Spending, and Factory Orders will round out the schedule. Mortgage markets will be closed on Friday ahead of the July 4th holiday.

Weekly Mortgage News: June 19th, 2009

2009-06-19T07:08:00.000-07:00

Tame Inflation vs. Economic Growth

Tame inflation data helped mortgage rates move lower early in the week, but stronger than expected economic data turned them higher later in the week, leaving mortgage rates nearly unchanged from last week. The announcement of larger than expected Treasury auctions next week ($104 billion) also was negative for mortgage rates.

This week's Consumer Price Index (CPI) and Producer Price Index (PPI) data indicated that inflation is not a concern in the short-term. A significant decline in energy prices from one year ago resulted in a very low overall annual inflation rate. Even Core CPI, which excludes food and energy, rose at a tame 1.8% annual rate. However, the benefits from the favorable inflation news was offset by stronger than expected economic growth data. In particular, the Philadelphia Fed manufacturing index showed surprising improvement. In addition, May Housing Starts rose 17% from April, while Building Permits, a leading indicator of future activity, also exceeded expectations. This week's data sets the stage for next week's Fed meeting. With inflation currently low but at risk of increasing if the economy continues to improve, the Fed may be reluctant to introduce more stimulus, opting instead to wait and see how the economy performs.

President Obama this week proposed broad new rules for regulating the financial system. One proposal under the Obama plan would create a consumer protection agency which would have the authority to set rules for the mortgage industry. The details may not be known for quite a while, as the plan now faces a lengthy debate in Congress.