The 8:15 release of the Dec ADP private jobs report was more losses than what was expected; private job losses were expected to be 75K but were down 84K. Markets didn't make much of it however; its the BLS report coming this Friday that overrides the ADP data. Historically ADP estimates have been more bearish than what the BLS data shows. Markets are still looking for job losses to be negligible in Dec with seasonal hirings boosting and distorting the data.
At 9:00 this morning the 10 yr note -3/32, mortgage prices +1/32 and the DJIA index -2 points. At 9:30 the DJIA opened -15, the 10 yr note -1/32 and mortgage prices unchanged.
At 10:00 the Dec ISM services sector data; expectations were for the overall index to increase from 48.7 to 50.5, it hit at at 50.1. New orders component 52.1 frm 55.1, prices pd at 58.7 frm 57.8 and the employment index increased to 44.0 frm 41.6. Any reading over 50 is expansion, under 50 contraction. The reaction generated slight selling in the mortgage markets and a bounce in the stock indexes.
Earlier this morning, the MBA mortgage applications; for the weeks ending December 25, 2009 and January 1, 2010. For the week ending December 25, 2009, the Market Composite Index, a measure of mortgage loan application volume, decreased 22.8% on a seasonally adjusted basis from the prior week. For the week ending January 1, 2010, this index increased 0.5% on a seasonally adjusted basis. Both weeks’ results include an adjustment to account for the Christmas and New Year’s Day holidays. For the week ending December 25, 2009, the Refinance Index decreased 30.5% from the previous week and the seasonally adjusted Purchase Index decreased 4.0% from one week earlier. The following week, the Refinance Index decreased 1.6% and the seasonally adjusted Purchase Index increased 3.6%. The refinance share of mortgage activity for the week ending January 1, 2010 is 68.2%, a decrease from 69.6% for the week ending December 25, 2009.
For the week ending December 25, 2009, the average contract interest rate for 30-year fixed-rate mortgages increased to 5.08% from 4.92%, with points increasing to 1.48 from 1.23 (including the origination fee) for 80% LTV loans. For the week ending January 1, 2010, the average contract interest rate for 30-year fixed-rate mortgages increased to 5.18% with points decreasing to 1.28. For the week ending December 25, 2009, the average contract interest rate for 15-year fixed-rate mortgages increased to 4.57% from 4.34%, with points decreasing to 0.91 from 1.03 (including the origination fee) for 80% LTV loans. For the week ending January 1, 2010, the average contract interest rate for 15-year fixed-rate mortgages increased to 4.62%, with points increasing to 0.98.
A double dip in 2010? The overwhelming consensus from the majority of analysts and economists----not to mention Wall Street brokers----is that the economy will continue to improve in 2010 and we won't experience a U or W bottom. According to the consensus view, the worst is behind us, jobs will begin to increase and the economy will grow. Well, for many years I used to write our annual forecast for the year about this time of the new year; no more, it is way too sketchy and uncertain to put out a forecast that has little value more than a month or two. With that, what bothers us, and we can't shake it, that the housing sector is not recovering and many are simply ignoring that fact. Foreclosures are not declining, they are increasing and it is now including so-called prime mortgagors. Home values are continuing to decline. Consumers are continuing to pull back on spending (except for Christmas); consumer credit has declined for the each of the past 10 months. As everyone knows, consumer spending accounts for 70% of GDP growth, unless there is a sea change in consumer spending and the housing sector decline, the economy isn't likely to grow as the present consensus implies.
48 hours until the employment report for Dec. Every employment report is critical, this one adds even more to the markets as estimates are for non-farm jobs to come in unchanged with no additional losses in jobs. Seasonal hirings according to analysts will overcome more long lasting job losses according to those that know this for sure. Knowing anything for sure when it comes to employment is a formula for disappointment, all one has to do is consider the market volatility when the data is released----always wild swings in equities and interest rates.
Source:TBWS
Showing posts with label mortgage rates. Show all posts
Showing posts with label mortgage rates. Show all posts
Wednesday, January 06, 2010
Thursday, December 03, 2009
Credit and Security
One aspect to doing loans in Hemet and home loans in California is to understand how credit can affect you. Here is a recently posted article that I included in an email to my customers in Hemet and Van Nuys regarding home loans and credit.
