Prior to 8:30 mortgage prices traded down 6/32 (.18 bp) and the 10 yr -8/32 to 2.20%. At 8:30 Sept CPI increased 0.3% overall and when food and energy are removed up 0.1%; yr/yr CPI +3.9%, the core yr/yr up 2.0%. Yesterday’s PPI was stronger than expected increasing concerns that inflation may be increasing, today the CPI takes a little worry away but not totally. Also at 8:30 Sept housing starts and permits; starts were expected up 4.0% as reported starts increased 15.0%; permits were expected down 1.5% but declined 5.0%. Starts are a surprise, so much so that we question the data. Starts totaled 658K annually frm 572K in August; permits at 594K down from 625K in August. Single family starts were up 1.7% the rest was in multi-family starts (+50%). The initial reaction the the 8:30 data took the 10 yr down in price a little, mortgage prices at 8:45 -5/32 (.15 bp).

 

In Europe this morning, riots in Greece; protestors being gassed as it escalates. Yesterday’s maniacal reaction to a headline in a British newspaper that a deal was in the offing to increase the EFSF to re-capitalize the banks in the region sent markets into another round of excessive volatility. One hour after the news it became apparent that the news was woefully lacking in fact and substance. There is no plan that has been resolved. Markets, as noted yesterday, don’t wait for facts these days; it is all about headlines and in turn creates huge volatile swings.

 

Europe continues to drive global markets, every word out of the region is taken as the last word. There is still nothing of substance after over a year of discussions; Europe’s banks do not want to take the haircut that will likely be necessary. Most of the sovereign debt has to be taken as losses at least by 50% or more, banks will continue to fight it. Politicians here and there remain convinced a plan will be worked out that will stabilize Italy, Spain and Portugal as well as keeping Greece from default. The problem with that is, so far after all this time there is nothing. On Oct 23rd finance ministers from the G-20 countries will meet in a summit, at the moment its in the hands of Germany and France, the only two EU countries that are not in some way impaired. German Finance Minister Schaeuble hasn’t specified how much additional strength the European bailout fund may have and negotiators are still in “intensive discussions.” What’s new about that?

 

Early this morning the weekly MBA mortgage applications; the composite index declined 14.9%, purchase applications down 8.8% while re-finances declined 16.6%. Higher interest rates dropped the re-finance markets, purchases remain soft. There is an anomaly though, the week included Columbus Day, the few that are optimistic about the housing sector are making a lot out of the holiday, we don’t hold much to that. Any even small increase in mortgage rates shuts of the flow, mortgage rates and treasuries were higher last week.

 

At 9:30 this morning the DJIA opened -22, NASDAQ-12, S&P -3; the 10 yr note -6/32 to 2.19% +2 bp and mortgages unchanged. Until 9:30 mtg prices were generally off 4/32 (.12 bp).

 

The only other scheduled information today is at 2:00 when the Fed releases its Beige Book, the Fed’s detailed report on the economy in the 12 Fed districts. Always some meat in it but generally nothing shocking and new markets are not already thinking about—–that of course is if anyone is actually thinking these days rather than reacting.

 

Treasury and mortgage markets remain bearish; until the 10 yr can decline below 2.0% the bearish technicals will continue. That said, we remain confident that the 10 yr will find support at 2.30%, the recent high was 2.27% five sessions ago. The Fed’s Operation Twist is still out there and the Fed has increased MBS purchases. Interday and intraday volatility will continue following the paranoid equity markets. Already this morning 30 yr MBSs have traded in a .34 basis point range. The treasury market is being stretched between better equity markets and the need for safety as Europe is still in play; equity markets a little weaker early today keeping rate markets generally unchanged so far.

Apply for a Purchase or Refinance Mortgage

 

 

 

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The S&P / Case Shiller Report released today for April indicates increasing home values.:

 

Data through April 2011 … show a monthly increase in prices for the 10- and 20-City Composites for the first time in eight months. The 10- and 20-City Composites were up 0.8% and 0.7%, respectively, in April versus March. Both indices are lower than a year ago; the 10-City Composite fell 3.1% and the 20-City Composite is down 4.0% from April 2010 levels.

Six of the 20 MSAs showed new index lows in April – Charlotte, Chicago, Detroit, Las Vegas, Miami and Tampa. Thirteen of the cities and both composites posted positive monthly changes. With index levels of 152.51 and 138.84, respectively, both the 10- and 20-City Composites are above their March 2011 levels, which had been a new crisis low for the 20-City Composite.

