Delaware Mortgage Loans

As discussed yesterday, each time the price curve on the 5.5% coupon approaches 101-00, we begin to encounter resistance, and it will likely take an incontrovertibly grim economic outlook to create sufficient demand to push us higher.  A 200 point drop in the Dow would be enough, but only if the index itself were much closer to 12000 than 13000.  This would have to coincide with a lack of negative mortgage related headlines.

We had hoped to float until the Fed Minutes today, but the Mortgage Backed Securities market appears to be getting a little too much resistance.  So be advised some lenders may reprice for the worse if they already have Mortgage Interest rates out.  We’re down 7/32nds on the day so far on the 5.5% coupon.

Lots of potential volatility remains for the day as we have limited data and the Fed Minutes in a few hours.  Look for a more detailed analysis of the action following that.  Until then, safest bet is to lock your Delaware Mortgage Rate considering recent declines combined with the historically high MBS prices, but we may see more improvement for you risk-takers after the Fed minutes are released. 

John Thomas - Certified Mortgage Planner

Here are the daily thoughts on floating or locking your Delaware Mortgage Loan Interest Rate. 

As always - consult your favorite mortgage professional who will be able to offer the best advice for YOUR unique situation.

The Producer Price Index (PPI) - the cost of supplies to produce consumer goods - came in below expectations.  Though stripping out the volatile energy and food prices, the core PPI was higher than expected.

Technically speaking - the FNMA 5.5% 30 year bond jumped yesterday as the stock market slid from its daily high.  This morning the bond is rallying due to both the PPI slipping and stock markets down around the globe. 

Oil hits record $129.58 a barrel in NYMEX trading - stocks suffer. Investors flock to bonds.

Home Depot posts a 66% drop in net income due to the slowing economy and housing slump.

Thought this increase in bonds is good, they are also getting ready to bump up against a rather solid celing of resistance. I recommend floating but be prepared to take advantage of these recent improvements in Delaware Mortgage Rates if the bonds bouce off the ceiling of resistance.

If you need help with a Delaware Home Loan, please feel free to contact me by calling 302-368-7132 Ext.12.

John Thomas - Certified Mortgage Planner

Mortgage bond prices remained near unchanged last week holding Delaware Mortgage interest rates steady. Trade continued to be extremely volatile with discount points rising and falling by as much as 1/2 on a near daily basis. Once again, gyrating oil prices caused much of the volatility. The price of a barrel moved as much as $6.00 in a trading day. Rising oil prices stoked inflation fears and resulted in Delaware mortgage rate spikes. 

For the week, Delaware interest rates on government and conventional loans fell by about 1/8 of a discount point.

This week brings us the release of only three pieces of economic news in addition to the minutes from the last FOMC meeting. Only one of those three can be considered of high importance to the markets and mortgage rates, so we may see a fairly calm week for mortgage rates.

The producer price index data Tuesday will be the most important event this week. Leading economic indicators and the Fed minutes have the potential to cause mortgage interest rate volatility. The bond market closes early Friday ahead of the Memorial Holiday the following Monday. 

The National Association of Realtors will give us the Existing Home Sales report Friday morning. This data tracks resales of homes in the U.S., giving us a measurement of housing sector strength. However, it is not considered to be of much impor! tance to the bond market unless it varies greatly from forecasts. Current forecasts are calling for decline in sales between March and April.

Overall, it may be an interesting week for mortgage rates. We could see little movement in rates if the stock markets remain calm and the week’s data doesn’t reveal any major surprises. Tuesday’s PPI report is the single most important data of the week, but the FOMC minutes may also lead to some volatility in the markets. Also worth noting is an early close in the bond market Friday afternoon ahead of the Memorial Day Holiday Monday. These early closes sometimes lead to additional volatility bond prices as investors prepare for the long weekend and trading thins with many traders starting the weekend early.

Producer Price Index 

The producer price index is a measure of prices at the producer level and is important because it is a primary inflation indicator released each month. Investors are typically able to gain an initial indication of inflationary pressures at the producer level from the release. If producer prices are increasing, there is a tendency for producers to pass the increases on to consumers in the form of higher priced goods. It is important to note that the PPI is only a measure of goods, while the consumer price index is a measure of goods and services. It is possible for the price of goods to remain stable, while the price of services increases. In this scenario PPI would do little to warn of a change in inflationary pressures, while the CPI report would provide an indication of the inflationary effects of the service component. This distinction between the two reports shows why most analysts view the CPI as a more accurate indicator of inflation. 

