Friday, October 29, 2010

Market Snapshot by Sigma Research by SC Mortgage Assoc

Friday, October 29, 2010
8:30 Q3 GDP was right on at +2.0% besting Q2 at +1.7%. Although a better Q3 it is still very weak; the Q3 employment cost index up 0.4%, forecasts +0.5%. Final sales in Q3 up 0.6% compared to +0.9% in Q2. The reaction to the data sent treasuries rallying and mortgage prices increasing. Even with the improvement in Q3 there is increasing questioning that the gains are insufficient to cut into the unemployment rate, and adds to the idea that the Fed needs to ease and inflation fears are overdone----at least that is the momentary thought, it swings almost daily. At 9:00 the 10 yr note +11/32 at 2.62% -4 BP and mortgage prices up 8/32 (.25 bp) frm yesterday's close. The DJIA traded weaker prior to the 9:30 open; at 9:30 the DJIA opened -20, 10 yr note +9/32 at 2.64% -2 bp and mortgage prices mixed with 30 yr +7/32 (.22 bp) and FHAs +4/32 (.12 bp).

More data; at 9:45 the Oct Chicago purchasing mgrs index, expected at 57.6, it was better at 60.6 frm 60.4 in Sept. The components were also better than Sept; new orders index at 65.0 frm 61.4, employment index at 54.6 frm 53.4 and prices pd at 68.9 frm 55.0 in Sept, mostly up on energy costs. The was not much reaction in the bond markets to the better report but the stock indexes did manage a little bounce.

The final data point this week, the U. of Michigan consumer sentiment index was expected at 68.0 frm 67.9, was weaker at 67.7 the lowest sentiment reading since Nov 2009. The 12 month outlook fell to 67 frm 70 two weeks ago; the 12 month inflation outlook at 2.7%. No real immediate reaction to the report.

Moving toward next Wednesday's FOMC meeting and the Fed's announcement of the QE that has been the focal point for traders and investors since the 9/21 meeting when the Fed said it was "prepared" to ease further if necessary. Since that statement it sent rate markets first rallying, then retreating back to levels prior to the comment. There is no doubt in the markets that the Fed will ease by buying treasuries; the concerns are on how much and how quickly the Fed will buy and what the impact may be on the economic recovery and the outlook for inflation. The Fed wants inflation to increase a little to crush out deflation potential, the long end of the yield curve (5s, 10s and 30s) however worry over inflation increasing. And then the dollar; along with attempting to stimulate recovery, the Fed and Treasury want the dollar to decline (although Treasury would never admit it); in the global context it is somewhat of a currency war with central banks trying to weaken their currency to increase exports. Printing money as the Fed will do with the easing has the effect of weakening the dollar as long as it a substantial easing move. The initial reaction to easing sent rates lower, then on concerns of inflation that easing might generate rates swung back. The take away----there is no certainty about the amount of easing, the impact of it on the dollar, on the impact for the economic recovery, or how it will . Gallons of ink and a lot of talk about the easing, yet in the end here we sit right where interest rates were prior to the 9/21 FOMC statement. Some say $500B, some say $1T, some believe $110B a month for six months, a few still hold out for a shock and awe amount; no one wants to bet much on any of the forecasts.

Thursday, October 28, 2010

Market Snapshot by Sigma Research by SC Mortgage Assoc

Thursday, October 28, 2010
After 5 days of selling in the rate markets, this morning a little improvement. Prior to 8:30 the 10 yr note held a 12/32 price gain and mortgages up 7/32 (.22 bp); at 8:30 weekly jobless claims were better halting any additional improvement. Claims for last week were expected to be up 3K to 455K, as reported claims fell 21K to 434K, the lowest in weeks. Continuing claims fell to 4.35. mil frm 4.80 mil last week. Treasuries and mortgages dropped back a touch but still managing to hold a little improvement. At 9:00 the 10 yr note +7/32 at 2.71% -2 bp and mortgages +5/32 (.15 bp) frm yesterday's close. Not much, but any gain is welcome after the bond market flipped on the QE outlook.

When the FOMC announced the Fed was prepared to ease further at the conclusion of the 9/21 meeting it set off a huge run lower in rates on the belief the Fed was intent on driving long term rates lower. The 10 yr note yield fell 45 basis points and mortgage rates declined 24 basis points. The dollar declined and the equity markets rallied. Recently though the outlook for a strong easing move from the Fed has faded and the rate markets are now back to levels prior to the FOMC meeting. The read on the easing initially was that the Fed would buy significant amounts of treasuries to drive long term rates lower, bust the dollar and ignite more interest in the housing sector. Over the last 10 days the sentiment has changed; presently the consensus is that the Fed will launch an easing move but that it will be at a slower pace than the initial expectations.

The stock market opened better this morning on the weak dollar; after a couple of days of improvement the dollar is under pressure again today. China’s yuan fell to its weakest level this month after the central bank set a lower reference rate for a third day, spurring speculation the government is limiting appreciation. The People’s Bank of China set the reference rate 0.11% weaker at 6.6986 against the greenback. The yuan has weakened 0.5% since policy makers from the Group of 20 nations said on Oct. 23 they would refrain from “competitive devaluation” before the Nov. 11-12 leaders’ summit. The Dollar Index, which tracks the greenback against currencies of six major U.S. trading partners, declined 0.6% to 77.698. The gauge has fluctuated between gains and losses this month as speculation additional credit-easing measures from the Fed will weaken the currency were offset by bets the central bank will buy a smaller amount of bonds than some analysts predicted.

At 1:00 Treasury will auction $29B of 7 yr notes; yesterday's 5 yr note was met with OK demand but not nearly as strong as past auctions. The 7 yr today will be more difficult to get strong demand.

The Fed is about to turn on the printing press to print more dollars. That is what QE is all about. The Fed however talks about helping revive the economy with the easing while the real emphasis is to drive down the dollar to improve exports and improve the economy. Lower interest rates, while helping, is only a method to beat down the dollar. The problem is however, that every country is trying to do the same. With the Fed about to "ease", the effect will be that other central banks will be forced to do the same. The recent jump back in rates has likely run its course but we are left with the question, how much lower will rates fall when the Fed actually announces its easing policy, and will the Fed lay out the entire plan being formulated? Flying blind, throwing it against the wall to seer what sticks. Unemployment isn't going to fall much, consumers still deleveraging and the housing sector shows no real signs of stabilizing. Lower interest rates are just a by-product of the Fed printing more money to bring the dollar down.

Market Snapshot by Sigma Research by SC Mortgage Assoc

Wednesday, October 27, 2010
Interest rates continue to increase, the 6th day in succession that the rate markets have experienced selling. The bellwether 10 yr note is now back to the level it was trading when the FOMC statement called for another QE move. The mortgage market and treasury market rallied sending rates down as much as 40 basis points on the 10 yr and 20 basis points on mortgages. Now there is apparently a concern in the markets that whatever the Fed may do next Tuesday won't be enough shock-and-awe to drive rates lower. The Wall Street Journal reported this morning that the Fed is likely to unveil a program of U.S. Treasury bond purchases worth a few hundred billion dollars over several months, in contrast to the central bank's purchases of nearly $1.5 trillion worth of bonds during the financial crisis. The report said officials want to avoid the "shock-and-awe" approach used during the crisis in favor of an approach that allows them to adjust policy over time as the recovery unfolds.

