On December 23, 2011, President Obama signed into law the Temporary Payroll Tax Cut Continuation Act of 2011. Among its provisions, this new law directs the Federal Housing Finance Agency (FHFA) to increase guarantee fees charged by Freddie Mac & Fannie Mae by no less than 10 basis points from the average guarantee fee charged by these companies in 2011 on single-family mortgage backed securities....
This requirement is effective immediately, meaning that the average guarantee fees charged in 2012 need be at least 10 basis points greater than the average guarantee fees charged in 2011 and that this increase be remitted to the U.S. Treasury rather that retained as reserves by Freddie Mac and Fannie Mae.
Basically what this means is mortgage rates are going up and are being "taxed" in order to pay for the payroll tax cuts. So essentially, homeowners will pay for this program. Not to mention it will put a downward pressure on home values as new buyers will have reduced buying power. This definatley does NOT help to stimulate the struggling housing market. Additionally the money will be transfered from Fannie and Freddie to the Treasury.
Friday, January 13, 2012
Thursday, May 12, 2011
Fed Policy Could Be Wrong on Inflation
Is the Fed's model on measuring inflation wrong? Outdated? The answer is Yes according to top economic forecasters Michelle Girard and Omair Sharif of RBS Securities.
I thought I would share this very intersting article about inflation and the model the Fed is using. I am by no means an economist but I have heard many times that there is no inflation. I ask myself how could that be when the cost of everything is going up. In some areas....skyrocketing. After reading this article on how the Fed determins inflation it is very clear how they make there claim. The model says that there cannot be inflation unless wages are rising in tandem with costs of goods and services. With unemployment at record highs (and expected to remain high for quite some time) we all know that wages are definatley NOT rising. For that reason they say there is no inflation. Please, I dont know about you but my pocketbook can definatley feel it.
What does all this mean to you and me? The Fed has implemented many tools to keep interest rates low in an effort to fule both the econpmy and the housing market. If inflation is evident-they will be forced to begin raising the prime rate to offset. This means mortgage rates will rise sharply. If the FED is wrong and inflation exists and is "sneaking up" on them, we could see mortgage rates spike up which in my opinion would have a negative imapct on a crippled housing market. If you have been considering taking advantage of these low rates it may be best to act sooner rather than later.
Read Article Here
Keith Stewart
773-529-7000
I thought I would share this very intersting article about inflation and the model the Fed is using. I am by no means an economist but I have heard many times that there is no inflation. I ask myself how could that be when the cost of everything is going up. In some areas....skyrocketing. After reading this article on how the Fed determins inflation it is very clear how they make there claim. The model says that there cannot be inflation unless wages are rising in tandem with costs of goods and services. With unemployment at record highs (and expected to remain high for quite some time) we all know that wages are definatley NOT rising. For that reason they say there is no inflation. Please, I dont know about you but my pocketbook can definatley feel it.
What does all this mean to you and me? The Fed has implemented many tools to keep interest rates low in an effort to fule both the econpmy and the housing market. If inflation is evident-they will be forced to begin raising the prime rate to offset. This means mortgage rates will rise sharply. If the FED is wrong and inflation exists and is "sneaking up" on them, we could see mortgage rates spike up which in my opinion would have a negative imapct on a crippled housing market. If you have been considering taking advantage of these low rates it may be best to act sooner rather than later.
Read Article Here
Keith Stewart
773-529-7000
Thursday, May 5, 2011
Interest Rates Falling on Jobless Claims Surge
The recent news reported that the number of people who filed initial requests for jobless benefits surged by 43,000 to a seasonally adjusted 474,000 in the week ended April 30, the Labor Department reported.
Economists surveyed had expected claims to decline to 412,000. Claims in the prior week were revised up slightly to 431,000.
This is good news for mortgage rates which have pulled back again over the last few days. It may not be too late after all to refinance and save money.
Call Today if you would like to discuss your options. 773-529-7000
Economists surveyed had expected claims to decline to 412,000. Claims in the prior week were revised up slightly to 431,000.
This is good news for mortgage rates which have pulled back again over the last few days. It may not be too late after all to refinance and save money.