A Quick Recap!
A credit score is a number lenders use to help them decide: If I give this person a loan or credit card, how likely is it that he or she will become 90 days or more late in a 24 month period. A credit score is a snapshot of your credit risk at a particular point in time. It may range from 350 to 850 with the average consumer score being 686. Credit scores are provided to lenders by the three major credit reporting agencies also know as repositories: Equifax, Experian and TransUnion.
Five Factors Determining A Credit Score
1. Late payments.
2. Frequency and patterns of credit use.
3. How long credit has been established.
4. The number of times credit has been requested (inquires).
5. The types of credit (i.e. revolving, installment, secured, unsecured.)
How Credit Bureaus Rank your Credit Score
1. 35% is based on payment history.
A recent 30 day late payment is worse than a 90 day late payment that occurred more than 12 months ago. This can lower your score by 60 points or more.
2. 30% is based on existing balances.
Make sure the balances do not exceed 50% of the maximum limit on each card. Over 50% of the credit card limit will have a significant negative effect on your credit score. Distribute existing credit card debt among three to five cards.
3. 15% is based on how long your credit has been established.
Do not close accounts that have a perfect payment history and have been open for at least three years. These cards have a positive effect on your credit score.
4. 10% is based on types of credit.
A combination of credit types is best. For example, a mortgage, an auto loan and three to five revolving credit cards is ideal. Home equity lines of credit are reported as a credit card debt when the amount is less then $30,000. Try to apply for lines of credit for at least $30,000.
5. 10% is based on inquiries.
Credit inquiries from various industries can lower your credit score up to 60 points. If multiple mortgage inquiries are within a 30-day window, they count as one inquiry in total. This is also true for the auto and insurance Industry inquiries. Personal credit and bank account review inquiries do not count.
Tips To Help Protect Your Credit
1) Be very careful providing personal financial information over the internet. If you are going to provide credit card numbers, social security number, etc over the internet make sure it is through a secure website. Look for https:// instead of http:// at the website address and look for the little yellow padlock on the lower right corner of the screen.
2) Use a paper shredder when discarding any personal credit information such as credit solicitations, credit card statements, pay stubs, invoices, bank statements, etc
3) Keep a list of all credit card accounts with their respective customer service phone numbers in a safe place in the event your wallet or purse is lost or stolen.
4) Never use your full name on personal checks, use your initials instead. For example: J. Doe or J.C. Doe. If your checkbook is lost or stolen, no one will know how to sign your check (except for the bank.)
5) When paying your credit card bill, do not put your full credit card number on the memo line of your personal check. Only list the last 4 digits of your account number.
6) It is not wise nor is it necessary to carry your social security card in your wallet or purse. Commit the number to memory and keep the card at home in a safe place.
7) If your wallet or purse is stolen, contact one of the three credit bureaus immediately and have them issue a fraud alert. That credit bureau will notify the other two. This will be done free of charge and you will receive a credit report showing that the fraud alert has been issued.
Here are the three credit bureaus:
Equifax 800-685-1111 www.equifax.com
Experian 888-EXPERIAN www.experian.com
Trans Union 800-916-8800 www.transunion.com
As always, if you need help or advice, just respond . More to follow!
A Quick Recap!
A credit score is a number lenders use to help them decide: If I give this person a loan or credit card, how likely is it that he or she will become 90 days or more late in a 24 month period. A credit score is a snapshot of your credit risk at a particular point in time. It may range from 350 to 850 with the average consumer score being 686. Credit scores are provided to lenders by the three major credit reporting agencies also know as repositories: Equifax, Experian and TransUnion.
Five Factors Determining A Credit Score
1. Late payments.
2. Frequency and patterns of credit use.
3. How long credit has been established.
4. The number of times credit has been requested (inquires).
5. The types of credit (i.e. revolving, installment, secured, unsecured.)
How Credit Bureaus Rank your Credit Score
1. 35% is based on payment history.
A recent 30 day late payment is worse than a 90 day late payment that occurred more than 12 months ago. This can lower your score by 60 points or more.
2. 30% is based on existing balances.
Make sure the balances do not exceed 50% of the maximum limit on each card. Over 50% of the credit card limit will have a significant negative effect on your credit score. Distribute existing credit card debt among three to five cards.
