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Lanning Financial Inc.
For the week of April 23, 2012 |
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Lanning Financial Inc.
636 Fourth Street
San Francisco, CA 94107
415.354.5699 ph. & private fax
Jessica Lanning and Lanning Financial provide mortgage services and financial strategies that bring focus and perspective to your individual financial needs. |
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Last Week in Review... | |
"Bad news goes about in clogs, good news in stockinged feet." Welsh Proverb. And we certainly saw both good and bad news in the economic reports released last week. Here are the details...and what they mean for home loan rates.
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On the good side, Retail Sales in March rose by a nice 0.8%, as consumers bought all kinds of products across the board. And when stripping out autos, sales still grew. This adds to the increasing trend seen in January and February and is a good sign for our economy, as consumers don't spend when they aren't feeling optimistic about their financial situation.
But over in the manufacturing sector it was not as pretty a picture, as both the Empire State Manufacturing Index and the Philly Fed Index came in below expectations. This is largely being attributed to a global slowdown, and experts say that the outlook for our manufacturing remains positive...but just not accelerating at the present time. Things weren't as pretty in the housing sector either, as both Existing Home Sales and Housing Starts fell in March.
And things in the labor market were verging on ugly, as Initial Jobless Claims spiked sharply higher. The Labor Department reported 386,000 fresh Claims in the latest week, above the 375,000 that was expected...and well above the 350,000 range seen in recent weeks.
Also verging on ugly was news out of Europe. There is growing and very justified concern about Spain's ability to pay down debt, meet new budget deficit targets, and avoid a bailout or debt restructuring. The Spanish situation has prompted the G-20 (Finance Ministers and Central Bankers of the 20 largest economies) to urge the European Central Bank to do more to contain their debt crisis as it threatens global growth. And let's not forget that besides Spain, we still have France, Portugal, Ireland and Greece to deal with in future months and years.
So what does all of this mean for Bonds and home loan rates? There will likely be more safe haven trading into the relative safety of the US Dollar and US Bonds (which will benefit Mortgage Bonds, to which home loan rates are tied) as the uncertainty out of Europe escalates. And more bad economic reports here in the United States could add to this safe haven trading into our Bonds, just as more good economic news here would likely benefit Stocks at the expense of our Bonds and home loan rates.
This mix of factors will continue to impact the direction in which Bonds and home loan rates move in the weeks ahead. The takeaway 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... |
The economic calendar this week will give the investor a broad view of the U.S. economy...but the Federal Open Market Committee (FOMC) meeting will be front and center in the minds of investors. Here's a break down of what to watch:
- Consumer Confidence will be released on Tuesday...with Consumer Sentiment set to be delivered on Friday.
- Also on Tuesday, New Home Sales for March will be released, followed by Pending Home Sales for March on Thursday.
- On Wednesday, Durable Orders - which are products that are supposed to last at least three years - will be released.
- Initial Weekly Jobless Claims will be released on Thursday. The number of new claims has been steadily rising in the past month, which is not a good sign for the labor markets. So all eyes will once again be on this report.
- On Friday, the first reading on Gross Domestic Product (GDP) for the first quarter of 2012 will be announced.
- Also on Friday, we'll see the Employment Cost Index, which measures the costs of hiring and paying the American workforce. Higher costs could lead to inflation pressures, which could push Bond prices lower and home loan rates higher.
In addition to those reports, this week's FOMC meeting will be closely watched by both the Bond and Stock markets for any clues on how the U.S. economy is holding up.
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, the mix of news last week benefitted Bonds and home loan rates. I'll be watching closely to see what happens this week.
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Chart: Fannie Mae 3.5% Mortgage Bond (Friday, April 20, 2012)
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| The Mortgage Market View... | |
Fun Housing Facts
The United States Census Bureau recently released some fun facts related to housing across the country, based on data for 2010. Here are just a few highlights from the release that you may find interesting...and may want to pass on to others.
Heating Our Homes
*57 million = Number of houses heated by utility gas.
*2.2 million = Number of houses heated by wood.
*38,010 = Number of houses heated by solar energy.
From Home to Work
*25.3 minutes = Average time workers across the country spent getting from home to work.
*31.8 minutes = Longest commute time in the nation, which belonged to Maryland residents.
*16.1 minutes = Shortest commute time in the nation, which belonged to North Dakota residents.
Home Sweet Home
*2,392 square feet = Average size of a single-family house built in 2010. That number was down a little from 2,438 square feet in 2009.
*131.7 million = Number of housing units counted in the 2010 Census. Compare that to 37.2 million in the first housing census, which was conducted in 1940!
Bonus Fact!
The first housing census in 1940 featured 31 housing questions - including some we may find odd today, such as whether the house had a radio...toilets or an outhouse...electric lighting...and running water.
Conversely, the 2010 census only included two housing questions: (1) whether the home was owned or rented and (2) whether the respondent sometimes lived or stayed somewhere else. The number of housing questions in the census has dropped because we now ask a number of housing questions in the American Community Survey, which is sent to about 3 million households nationwide every year.
Over the years, housing has really changed. But regardless of the time or location, one thing remains the same...there's no place like home! | |
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| Recommend Your Favorite Professionals... | | Jessica is looking to expand her business network and is looking for outstanding professionals in the following fields:
· Tax Attorney
· Nutritionist
· Relocation/Moving Specialist
· Marketing Specialist
If you know someone who is really great, please connect that person to me! Thank you! | |
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| This Week's Economic Indicator Calendar... | |
Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.
Economic Calendar for the Week of April 23 - April 27, 2012
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 not without errors. As your trusted advisor, I am sending you Lanning's LiveWire because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you. In the unlikely event that you no longer wish to receive these valuable market updates, please email: jlanning@jessicalanning.com If you prefer to send your removal request by mail, the address is: Jessica Lanning, CMC Lanning Financial Inc 636 Fourth Street San Francisco, CA 94107 Mortgage Success Source, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated. Mortgage Success Source, LLC does not grant to you a license to any content, features or materials in this email. You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose. |
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Jessica Lanning
Lanning Financial Inc.
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