Energy price increases have many analysts concerned about the threat of inflation. Market participants will gain valuable insight into potential volatility in the financial markets from the release. 

If this week’s producer price index release indicates falling price pressures, Delaware mortgage interest rates may improve. However, if the PPI release indicates an increase in price pressures, Delaware mortgage interest rates may push higher. 

Mortgage interest rates remain favorable. This week could result in market swings that are favorable or negative in nature. Considering the heightened possibility for mortgage interest rate volatility, a cautious approach to interest rate exposure is prudent.

 HOME PRICES:  This past week, I reviewed the median home price information for the 80 highest priced metropolitan areas for the last three years (2005-2007) as complied by the National Association of Realtors using U.S. Census Bureau information. Over the two year period, only 16 are down.  Two are in California, six are in New England, four are in Florida, two are in Nevada, and the other two are in the metropolitan areas around Minneapolis, Minnesota and Hagerstown, Maryland.  Over a one year period (2006-07), 9 areas have dropped double digits, and all but two (Las Vegas and Hagerstown) are in Florida or California.  Those going up by double digits over a one year period are in San Jose California, Atlantic City, NJ, Kennewick, Washington and Yakima, Washington.  The Philadelphia area has gone from a median of $215,000 in 2005 to $234,600 in 2007.  Allentown Pennsylvania has gone from $243,400 to $260,500.  The New York, North Jersey area has moved from $445,200 to $469,700.

ECONOMIC AND MARKET UPDATE:  Housing starts in April recorded a surprisingly strong +8.2% increase.  The gains were in multi-unit construction.  Single-family housing starts continued to decline.  Permits for new construction were up +4.9%.  Both starts and permits were about thirty percent below year earlier figures.  Retail sales declined by 0.2% in April, but the entire decline was in auto sales.  Non-auto retail activity was up 0.5%.  The Consumer Price Index (CPI) was up 0.2% for April and the “core” rate (excluding food and energy) was up 0.1%.  The markets continued to recover and close in on break-even for the year.  The Dow Jones Industrial Average was up nearly 2% (down 2.1% for the year).  The S & P 500 was up 2.67% (down nearly 3% for the year).

GOLD AND OIL:  According to the Financial Times , “an ounce of gold will now buy only seven barrels of oil.  Ten years ago, it could have bought as much as 26 barrels.”

AVERTING A STUDENT LOAN CRISIS?:  On May 7, President Bush signed The Ensuring Continued Access to Student Loans Act of 2008. The Act seeks to ensure that college students and their parents have uninterrupted access to federally guaranteed student loans despite the recent turmoil in the credit markets.  The Act grants the Secretary of Education temporary authority to purchase loans from lenders in the federally guaranteed loan program.  The Act also authorizes the Secretary of Education to advance federal funds to guarantee agencies that are operating as “lenders of last resort” in the event they don’t have sufficient capital to originate new loans. The Act also dispenses with the requirement that students demonstrate an inability to borrow from other sources before turning to a lender of last resort.

The Act increases loan limits on unsubsidized federal Stafford Loans by $2,000 for undergraduate students, and increases the total loan limits (for both unsubsidized and subsidized loans) to $31,000 for dependent undergraduate students (up from $23,000) and to $57,500 for independent undergraduate students (up from $46,000).  Dependent undergraduates will be able to borrow up to $5,500 in Stafford Loans during their first year of college ($3,500 of which can be subsidized); $6,500 during their second year (up to $4,500 subsidized); and $7,500 in the third, fourth, and fifth years of college (up to $5,500 subsidized). For independent undergraduate students, the new borrowing limits are $8,625 for the first year (up to $3,500 subsidized); $9,500 for the second year (up to $4,500 subsidized); and $12,500 for the last three years (up to $5,500 subsidized).   Finally, the Act now gives parents who take out PLUS loans the option to defer repayment for up to six months after their child has left school. 

UNEMPLOYMENT:  The unemployment rate in the USA is 5.0% today.  The unemployment rate in the 15-nations that use the euro (i.e., the Euro-zone) is 7.1% today, the lowest ever recorded.  The euro was introduced in January 1999.

