Mortgage Market Guide Weekly Issue 1

Last Week in Review: The Fiscal Cliff was avoided, plus the Jobs Report for December was released.

Time will tell. And as 2013 marches along, time will tell us what impact avoiding the Fiscal Cliff had on our economy...and if our labor market will continue to improve. Read on for details, and what they mean for home loan rates.

On Friday, the Labor Department reported that 155,000 jobs were created in December, with 168,000 private job gains offset by modest government losses. The Unemployment Rate was unchanged at 7.8% (November's 7.7% reading was subsequently revised higher).

The Labor Force Participation Rate (LFPR) was also unchanged at 63.6%, which is still the lowest reading in over 31 years. The LFPR calculation is quite simple. If you are 16 years old and not in the military, then you either have a job or you don't. The ratio of people "participating" or working is then compared to the total population. All in all, the Jobs Report was in-line with expectations and shows that the labor market is continuing to improve, but at an anemic pace.

The other big news from last week: The Fiscal Cliff was avoided after a last-minute deal was passed in Washington. The deal will shield millions of Americans from higher taxes and will extend Unemployment Benefits for the long-term unemployed. However, spending cuts were not addressed, which is something Congress will have to do over the next 60 days.

So what does this mean for home loan rates? Looking ahead, there is more uncertainty on the horizon as to how Congress will handle the debt ceiling, which is currently at $16.4 trillion and which must be raised in the coming weeks. There is also uncertainty after the Fed released the statement from their Federal Open Market Committee (FOMC) meeting in December, which revealed that some Fed members think the Fed should stop their latest rounds of Bond buying (known as Quantitative Easing) sooner than initially planned. While Bonds and home loan rates did worsen after hearing this news, the continued uncertainty here in the markets means that investors will likely continue to see our Bond market as a safe haven for their money. This could ultimately benefit Bonds--and home loan rates, which are tied to Mortgage Bonds--in the process.

The bottom line is that now is a great time to consider a home purchase or refinance, as home loan rates remain near historic lows. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week: A quiet economic report week is ahead, but volatility could be as well.

A light economic report calendar is ahead for the first full week of January. But with the markets watching to see how Congress continues to handle key items like the debt ceiling and spending cuts, we could see some volatility.

• Weekly Initial Jobless Claims will be released as usual on Thursday. Now that the seasonal abnormalities are behind us, investors will be looking for the real numbers.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on.

When you see these Bond prices moving higher, it means home loan rates are improving -- and when they are moving lower, home loan rates are getting worse.

To go one step further -- a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Bonds and home loan rates worsened after the Fed minutes were released last week. I'll be watching all the news closely to see what happens this week.

View: Check out these tips to help you quiet your mind and improve your productivity in the process.

Brain Power Boosters for Busy People

Researchers at UCLA have long known about the benefits of meditation. But a further report by Eileen Luders, assistant professor at the UCLA Laboratory of Neuro Imaging, has revealed people who meditate frequently have larger amounts of gyrification--or folding of the cortex--which may allow them to process information faster than those who do not meditate.

Whether you've mediated before or not, taking a short mental break during the day is a great way to improve your productivity. Here are a few tips to try and to pass along to your clients, colleagues, friends and family members:

Commune While You Commute. Simply letting your mind relax twice each day, on the way to and from work is a great first step. While easier to do if you commute by public transit or carpool, it's still possible if you drive your own car by leaving for work a bit earlier. Focus on something very calming and specific. Perhaps a waterfall, waves on a beach, flowers, or a tree swaying in the wind--it's up to you--the point is letting your mind stay clear. If any other thoughts interrupt you, gently sweep them aside and continue to focus on your scene.

Pulse Power. K. Anders Ericsson, psychologist and researcher at the University of Florida, discovered that people were much more efficient working in clearly divided blocks or "pulses." The optimal time limit being about 90 minutes, after which the mind needs a break. The simplest way to remind yourself to take a time out is to download a free break-timer application such as Scirocco (PC) or Time Out (Mac)--or just use the alarm feature on your smartphone.