As the calendar ticks off closer to the easing move, designed to push long term rate lower, there is increasing skepticism that the amount of the easing move may not be what the original beliefs thought when the FOMC made that statement. Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, said Monday that more expansive monetary policy was a "bargain with the devil." While there is a serious debate within the Fed about another easing move, it is still likely to occur but as we noted in past comments, traders are withdrawing their bets that the amount of the Treasury buying will be less than originally believed. While speculators are covering their bullish bets that rates will decline substantially, the Fed will ease and at worse will keep rates from increasing. The issue now is by how much and on what time frame? How the bond market will trade on the easing next Wednesday is uncertain, but we believe the market is coming close to the end of its bull market that has taken interest rates to historic lows.

At 8:30 Sept durable goods orders were expected to be up 1.7%, as reported orders were up 3.3%, but when the volatile transportation orders are removed orders declined 0.8%; the estimate was for an increase of 0.1%. A slight improvement in the rate markets but not much. Stock indexes dipped with the DJIA futures down 55 points ahead of the 9:30 open.

Earlier this morning the weekly MBA mortgage applications; the Market Composite Index, a measure of mortgage loan application volume, increased 3.2%. The Refinance Index increased 3.0% from the previous week. The Purchase Index increased 3.9% from one week earlier. The unadjusted Purchase Index increased 3.5 percent compared with the previous week and was 30.3% lower than the same week one year ago. The four week moving average for the seasonally adjusted Market Index is up 1.4%, while this average is up 1.9% for the Refinance Index. The refinance share of mortgage activity decreased to 82.3% of total applications from 82.4% the previous week. The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.25% from 4.34%, with points increasing to 1.0 from 0.81 (including the origination fee) for 80% loans. The 30-year contract rate matches the rate from the week ending October 1, 2010, which was the second lowest ever observed in this survey. The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.67% from 3.74%, with points decreasing to 0.96 from 1.00 (including the origination fee) for 80% loans. The 15-year contract rate is the second lowest observed in this survey, with the lowest being 3.62% from two weeks ago.

At 10:00 Sept new home sales, expected up 2.5%, jumped 6.6% to 307K annualized units. Prices fell 3.3% with an 8 month supply from 8.6 months last month. There are 204K units on the market, the lowest since July 1968. Treasuries and mortgages saw some selling on the report. Not much improvement in the equity markets.

Later this afternoon (1:00 pm) Treasury will auction $35B of 5 yr notes; yesterday's 3 yr note auction was well bid but as borrowing moves out the curve the demand normally slides a little. Until the auctions two weeks ago the demand for US Treasury debt had held very strong, the auctions two weeks ago were a little weaker and now have dealers a little more concerned. That said, the demand will be strong even if not at the recent levels.

Market Snapshot by Sigma Research by SC Mortgage Assoc

Tuesday, October 26, 2010
Treasuries and mortgage markets opened soft this morning on better economic data from England. The U.K. economy grew more than forecast in the third quarter and Standard & Poor’s said the nation no longer faces the risk of downgrade as pressure eases on the Bank of England to add more stimulus. The U.K. gross domestic product rose 0.8% in the quarter through September after climbing 1.2% in the previous three months, the Office for National Statistics said in a separate report in London. The U.K. also has the top credit grades at Moody’s Investors Service and Fitch Ratings, both with a stable outlook. S&P had previously said that Britain faced a one-in-three chance of a downgrade because of its ballooning debt. The Brits are biting the bullet with huge spending cuts while here in the US we can't stop spending as the government grows like a dandelion in July.

At 9:00 the Case/Shiller home price index, expected up 0.2% took another dip, down 0.2%. The decline in prices may be the precursor for another run on home prices and isn't what anyone wanted to see. There was little reaction to the report as both treasuries and mortgages were already trading lower. The stock indexes were weaker and lost a few more points on the data.

At 9:30 the DJIA opened -56, the 10 yr note -12/32 at 2.61% above its recent high yield; mortgage prices at 9:30 -9/32 (.28 bp) frm yesterday's close on 30s, 15s -5/32 (.15 bp).

At 10:00 the Conference Board reported Oct consumer confidence up 50.2 frm a slightly revised 48.6 (frm 48.5).

Also at 10:00 the FHFA reported its home price index for Aug; up 0.4%, better than expected.

The Richmond Fed manufacturing index also came in better, at +5 frm -2.0 in Sept.

The three data points at 10:00, all better than forecasts but there has been no immediate reaction to the data in the bond market. The stock indexes however did improve but still lower on the day at 10:05.

Now the auctions for the week; at 1:00 Treasury will auction $35B of 2 yr notes. The demand should be good, banks like the 2 yr. Two weeks ago Treasury auctioned 3 yr, 10 yr and 30 yr notes and bonds, the demand was weak so this go-round bidders are hedging their bets by selling treasuries and also pushing mortgage prices lower.

Markets still consumed with next week's QE from the Fed; we will get the easing but the details remain cloudy with estimates all over. If there is a consensus it is that the Fed will announce it will purchase $500B of longer dated treasuries over a six month timeframe. The idea, to push rates lower and generate more consumer spending. Will it really? Hard to handicap how lower rates will motivate consumers, but we don't expect as much benefit as many do. Keeping interest rates low won't be easy and likely won't last long if consumer spending and the housing sector show any life as a result of the easing move.

Market Snapshot by Sigma Research by SC Mortgage Assoc

Monday, October 25, 2010
Treasuries and mortgages opened firm this morning ahead of the Sept existing home sales at 10:00. The dollar is being hit again this morning, adding support to the stock indexes and the bond market; the finance ministers finished their meeting in South Korea with a statement that MAYBE the G-20 will think about adopting a plan to make currencies more attuned to markets and the economy rather than moving closer to a currency war that has been brewing for months; the dollar this morning is pushing into lows against the yen not seen in years. European stocks climbed after Group of 20 finance chiefs heightened speculation the Federal Reserve will announce further stimulus measures next week.

Ben Bernanke spoke early this morning (8:30) saying the central bank and other regulators are “intensively” examining financial firms’ home-foreclosure practices and expect preliminary findings next month. “We have been concerned about reported irregularities in foreclosure practices at a number of large financial institutions,” ...... “We are looking intensively at the firms’ policies, procedures, and internal controls related to foreclosures and seeking to determine whether systematic weaknesses are leading to improper foreclosures.” He didn’t comment on the outlook for the economy or monetary policy, eight days before the Fed meets to decide on what economists and investors expect will be a plan to boost growth by restarting large-scale securities purchases. After discussing foreclosures, he devoted much of his remarks to the Fed’s housing-market efforts, such as studies, conferences and events serving troubled borrowers.

The DJIA opened +50; 10 yr at 9:30 +14/32 2.51% -6 bp and mortgage prices +7/32 (.22 bp) on 30s and +5/32 (.15 bp) on 15s.

At 10:00, the only data today, Sept existing home sales, expected up 2.9%, increased 10.0% to 4.53 mil annualized. A big jump but not what the headlines would suggest; most closings were part of the tax credit, 35% of the sales were distressed sales and now with the foreclosure issues sales in Oct won't do so well. The median home price $171,700.00 with a 10.7 month supply on the markets, inventory levels did decline 1.9% but still leaves a huge overhang, especially when the foreclosure moratorium ends. There was no reaction to the better report in the bond or mortgage markets on the report.