Call Today if you would like to discuss your options. 773-529-7000
Wednesday, April 27, 2011
Fed Hikes 2011 Inflation View and Cuts GDP Outlook
WASHINGTON (MarketWatch) -- The Federal Reserve hiked its forecast for inflation and cut its economic growth view, though the central bank's board members and presidents have become more optimistic on the jobless rate. The Fed now sees the U.S. economy growing between 3.1% and 3.3% this year, down from a prior projection of 3.4% to 3.9% but still above Wall Street economist views around 2.9%. On inflation, they now see the price index for personal consumption expenditure growing between 2.1% and 2.8% this year, compared to the view in January of 1.3% to 1.7% growth. Some but not much of the PCE increase has filtered into core inflation, which excludes food and energy prices, which is now seen growing between 1.3% and 1.6%, vs. an earlier view of 1% to 1.3%. The unemployment rate however is now seen falling to a range of 8.4% and 8.7%, against an earlier estimate of 8.8% to 9%. The 2012 estimates aren't changed that much, though core PCE inflation is now seen ranging between 1.3% and 1.8%, up from 1% to 1.5%. The U.S. economy is seen growing between 3.5% and 4.2% in 2012 and between 3.5% and 4.3% in 2013.
Monday, April 18, 2011
Spring Purchase Market Update
Its very exciting to be coming into another spring purchase market. As the weather get warmer I am seeing a considerable amount of increased activity. I am hopful we will have a stronger purchase market this year than last.
Monday, July 12, 2010
Friday, July 2, 2010
Pending Home Sales Fall; Unemployment Claims Up
Pending home sales in May fell by 30.0 percent to an index level of 77.6 from 110.9 in April, the National Association of Realtors reported yesterday.
The level of pending home sales is 15.9 percent below May 2009. The data reflect contracts signed to purchase a home but not closings, which normally occur with a lag time of one or two months. This was the lowest level of pending home sales in the data series, which dates back to 2001.
Pending home sales in the South saw the largest regional decline, decreasing by 33.3 percent; they are 14.4 percent lower than May 2009. In the Midwest the index fell by 32.1 percent and is 20.2 percent below a year ago. Sales in the Northeast fell by 31.6 percent and are 14.8 percent lower than a year ago. The West saw the smallest decline, but still fell by 20.9 percent and were 15.1 percent below a year ago.
The May pending home sales data are in line with the MBA’s Weekly Applications Survey data, which have showed an 18 percent decline in May and a 15 percent drop in June, following 9 percent increases in the two months prior, indicating that new and existing home sales are likely to continue to fall in the months ahead. The home buyer tax credit has pulled demand for homes forward in the spring and we are now seeing some payback following the end of program, as the deadline for signing contracts was April 30. New home sales fell by nearly 33 percent in May and existing home sales fell by 2 percent.
Meanwhile, for the week ending June 26, seasonally adjusted initial unemployment claims was 472,000, an increase of 13,000 from an upwardly revised 459,000 (previously reported as 457,000) the previous week. The four-week moving average increased by 3,250 to 466,500 from 463,250 the week before, which was initially reported as 462,750.
The advance seasonally adjusted insured unemployment rate was 3.6 percent for the week ending June 19, unchanged from the prior week's revised rate of 3.6 percent, which was estimated at 3.5 percent previously.
The advance number for seasonally adjusted insured unemployment during the week ending June 19 was 4.616 million, an increase of 43,000 from the preceding week's revised level of 4.573 million. The four-week moving average was 4.567 million, a decrease of 25,250 from the preceding week's revised average of 4.592 million.
June’s initial unemployment claims are 1.94 percent higher than April’s level, the second increase in three months. In the 10 months prior to March, claims had fallen in eight of those months. June’s average level of 467,000 claims is the highest since February this year.
In other news, the Institute for Supply Management Manufacturing Index for June decreased by 3.5 percent to 56.2 percent from May’s 59.7 percent, a sign that while both the overall economy and the manufacturing sector continue to grow, the pace of growth is slowing.
A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting. A PMI in excess of 42 percent, over a period of time, generally indicates an expansion of the overall economy. Thus, the index indicates growth for the 14th consecutive month in the overall economy and expansion in the manufacturing sector for the 11th consecutive month.
Most component indexes pointed to slower growth, while inventories components indicated that inventories are contracting, but at a slower rate. The index for new orders decreased by 7.2 percentage points to 58.5 percent. This was the 12th consecutive month of growth in new orders. A New Orders Index above 50.2 percent is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).
The index for production decreased by 5.2 percentage points to 61.4 percent from 66.6 percent. An index above 51 percent tends to be in line with an increase in the Federal Reserve Board's Industrial Production figures. This is the 13th consecutive month that the Production Index has registered above 50 percent. The index for manufacturing employment decreased 2 percentage points to 57.8 percent from 59.8 percent, which was the seventh consecutive month of employment growth in this sector. A value above 49.8 percent is generally consistent with an increase in Bureau of Labor Statistics data on manufacturing employment.