Daydream Believer. It's a fact that daydreamers score higher on creativity tests and come up with better ideas than those focused exclusively on work. Daydreaming is different than meditation in that you're filling your mind rather than trying to empty it, but the trick is to focus on things other than work or problems. Taking a 20-minute lunchtime walk as you let your mind wander freely is a great way to refresh both mind and body with a bit of fresh air and exercise.

Economic Calendar for the Week of January 07 - January 11

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.

As your mortgage professional, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.

How to Protect Your Identity If You Lose Your Phone

How to Protect Your Identity, Finances If You Lose Your Phone

It’s a gold mine for ID thieves. Take steps to protect your information. 

By Lisa Gerstner, Kiplinger.com

Lose your smart phone and you could have more to contend with than missed calls and text messages, a lost contact list, and Angry Birds withdrawal. Anyone who finds it will have an opportunity to empty your bank account, steal your identity or both.

Think of your smart phone as part wallet, part computer. If someone were to access your online-banking or eBay application, for instance, the funds in your checking account could be gone in minutes. Thieves could also get information from your e-mail messages -- as well as reset passwords for your online accounts and retrieve them from your e-mail account. Or they could use your contacts for phishing schemes.

Preventive measures. Start by using your phone’s security settings to lock your screen with a password. Only 38% of smart-phone owners take that simple, effective step, according to Javelin Strategy & Research. And don’t use an obvious PIN (such as your birth year) or a simple pattern to unlock your screen. Hide the phone as you enter the code if strangers are nearby.

When you finish using your applications, log out. At the very least, sign out of your banking and payment apps (and any others that could allow someone to go on a spending spree). And don’t store your log-in information in an app’s data-entry fields for easy access. Even apps that seem harmless could be a treasure trove for a crook, says Eduard Goodman, chief privacy officer for Identity Theft 911. The list of connections on your Facebook account may reveal your mother’s maiden name, for example.

If your phone disappears. You can install a location-tracking app on most smart phones. Apple’s iPhone has the Find My iPhone app built in, but you need to activate it; apps such as “Where’s My Droid” are available for Android devices. The feature is a big help if, say, you can’t remember where you left your phone. And if it has been stolen, police may be able to use the app to help track down the thief.

Also, set up your phone so that you can remotely erase its data. Your wireless carrier may offer this service, and many security apps include the feature. But keep in mind that a sophisticated thief may be able to restore the information, says Kevin Johnson, senior security consultant for Secure Ideas. Your data won’t be lost if it’s saved automatically to your Google or iCloud account, and you can regularly perform backups by plugging your phone into your computer.

Malware and more. Losing your phone isn’t the only potential danger. Hackers can collect sensitive information through malware. Android phones are particularly susceptible because developers can more easily submit virus-laden apps. (Google has an open-source market, while Apple has a rigorous screening process for apps.) Research an app’s developer and read reviews of the app before you download it. If you receive suspicious-looking text messages, don’t reply or click on links.

Some of the big names in antivirus protection offer malware protection for phones (Symantec’s Norton Mobile Security is $30). But you may want to wait until such mobile software improves, says Johnson. The programs may slow down your phone and offer little protection.

Using unsecured Wi-Fi and leaving your Bluetooth connection open are other actions that could leave your phone vulnerable to hackers. Goodman suggests turning your cell phone off at night to avoid stealth attacks while you sleep.

Reprinted with permission. All Contents ©2012 The Kiplinger Washington Editors. Kiplinger.com 

Mortgage Market Guide Vol. 10 Issue 22

I sincerely hope you have been enjoying your complimentary subscription to the MORTGAGE MARKET GUIDE WEEKLY. As the Memorial Day holiday is being observed, the next full issue will arrive on Monday, June 4th. I wish you and your family a peaceful Memorial Day holiday, as we remember the sacrifices of all of our Armed Forces servicemen and women, past and present, who have worked so hard to protect our great country. And please share the important article below with your clients, friends, and family members so they can keep their personal information safe — beyond this holiday weekend.

The Mortgage Market Guide Weekly is the industry's leading publication of this type, and I'm pleased to provide this valuable resource to you. If you feel that any of your clients, friends, family members or associates would benefit from keeping up-to-date on market and economic trends with this easy-to-read format, please let me know, and I will be happy to add them free of charge. 