This Week's Economic calendar:
Tuesday;
9:00 am Case/Shiller 20 city home price index (+2.0%, August +3.18%)
10:00 Oct consumer confidence index (49.0 frm 48.5)
1:00 pm $35B 2 yr note auction
Wednesday;
7:00 am Weekly MBA mortgage applications
8:30 am Sept durable goods orders (+1.7%; ex transportation orders +0.1%)
10:00 am Sept new home sales (+2.4% to 295K units annualized)
1:00 pm $35B 5 yr note auction
Thursday;
8:30 weekly jobless claims (+3K to 455K)
1:00 pm $29B 7 yr note auction
Friday;
8:30 am Q3 advance GDP (+2.0% frm +1.7% in Q2)
Q3 employment cost index (+0.5%)
9:45 am Oct Chicago purchasing mgrs index (57.5 frm 60.4)
9:55 am U. of Michigan consumer sentiment index (68.0 frm 67.9)

Interest rate markets are likely to continue their narrow trendless range through the week ahead of the QE and elections next week. Over the past two weeks mortgage prices and mortgage rates have been generally flat with prices moving in a very narrow range. The Fed will step up and announce large scale buying of treasuries when the FOMC meeting concludes on Nov 3rd, in the meantime the Nov 2nd elections, while generally conceded to Republicans, is still a soft point for markets; the margins of victories and the number of them will be closely monitored as a measure of consumer discontent that has increased dramatically over the past 9 months. The health care bill a true mess, and government spending have consumers increasingly nervous over the economic outlook. Can the new make up of the House and Senate change the underlying fears of consumers? Will Pres Obama stand strong and use his veto powers to hold health care as it is currently written or will he concede the bill is flawed and work to fix it? These and other key questions will dominate through the remainder of the year.

Thursday, October 21, 2010

Mortgage Rates Keep Falling Making Home Purchase More Attractive Brought to You By: ConsumerAffairs.com

Mortgage Rates Keep Falling Making Home Purchase More Attractive

Brought to You By:
ConsumerAffairs.com


Is this the right time to buy a home? Prices are still falling but may be stabilizing. Just as important, mortgage rates continue to fall.

Average mortgage rates dropped this week, according to a snapshot of the lowest and average mortgage rates available within large networks of lenders.

On September 28, average home loan rates offered by lenders on the network fell week-over-week to 4.39 percent (4.6% APR) for 30-year fixed mortgages, 3.86 percent (4.17% APR) for 15-year fixed mortgages and 3.39 percent (3.66% APR) for 5/1 ARMs.

On the same day, mortgage rates offered by lenders were as low as 3.875 percent (4.01% APR) for a 30-year fixed mortgage, 3.25 percent (3.58% APR) for a 15-year fixed mortgage and 2.75 percent (3.37% APR) for a 5/1 adjustable rate mortgage (ARM).

Rates fell one-eighth of a point for 15-year fixed home loans and remained flat for 30-year fixed loans and 5/1 ARMs.
No clear direction

"Since the end of August when Federal Reserve Chairman Ben Bernanke said the U.S. central bank would 'do all that it can' to ensure a continuation of economic recovery, mortgage rates have lacked any clear direction," said Cameron Findlay, Chief Economist of LendingTree.com. "Rates are not simply just declining anymore as they have been since April, but rather the magnitude of change from day-to-day has been pronounced. For example, the average rate last Friday, September 24, was up 18 basis points from Thursday's average rate."

With such a volatile rate environment, it's important for borrowers to do their homework before locking in a rate. It's also to get the right price on a piece of property.

Fannie Mae and Freddie Mac are dumping nearly 150,000 homes seized in foreclosure, creating a vast inventory in many markets. To move that inventory, the GSE's are letting some homes go at bargain basement prices. An analysis by SmartMoney Magazine shows some homes are being sold at $100,000 discounts, compared to comparable properties.

Chances are, it will take sellers years to work through the glut of homes on the market, meaning prices should stay soft for a while. The foreclosure tracking firm RealtyTrac says lenders are expected to take over 1.2 million homes this year, with all of them either auctioned or listed for sale. In the second quarter of this year, foreclosed homes made up 24 percent of all U.S. home sales, the firm said.
Game changer

While foreclosed properties need to be sold before the market can fully recover, the recent revelation that GMAC Mortgage may have violated rules in some foreclosure proceedings could throw an element of uncertainty into buying a foreclosure, experts say.

Roy Oppenheim, a legal blogger and Florida foreclosure defense attorney says banks aren't the only ones who might be affected by any legal action resulting from the revelations. The issue, he says, has broad consequences, not just for the people who lost homes, but for the millions of buyers of foreclosed homes, some of whom might not have clear title to their bargain property.

What It Takes to Get a Loan

What It Takes to Get a Loan
by Jessica L. Anderson, Pat Mertz Esswein and Joan Goldwasser
Thursday, October 14, 2010
Lenders loosen their grip, but your credit history will decide whether you get a mortgage, car loan or credit card.
When the financial crisis hit, many banks became tightfisted, and plenty of potential borrowers walked away empty-handed. But financial institutions have emerged from the recession stronger and ready to lend. "Credit is available. No question about it," says James Chessen, chief economist for the American Bankers Association. "Banks are being careful because the economy is still weak, but I don't know a bank out there that's not anxious to make a loan."