3. 15% is based on how long your credit has been established.
Do not close accounts that have a perfect payment history and have been open for at least three years. These cards have a positive effect on your credit score.
4. 10% is based on types of credit.
A combination of credit types is best. For example, a mortgage, an auto loan and three to five revolving credit cards is ideal. Home equity lines of credit are reported as a credit card debt when the amount is less then $30,000. Try to apply for lines of credit for at least $30,000.
5. 10% is based on inquiries.
Credit inquiries from various industries can lower your credit score up to 60 points. If multiple mortgage inquiries are within a 30-day window, they count as one inquiry in total. This is also true for the auto and insurance Industry inquiries. Personal credit and bank account review inquiries do not count.
Tips To Help Protect Your Credit
1) Be very careful providing personal financial information over the internet. If you are going to provide credit card numbers, social security number, etc over the internet make sure it is through a secure website. Look for https:// instead of http:// at the website address and look for the little yellow padlock on the lower right corner of the screen.
2) Use a paper shredder when discarding any personal credit information such as credit solicitations, credit card statements, pay stubs, invoices, bank statements, etc
3) Keep a list of all credit card accounts with their respective customer service phone numbers in a safe place in the event your wallet or purse is lost or stolen.
4) Never use your full name on personal checks, use your initials instead. For example: J. Doe or J.C. Doe. If your checkbook is lost or stolen, no one will know how to sign your check (except for the bank.)
5) When paying your credit card bill, do not put your full credit card number on the memo line of your personal check. Only list the last 4 digits of your account number.
6) It is not wise nor is it necessary to carry your social security card in your wallet or purse. Commit the number to memory and keep the card at home in a safe place.
7) If your wallet or purse is stolen, contact one of the three credit bureaus immediately and have them issue a fraud alert. That credit bureau will notify the other two. This will be done free of charge and you will receive a credit report showing that the fraud alert has been issued.
Here are the three credit bureaus:
Equifax 800-685-1111 www.equifax.com
Experian 888-EXPERIAN www.experian.com
Trans Union 800-916-8800 www.transunion.com
As always, if you need help or advice, just respond . More to follow!
Tuesday, December 16, 2008
4.5 mortgage rates
Ok so I've recieved some phone calls about the fed and rates. My clients that are at 6 and above are ready to refinance and seem very in to what they see on TV. This is what I've explained to them lately.
The Fed does not matter when it comes to mortgage rates. What matters is who is buying the coupons and right now it's you and I. Simply put the whole mortgage market has come down to 3 players. Fannie, Freddie and FHA. The first two are currently owned by us.
We basically are there without the help of the fed. I can quote 4.875 today at a cost to the borrower. Most of my clients are familiar with pricing because I go to great lengths to make sure they understand how much I make for assisting them with the process of getting a Mortgage Loan. I always find it rewarding for them to understand why they should pay the point and get that rate down. Of course when appropriate I will guide them the other way.
One of the things that occured when the fed funds rate was low, was the borrowing of money by certain companies that lent that money out at much higher rates based on high risk. We called that sub-prime lending. I don't see it coming back soon. Right now credit is tight and Fannie and Freddie are not helping by charging a premium for lower fico scores. Hopefully they will loosen up a bit and we can go back to helping those that are not postal workers or public school teachers to get a loan.
The Fed does not matter when it comes to mortgage rates. What matters is who is buying the coupons and right now it's you and I. Simply put the whole mortgage market has come down to 3 players. Fannie, Freddie and FHA. The first two are currently owned by us.
We basically are there without the help of the fed. I can quote 4.875 today at a cost to the borrower. Most of my clients are familiar with pricing because I go to great lengths to make sure they understand how much I make for assisting them with the process of getting a Mortgage Loan. I always find it rewarding for them to understand why they should pay the point and get that rate down. Of course when appropriate I will guide them the other way.
One of the things that occured when the fed funds rate was low, was the borrowing of money by certain companies that lent that money out at much higher rates based on high risk. We called that sub-prime lending. I don't see it coming back soon. Right now credit is tight and Fannie and Freddie are not helping by charging a premium for lower fico scores. Hopefully they will loosen up a bit and we can go back to helping those that are not postal workers or public school teachers to get a loan.
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