Beware of Smart Phone Text Scams

Don't Click That Link!

Beware of Smart Phone SMS(Text) Scams

Smart phones can make life – not to mention business – much easier. You can send and receive text messages in a flash to clients and colleagues. You can even text links to important web pages that can be opened right on a smart phone.

Of course, those same benefits make scams much easier for criminals. Take for instance the latest craze: smishing.

What Is Smishing?

Smishing uses SMS technology to deliver fake (and criminal) messages. In fact, the name actually comes from combining the acronym SMS with the word phishing (that is: SMs + phISHING = SMISHING).

How Does It Work?

It works much like a phishing email, except you receive it on your smart phone as a text message. It starts with a text message to your phone, often stating that you've won a prize or that your account requires some kind of update.

Two recent smishing scams consist of text messages that appear to be sent by Best Buy or Wal-Mart, stating that you've been randomly selected for a $1,000 gift card. The text message includes a link to a web page that looks professional and official. But it's not. It's really just a clever way for criminals to collect your personal data.

What Should You (NOT) Do?

If you receive any message that seems out of the ordinary or too good to be true, take the following precautions:

• Don't open: If you didn't register for a prize, you probably didn't win one. So always be skeptical about emails or text messages that are unsolicited or offer free prizes that you didn't register for yourself. If you see one that looks suspicious, don't open it.

• Don't click: If you do open the message before you realize it's suspicious, don't click the link.

• Don't reply: Sometimes, people try to reply STOP in an effort to avoid receiving future text messages. But what they don't realize is that there isn't a list in most cases. Instead, criminals program their computers to randomly dial/text different phone number combinations. So, by replying to the message, you may actually be informing the criminals that you have an active number that received the message.

• Don't call: Some smishing text messages will direct you to call a phone number rather than click a link. That may lower your guard, but the toll-free number is just part of the plan. Once you dial it, you'll hear an automated voice that will collect your personal data for use by the criminals. If you do decide that you want to check if the message is real, don't dial the number in the text or email. Instead, look the number up in the phone book or on a reputable site.

Here are just a few options that you should do if you receive a suspicious message:

• Delete: One of the best options is to simply delete the suspicious text or email.

• Report: You can also report the scam by filing a complaint on the FBI's Internet crime website at http://www.ic3.gov.

• Stay up to date: You can stay up to date on the latest scams by following websites that track these issues. One option is the website ScamBook.com, which relies on user submissions to track everything from smishing to false advertising.

The bottom line is that no reputable company would text you to ask for your information. Keep your guard up and be suspicious of anything that seems odd or too good to be true. And remember to pass these tips on to your friends, family members and clients.

Mortgage Market Guide Vol. 10 Issue 21

Last Week in Review: There was more drama out of Europe, plus some important inflation news.

It's all Greek to me. And last week, news out of Europe dominated the headlines...impacting our markets and home loan rates. Read on for details.

Last week there was news that the European Central Bank (ECB) stopped providing funding to some Greek banks, adding to the drama in the region. ECB President Mario Draghi backed the move saying that the ECB will not compromise "the integrity of our balance sheet" to bail out Greek banks and the recapitalization effort must come from the Greek government themselves.


What will be made of Greece? Will there be a "Grexit," with the country exiting the Euro? What's more, Spain looks like it will be in a recession throughout 2013 and that country is drowning in debt with Bond yields now approaching very lofty levels. When there is this much risk out in the market, Traders seek a safe haven like the US Dollar and US Bonds...and the drama and risk in Europe benefitted our Bonds (including Mortgage Bonds, to which home loan rates are tied) last week.


Here at home, inflation as measured by the Consumer Price Index (CPI) came in at 2.3% year-over-year. Remember, inflation hurts the value of fixed investments like Bonds (thus, hurting home loan rates)...so inflation staying in check is crucial when it comes to home loan rates remaining near record best levels. And while the year-over-year CPI reading was the lowest since February 2011, it's important to realize that there is a negative correlation between inflation and what Treasuries are yielding...and this negative correlation can't last forever. Investors will not continue to "lose" money to inflation by holding Treasuries. Either inflation has to moderate a lot OR the Bond Market has to adjust for inflation with prices moving lower. This will result in home loan rates moving higher. 