Keep in mind that from mortgages to car loans, your credit history and score matter more than they did prior to the crunch. Rates are at rock-bottom levels for borrowers with top-tier credit -- generally credit scores above 720. Before you shop rates, get your credit reports at www.annualcreditreport.com and check for errors. And buy your credit score from Equifax for $7.95. That way you can see where you stand before you apply for a loan.
Mortgages: Stricter Rules
Mortgage lenders want to make loans now, and they may even bid against one another for your business. But lending standards remain tight, and you must be prepared to produce a mound of paperwork to document your income and assets.
Rates are as low as they were in the 1950s, so going through the motions could pay off. In mid September, the average interest rate for a 30-year, fixed-rate conforming loan -- a mortgage of $417,000 or less -- was 4.5%, according to HSH Associates, a mortgage-tracking firm. The initial rate for a 5/1 adjustable-rate mortgage (a fixed rate for five years, followed by annual adjustments) was 3.6%.
Fannie Mae, Freddie Mac and the Federal Housing Administration continue to dominate the mortgage market, setting the standards for the loans that lenders make and sell to investors. So lenders strive to dot every i and cross every t when they qualify you.
If you're buying or refinancing the mortgage on your primary home, you'll need a minimum down payment of 5% to 10% for a conforming loan or 10% to 15% for a conforming jumbo loan (125% of a metro area's median home price, up to $729,750). With 20% or more down, you avoid private mortgage insurance, which typically costs 0.5% to 1.5% of your loan amount per year.
Fannie Mae and Freddie Mac allow a minimum credit score of 620 if you have at least 25% equity in the property or a score of 660 with equity of less than 25%; you'll get the best rate if your score exceeds 720. The FHA will soon require a minimum credit score of 580 to qualify with a down payment of 3.5%, but FHA lenders often impose a higher minimum score of 670.
In addition to your credit, lenders will also scrutinize your ability to pay, starting with your ratio of debt to income. Monthly housing expenses (principal, interest, taxes, hazard insurance, private mortgage insurance and association fees) shouldn't account for more than 28% of gross monthly income. Total debt shouldn't exceed 36% of gross income, but in some cases lenders stretch the maximum to 45%.
Even people with lower credit scores may qualify if they have stable employment, a history of paying rent and credit lines on time, and money in the bank or in a retirement account. However, some borrowers may need to delay their home purchase long enough to improve their credit score, eliminate debt, get a raise and save more money. They might earn a better interest rate, improving their buying power. Plus, "it's not good to lay out every bit of cash you have if you won't have money for a rainy day."
Prove it. At a minimum, you must supply your pay stubs for the past 30 days and W-2 forms for the past two years. Lenders will want to see bank, retirement-account and investment statements for the past 60 days. Bennett says three types of borrowers will face additional requirements:
If you're self-employed or if 25% or more of your income is from commissions or bonuses, you must provide two years of tax returns. Lenders will average your income over the past two years to figure your debt-to-income ratio. If you have pursued opportunities to reduce your taxable income, you may not have sufficient income to qualify even though you may have a lot of money in the bank. Community banks, credit unions and other lenders that typically keep their loans on their own books are the best bet for borrowers with low incomes and high assets, says Bennett.
If you want to rent out your home and buy a new one, you must provide a signed lease for a minimum of 12 months. You can use only 75% of rental income to help qualify for the mortgage, and you must have at least 30% equity in your former home.
If you and your spouse are relocating for work and your spouse doesn't have a job yet, you must qualify for the loan based on one income unless your spouse has a signed agreement with an employer to begin work within 45 days of closing the loan.
Even if you qualify, you can throw a monkey wrench into the final loan approval if you take on new debt that could affect your credit score or your debt-to-income ratio. Some lenders pull another credit report just before closing. Another possible sticking point is the appraisal. Overly generous appraisals helped to fuel the housing bubble. Now, miserly ones may thwart your closing, says Guy Cecala, publisher of the newsletter Inside Mortgage Finance. Lenders will estimate the value of your home conservatively, and appraisers are generally following suit, especially if the local market is in flux
To see if you qualify for a mortgage click here
Home Equity: Lower Limits
Several years ago, home values were rising so rapidly that you could build a pile of equity practically before the ink was dry on your settlement papers -- and then borrow against it to pay for everything from home repairs to college tuition. But as prices have tumbled, lenders have tightened their criteria for approving fixed-rate home-equity loans and variable-rate lines of credit.
Now in most cities you'll be able to borrow no more than 80% of the appraised value, less the mortgage. In some cities you may get away with 90%, says Keith Gumbinger, of HSH Associates. But in areas where prices have plummeted, such as parts of Florida, Nevada and California, the loan-to-value ratio goes as low as 60%.
You'll need a credit score of at least 720, as opposed to the 650 to 680 you could get away with a few years ago. And as with first mortgages, you'll have to document income and assets. Interest rates depend on the amount you borrow and your location. Recent rates averaged about 5.3% on home-equity lines of credit and 7.4% on loans, according to HSH.
Car Loans: Better Rates
When you need to borrow money to buy a new set of wheels, credit isn't the major stumbling block anymore. Loan approvals are up from last year in every credit category, according to CNW Research. "Most people have good enough credit to qualify," says Greg McBride, of Bankrate.com. "The down payment is what's problematic for people without a lot of savings." Lenders are looking for 10% down on a new car and 20% for used cars.
The average rate from the manufacturers' finance companies was 4.5% in August, versus 6.9% in January 2009. Automakers and their finance companies, desperate to prop up sales, are aggressively promoting low-rate loans on new cars for top-tier borrowers. Expect to see 0% offers on 2010 models as dealers clear their lots for the 2011s. And even though the new model year is still fresh, rates as low as 1.9% and 2.9% for 60 months recently made up a sizable number of offers.
Low rates aren't limited to new-car buyers. After welcoming their first child, Andrea Hewitt and her husband, Josh, decided "it was time to grow up." They traded in the 2004 Honda Accord coupe Andrea had bought when she was single for a more family-friendly 2008 Nissan Altima sedan. The dealer offered a loan at 5% for five years, which the Hewitts bargained down to 4.29%. If they had purchased the extended warranty, the dealer would have knocked the rate down to 0.9%. The trade-in took care of a chunk of the loan balance, and the Hewitts put down another $1,500 to keep their payments low. While the best financing deal is often at the dealer, make sure you have a backup plan in case you don't qualify for the lowest rates. At big banks, good credit will get you rates below 4% for five years on new cars and about 4% to 5% for used cars. Some credit unions are beating even those rates. If you don't belong to a credit union, you can probably find one for which you're eligible at www.creditunion.coop.
Credit Cards: High Scores
Despite fewer credit-card delinquencies, most large issuers have not relaxed their standards; they continue to require higher credit scores and offer lower credit limits than before the recession. If you have fair or poor credit, you'll have a tough time qualifying. Even if you have a credit score of 740 or 750, you would be approved for a credit card but might not qualify for the lowest rate, says Bill Hardekopf, of LowCards.com.
If you have excellent credit, whether or not you qualify for the lowest rate, your mailbox has probably been peppered with credit-card solicitations. Mintel, a market-research firm, expects issuers to send out three to four billion offers this year, compared with two billion a year ago, most of which will be for rewards cards. A lot of rewards cards have attractive perks, but now you're more likely to be charged an annual fee (often waived for the first year). Teaser rates as low as 0% are also making a comeback, although balance-transfer fees at many banks have risen to 5%.
To qualify for the best offers, pay on time, even if it's just the minimum. You could receive a reminder -- and a spike in your interest rate -- if your payment arrives even one day after the due date. If your card issuer lowers your credit limit, you may receive a separate notice or see it announced in your monthly statement. Many issuers no longer charge over-limit fees, but with others, exceeding your limit can cost up to $29 in fees and will probably mean an increase in your interest rate.
Hold your balances below 30% of your total credit limit. If your charges creep above that ratio, it's a red flag that lowers your credit score and could prompt the issuer to raise your rate (you must receive 45 days' notice). It's better not to close accounts because you increase the ratio of your outstanding balance to your available credit, which can hurt your credit score. Issuers can no longer charge inactivity fees, but if you are being charged an annual fee for a card you no longer use, it's worth it to close the account and take a small hit on your credit score.

How to Get a Perfect Credit Score

How to Get a Perfect Credit Score
by Jeanine Skowronski
Tuesday, October 19, 2010 provided by