This information is provided by my good friend and business associate, Doug MacGray.  Doug is a certified financial planner, so if you need assitance with financial planning please feel free to contact me and I can refer you to Doug.

If you need help with a home loan please feel free to call me (John Thomas) at 302-368-7132 or send me an e-mail to DelawareMortgages@yahoo.com

Here are the daily thoughts on locking or floating your Delaware Mortgage Rate for May, 15, 2008.

Here’s the News That’s Moving Markets Today:

1. Empire State MFG Survey

    This report was much higher than expected last month, and we had hoped that would be an outlier as opposed to a sign of economic recovery.  Today we were vindicated.  The consensus was for no growth at 0.0 and the actual report was released at negative 3.2.  Great News for MBS.

2. Jobless claims were almost dead on with expectations at 371k loss.  The consensus was a 370k loss.  This keeps the moving average very low and is another reassurance that we are indeed moving into deeper recession.  Good News for MBS.

3. Treasury International Capital.  The demand for  US securities from foreign buyers stood at 80.4 billion.  This is a high level of a demand, but is more of an effect than a cause as far as market movement is concerned.

4. Industrial production read at minus .7% as opposed to estimates of negative .3%.  This is in line with the Empire State survey and more edification for a weakening economy.  This is more good news for MBS.

5. Philly Fed Survey.  Though the contraction indicated by the negative 15.6 reading is better than estimates of a negative 20.0 reading, the fact that it is still negative (for a 6th straight month now) minimized the damage this report does to the MBS market.  We had some slight selling following this report, but nothing major.

6. Stocks.  Despite the weak data, stocks are being bolstered by a few key players.  The Dow is slightly positive on the day, which is preventing a massive improvement in MBS.

7. Flow considerations.  As the economy showed signs that it may be headed for a recovery over the last few weeks, traders forcefully withdrew their lower coupon MBS, especially the 5.0% coupon.  Now that we have the “mixed bag” again, traders have bought 5.0% coupons en masse.  The price on 5.0’s is up over 1-15 currently!  That’s a huge swing and will help discounted wholesale rates to come back into reach.  The 5.5, by comparison, is only up 12/32nds.

Float with these gains.  If housing starts and consumer sentiment is weak tomorrow, the gains will continue.  The stock market will play a key role for the rest of the day in helping us gauge reaction to the numbers.  If stocks start to climb, check back here and be ready to lock.  In the mid-term at least, if you have a few weeks before closings, floating will probably improve your rate slightly, but if you are happy with what improvement you got today in the Delaware Mortgage Rates, then go ahead and Lock it in today.

If you need help with a Delaware Home Loan, please feel free to call me (John R. Thomas) at 302-368-7132 or send me an e-mail to DelawareMortgages@yahoo.com. 

The following events are sponsored by the Downtown Newark Partnership

May 2008 Events
5/8 thru 5/29 – Spring Concert Series on Academy Lawn every Thursday Evening from 7-8 PM

5/18 – Memorial Parade – Sunday at 1 PM

June 2008 Events
Every Thursday in June – Spring Concert Series on Academy Lawn from 7-8 PM

6/7 – Saturday – Newark Nite 5-9:30 PM

July 2008 Events
7/4 – Liberty Day and Fireworks 4-9 PM – University of Delaware Athletic Complex

7/26 – Food & Brew Festival – Saturday from 12 PM on – Sidewalk Sales

For more information on events in the city of Newark, Delaware visit www.enjoydowntownnewark.com

IF you need help with a home loan or need more information on refinancing or purchasing a home in Newark, please feel free to call me (John Thomas) at 302-368-7132 or send me an e-mail to DelawareMortgages@yahoo.com

Here are the daily thoughts on floating or locking your Delaware Mortgage Rate for May 14, 2008. 

As always - consult your favorite mortgage professional who will be able to offer the best advice for YOUR unique situation.

Consumer Prices came in below target expectations today.  Both the regular and the core were lower than expected.  This rather tame reading on inflation, while normally good for bonds, has caused the stock market to improve markedly causing bonds to lose what little they gained today.

Technically speaking - the FNMA 5.5% 30 year bond which had a major downturn yesterday has since managed to bounce off of the 200 day moving average. 

As you can see, we were in that trench from about 10AM to 130PM when we fell out.  We are back in now, and indeed pushing the upper limits with the 5.5% at 99-27.  Needless to say, a wild day.  Tomorrow could be even wilder. 