The bottom line is that home loan rates remain near historic lows and now continues to be a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week: Several important reports are ahead of the holiday weekend, with news on the housing market, durable goods, and consumer sentiment.

As you can see in the chart below, the drama in Europe helped Bonds and home loan rates reach record best levels. I'll be watching closely to see what happens this week.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on

 Chart: Fannie Mae 3.5% Mortgage Bond (Friday May 18, 2012)

To go one step further – a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

This week's economic calendar is light, but there are still some important reports to watch:

• Existing Home Sales and New Home Sales will be released on Tuesday and Wednesday, respectively. The data comes after last week's positive Housing Starts report.
• Weekly Initial Jobless Claims will be released on Thursday as usual.
• Also on Thursday we'll see the Durable Goods Report for April. This report measures orders for big ticket items that last for an extended time.
• Consumer Sentiment rounds out the week and will be delivered on Friday.

In addition to those reports, the markets may be impacted by the upcoming holiday weekend. That's because the week leading up to Memorial Day weekend usually sees low trading volumes – and by Friday afternoon, trading desks have pretty much cleared out. When volumes are low, markets can easily see some big swings

When you see these Bond prices moving higher, it means home loan rates are improving – and when they are moving lower, home loan rates are getting worse.

It Pays to Have a Good Memory

It Pays to Have a Good Memory

In today’s housing market, it can pay (quite literally) to have a good memory. That’s because a good memory can help you stand out from the competition — especially when you’re networking and trying to remember names.

Unfortunately, many of us have trouble remembering the name of someone two minutes after we shake her hand. If that sounds like you, don’t worry… you’re not alone. It's actually an extremely common occurrence for many people. The good news is there are a number of simple, practical steps you can take to improve your memory now and long into the future. Here are just two of the great tips for proactively strengthening your memory.

Tip #1: Neurobic Exercise

You know all about the wonderful effects aerobic exercise has on the heart, but have you heard of neurobic exercise for the brain?

According to Lawrence Katz, co-author of Keep Your Brain Alive: 83 Neurobic Exercises, the best exercise for the brain is to force it to form "new patterns of association" or new pathways. In other words, challenge your brain every day. Take it off autopilot and make it relearn or create new associations with the most routine activities of your day.

Katz's book offers numerous examples of small changes you can make to activate your brain, including: brushing your teeth with the other hand; taking an alternative route to work; moving your wastebasket to the other side of your desk; closing your eyes while putting your key in and unlocking the front door; and changing where you and your family members sit at the dinner table.

So if you feel like your memory might be starting to slip a bit, try some of these simple neurobic exercises today!

Tip #2: Mnemonic Drilling

There are actually three steps or stages of memorization: acquisition, consolidation, and retrieval. That means, once we acquire new information, like someone's name for instance, the way in which we consolidate that data will directly affect how well we're able to retrieve it from memory.

Whether you're a visual or auditory type of learner, there are many mnemonic devices that can help you to better organize or consolidate the new information that you need to recall.

Here's an example of simple steps that might help:

First, associate the data you want to remember with common images. For instance, let's say you meet someone named Jennifer Green. Imagine Jennifer playing golf, or picture her wearing all green clothes, or imagine her face painted completely green.

Second, think of associations you can use to help you remember this person. For instance, link Jennifer to the quality that best fits her personality (use alliteration and rhymes whenever possible): Jolly Jennifer Green.

Finally, connect sound to your memory by saying the name aloud.

Do this regularly and, before you know it, you'll never forget anyone's name again! And that can give you a nice advantage in networking and communicating with clients! 

Mortgage Market Guide Vol. 10 Issue 20

Last Week in Review: Bonds and home loan rates improved to record levels — find out why.

Survey says? Last week’s economic report calendar may have been light, but some important surveys revealed key data to note. Read on for the details...and how home loan rates fared.