There are certain things that we discover are just an illusion as we grow up: Santa Claus, the Easter Bunny and the Fountain of Youth are a few. However, much like Big Foot, one myth that persists well into adulthood, is the perfect credit score. Some swear they've seen it, others think it's impossible.
"Never in my life have I met anyone with an 850 credit score," Bruce McClary of Clearpoint Credit Counseling Solutions, who has worked in the credit industry for years, tells MainStreet.
According to FICO, the company that designed our current credit model, these overachievers are out there. Craig Watts, senior manager for Public Relations for FICO, tells MainStreet that while most people score in the middle-to-low 700s on their credit scale, less than 1% of the U.S. population (about 1 million people) do, in fact, net a full score of 850.
"They tend to be more conservative and a little older," Watts explains. He adds that these individuals also tend be rather humble, which may explain the near mythic status they have inadvertently achieved.
"We don't get too many of them in our forums," he admits. "They aren't the type of people who stand up on a bus and tell everyone they scored an 850."
People who don't share their score aren't likely to share their secrets for attaining it either. Which is unfortunate, considering that the credit elite obtain the lowest annual percentage rates, get the best credit card rewards programs and qualify more readily for large loans.
"It's a noble goal to try to achieve," McClary says. However, he explains that you don't need to reach perfection to be considered among the credit elite.
"In reality, you don't have to have an 850," says John Ulzheimer, a former FICO employee now with Credit.com. Those with a FICO score above 760, he says, are typically privy to the same benefits as those with perfect credit.
Of course, a score that high isn't easy to achieve either. To reach the top tier you have to master not just the basics — maintaining positive payment history and a low debt to credit ratio, but you must pay attention to the details as well. In an effort to help those with lofty credit aspirations, MainStreet has put together a profile of what these credit superstars look like.
They Have a Long and Impressive Payment History and a Clean Record
The bulk of your credit score is determined by your payment history and the amount of debt you may or may not have currently on file. Unsurprisingly, those with perfect credit scores use credit regularly while paying it off on time, every time. They also have a squeaky clean record. Ulzheimer explains that the credit elite have no debt to speak of. "No liens, no bank repossessions, no settlements," he says. "Nothing."
They Maintain a Diverse Set of Accounts
According McClary, credit lines fall into two major categories. Installment accounts are closed-ended and require consumers to pay a fixed amount each month until the entire balance has been depleted. These typically include mortgages or car loans. Revolving accounts, on the other hand, limit the line of credit, but have balances that fluctuate. These essentially are the accounts tied to the credit cards in your wallet.
Top credit scorers have a careful balance of both accounts on record. "They'll have a mortgage, a car loan and a few credit cards on file," McClary explains.
They Have a "Well-Aged" Credit Report
When I pulled my own credit report a few weeks ago, I was surprised to learn that my score, though quite good, still paled in comparison to my financial mentors, good old mom and dad. The truth is, unless they should both decide to stop managing their credit so meticulously, I stand little to no chance of ever surpassing them.
"One advantage to being older is that you tend to have a longer credit history," McClary says. Keep in mind, though, that it's not your age, but the age of your oldest credit account on file that influences your overall score. As such, you may want to keep open that store charge card you opened up on your 21st birthday.
They Have a Very Limited Number of Credit Inquiries on Record
On the other hand, those without a store charge card shouldn't simply open one frivolously. While having large number of credit card inquires on file won't dramatically decrease your score, it can keep you from joining the credit elite, especially if several inquiries are recorded over a short period of time. This is why Ulzheimer advises that you refrain from opening up a litany of store accounts during the holiday season, no matter what type of discount the retailer is offering as an incentive to do so.

Monday, October 18, 2010

Mortgage Rates Keep Falling Making Home Purchase More Attractive - By Consumer Affairs

Mortgage Rates Keep Falling Making Home Purchase More Attractive

Brought to You By:
ConsumerAffairs.com


Is this the right time to buy a home? Prices are still falling but may be stabilizing. Just as important, mortgage rates continue to fall.

Average mortgage rates dropped this week, according to a snapshot of the lowest and average mortgage rates available within large networks of lenders.

On September 28, average home loan rates offered by lenders on the network fell week-over-week to 4.39 percent (4.6% APR) for 30-year fixed mortgages, 3.86 percent (4.17% APR) for 15-year fixed mortgages and 3.39 percent (3.66% APR) for 5/1 ARMs.

On the same day, mortgage rates offered by lenders were as low as 3.875 percent (4.01% APR) for a 30-year fixed mortgage, 3.25 percent (3.58% APR) for a 15-year fixed mortgage and 2.75 percent (3.37% APR) for a 5/1 adjustable rate mortgage (ARM).

Rates fell one-eighth of a point for 15-year fixed home loans and remained flat for 30-year fixed loans and 5/1 ARMs.
No clear direction

"Since the end of August when Federal Reserve Chairman Ben Bernanke said the U.S. central bank would 'do all that it can' to ensure a continuation of economic recovery, mortgage rates have lacked any clear direction," said Cameron Findlay, Chief Economist of LendingTree.com. "Rates are not simply just declining anymore as they have been since April, but rather the magnitude of change from day-to-day has been pronounced. For example, the average rate last Friday, September 24, was up 18 basis points from Thursday's average rate."

With such a volatile rate environment, it's important for borrowers to do their homework before locking in a rate. It's also to get the right price on a piece of property.

Fannie Mae and Freddie Mac are dumping nearly 150,000 homes seized in foreclosure, creating a vast inventory in many markets. To move that inventory, the GSE's are letting some homes go at bargain basement prices. An analysis by SmartMoney Magazine shows some homes are being sold at $100,000 discounts, compared to comparable properties.

Chances are, it will take sellers years to work through the glut of homes on the market, meaning prices should stay soft for a while. The foreclosure tracking firm RealtyTrac says lenders are expected to take over 1.2 million homes this year, with all of them either auctioned or listed for sale. In the second quarter of this year, foreclosed homes made up 24 percent of all U.S. home sales, the firm said.
Game changer

While foreclosed properties need to be sold before the market can fully recover, the recent revelation that GMAC Mortgage may have violated rules in some foreclosure proceedings could throw an element of uncertainty into buying a foreclosure, experts say.

Roy Oppenheim, a legal blogger and Florida foreclosure defense attorney says banks aren't the only ones who might be affected by any legal action resulting from the revelations. The issue, he says, has broad consequences, not just for the people who lost homes, but for the millions of buyers of foreclosed homes, some of whom might not have clear title to their bargain property.

Greenville Economy and Interest Rates Greenville Economy and Interest Rates

Greenville Economy and Interest Rates Greenville Economy and Interest Rates
Monday, October 18, 2010

According to a recent article in the Greenville News, numbers for the housing market are down for September, but numbers for year-to-date are up. Numbers pulled from the Greenville Multiple Listing Service show only 466 home sales as opposed to September 2009 home sales of 597. When 2010 year-to-date numbers are compared to 2009, we see a slight increase of 1.7% in home sales. The medium sales price for homes in the Greenville area rose 2.1%, $140,000 to $143,000. This is as positive sign for Greenville, however small it is. In September 2009, home buyers were still working hard to take advantage of the tax credit, thus the influx of home sales.

With unemployment at 11% and an unsteady economy weighing heavily on home buyers and sellers, the real estate market seems to be settling in for a long winter. The good news for homeowners is interest rates are still low.

According to a Freddie Mac survey released last week, 30-year fixed-rate mortgage interest rates averaged 4.19% for the week ending October 14, 2010. This is a record low since the survey began in 1971. The survey went on to say that 15-year fixed-rate mortgages averaged 3.62% for the same timeframe; this being the lowest since 1991, when Freddie Mac began tracking this type of loan.

Because of record low interest rates, banks have seen a surplus of home owners refinancing their homes. This surplus will definitely provide a stir to the sluggish economy. Homeowners who save more on their monthly mortgage will likely have more money in their pocket to spend.

Friday, October 15, 2010

Market Snapshot by Sigma Research by SC Mortgage Assoc

Friday, October 15, 2010
Prior to 8:30 this morning the interest rate markets were improving with nice price gains across the curve as well as mortgage prices. At 8:30 however, economic data hit that was better than had been forecast. Start with Sept retail sales, expected to be up 0.4%, increased 0.6% with auto sales removed up 0.4%; auto and truck sales were largely expected to be flat but the data implies better sales of autos and trucks. Next up at 8:30; Sept CPI, expected to be +0.2% overall and +0.1% when food and energy are removed, CPI increased just 0.1% with the core at unchanged; yr/yr the CPI +1.1%, ex food and energy +0.8% yr/yr. The cost of living in the U.S. rose less than forecast in September, indicating limited consumer demand is making it difficult for companies to raise prices. Meanwhile, while the data was being released Fed chief Ben Bernanke was speaking on the Fed's concerns that inflation is too low; he pointed out that for decades central bankers were battling inflation, now the Fed believes inflation is too low and potential leading to deflation.