Though bouncing off the 200 day moving average, the best bet is to

     Lock your interest rate.

Here are the daily thoughts on floating or locking  your Delaware Mortgage Rate.

As always - consult your favorite mortgage professional who will be able to offer the best advice for YOUR unique situation.

Retail sales came in exactly on target.  Unfortunately, sales minus the ever fluctuating auto industry came in better than expected.  This will give encouragement to the stock market and feed a sell off of bonds - translating to an increase in rates today.  Oil also jumped up today and is looking to finish at an all time high again.  Look for a re-price late in the day for the worse.

Technically speaking - the FNMA 5.5% 30 year bond fell below a major level of support this morning on the news of retail sales. 

Since this level of support has been breached, the best bet is to

     Lock your Delaware Mortgage Interest Rate.

If you need help with obtaining a home loan for the purchase or refinance of a home please feel free to call me at 302-368-7132 (John R. Thomas) or send me an e-mail to DelawareMortgages@yahoo.com

There will be a Free Delaware First Time Home Buyer Seminar on Saturday May 31, 2008 at 10:00 AM.  The seminar will last about 2 hours and each participate will be able to recieve a free copy of their tri-merge credit report.  The seminar will cover all of the basics of buying a new home in Delaware.  The seminar will cover Delaware FHA loans, Delaware VA loans, My Community loans, and First Time Home Buyer Loan Programs.  Each participate will recieve a Free Audio CD on Credit Scoring, Credit Scoring Handbook, Homebuying Handbook, and an opputunity to meet with a mortgage planner to be pre-approved to buy a home at the seminar.You will also learn importance of credit in buying a home and learn valueable tips on how to improve your credit score.  Learn what programs are available to help with down payment and closing costs.  The new loan limits for conventional and FHA will be covered as well as changes to borrowing 100% financing.

The Seminar is being held at 256 Chapman Rd, Suite 105, Newark, DE 19702.

To register for the seminar, please call 302-368-7132 Ext 12 and ask for John Thomas.  You can also e-mail me at DelawareMortgages@yahoo.com

With little economic data on the schedule for last week, the major economic story during the week was the continued rise in oil prices, which hit a new record high of $126 per barrel. Oil prices have nearly doubled since last summer. A major Wall Street investment bank issued a forecast this week that predicted a spike in oil prices to between $150 and $200 per barrel, possibly before the end of the year. The impact of rising oil prices on mortgage markets could be either positive or negative, depending on a couple of factors. Rising oil prices leads to higher prices for goods and services, and higher inflation usually leads to higher mortgage rates. On the other hand, higher energy costs slow economic activity, which serves to reduce inflationary pressures. In general, stock investors don’t like to see higher oil prices, while mortgage investors are less concerned. Delaware Mortgage Rates ended the week about where they started.
In the housing sector, the March Pending Home Sales index fell slightly from February, matching expectations. Pending Home Sales are a leading indicator of future housing market activity, so the next Existing and New Home Sales reports may show small declines. The National Association of Realtors (NAR) latest forecast predicted that conditions will remain soft for the first half of 2008, but that activity will pick up during the second half of the year.

Other significant news for the housing sector came out during the week as well. Fannie Mae announced that it will buy the new Jumbo Conforming mortgages for the same prices as those below the old conforming loan limit, which should make some larger mortgages more affordable. In addition, a $300 billion FHA housing loan guarantee program passed a vote in the House. More hurdles remain, as the program must be approved by the Senate and the President. If passed, this program will assist troubled borrowers in refinancing into a mortgage with more affordable terms, resulting in a reduction in the number of foreclosures.

This week will kick off with the Retail Sales report on Tuesday. Consumers account for about 70% of economic activity, and this report is a major indicator of spending levels by consumers. The most highly anticipated economic data will be Wednesday’s Consumer Price Index (CPI) inflation data. Almost without exception, higher inflation leads to higher interest rates, and CPI looks at the price change for those finished goods which are sold to consumers. Industrial Production, an important indicator of economic activity, will come out on Thursday. Housing Starts and Consumer Sentiment will round out a full schedule on Friday.

If you need help with a Home Loan, please contact me (John R. Thomas) at 302-368-7132 or send me an e-mail to DelawareMortgages@yahoo.com