As you can see in the chart, the National Association of Realtors (NAR) said that of the 146 Metro cities surveyed, home prices rose in 74 of them in Q1 2012. This is up from 29 cities that saw an increase in home prices in Q4 2011. In addition, the NAR also said that inventories for existing homes fell 22% since this time last year and are down 41% since the peak in mid-2007. While the housing market has a long way to go, this report was a nice step in the right direction.

There was also news from the National Federation of Independent Business, which said that its small business optimism index gained 2% in April as the survey revealed that companies have increased plans for hiring and investing in the future. While companies added new employees at a slower pace in April than in March, the index rose to 94.5 — the highest level since February of 2011. Overall, though, the report showed that our economy is improving but is still fragile. The state of our economy is part of the reason for the improvement in Bonds (and home loan rates, which are tied to Mortgage Bonds) of late.

Another big reason that Bonds and home loan rates have been improving is the fresh round of uncertainty out of Europe. France elected a new president, and this change of the guard represents the ninth EuroZone leader swap since the financial crisis began. Greece is also back in the news and their citizens are not taking to the austerity measures either. The New Democracy government, a pro-bailout party, is having trouble gathering the support to rule the government. This has sparked some safe haven trading into our Bonds, as investors see our Bonds as a safe place for their money.

The bottom line is that now continues to be a great time to purchase or refinance a home, as home loan rates remain near historic lows. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week: A full slate of economic reports is ahead, with news on inflation, the housing market, manufacturing and more.

As you can see in the chart below, Bonds and home loan rates reached record best levels last week. I’ll be monitoring the markets closely this week to see what happens next.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday May 11, 2012)

With earnings season behind us, investors will be deluged with a slew of economic reports that will touch on many segments of the U.S. economy: 

• Retail Sales will be released on Tuesday. This report gives the markets some insight to how consumer spending is holding up.
• Also on Tuesday, the Consumer Price Index (CPI) will report on inflation at the consumer level. Last week’s Producer Price Index showed that inflation at the wholesale level has moderated, thanks to lower energy prices. Will CPI follow suit?
• Manufacturing from the New York Empire and Philadelphia Fed Index will also be released Tuesday and Thursday, respectively.
• Housing Starts and Building Permits data will be delivered on Wednesday.
• Last — but not least — will be the Weekly Initial Jobless Claims numbers on Thursday. Last week's data was the lowest in a month.

In addition to those reports, European headlines will continue to dominate the news as the debt woes in that region plague the global economies. Also, the minutes from the Fed's April meeting of the Federal Open Market Committee will be released and this could move the markets. 

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart above shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on.


When you see these Bond prices moving higher, it means home loan rates are improving — and when they are moving lower, home loan rates are getting worse.


To go one step further — a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning. 

View: Did you know that bad news can be good for home loan rates? Be sure to read the article below.

Why Bad News Can Be Good for Home Loan Rates


It may seem odd that negative economic news can actually be good for home loan rates, but there's a pretty simple explanation for this phenomenon. Here’s a concise explanation you can share with your clients or you can use to gain a better understanding yourself.


First, we need to remember that big money managers who are in search of higher returns avoid holding onto cash by investing in both Stocks and Bonds.


Second, we need to dispel the myth about how home loan rates are determined. Despite what it may sound like in news stories covering the Federal Reserve’s meeting, home loan rates are based on the performance of mortgage-backed securities — which are a type of Bond.


When we put those two points together, we see that whenever the economy is on fire and there are good economic news reports, investors tend to put more money into Stocks. That’s because Stocks offer higher returns, even though they are generally more risky. To put money into Stocks, however, investors must remove some of their money from less-risky Bonds. The result is a decreased demand in Bonds that causes Bond prices to worsen, which causes home loan rates to go higher.


Inversely, when the economy is sluggish and economic reports are negative, money managers tend to take money out of higher-risk Stocks to put it into less-risky Bonds. As demand for Bonds increase, Bond pricing improves and home loan rates go down.


So while it may seem odd that home loan rates improve when economic news is sluggish, it actually makes sense when you look at the big picture.


If you have any questions about how the economic news is impacting home loan rates, please just call or email. I’m always happy to chat about what’s happening in the markets and what it means to home loan rates.