More at 8:30 this morning; a huge improvement in manufacturing in the NY State manufacturing index; the overall index was thought to be up to 6.0 frm 4.1 in Sept, it exploded to 15.73. The sub-components were also very strong; new orders jumped to 12.90 frm 4.33, employment index increased to 21.67 from 14.93 and prices received increased to 8.33 frm 1.49. Any index reading over zero is considered expansion.

Prior to the 8:30 data the 10 yr note was up 10/32, 30 yr mortgages up 11/32 (.34 bp). By 8:45 the 10 yr was unchanged and mortgage prices fell back to a 2/32 gain (.06 bp). Bernanke was still speaking but by 8:45 most of his prepared text had been read and dissected. He said the long term weak employment will be detrimental to economic recovery and keep spending lower than needed to keep the recovery going. Inflation is too low to foster the Fed's inflation target. Short term real rates still too high. Fed can purchase assets; that should cement any concerns that the QE 2 is on track for Nov. Most of Bernanke's remarks were about what we have heard from the Fed for months; his comment that the Fed can purchase assets to lower interest rates removes any concern that QE 2 is unnecessary, at least in the minds of the Federal Reserve officials. The remaining question for the Fed according to Bernanke is how much QE?

By 9:00 this morning al the initial early gains in the bond and mortgage markets had evaporated. The stock indexes, on the 8:30 data, were improving. The DJIA futures at 9:00 up 12, not a lot but Bernanke's remarks about the economic outlook were not encouraging. The 10 yr note at 9:00 -6/32 to 2.53% testing its 20 day moving average; mortgage prices at 9:00 were weaker across the board for 30s and 15s. At 9:30 mortgage prices were mixed; 30 yr FNMAs -3/32 (.09 bp), 30 yr FHAs -9/32 (.28 bp) and 15s -6/32 (.18 bp). The 10 yr note -9/32 at 2.54% above its 20 day moving average. The DJIA opened +36.

Going into more data at 9:55 and 10:00 the market volatility was extreme; better manufacturing on the NY Empire State data, lower inflation readings and better retail sales set up volatility as the dollar traded weaker then reversed on the data and Bernanke's remarks. At 9:55 the U. of Michigan/Reuters consumer sentiment index was expected at 68.6 frm 68.2, it came at 67.9; the 12 month outlook at 70.0 frm 61.0 at the end of Sept. At 10:00 the final data point for this volatile day; August business inventories, expected at +0.5%, increased 0.6% with sales up just 0.1%; the inventory to sales ratio at 1.27 months from 1.26 months in July. Later this afternoon (2:00) Treasury is set to release the budget deficit for Sept, expected at -$32B

Where are the markets now? After a substantial decline in interest rates after the FOMC meeting on 9/21 when QE was put on the table, markets are consolidating the gains but not adding more to the rally. What remains now is how much will the Fed buy of US treasuries; we have nothing more than a guess, likely $500B to start with, with the proviso that if needed the Fed will buy more. There is no time line either; will it be dished out slowly or will the Fed make huge move? Likely a slow easing process rather than shock and awe.

Thursday, October 14, 2010

Market Snapshot by Sigma Research by SC Mortgage Assoc

Thursday, October 14, 2010
Treasuries and mortgages opened a little lower in price this morning. At 8:30 three economic reports somewhat confused traders; weekly jobless claims were expected to be down 2K but actually increased 13K to 463K with last week's claims revised from 445K to 449K. Continuing claims however did fall to 4.40 mil frm 4.51 mil in the previous week, declining continuing claims suggests many are now losing their unemployment benefits.

Also at 8:30 Sept PPI was expected to be up 0.2%, it jumped 0.4% for the overall but when food and energy are extracted up just 0.1%. The overall increase is the second in a row that increased 0.4%. An increasing debate is brewing around whether excluding food and energy is distorting inflation readings and should be ignored in favor of the overall inflation readings.

Finally at 8:30, the August trade balance, expected at $-44.5B, was $-46.3B. Of the three data points at 8:30 the trade deficit is the least concern.

The US dollar continues to weaken, lower again this morning against the euro and most other key currencies. It is a developing currency war between countries trying to beat down the value of their currency to increase exports and increase economic recovery. So far, based on today's August trade deficit it hasn't yet worked. The August deficit at $46.3B is evidence the US is importing more than exporting. Many believe one of the key thoughts at the Fed on QE 2 is a move to further lower the value of the dollar. There is some encouraging news out of China that it may be ready to let its yuan appreciate, the US has been pushing China to let its currency increase to level the playing field on exports and import prices. Overnight Singapore moved to increase its currency by widening its trading band, suggesting the beginning of China and US compromise on the currency battle that some worry may start a trade war.

The foreclosure mess that is boiling may have serious consequences for the recovery of the housing markets. New estimates from RealtyTrac that if foreclosures are halted for three months it would push the housing market recovery out another two to three quarters into 2014. One third of all sales have been distressed sales on foreclosures, that market is in jeopardy as states are evaluating their foreclosure laws and whether lenders have violated them; in the meantime investors and home buyers that have been buying up foreclosed properties are on hold until clarity on the validity of the titles can be certain. Top legal officers of all 50 states opened a joint investigation into home foreclosures, saying they will probe practices at banks and mortgage companies. The states will conduct a coordinated inquiry into whether banks and loan servicers used false documents and signatures to justify hundreds of thousands of foreclosures, Minnesota Attorney General Lori Swanson said yesterday in a statement. At Chase, CEO Jamie Dimon said he is sure Chase did not seize any properties illegally and that the costs of reviewing 115K files would be "incremental".

At 9:30 the DJIA opened -3, the 10 yr note -4/32 and mortgage prices at 9:30 off .06 bp.

Treasury will completes this week's borrowing at 1:00 this afternoon with $13B of 30 yr bonds. The 3 yr and 120 yr note auctions were somewhat disappointing but still saw good bidding. Today's 30 yr is hard to handicap; the 30 recently has been moving erratically compared with other treasury coupons.

Tuesday, October 12, 2010

9 Credit Score Myths Do More Harm Than Good

9 Credit Score Myths Do More Harm Than Good
by Teresa Bitler
Monday, October 11, 2010
Dispute everything on your report? Freeze your cards in ice? Hmmm ...In today's economy, a good credit score is more valuable than ever, and for many, improving your score has become a financial priority. Turn on the radio, flip on the TV or head to the company water cooler and you'll likely be bombarded with various credit-improving strategies. But not all advice is good advice. Here are nine credit score myths that could actually do more harm than good:
1. Closing out old, inactive accounts will help your score.
Your credit score is based, in part (15 percent), on the length of your credit history; and in part (30 percent) on your utilization rate -- your total balances versus the total amount of credit available to you. Canceling old accounts can make your credit history appear shorter and, as a result, actually lower your score, according to Heather Battison, consumer education director for TransUnion. It also reduces the total amount of your available credit, so you'll be utilizing a higher percentage of your credit, which can also affect your score.
2. Opening (but not using) accounts will help your score.
To improve their utilization rate and, theoretically, their credit scores, some people open as many accounts as they can. Rod Griffin, director of public education for the credit bureau Experian, says this strategy is more likely to raise eyebrows than your credit score. "Your score is affected by how well you manage the credit you do have over a period of time, not by how many credit cards you have or the available balances."
3. You should avoid using your credit cards at all.
Remember the advice that you should stick your credit cards in a bowl of water and freeze them, ausing them only for emergencies? If you're a financially responsible consumer, that approach could negatively impact your credit score. Bruce W. McClary with ClearPoint Credit Counseling Solutions explains that your score reflects the responsible use of credit. If you're not using your credit, you're not building credit history. He advises using your credit from time to time and then promptly paying off the balance.
4. Dispute letters can clean up your bad credit.
Errors on your credit report can and should be disputed, but don't expect to magically erase accurate but negative credit history. Disreputable credit repair firms will advise that if you send enough letters disputing legitimate but negative records on your credit report, eventually the lender will not be able to respond quickly enough and the credit bureau will have to remove the item permanently from your credit report. Griffin says that's not the case. Dispute letters may force the removal of negative items temporarily, but once the lender can prove the record's accuracy, it will reappear on your credit report.
5. Paying off old debts and judgments will help your score.
Have a judgment or an account that went to collections? Don't expect to make that negative "disappear" by paying it off. Negative records -- judgments, collections accounts, bankruptcies or late payments -- remain on your credit report for seven to 10 years, regardless of any remedies you've made.



