Monday, June 28, 2010

Market Snapshot by Sigma Research

Treasuries and mortgages opening firm this morning with equity markets working lower. The G-20 meeting in Toronto didn't produce anything not expected, most countries favor deficit cutting while the US favors continued stimulus spending to keep the economy from back-sliding into a double dip. The end G-20 statement agreed to keep stimulus spending with "pledges" to cut deficits by one-half by the end of 2013. Pres Obama is saying the same, cutting US annual deficits by half by 2013----a goal more a pipe dream than reality. The global economic outlook has been ratcheted lower over the past couple of weeks with data points soft. Last week's huge and unexpected decline in new and existing home sales took the wind out of the view that the market was showing signs of stabilizing. The housing markets remain in deep recession. The statement from the FOMC last week implied the Fed has lowered its outlook for the economy. Q1 GDP in the final revision was revised lower, from +3.5% on the advance release to +2.7% on the final, Q2 growth is being revised lower from estimates a month ago.

Early this morning the 10 yr note did push through its resistance at 3.09% to 3.06% at 9:00. Mortgage prices at 9:00 were up 7/32 (.22 bp) frm Friday's close. The DJIA at 9:00 down 8 points. At 9:30 the DJIA opened +30, 10 yr note at 9:30 +15/32 3.06% -6 BP and mortgage prices 9/32 (.28 bp).

May personal spending was fractionally stronger than estimates this morning; up 0.2% against +0.1% anticipated; income increased 0.4%, markets expecting +0.5%. The savings rate at +4.0% was the best since Sept 2009, consumers are less optimistic about the future than what is coming from The Street and Washington.

The bond market is improving this morning on the G-20 pledge to lower deficits; the perception that cutting deficits will weaken global economic growth fueled a nice move this morning. Got to have a reason for movement; the idea that governments will actually do what they pledged at the G-20 meeting is a stretch, especially in the US with our politicians so ingrained in pork spending and unable to increase taxes now. Massive tax increases are coming but not until at least next year. The VAT tax is almost a certainty along with higher income taxes for those wealthy people.

This week's economic calendar:
9:00 am Case/Shiller 20 city home price index (+3.4%)
10:00 June consumer confidence index (62.0 frm 63.3)
7:00 am Weekly MBA mortgage applications
8:15 am ADP private job estimate for June (+61K)
9:45 am Chicago purchasing mgrs index (59.7 frm 63.8)
8:30 weekly jobless claims (+1K to 458K)
10:00 May construction spending (-0.9%)
June ISM manufacturing index (59.0 frm 59.7 in May)
May pending home sales
2:00 June auto and truck sales
8:30 June non-farm payrolls (-100K; unemployment rate +9.8% +0.1%)
10:00 May factory orders (-0.7%)

The interest rate markets looking good so far this morning with the stock market suspect; stock indexes opened well at 9:30 but within 10 minutes of the open the indexes were struggling to hold together. The 10 looks like it wants to test 3.00%, something that doesn't happen often. This morning traders are basing buying on G-20 statements of increasing concerns of increased deficits; cutting spending is a positive on two fronts; less supply in the future and weaker economic growth.

Friday, June 25, 2010

Market Snapshot by Signa Research

Mortgage markets started soft today after heavy selling yesterday with the bellwether 10 yr note failing at its longer term technical resistance at 3.09%. After two weeks of price increases and declining rates the markets were ready for a correction and it began yesterday. We still have a bullish bias for the bond and mortgage markets, however to push the 10 yr note below 3.00% will require a consensus that the US economy is not growing. So far there isn't any definitive consensus either way on the economic outlook. The equity markets haven't seen any directional movement on the indexes for weeks; just chopping back and forth playing with 200 day moving averages.

The stock market opened up 15 points on the DJIA, the 10 yr note weaker earlier, unchanged at 9:30 and mortgages which were down 8/32 (.25 bp) at 9:00 improved to +2/32 (.06 bp).

