Long Beach California Real Estate Loans

Long Beach, Ca.  Equity market is retreating today on earnings concerns and lower oil prices. Bond market is negative this morning as well and is down .125% in price from Friday's close. The artificial bond market now is dependent upon when the FED is buying mortgaged backed bonds.  $10 billion down, $490 billion to go!  So goes the Fed's program to buy $500 billion in securities backed by mortgages. It has certainly helped conforming conventional rates "tighten" to Treasury pricing.

There is no relevant economic news scheduled for release today or tomorrow. Look for the stock markets to influence bond trading and therefore mortgage rates until we get to the relevant data later in the week. If we continue to see stock weakness, bonds may thrive, pushing mortgage rates slightly lower.  The rest of the week brings us the release of five pieces of economic data to digest. The first is December's Retail Sales data early Wednesday morning. Overall, Wednesday, Thursday or Friday may end up being the most important day of the week. The single most important report is the CPI, but the Retail Sales and PPI reports on Wednesday and Thursday respectively, are also considered to be of high importance

As a home owner, ou need to be aware of  the economic stimulus package, which is slated for a full House vote next month, will hike the Fannie Mae/Freddie Mac loan limit back up to $729,500, said Rep. Barney Frank, chairman of the House Financial Services Committee. The Democrat from Massachusetts said the loan limit increase has received the blessing of the incoming Obama Administration. The loan limit (for high-cost housing areas only) had been temporarily increased to $729,500 early last year but expired at Dec. 31. The new loan cap is $625,000, which will remain in place until the stimulus legislation passes. Many top ranked lenders continue offering jumbo mortgages but at interest rates 200 basis points higher than on "conforming" loans.  We are expecting this will probably pass as currently, anyone who closed a loan at the 2008 limits are shut out from refinancing at the lower 2009 agency jumbo limits.

On a positive sounding note, the attached article discusses the positives of hidden values for the housing market.  Something your realtor referral sources may appreciate receiving as they look for support to encourage clients to buy a home.   http://www.bloomberg.com/apps/news?pid=20601039&sid=aUCkQKQ1IrkA&refer=home

Lastly, as expected many people are calling for added oversight to FHA as the percentage of loans being originated exceed 60% of the market or more.  The Federal Housing Administration needs to beef up oversight of its mortgage programs, a task that is both increasingly difficult and important as the agency's market share grows and its resources are stretched, according to Friday testimony by a government auditor. The FHA, which provides government-backed mortgage insurance, needs to increase personnel, increase training for personnel and increase oversight of appraisal and underwriting, according to James Heist, assistant inspector general for audit with the Department of Housing and Urban Development, which oversees FHA.

Kirk Mulhearn, a mortgage planner and real estate broker, may be contacted at 866-961-8042 ext. 110

http://www.longbeachrealestateandloans.com/00494E

Long Beach, Ca. 30 Year interests rate are low, we are consistantly locking interest rate below 5% for 30 year fixed mortgages.  There has been a recent buzz and flurry of loan applications from home owners attempting to advantage of current interest rates in Southern California

Unemployment rate report has come out and the statistic for last month data stands now at 7.2% and they were expecting 7.0%.   Equity market is acting negative to this news as well as our bond market.   Pricing opened down about .25% in price but has improved slightly, however, we have not seen investors post any changes to their opening rate sheets as of yet.  Next week brings us the release of several important reports including December's Retail Sales data and two key inflation readings. There is no economic data scheduled to be posted Monday or Tuesday, but every other day of the week has important releases scheduled. Currently, the Ten Year yield is at 2.44% (2.44% yesterday).

Our mortgage pricing going forward will be affected by the ongoing purchases of mortgage backed bonds.  The Federal Reserve bought $10.213 billion of mortgage securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae in the first three days of a new program to support the housing market. The central bank has pledged to buy $500 billion, or possibly more, of these bonds backed by home loans in the first half of the year, an effort that has started to drive down mortgage rates. Market participants had expected the Fed purchases to average $3 billion to $4 billion daily, which would keep it on target to complete the aggressive spending spree within the first half.  So our normal rules of watching out for Friday's and coming up on Holidays will be semi on hold while the market is manipulated by the government purchases of mortgage backed bonds.