6. Credit inquiries hurt your score.
Inquiries alone have little impact on your score. Coupled with a history of bad credit, a hard inquiry, such as an inquiry for credit, could factor negatively into your score, but again, the effect would be minimal. Another myth? Pulling your own credit report, a soft inquiry, lowers your score. In fact, checking your credit report on a regular basis allows you to catch errors that could affect your score and identify those areas that need improvement.
7. Using a credit counseling service lowers your score.
Credit counseling services no longer figure into the FICO scoring system, so although your report might indicate you are receiving credit counseling, using those services won't lower your score. It could actually help your score, according to Todd Christensen, director of education at Debt Reduction Services Inc. "You're making your payments on time and paying down your debt, the top two factors in credit scoring," he says.
8. There's a set formula for obtaining good credit.
Be suspicious of any blanket statement about what people should or shouldn't be doing to improve their credit scores. "Credit is a very individual thing," says Griffin. "Credit scoring looks at everything and takes it all into account. If you are keeping your balances low and paying your bills on time, you'll have good credit and a good credit score."
9. You can get a perfect score.
Don't go to Herculean efforts trying to obtain that elusive 850 -- getting a perfect credit score is nearly impossible. Your credit score is a reflection of your credit risk, and regardless of your credit history, there's always a risk. Doug Minor, author of "Anatomy of Credit Scores," recommends working toward a score of at least 740. "It's more realistic and attainable than 850," he says.


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


This communication may contain privileged and/or confidential information. It is intended solely for the use of the addressee. If you are not the intended recipient, you are strictly prohibited from disclosing, copying, distributing or using any of this information. If you received this communication in error, please contact the sender immediately and destroy the material in its entirety, whether electronic or hard copy. This communication may contain nonpublic personal information about consumers subject to the restrictions of the Gramm-Leach-Bliley Act. You may not directly or indirectly reuse or redisclose such information for any purpose other than to provide the services for which you are receiving the information. There are risks associated with the use of electronic transmission. The sender of this information does not control the method of transmittal or service providers and assumes no duty or obligation for the security, receipt, or third party interception of this transmission.This transmission may be an ADVERTISEMENT. * Rates and terms subject to change. Programs based on credit and down payment qualifications.

Monday, October 11, 2010

Market Snapshot by Sigma Research by SC Mortgage Assoc

Monday, October 11, 2010
This Week; the bond market is closed on Monday but we have been getting some mortgage quotes this morning. The recent decline in rates is changing the current coup[on from 4.0 to 3.5; we will be tracking 3.5 FNMA, GNMA and Freddie coupons now. This week inflation data with Sept PPI and CPI, Sept retail sales, weekly jobless claims and the U. of Michigan consumer sentiment index will garner most of the attention. Weekly jobless claims are expected up 4K to 449K. The stock market continues to discount the coming Fed easing that is widely expected, the bond market has declined 40 basis points in rate on the 10 yr note and technically is beginning to look overbought momentarily.

The IMF met over the weekend and came away with nothing other than a pledge to continue co-operation between G-20 countries on currency issues. Every major country is on a race to see who can devalue their currencies faster. Trade wars are increasingly worrisome as every country wants to increase its exports by deriving their currency lower. If it continues no one wins, the US with the Fed QE coming early in Nov has seen our dollar take a dive while China remains stalwart in its refusal to strengthen its currency. China saying that they will firm their yuan but at a pace slower than the US is pushing for.

Wednesday, October 6, 2010

Historic News on Rates by SC Mortgage Associates

3.875% 30 year fixed!*

This is NOT an Adjustable Rate…It is fixed for 30 years.

Wow! If you have ever thought of purchasing a home or refinancing your current home call today and lock in your rate. This rate is only good as the market allows.
Don’t miss out on a truly historic rate.

To discuss your options call:

864-316-0090 – Spartanburg

864-386-6326 - Greenville


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





This communication may contain privileged and/or confidential information. It is intended solely for the use of the addressee. If you are not the intended recipient, you are strictly prohibited from disclosing, copying, distributing or using any of this information. If you received this communication in error, please contact the sender immediately and destroy the material in its entirety, whether electronic or hard copy. This communication may contain nonpublic personal information about consumers subject to the restrictions of the Gramm-Leach-Bliley Act. You may not directly or indirectly reuse or redisclose such information for any purpose other than to provide the services for which you are receiving the information. There are risks associated with the use of electronic transmission. The sender of this information does not control the method of transmittal or service providers and assumes no duty or obligation for the security, receipt, or third party interception of this transmission.This transmission may be an ADVERTISEMENT. * Rates and terms subject to change. Programs based on credit and down payment qualifications.

APR is 4.599%. Rate is subject to change. Restrictions Apply. For loans $150,000.00 or greater.

Market Snapshot by Sigma Research by SC Mortgage Assoc

Wednesday, October 06, 2010
Treasuries got a huge boost this morning on the ADP private jobs report for Sept. Markets were expecting ADP would report an increase of 20K to 25K ne jobs in the private sector, as reported jobs fell 39K. August jobs were however revised from -10K to +10K. ADP added more confusion top what Friday's official jobs report will be. The decline in jobs in Sept is the worst since January. Small businesses (less than 50) fell 14K, medium businesses (less than 400) fell 14K and large businesses lost 11K. Goods producing jobs were down 4K, service sector jobs +6K and manufacturing jobs down 17K. Not a good report no matter the argument that ADP doesn't do a good job trying to mimic the BLS data. The reaction sent the 10 yr note from +4/32 to +17/32 with its yield falling to a new low yield at 2.41%, the lowest by a fraction in this recent decline. Mortgage prices improved by 5/32 (.15 bp) on the reaction.

Stock indexes were trading better in line with Asian and European equities until the ADP report, then lost their gains. At 9:00 the DJIA trade was +3, the 10 yr +16/32 at 2.42% -6 bp and mortgage prices +6/32 (+.18 bp) frm yesterday's close. At 9:30 the DJIA opened -3, the 10 yr note at 2.39% -9 bp and mortgage prices +6/32 (+.18 bp).

Earlier this morning (7:00 am) the weekly MBA mortgage applications were better last week. The Market Composite Index, a measure of mortgage loan application volume, decreased 0.2% on a seasonally adjusted basis from one week earlier. The Refinance Index decreased 2.5% from the previous week. The seasonally adjusted Purchase Index increased 9.3% from one week earlier and is the highest Purchase Index observed in the survey since the week ending May 7, 2010; but was 34.7% lower than the same week one year ago. The four week moving average for the seasonally adjusted Market Index is down 3.0 percent. The four week moving average is up 2.0% for the seasonally adjusted Purchase Index, while this average is down 4.2% for the Refinance Index. The refinance share of mortgage activity decreased to 78.9% of total applications from 80.7% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.1% from 6.0% of total applications from the previous week. The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.25% from 4.38%, with points decreasing to 1.00 from 1.01 (including the origination fee) for 80% loans. The 30-year contract rate is the lowest recorded in the survey, with the previous low being the rate observed last week. The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.73% from 3.77%, with points increasing to 1.14 from 1.13 (including the origination fee) for 80% loans. The 15-year contract rate is the lowest recorded in the survey, while the previous low was observed last week.