Congressional conferees finally hammered out financial reform legislation last night. Reminds me of the health care bill; massive and still most don't really know what much of it means. On the surface it appears Wall Street came out the winner. The most sweeping reform ever on the financial system; some of it good, some rather mundane and some of it so complex (who is too big to fail, how do we know, and how will the government step in to take charge) that it will take weeks or months to work out the details.

Q1 GDP final report was widely expected to be unchanged from the preliminary reading last month; growth at 3.0%. Like much of the recent economic data it was another downward revision to prior reports; +2.7% for Q1. The reason; weaker consumer spending. Like a broken record, but we can't refrain from saying it once again----consumers are not spending as much as markets believe and will not with high unemployment, home prices still declining in most areas, home sales declining every month and job stability uncertain.

Yesterday the Senate defeated the bill that would have extended unemployment payments. 1.2 mil will loose unemployment compensation at the end of this month and 200K a week will continue to run out of unemployment payments. Republicans and a couple of Democrats made bets that voters are increasingly troubled over continued government spending and massive budget deficits. Time will tell but the take away is more economic trouble ahead.

The U. of Michigan consumer sentiment index, expected to be unchanged at 75.5, hit at 76.0 the highest since Jan 2008. Not a big deal however, the sentiment index is volatile and emotional; the 12 month expectations index in the data fell to 79 from 83.

Yesterday the 10 yr note tried and failed to break and hold into new low yields under 3.09%, the reaction was somewhat muted in Treasury markets but not in the mortgage market. Mortgage prices declined with strong selling after three weeks of improving prices and lower rates. There is nothing significant in what occurred so far; the technical outlook remains bullish for interest rates. The 10 yr note won't be a concern unless its yield climbs above 3.32% and mortgage markets will remain bullish as long as the 4.0 MBS coupon holds above a price of 99.83 bp, presently at 100.56 bp. Increased volatility is likely; already this morning mortgage prices have traded in a 14/32 range (.43 bp).

4th of July & Fireworks

The Consumer Product Safety Commission (CPSC) reports that most injuries from fireworks occur in the few weeks around July 4th. The CPSC also reports that in 2008, there were seven fireworks-related deaths and an estimated 7,000 hospital emergency room treated injuries. Of course, the best way to protect your family from fireworks accidents is to not use fireworks at home. It's a lot safer and cheaper, and the fireworks are a lot bigger, if you attend a public fireworks display and leave the lighting to the professionals. Lighting fireworks at home isn't even legal in many areas, so if you still want to use them, be sure to check with your local police department first. If they're legal where you live, keep these safety tips in mind:
• Kids should never play with fireworks. Things like firecrackers, rockets, and sparklers are just too dangerous. If you give kids sparklers, make sure they keep them outside and away from the face, clothing, and hair. Sparklers can reach 1,800° Fahrenheit (982° Celsius) - hot enough to melt gold.
o Buy only legal fireworks (legal fireworks have a label with the manufacturer's name and directions; illegal ones are unlabeled), and store them in a cool, dry place. Illegal fireworks usually go by the names M-80, M100, blockbuster, or quarterpounder. These explosives were banned in 1966, but still account for many fireworks injuries.
o Never try to make your own fireworks.
o Always use fireworks outside and have a bucket of water and a hose nearby in case of accidents.
o Steer clear of others - fireworks have been known to backfire or shoot off in the wrong direction. Never throw or point fireworks at someone, even in jest.
o Don't hold fireworks in your hand or have any part of your body over them while lighting. Wear some sort of eye protection, and avoid carrying fireworks in your pocket - the friction could set them off.
o Point fireworks away from homes, and keep away from brush and leaves and flammable substances. The National Fire Protection Association estimates that local fire departments respond to more 50,000 fires caused by fireworks each year.
o Light one firework at a time (not in glass or metal containers), and never relight a dud.
 Soak all fireworks in a bucket of water before throwing them in the trash can.
 Don't pick up pieces of fireworks after an event. Some may still be ignited and can explode at any time.