Kirk Mulhearn, a mortgage planner and real estate broker can be contacted at 562-989-4608 ext. 110 or emailed at:  kirkmulhearn@gmail.com

Subscribe to this blog at:  www.longbeachrealestateandloans.com 

 

http://www.longbeachrealestateandloans.com/004943

Long Beach, CA.  We are very concerned about this development for future mortgage pricing.  In what appears to be a reversal in position for the banking industry, Citigroup Inc. is in talks with lenders regarding legislation to permit mortgage restructuring in bankruptcy court. The industry previously has warned that "cram downs" would boost borrowing costs, but such bankruptcy reform has the support of many Democrats as well as President-elect Barack Obama. Sen. Dick Durbin, D-Ill., introduced a bill on Jan. 6 to allow bankruptcy judges to restructure mortgages, and similar legislation was also raised in the House. Some estimates say this will increase the cost of a mortgage by 50 basis points in rate to one point.  The Mortgage Bankers Association is opposed to this, but given the democratic controlled Congress, this appears likely to become passed. 

As we all know by now, CalHFA has stopped lending and is working to de-leverage their balance sheet. Yet this is at a time when we expect a government agency to support the credit crisis, not curtail their lending. Why has this happened?  Apparently the agency faces a credit rating downgrade and must work through a half billion of bonds that have been put back to their banks which forced the agency to focus on their balance sheet rather than lend.  Meaning no money for prospective borrowers.

Finally we are seeing this morning comments about the need to address Fannie and Freddie.  President-elect Barack Obama has little time to decide the fate of Fannie Mae and Freddie Mac as bank regulators warn of the drag the government-seized mortgage- finance companies are having on the U.S. economy. Federal regulators are concerned that if the new Obama administration doesn't act quickly enough it may miss the opportunity to resolve the ambiguous government backing of Fannie and Freddie, an arrangement that has scared away many foreign investors the companies rely on to fund new loans. Throwing the full faith and credit of the U.S. behind Fannie and Freddie may almost double the $5.8 trillion in federal debt, pushing Treasury rates higher, raising the government's borrowing costs, and boosting inflation. Regulators may be ready to pay that price, with some pushing for an explicit guarantee for the companies and others seeing the need for nationalization. We need to watch this as it would clearly impact the drop in rates we have received.

U.S. stocks have slid for a second day after retailers from Wal-Mart Stores Inc. to Limited Brands Inc. said profit will trail forecasts as the recession limited holiday spending and sent jobless claims to a 26-year high. Equities have fell three of four days this week as the recession forced the biggest U.S. companies to acknowledge that forecasts made last year were too optimistic. The five-quarter slump in profits at S&P 500 companies is projected to last two full years before a rebound in the second half of 2009, according to most analyst estimates.

Based upon the high jobless claims, treasuries and mortgage backed have held and MBS are up 4/32nds from yesterday at the moment or about .125% in price.  But as you all know by now, our investors are not necessarily following this one for one for a  variety of reasons.  Such as taking in too many locks, limited staff or their capacity. Currently, the Ten Year yield is at 2.44% (2.48% yesterday).  On Tuesday, Chase wholesale went so far as to send this out from their wholesale channel, "Due to high registration volume, effective 3:00 PM Eastern Time, Chase is temporarily suspending all new registrations and locks until the next business day's rate sheets are delivered." Couldn't they just price themselves out just like other lenders? Yet the headlines like the link below continue to show borrowers that they can find 30-yr mortgages below 5%, especially at bank branches.  http://www.bloomberg.com/apps/news?pid=20601103&sid=abG3KpLnk0IE&refer=us

Kirk Mulhearn is a professional mortgage planner and real estate broker, he may be reached at 866-961-8042 ext. 110 or Kirkmulhearn@gmail.com 

http://www.longbeachrealestateandloans.com/00493C

Long Beach, CA.  Will 2009 bring economic collapse or will markets begin to mend?
Two reliable predictors give hope. First, the spread between LIBOR and Treasury yields, which measures global risk. The spread ended the year tighter than when it began, and far tighter than the extreme levels of late summer. Second, volatility embedded in stock option prices is a good predictor, and is referred to as the "fear index." While still elevated, it ended the year reflecting much less fear than the worst seen in 2008. Both indicators lead us to believe that the economy has backed away from the brink.

While the economy may not collapse completely, we have some tough work ahead of us. Recessions brought on by financial crises (rather than typical business cycles) are severe, reports John Mauldin. In past such recessions, real housing prices declined 35% over six years, while equity prices collapsed 55% percent over three and a half years. The unemployment rate rose by 7% over four years and output fell 9% over two years. And government debt increased massively. By these historical measures, we have a long way to go.

The good news for home buyers is that mortgage rates are low, and are likely to stay that way. Fallout - of the 50% variety - and early loan payoffs have become the problems du jour. In spite of Barron's warning to "get out (of Treasuries) now," there is little economic reason for mortgage rates to rise. Nary a holiday party went by without someone asking when they could have their 4.50% mortgage rate (in the near future, we think). Mortgage demand is strong. The New York Fed "began purchasing fixed-rate mortgage- backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae," the Fed bank said in a statement released by e- mail.

