TEAM EMPOWERMENT MORTGAGE CHATTER: January 14: Great Local News Source; Federal Reserve; rates improving; TODAY’S RATES, CO-BRANDED STATEMENT

“If you go to work on your goals, your goals will go to work on you.
If you go to work on your plan, your plan will go to work on you. Whatever good things we build end up building us.”
Jim Rohn: Was an entrepreneur and motivational author and speaker

Folks wonder where the most reliable sources of mortgage news are. Besides Us, People, and Martha Stewart’s Living, this is quite amazing. Put your mouse on a city and see today’s newspaper’s front page: FrontPage


Speaking of news, in a paper published by the Federal Reserve Bank of San Francisco, In the years leading up to the financial crisis of 2008-2009, a combination of factors including low interest rates, lax lending standards, the proliferation of exotic mortgage products, and the growth of a global market for securitized loans promoted increased household borrowing. “Homebuyers with access to easy credit helped bid up U.S. house prices to unprecedented levels relative to rents and disposable income. The rapid rise in household net worth encouraged lenders to ease credit even further based on the assumption that house price appreciation would continue indefinitely. U.S. household leverage, as measured by the ratio of debt to disposable income, reached an all-time high of 130% in 2007.”  The research piece goes on to say that house prices in the United States have dropped on average by about 30% from their peak in 2006, but also that the personal saving rate trended up from around 1% to about 6% in the third quarter of 2010 while the ratio of household debt to disposable income dropped from 130% to 118%.


As has been written in the past, on the one hand “higher saving rates imply correspondingly lower rates of domestic household consumption growth so that a larger share of GDP growth would need to come from business investment, net exports, or government spending. On the other hand, an increase in domestic saving would help rebuild household nest eggs in preparation for retirement and also help correct the large imbalance that now exists in the U.S. current account.”


Turning to the interest rate markets…yesterday was a good day! Volumes picked up in MBS sales, which, when prices are moving up, is a good sign. But overall volumes are less than where they were a month or two ago, indicating that indeed a slow-down is occurring. On the demand side, traders are reporting good demand for MBS production – given how clean and well documented this paper is, who wouldn’t want to own it? Of course, that doesn’t help the foreclosure numbers for 2010, which set a new record


MBS prices closed up nearly 1/2 point on 3.5s to 1/4 point on 5.5s, rate-sheet mortgage prices improved by .250-.375.

Today we have already had a slew of economic news, which has moved rates lower. CPI saw its highest change going back to mid-2009, +.5%. The core rate was +.1%, and year-over-year the CPI was +1.2%. December Retail Sales were +.6%, less than expected and less than November’s +.8%, ex-auto it was +.5%. For the year Retail Sales were up 6.6%. For Capacity Utilization we had a 76% print, and Industrial Production was +.8%. JPM reported better than expected earnings this morning ($1.12 EPS vs. $1.00 est.), while Citi, BONY, and Wells report early next week. And 9:55AM EST brings the preliminary Michigan Sentiment report for January which is anticipated higher to 75.4 from 74.5 at the end of December. The 10-yr is down to 3.27% and MBS prices are better by .125-.250, roughly.



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