If someone is injured by fireworks, immediately go to a doctor or hospital. If an eye injury occurs, don't touch or rub it, because this can make it hurt even more. Also, don't try to flush the eye with water. Cut out the bottom of a paper cup instead, and place it around the eye. Immediately seek medical attention - your eyesight may depend on it. If it's a burn, remove clothing from the burned area and run cool, but not cold, water over the burn (do not use ice). Call your doctor immediately.
Fireworks are meant to be enjoyed, but you'll enjoy them much more knowing your family is safe. Whether you decide on a personal fireworks show or not, be sure to spread the word about firework safety to anyone you think could use it. Either way, if you shoot fireworks at home or go to a public display, be sure to have fun and enjoy this Fourth of July.

Thursday, June 24, 2010


Forwarded exclusively by:

Michael Forrester
South Carolina Mortgage Associates - NMLS:92550
Office: TF:1-877-853-5385

Where SC shops for mortgages!
Thursday, June 24, 2010
Treasuries and mortgage opened better again this morning on weaker stock index trading. At 8:00 am the 10 yr note was +15/32 at 3.06%; mortgage opened better, up 6/32 (.18 bp) frm yesterday's close. Late yesterday there was some slippage in mortgage prices from 4:00 levels taking mortgage prices back to about unchanged on the day and unchanged from 9:30 yesterday.

At 8:30 two data points; weekly jobless claims were expected to have declined 7K to 465K, claims were down 19K to 457K after an upward revision last week from 472K to 476K. Continuing claims declined to 4.548 mil from 4.593 mil. May durable goods orders expected to be down 0.5% were down 1.1% overall but when the volatile transportation orders are subtracted orders were up 0.9% in line with forecasts. A little decline from the best levels in bonds and mortgages but still were better. The DJIA index at 9:00 was down 45 points suggesting a lower open at 9:30. At 9:30 the DJIA opened -50, 10 yr note +10/32 at 3.08% and mortgages +5/32 (.15 bp).

Weekly unemployment claims were better than expected, however when we stand back to take a wider look claims are still running around 450K a week, or 2.25 mil a month. Hard to make a silk purse out of a pigs ear and spin something positive out of the claims, nevertheless markets are trying. The 0.9% increase in durable goods bookings for goods meant to last at least three years, excluding autos and aircraft, followed a 0.8% decrease in April. The take away from durables is that the manufacturing sector is continuing to improve; ex transportation orders have been up three out of the last four months. All that is good but so far consumers that account for 70% of GDP growth have not shown much interest in spending, keeping economists on edge and the Fed lowering its economic outlook at the FOMC statement yesterday.

Long term interest rates are falling around the world as fears of a very slow recovery spread. In Japan their 10 yr JGB bond has declined from 1.30% to 1.13% in the past few weeks, the German 10 yr bund yield also is declining. European stocks fell today, led by indexes in Greece, Spain and Portugal. Credit-default swaps on Greek government debt rose 38 basis points to a record 970, according to CMA DataVision. Debt issues in Europe continue to roil markets with increasing concern Europe's economy will slip and slow recovery around the world, especially here in the US. Markets just cannot shake off Europe's financial problems.

At 1:00 this afternoon Treasury will auction $30B of 7 yr notes. Yesterday's 5 yr note auction was a little disappointing compared with recent Treasury borrowing. That said, Treasury has been very successful selling US debt over the past year and will continue to meet with decent to solid demand with so much uncertainty over global economic recovery and sovereign debt issues in Europe. All key bond markets are rallying.

The Treasury 10 yr note is working at the reactionary low rate made in late May at 3.09%; early today the yield fell to 3.06%. If the 10 yr is going to break below 3.00% it will have to be on the back of continued selling in the stock market. So far investors and analysts have kept a positive attitude toward the longer economic outlook being sluggish but not moving to a double dip recession. The stock market isn't collapsing nor is it rallying; swinging in wide ranges and teasing the 200 day average on key indexes.