So severe is the concern over lower rates, fallout, and refinanced mortgages, that the lack of premium mortgage pricing is as much an impediment to the refinance boom as anything else. You can pick any premium mortgage rate you want and your loan officer price struggles to get to par.  This will continue I am afraid until the housing market is steadied for prices and buyers other than the Federal government begin purchasing mortgage backed bonds.

The Fed began their MBS buying program yesterday; they will announce the amount purchased each Thursday. The mortgage basis tightened off of this purchasing pressure. Oil is now at a five week high as OPEC's production cuts are starting to have an effect on the market, oil is now above $50/barrel. Right now the futures market is pricing in a 76% chance that the Fed keeps rates somewhere between 0 and .25% until at least April 29^th, 2009. Currently, the Ten Year yield is at 2.56% (2.47% yesterday)

Speaking of rates, the historical link between Treasury rates and mortgage rates is practically non-existent. Yesterday, for example, Treasury rates moved up since Construction Spending fell only .6%, less than half as what was forecast, and before the $54 billion in government securities to be sold this week ($8 billion in 10-yr TIPS today). The government's sale of notes this week is causing impacting the supply side of the equation, moving Treasury rates higher. So this morning we find the yield on the 10-yr up to 2.56%, but mortgage prices are better than yesterday afternoon by .50% and continuing to show improvement.  Remember, investors have been very slow to reflect, but I would wait one hour or so and most investors should begin to reflect the improving price.  However, as I have said over and over, the market is artificially being impacted and can quickly retreat. 

Kirk Mulhearn, A professional Mortgage Planner, may be contacted at 866-961-8042 ext. 110

http://www.longbeachrealestateandloans.com/00492A

 

Long Beach, Ca.   There is no news today, aside from Construction Spending. Tomorrow we have the Commerce Department's November Factory Orders data. This data gives us a fairly important measurement of manufacturing sector strength, both in durable and non-durable goods, and is expected down 2.6%. Also Tuesday will be the release of the minutes from the last FOMC meeting. This will give market participants insight to the Fed's thinking and concerns regarding inflation and monetary policy. The usual Jobless Claims on Thursday, and then the final report of the week comes Friday morning when the Labor Department will post December's employment figures. Current forecasts call for a 0.3% increase in the unemployment rate up to 7.0%, and Nonfarm Payroll -500,000.

Not much happened to the economy in the last 4-5 days, aside from dire numbers coming from retailers which ordinarily would help rates. Yet we find the 10-yr Treasury hit 2.50%! It has come back down slightly from there, but keep in mind that a) The market was overbought, suggesting that a correction was due, b) we have supply ahead with a 3-yr and 10-yr auction this week on Wednesday and Thursday, and a 10-yr TIPS auction tomorrow, c) how much lower did anyone think that rates were going to go, in the near term? Fortunately mortgage rates and doing better than Treasuries, which makes some sense given that they did not participate in the big move down. Currently the 10-yr is at 2.43%, and mortgage prices are perhaps .5 better in price than late last week until the last 30 minutes where are pricing has faded to no improvement.   Our window of the FED buying mortgages seems to be lifted as pricing quickly has faded in the last 30 minutes. 

According to Democratic aides, President-elect Obama's $775B economic stimulus plan will include more than $300B in tax cuts. The proposal appears to have the support of both parties. The dollar rose on speculation that the plan will help the economy recover from recession. Right now the futures market is pricing in an 82% chance that the Fed keeps rates somewhere between 0 and .25% until at least April 29^th, 2009.

The Federal Reserve Bank of New York said Monday it has begun purchasing mortgage-backed securities in an effort to bolster the battered housing market. The program, initially announced Nov. 25, allows the Fed to spend $500 billion to buy mortgage-backed securities guaranteed by mortgage giants Fannie Mae and Freddie Mac and another $100 billion to directly purchase mortgages held by Fannie, Freddie and the Federal Home Loan Banks. The program is aimed at driving down the price of mortgages and making home loans more available.  When the government comes into our market, we see improvement in pricing and as quickly as it does, it begins to fade.  As I said last week, I believe rates will relax somewhat further but is driven by the only buyer we have, the Federal Government for mortgage backed securities.

To apply for a mortgage, contact Kirk Mulhearn at 866-961-8042 ext.110

email:  kirkmulhearn@gmail.com

http://www.longbeachrealestateandloans.com/004922