Along with Friday's Sept employment report, markets are focused on the Fed doing another easing move; that view was fortified yesterday when Japan announced it would do its own QE. Japan will buy $60B of Japan bonds and it cut its base rate to zero from +0.1%. The global QE is spreading; expect QE from England, and other European countries in the days ahead. It is a run to drive currency values lower with the result of better export business. Every major economy is now in a run to beat their currency lower. We still don't see much coming from the easing other than some lower interest rates initially, but if the easing moves are successful in improving the economic outlook interest rates won't stay low for long and likely will spike higher in a rapid move. That said, the economic recovery will remain weak until consumer spending increases and there is strong improvement in the housing sector; employment increases will lag until the underlying fundamentals improve.

U.S. Treasury Secretary Timothy F. Geithner said countries that rely on exports for growth must change their policies or “global growth will slow and all of us will be worse off.” “It is very important to see more progress by the major emerging economies,” Geithner said today in text prepared for a speech at the Brookings Institution in Washington.

The bellwether 10 yr note is hitting stops this morning as it pushed into new low yields from last August. Mortgages are going along for the ride but have yet to break out into new high prices; still .28 basis points from testing the highs set on Sept 1st.

Market Snapshot by Sigma Research by SC Mortgage Assoc

Tuesday, October 05, 2010
Yesterday the stock indexes were lower aiding the bond market, this morning in early trading activity the indexes were aiming toward a better open at 9:30. At 9:00 the DJIA +68, the 10 yr note +1/32 and mortgage prices +.03 bp) frm yesterday's close. At 9:30 the DJIA opened +83, 10 yr note +2/32 and mortgage prices +2/32 (.06 bp).

U.S. stock-index futures climbed as Japan pledged to buy 5 trillion yen ($60B) of assets and cut its benchmark interest rate to stimulate economic growth. The Bank of Japan pledged to expand its balance sheet in a bid to shore up the nation’s slowing economic recovery, and lowered the benchmark interest rate to a range of zero percent to 0.1% from the previous 0.1% target. The yen is losing a fraction on the news while the euro currency strengthens against the dollar. Japan is doing what the US is set to do, keep rates low and monetize some debt to keep the country from sliding. The move to lower its rates is the first since 2008.

Europe’s recovery is weakening as governments accelerate efforts to tackle their budget deficits and fix their banks just as the global economy weakens. Europe’s services and manufacturing industries grew at the slowest pace in seven months in September, adding to signs that the economy is weakening as governments implement austerity measures. The composite index of manufacturing and services fell to 54.1 in September from 56.2; like the US ISM data, a reading over 50 is considered expansion, under 50 contraction. Although the report was weak Europe's equity markets were better overnight.

The Johnson Redbook sales report showed an increase of 2.7% yr/yr. The ICSC-Goldman retail sales report showed an increase of 2.4% yr.yr and -0.8% week/week.

The data for the day hit at 10:00 with Sept ISM index expected at 51.8 frm 51.5; as reported the index jumped to 53.2. New orders component at 54.9 frm 52.4, employment index at 50.2 frm 48.2 and prices pd at 60.1 frm 60.3. A better report than expected sent the DJIA from +85 to +112 on the knee jerk, the 10 yr note frm +5/32 to unchanged and mortgage prices from +2/32 (.06 bp) with no initial change. Catch 22? If economic data improves what will the Fed do about easing? Likely it will take an unexpected big improvement in employment to shake the easing belief that is solidly embedded in markets.

Sept employment on Friday still has consensus with no change in total non-farm payroll jobs but +70K in private sector job growth. The government still cutting census jobs; the unemployment rate is expected up 0.1% to 9.7%. We expect the unemployment rate to increase in the months ahead if the economic recovery gains footing, millions have simply dropped out of the labor market, when they re-enter they will be considered unemployed. In the meantime many are living on 99 weeks of unemployment compensation.

Friday, October 1, 2010

Market Snapshot by Sigma Research by SC Mortgage Assoc

Friday, October 01, 2010
Treasuries and mortgages opened weaker this morning ahead of a flurry of economic data. First out of the gate; August personal income and spending at 8:30, income up 0.5% while spending was up 0.4% both generally in line with forecasts and didn't generate any movement in the markets. The stock index futures early on were pointing to a better open with the DJIA trading +54 points at 9:00 am.

Wm. Dudley a member of the FOMC was out speaking this morning and added more conviction that another QE is coming. Dudley, known as a dove on the FOMC, actually mentioned a number for the easing at $500B over a six month period. The Fed has been canvassing primary dealers on an easing move and CNBC has run its own poll of economists and dealers, according to the CNBC poll dealers are looking for what Dudley suggested, $500B. Not as much as markets were thinking so now we have QE Light. Dudley isn't Bernanke so his comments need to be taken with some grain of salt; however, the Feds likes to "leak" out what it is thinking at times to test the waters.

Taking it chronologically this morning; over night China’s manufacturing expanded at the fastest pace in four months in September, adding to signs that economic growth is stabilizing. The purchasing managers’ index rose to 53.8 from 51.7 in August, according to China’s logistics federation and statistics bureau, like the US manufacturing indexes, over 50 is expansion. At 9:00 the 10 yr note traded off 13/32 at 2.56% up 4 bp, mortgages -4/32 (.12 bp) and the DJIA +53 on the China news, Dudley's comments and the August income and spending. At 9:30 the 10 yr -14/32 2.56% +4 bp and mortgage prices -7/32 (.22 bp) on 30 yr FNMA's.

Next up this morning, at 9:55 the U. of Michigan consumer sentiment index was expected at 67.0 frm 66.6, as released sentiment increased to 68.2; the 12 month outlook on expectations at 61.0 frm 59.0. The initial reaction added a little to the DJIA but the bond and mortgage markets held steady. While a better index reading it is still on the historically low end. With the ISM hitting five minutes later markets were generally steady but weaker in rates and stronger in equities.

At 10:00, August construction spending, expected down 0.4%, was up 0.4%; July spending however was revised lower, from -1.0% to -1.4%.

Also at 10:00 the Sept ISM manufacturing index, expected at 54.5 frm 56.3, was right on at 54.4. New orders index at 51.1 frm 53.1, employment index at 56.5 frm 60.4 and prices pd at 70.5 frm 61.5. The ISM report overall was weaker than thought with declines in employment and new orders. The initial reaction dropped the DJIA from +66 to +27 and falling; the 10 yr note was -14/32, the knee jerk at -6/32; mortgage prices improved a little. On the margin the ISM was a disappointment for equity markets and should support the bond and mortgage markets through the session.

Technically; that the 10 yr note has failed to push into new low yields after testing them the last three days, isn't encouraging in the near term. The 10 yr low at 2.42% on an intraday trade is seen by investors as a level that must be violated to keep the interest rate rally moving forward. That it is running into selling suggests the note may increase in yield and pull mortgage rates up a little along with it. Support for the 10 yr if it continues to increase will come at the 2.65% area.