Tuesday, June 15, 2010

5 Keys to Unlocking a Better Credit Score

5 Keys to Unlocking a Better Credit Score
by Glenn Curtis
Monday, June 14, 2010
provided by

Sometimes people get in over their heads. They rack up so much debt that they're unable to make consistent interest and principal payments. When you're late or unable to make payments, your credit rating suffers. This reduces creditworthiness, and ultimately, it inhibits your ability to access financing.
The good news is that there are things consumers with less than stellar credit can do to improve their standing among lenders and to rebuild their credit score. In this article, we will look at techniques you can use to improve your stats.
Credit Score? What's That?
A credit score is the key to understanding how creditworthiness is evaluated by lending institutions, as a good credit score can unlock the vault to help obtain financing.
Your payment history, loans outstanding and a general indebtedness are statistically evaluated by the credit bureaus. The big three of the industry are: Equifax, TransUnion and Experian. Based upon a compilation of that data, your profile is assigned a number between 300 and 850, with 300 being the least credit worthy and 850 being the most credit worthy.
It is this number that lending institutions use as a basis for determining whether you qualify for a mortgage or a quick escort out the lobby doors. So, now that you understand how the score works, let's look at five tips that will help you raise a bad score and win favor with those stern-faced bankers.
Tip No. 1 -- Pay More Than the Minimum
If possible, always make payments over and above the minimum interest payment that is due. Credit bureaus not only look at the amount of debt an individual has outstanding, but also the length of time it takes to pay off the debt.
Unfortunately, there's no calculation that can be used to measure exactly how much this will boost your score. There are a myriad of factors that go into computing a credit score, but accelerating payments and satisfying debts on a timely basis is recommended as a means of repairing credit by lending institutions and well-known credit counseling agencies such Credit Guard of America.
Tip No. 2 -- Work Out a Plan
Most people don't realize that if they are behind on their debt payments and are going through some trying times, their lenders will often consider negotiating a revised payment plan or possibly forgiving a portion of the debt. For lenders, negotiating is cheaper than either hiring a collection agency or risking that the individual might have their debts cleared in a bankruptcy proceeding.

If you need a reprieve, approach the lender and ask for more time to make payments. You can also present a revised payment structure. If you can develop a plan that works for you and makes sense for the lender, there is a good chance they will accept it. If and when a deal is struck to forgive a portion of your debt, be sure that the major credit bureaus are aware of it and that they make the appropriate notations on your credit report. Less debt and timely payments equal a higher credit score.
You can check to see if the appropriate notations have been made by accessing your credit report, which will document your borrowing and any material changes made to these reports. You are entitled to one free report every 12 months. For more information on getting your free report see the Federal Trade Commission Website.
Tip No. 3 -- Switch from Credit to Debit Cards
Credit card debt is no friend to your credit score. One of the best ways to avoid credit card debt is to pay the debt right away, through the use of a debit card.
Debit is different from credit. With a debit card, you deposit money into an account and then use the card to charge against the money. There is no credit bill to rack up, and you can only spend what you actually have.
It is important to note that credit reports don't typically factor debit card payments into the credit score equation. But by disciplining yourself and using a debit card to settle debts on the spot, (rather than racking up huge credit card balances) you will, by extension, have a better credit score.

Tip No. 4 -- Cut Up Those Store Cards
Many people are just one more card away from witnessing the tragic death of their wallets. The leather strains and stretches to hold in all that easy credit. It's hard not to have an overstuffed wallet when every retailer you visit now has an in-house credit card they'd be ever-so-happy to sign you up for. While these cards often give bonus points, free merchandise or favorable rates, the bad news is that the more open accounts you have, the lower your credit score will be.
From a credit bureau's perspective, the logic behind this is that you could theoretically tap all of these credit sources to the max at one time and rack up a huge amount of debt. In other words, credit agencies and lenders are worried about your potential for taking on high interest debt, as well as the likelihood that you probably maintain small balances on each of those cards. If they don't have an outstanding balance the easiest solution is to simply call and cancel the cards.
If you have balances on numerous cards right now, one excellent solution is consolidating your debt. A personal loan at 12% is still better than the 20%+ rates some cards charge. However, if consolidation doesn't sound attractive, consider paying off the debt that has the highest interest rate first, and close out your accounts one by one as you pay them down.
The goal should be to reduce your card count to one or two credit cards. It will make reviewing monthly statements and paying your bills much easier. It will provide discipline as your overall credit limit will be lower, and finally it will keep your wallet from exploding in your pocket, which can be very messy.