Manufacturers' inventories contracted for the third consecutive month as the Inventories Index decline slightly by 0.2 percentage points to 45.8 percent. An index greater than 42.6 percent is generally consistent with expansion in the Bureau of Economic Analysis' figures on overall manufacturing inventories (in chained 2000 dollars). The index measuring customer’s inventories increased by 6 percentage points to 38 percent in June and was the 15th consecutive month that customer inventories were seen as “too low"
Chicago's Premier Broker
Keith Stewart
773-529-7000
www.ChicagosMortgageChoice.com
The level of pending home sales is 15.9 percent below May 2009. The data reflect contracts signed to purchase a home but not closings, which normally occur with a lag time of one or two months. This was the lowest level of pending home sales in the data series, which dates back to 2001.
Pending home sales in the South saw the largest regional decline, decreasing by 33.3 percent; they are 14.4 percent lower than May 2009. In the Midwest the index fell by 32.1 percent and is 20.2 percent below a year ago. Sales in the Northeast fell by 31.6 percent and are 14.8 percent lower than a year ago. The West saw the smallest decline, but still fell by 20.9 percent and were 15.1 percent below a year ago.
The May pending home sales data are in line with the MBA’s Weekly Applications Survey data, which have showed an 18 percent decline in May and a 15 percent drop in June, following 9 percent increases in the two months prior, indicating that new and existing home sales are likely to continue to fall in the months ahead. The home buyer tax credit has pulled demand for homes forward in the spring and we are now seeing some payback following the end of program, as the deadline for signing contracts was April 30. New home sales fell by nearly 33 percent in May and existing home sales fell by 2 percent.
Meanwhile, for the week ending June 26, seasonally adjusted initial unemployment claims was 472,000, an increase of 13,000 from an upwardly revised 459,000 (previously reported as 457,000) the previous week. The four-week moving average increased by 3,250 to 466,500 from 463,250 the week before, which was initially reported as 462,750.
The advance seasonally adjusted insured unemployment rate was 3.6 percent for the week ending June 19, unchanged from the prior week's revised rate of 3.6 percent, which was estimated at 3.5 percent previously.
The advance number for seasonally adjusted insured unemployment during the week ending June 19 was 4.616 million, an increase of 43,000 from the preceding week's revised level of 4.573 million. The four-week moving average was 4.567 million, a decrease of 25,250 from the preceding week's revised average of 4.592 million.
June’s initial unemployment claims are 1.94 percent higher than April’s level, the second increase in three months. In the 10 months prior to March, claims had fallen in eight of those months. June’s average level of 467,000 claims is the highest since February this year.
In other news, the Institute for Supply Management Manufacturing Index for June decreased by 3.5 percent to 56.2 percent from May’s 59.7 percent, a sign that while both the overall economy and the manufacturing sector continue to grow, the pace of growth is slowing.
A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting. A PMI in excess of 42 percent, over a period of time, generally indicates an expansion of the overall economy. Thus, the index indicates growth for the 14th consecutive month in the overall economy and expansion in the manufacturing sector for the 11th consecutive month.
Most component indexes pointed to slower growth, while inventories components indicated that inventories are contracting, but at a slower rate. The index for new orders decreased by 7.2 percentage points to 58.5 percent. This was the 12th consecutive month of growth in new orders. A New Orders Index above 50.2 percent is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).
The index for production decreased by 5.2 percentage points to 61.4 percent from 66.6 percent. An index above 51 percent tends to be in line with an increase in the Federal Reserve Board's Industrial Production figures. This is the 13th consecutive month that the Production Index has registered above 50 percent. The index for manufacturing employment decreased 2 percentage points to 57.8 percent from 59.8 percent, which was the seventh consecutive month of employment growth in this sector. A value above 49.8 percent is generally consistent with an increase in Bureau of Labor Statistics data on manufacturing employment.
Manufacturers' inventories contracted for the third consecutive month as the Inventories Index decline slightly by 0.2 percentage points to 45.8 percent. An index greater than 42.6 percent is generally consistent with expansion in the Bureau of Economic Analysis' figures on overall manufacturing inventories (in chained 2000 dollars). The index measuring customer’s inventories increased by 6 percentage points to 38 percent in June and was the 15th consecutive month that customer inventories were seen as “too low"
Chicago's Premier Broker
Keith Stewart
773-529-7000
www.ChicagosMortgageChoice.com
Subscribe to:
Posts (Atom)