 

This may be a sign that we have seen or are close to the bottom of the housing market.  Now is a good time to look at buying a home as a primary residence or investment property.  Apply Now to pre-qualify for a purchase.

www.PaulCantor.info

(804) 433-1510

 

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Yes seniors may purchase a home and have no monthly mortgage payment.  This is possible with a reverse mortgage (also known as a Home Equity Conversation Mortgage (HECM))

Here is an example for a 69 year old buying a home.

 

Purchase Price = 200,000

Amount of FHA reverse mortgage  =  $132,600

Funds needed a closing = $68,000

Monthly Mortgage Payment =   $0.00

 

Assumes the seller will pay all closing costs on a fixed rate reverse mortgage.

For more information on a reverse mortgage call (804) 433-1510 or click here.

 

 

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HPI delta from peakHome values dropped for the sixth straight month in March 2011, according to the Federal Home Finance Agency’s Home Price Index. The Home Price Index is a government-sponsored home value tracker.

The HPI report is the latest in a string of “falling home values” stories — a trend that’s troubling home sellers across Midlothian and nationwide.

However, although the Home Price Index says home values are falling, that doesn’t necessarily mean that they are. Like most statistics in the housing sector, the Home Price Index is plagued by poor methodologies and a lack of timeliness.

In short, the Home Price Index is flawed. In three ways.

The first big flaw in the Home Price Index is that it only measures the values of homes with mortgages backed by Fannie Mae or Freddie Mac. Homes financed via FHA, or via other means are specifically excluded from the calculation. For today’s purchase market, that leaves more than 1 in 4 homes “uncounted” — a big percentage of the market.

Second, the Home Price Index determines home values by measuring price change from sale to subsequent sale. This eliminates new homes — a major market segment.

And, lastly, the Home Price Index reports on a 60-day delay; we’re only now seeing data from March. This two-month lag renders the HPI a trailing indicator for the housing market instead of a forward-looking one. If you’re a home buyer looking for market insight, the HPI can’t give it — it’s out-dated and out of season.

Despite its shortcomings, though, we can’t ignore the Home Price Index completely. It’s among the most thorough home valuation models available, and it’s used in public policy discussions. When the HPI says prices are down, Wall Street and Capitol Hill take notice, and that trickles down to everyday life on Main Street.

Since peaking in April 2007, the Home Price Index is off 19.1 percent.

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Today is Tax Freedom Day®.  According to the Tax Foundation the typical American will work from Jan 1st through April 12th just to pay taxes.  Virginia’s Tax Freedom Day happened to also fall on the same day this year.  If you are renting buy your first home and move your personal Tax Freedom Day to a date earlier in the year.  Home owners enjoy extra tax benefits.  Consult your tax adviser about mortgage interest, PMI & property tax deductions.

Find out if you can qualify for home ownership by applying now or call Paul Cantor at (804) 719-1515.

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by | Categories: main, Purchase, Taxes | No Comments

Home affordability is at record high levels as home prices are down and mortgage rates are low.  However according to a recent article experts are predicting continued apartment rental rates as vacancy rates are dropping.  Many are forecasting double digit annual rent increases.  This is a reason for rents to look at buying a home.

If you are interested in pre-qualifying for a home purchase: click here.

 

www.PaulCantor.info

 

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by | Categories: main, Purchase | No Comments

Watch this NBC video, advising prospective first time home buyers to get off the fence and buy a home.  The reasons include, home affordability, low but sure to rise  mortgage rates, seller concessions (buyer’s market) and the uncertain future of Fannie Mae & Freddie Mac:

PaulCantor.info

(804) 719-1515

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Yesterday HUD (FHA) released their monthly report for December 2010.  This report shows REO (Real Estate Owned / Foreclosed properties) up 9.5% from November.

Combined REO for for Fannie Mae Freddie Mac & FHA was at 293,171 units at the end of 3rd quarter for 2010.  Fannie Mae & Freddie Mac have not yet reported 4th Quarter numbers.

Take a look at this graph.

This means homes are on sale for discounted prices.  Thinking about buying a home?  Now is a good time to look, it is a buyer’s housing market.

To get pre-approved for a purchase Click here.

www.PaulCantor.info

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Considering an FHA loan to buy or refinance a home? If so you should move fast. HUD has announced new annual FHA mortgage insurance premium (MIP) rates starting April, 2011. This means that the initial payment on FHA mortgages will feel like the note rate has increased .25%. These new monthly premiums are double what they were last year.