Tip No. 5 -- Add Comments to Your Credit Report
Often when you peruse your credit report you'll find an error. Perhaps you've paid off a particular loan that isn't reflected on the report, or there are legitimate reasons why a particular debt hasn't been satisfied, such as a temporary disability. In these instances your first recourse should be to contact the credit agency and request they make the appropriate changes. Fibbers beware: you will probably have to provide some documentation.
Few people realize this, but credit reports typically have a space for you to provide your comments at the bottom. This section is another area of recourse that can be used. It lets you comment on why a particular debt hasn't been paid or to point out any factual errors. To do this, the individual must contact the credit bureau directly and again may have to provide some documentation to support the claims.
To be clear, adding comments to the credit report won't necessarily boost your credit score. However, some lenders may take your comments into account when deciding whether to grant you a loan. This little-known space can be invaluable if you are fighting an incorrect rating.
Bottom Line
A low credit score is not the end of your financial world. Discipline and responsibility can help rebuild even the lowliest of scores. Paying more than the minimum, reducing the number of cards in your wallet, negotiating a payment plan and taking advantage of the comments section on your credit report can all help boost your score and improve your odds of success the next time you need a loan.

Mortgage Loans***
Mortgage loans are increasingly more difficult to qualify for. You should not use just any mortgage loan officer. There have been many times where a person has mentioned “I have a friend or I found them online” and their realtor just cringes. Ask your realtor for a referral and also contact your area’s leading experts. In the Upstate of South Carolina one of the few remaining Correspondent lenders that also offers Broker capabilities is South Carolina Mortgage Associates. If you are dealing with a lender they typically only offer you “their products” and “their rates”. That may be the best they offer but not the best that is actually available. South Carolina Mortgage Associates offers lending/brokering through many of the nation’s top banks and lenders. They work to find the loan that is right for you. For more information on how to qualify for a mortgage loan contact Michael Forrester and the experts at South Carolina Mortgage Associates.

G. Michael Forrester
South Carolina Mortgage Associates
Advance Mortgage Source, Inc.
864-316-0090 Toll Free:1-877-853-5385
NMLS: 92550

Monday, June 14, 2010

What Really Affects Mortgage Interest Rates?

What Really Affects Mortgage Interest Rates?
By Chris Cope

2010Many of you have questions about what really affects Mortgage Interest Rates. I don’t have a crystal ball that can answer your questions but what I do have is information about some of the underlying fundamental indicators that determine the general direction of mortgage interest rates.

Many people are surprised to learn that what the Fed does with the prime rate has less of an effect on Mortgage interest rates. Contrary to popular belief, the prime rate sets the tone for rates on business borrowings and consumer accounts. More often than not, Mortgage rates have anticipated what the Fed will do and have already factored in a corresponding move, be it up or down. Only if the market is wrong in their estimate will rates change with a Fed move.

So what would affect mortgage rates?

The most important factors are the general news on the economy, and not just the US economy but the global economy. Let’s talk more about the impact of economic news on rates. Traditionally when the news is good Mortgage rates should go up and conversely when the news is bad rates go down. The last few several weeks have been very interesting in terms of Mortgage rates as we still have historic lows but are getting good economic news, for the most part, on the US economy. What is happening here? One word, Europe, more specifically Greece. The debt problems in Greece and some other European countries are overriding any good economic news here in the US. The Shirmeyer report had this to say about the situation:

“US markets are completely focused on developments in Europe now; generally underplaying the US economic data.”

Right now, rates overall are still at historical lows and the jury is still out on how long they will stay that way. You can follow the economic indicators to get a general direction, but the bottom line is that you should decide what works for you and your situation. Take the time to determine what payment you are comfortable in making each month on your Mortgage.