Three Fed Speakers On Tap For Today

April 10, 2007

With three members of the Federal Reserve scheduled to speak today, don’t be surprised if mortgage rates show some brief volatility. Despite weakness in housing, the economy has shown resiliency and continues to push forward.  Markets had widely expected a slowdown, but are now having to change course — rapidly.  T his is why mortgage […]

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The Week In Review (April 9, 2007) : What To Watch For

April 9, 2007

On strength in jobs and hiring, mortgage rates finished last week at their highest levels in six weeks. It was a slow week last week until Friday when — with the stock market closed for Good Friday and with most bond traders on early vacation — the Non-Farms Payroll report handily beat expectations. This created […]

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Good Friday + Jobs Report Data = Major Mortgage Rates Movement

April 6, 2007

Today’s mortgage rates are getting slammed on the heels of the Non-Farm Payrolls report.  Instead of hitting the consensus estimate figure of 135,000 jobs, the report showed a very large 180,000 new jobs created in March. Unemployment levels dropped to 4.4% pointing to underlying strength in the economy. Mortgage bonds are selling off right now […]

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The Magic of Video Games: Ride the 117-Year Housing Roller Coaster

April 5, 2007

Want some help putting home values in historical perspective? Using the video game Roller Coaster Tycoon, Speculative Bubble created a roller coaster whose tracks follow home values (adjusted for inflation) from 1890 to 2007. The ride lasts three-and-a-half minutes, but the last thirty seconds really hammer home the point. You can almost hear the people […]

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The Domino Effect of Sub-Prime Lending on Move-Up Home Buyers

April 4, 2007

Wondering how the dramatic change in sub-prime mortgage lending will impact you? Try this stat on for size: Since 1998, 1.4 million families have used sub-prime mortgages to buy their first home. As sub-prime lending guidelines get tighter, there will be fewer first-time home buyers and that impacts every homeowner in the country. The reason […]

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It’s A Waiting Game Until Thursday Afternoon

April 3, 2007

There is little on the domestic front to move markets today as traders wait for Friday’s jobs report. The jobs data will take on more significance this month than in recent months because of Ben Bernanke’s testimony to Congress last week. The Fed Chief spoke more strongly about inflation that we’ve heard from him in […]

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The Week In Review (April 2, 2007) : What To Watch For

April 2, 2007

Last week, Ben Bernanke’s testimony before Congress served as a stark wake-up call that inflation is not going away so easily. Later in the week, hard data backed that up.  PCE, the Fed’s favorite inflation gauge, beat expectations and pushed the year-over-year increase to 2.4%. The Fed hopes that PCE will be 2.0% by 2008 […]

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Watch What I Do, Not What I Say I’ll Do

March 30, 2007

The University of Michigan Consumer Sentiment Survey slipped to 88.4 in March, down from February’s 91.3 and its lowest level in six months. Why should you care about the UofM survey?  In a nutshell, you shouldn’t.  But, you sort of have to. Here’s why: Consumer confidence is considered important by markets because hundreds of “real […]

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Bernanke Says Inflation Is “Somewhat Elevated”

March 29, 2007

Ben Bernanke delivered a prepared speech to the congressional Joint Economic Committee Wednesday in which he stated that inflation is “somewhat elevated”, but that it’s no reason to expect a Fed Funds Rate hike anytime soon. Some of Chairman Bernanke’s more salient points: Economic growth has slowed because of a “substantial correction” in the housing market […]

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What Last Night’s Oil Price Spike Reveals About Market Nerves

March 28, 2007

Oil prices are down since last year overall, mostly because the political risk has been removed from pricing. Last night, though, a rumored Iranian attack on a U.S. ship in the Persian Gulf showed how quickly markets can flip if oil supply is threatened. Immediately, the political risk of tightened oil supply found its way […]

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Would You Have Answered The Mortgage Type Quiz Correctly?

March 27, 2007

The pie chart at right comes from a Bankrate.com survey, sampling 1,000 adults about their current housing situation. The question asked: What type of mortgage do you currently have? While the 34% “Don’t Know” figure is troubling, even more frightening is the 6% “ARM” figure. The sample size was small, but far more than 6% […]

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The Week In Review (March 26, 2007) : What To Watch For

March 26, 2007

The Fed held the Fed Funds Rate at 5.250% last week and included verbiage in its Press Release that the FFR may have to come down before it goes up again.  This gave investors reason to cheer and the stock market rallied to its best week in four years. Mortgage rates did not fare as […]

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The Headlines On Housing Aren’t Telling The Whole Story

March 23, 2007

As a consumer, it’s very easy to be misled by newspaper headlines.  Today provides a great example. “Sales of Existing Homes Up 3.9% For The Biggest Monthly Gains In Three Years” What was not mentioned in the headline was that total inventory rose by 5.9%, adding more supply than for which there is demand. More […]

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The Fed Gets Ambiguous; Mortgage Rates Fall

March 22, 2007

Ben Bernanke and the Federal Open Market Committee spoke with ambiguity yesterday in electing to keep the Fed Funds Rate at 5.250%. So far, mortgage rates have benefited. A major goal of the Fed is to manage the expectations of markets.  Therefore, what the Fed does is sometimes not as important as what it says. […]

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The Fed Sets The Fed Funds Rate Sets Prime Rate

March 21, 2007

This afternoon, the Fed adjourns after a two-day meeting and it is widely expected that they will leave the Fed Funds Rate unchanged at 5.250%. So, what is the Fed Funds Rate and why does it matter to everyday people? The Fed Funds Rate matters to you and me because it is used to calculate […]

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Look Beyond Short-Term Movement Towards Longer-Term Trends In Housing

March 20, 2007

Mortgage rates are somewhat restrained today as the Fed begins its two-day meeting. As reported by the Census Bureau, Housing Starts — defined as the number of units for which construction began — surprised to the high-side, despite a cold February. The 9% increase over January showed relative strength, but when compared to February 2006, […]

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The Week In Review (March 19, 2007) : What To Watch For

March 19, 2007

Sub-prime mortgage news dominated the headlines this past week as the Chicken Littles were out in full force.  Perhaps the fears of a credit crunch are overblown, but then again, perhaps there’s reason to worry. Like everything else in the world of economics, it all comes down to expectations. Markets makes predictions about the future […]

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The Cost of Living Index Increases; Mortgage Rates Increase, Too.

March 16, 2007

The Consumer Price Index came in higher than expected this morning, registering a 0.371% increase.  Excluding volatile gas and food prices, CPI grew by 0.241%.  The latter figure is called “Core CPI”. CPI is sometimes referred to as the “Cost of Living Index” because it measures how consumers are impacting by changing prices of energy, […]

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How To Answer “How Much Home Can I Afford?”

March 15, 2007

Home shoppers know to consider the impact that a new home will have on their household budget and that is called keeping your eye on the ball. Unfortunately, most shoppers are keeping their eye on the wrong ball. The proper way to answer the “How Much Home Can I Afford” question is to think in […]

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Conforming ARMs Are Going Delinquent More Rapidly Than Sub-Prime ARMs

March 14, 2007

The Mortgage Bankers Association released a report yesterday detailing how mortgage-holding homeowners are meeting their obligations. The statistics were a major factor in the Wall Street sell-off yesterday as investors increasingly grow nervous that sub-prime mortgage defaults will spill over into other credit markets and take the economy with it. The report stated that fourth […]

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