New FHA Annual Mortgage Insurance Rates

The following is the table for the new rates

Transaction Type LTV Loan Term UFMIP Annual MIP(% ÷ 12)
PurchaseStreamline (All Types)

Rate-Term Refinances

<= 95% > 15 Years 1.00% 1.15%
> 95% > 15 Years 1.10%
<= 90% <= 15 Years 0.25%
>= 90% <= 15 Years 0.50%

This may mean it may be harder to qualify to purchase a home and some FHA Streamline refinances will not make sense.

Apply for an FHA mortgage

If you are thinking of buying your first home or refinancing your current FHA loan with a streamline refinance start by sending a email by clicking here an email by clicking here..

Paul Cantor
(804) 719-1515

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Last Friday mortgage prices increased a little, but not much; holiday trade generally doesn’t amount to much. This morning the bond and mortgage markets opened better with no data points today; this week however, is filled with data beginning tomorrow. The dollar is stronger again this morning, not what equity markets want to see, the stock index futures were lower as a result. The US rate markets are supported on concern the rescue for Ireland will fail to contain Europe’s sovereign-debt crisis, increasing demand for the safety of U.S. government debt. Next up are Portugal and Spain as Europe’s debt issues show little signs of being contained. The tensions between South and North Korea continue to be a concern but so far as these kinds of face offs go, it hasn’t been a major impact on the markets.

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Christmas shopping (yes, I said Christmas) was slightly stronger than last year. Consumer spending on Black Friday was up about 0.3%, with most retailers better but still remains an unfinished story. Not anyway scientific, I was out briefly on Sunday and wasn’t impressed with what I saw at the most prestigious malls in Indy, not as much traffic as one would have expected. Most analysts expect stronger Christmas sales than last year, but refrain from becoming too optimistic.

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More QE 2 Fed buying today; the Fed is scheduled today to buy $1.5B to $2.5B of Treasuries due from February 2021 to November 2027 and $6B to $8B in government debt maturing from May 2013 to November 2014. The central bank plans to focus about 86% of its purchases on notes due in 2.5 years to 10 years, leaving the 30- year bond as the security that most closely reflects market expectations for inflation. Since the Fed’s Nov. 3 announcement, the 30-year yield rose 0.28 percentage points, suggesting growing investor confidence in the central bank’s efforts to avoid deflation as the economy expands.

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Date Time (ET) Statistic For Market Expects Prior
11/30/10 09:00:00 AM Case-Shiller 20-city Index Sep 1.00% 1.70%
11/30/10 10:00:00 AM Consumer Confidence Nov 52 50.2
12/01/10 08:15:00 AM ADP Employment Report Nov 58K 43K
12/01/10 08:30:00 AM Productivity-Rev. Q3 2.40% 1.9
12/01/10 10:00:00 AM ISM Index Nov 56.5 56.9
12/01/10 10:00:00 AM Construction Spending Oct -0.50% 0.50%
12/01/10 02:00:00 PM Auto Sales Nov 3.71M 3.68M
12/01/10 02:00:00 PM Truck Sales Nov 5.35M 5.59M
12/01/10 02:00:00 PM Fed’s Beige Book Dec
12/02/10 08:30:00 AM Continuing Claims 11/20/10 4200K 4182K
12/02/10 08:30:00 AM Initial Claims 11/27/10 422K 407K
12/02/10 10:00:00 AM Pending Home Sales Oct 0.00% -1.80%
12/03/10 08:30:00 AM Nonfarm Payrolls Nov 130K 151K
12/03/10 08:30:00 AM Nonfarm Private Payrolls Nov 140K 159K
12/03/10 08:30:00 AM Unemployment Rate Nov 9.60% 9.60%
12/03/10 10:00:00 AM Factory Orders Oct -1.30% 2.10%

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Overall, the most important day of the week is Friday with the employment figures being released, but we may also see sizable movement in rates Wednesday. Friday’s employment data could cause a significant change in rates, but Wednesday’s ISM index is also one of the more important reports we see each month. If Friday’s data reveals stronger than expected results we may see rates spike higher after its release, possibly erasing any gains from the week. It will probably be the key to rates moving lower or higher for the week. I suspect it will be another fairly active week for the markets and mortgage pricing, so it would be prudent to maintain contact with your mortgage professional if still floating an interest rate.

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