The Weekly Rap! Friday Sept 28, 2012

The Dow is currently trading at 13,432 higher by 205 pts over last week  The S&P 500 is trading higher at 1,441.  Gold is trading at $1,774 an ounce, while oil futures at $92.14 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.87/Gal.  Yields on 10-year notes, which move inversely to prices, are trading at 1.64%.  30-year bond yields are trading at 2.83%.

In economic news this week; U.S. home prices rose in July for the fourth straight month to reach their highest level in nearly two years.  The S&P/Case-Shiller 20-city composite posted a 1.6% increase in July, following 2.3% advance in June.  For the third month in a row, all 20 cities in the index recorded prices gains.

The rise in prices, reflecting a growing demand for new and pre-owned homes following the real-estate market’s worst slump in modern times, is welcome news finally when there have been few things in this current economy that warrants anything to get excited about. Ultra-low interest rates make owning a home more affordable and a mildly improved economy is drawing in buyers who previously were reluctant to make such a big financial commitment.

Pending home sales retreated a bit in August after hitting a two-year high in the previous month. The pending-home-sales index fell to 99.2 from 101.9 in July, the National Association of Realtors reported.  Compared to the same period in 2011, pending home sales were up 10.7%, marking the 15th straight month of year-on-year gains.  A sale is listed as pending when the contract has been signed but the transaction has not closed, and an index of 100 is equal to the average level of contract activity during 2001.

Consumer Confidence increased to 70.3 in September to the highest level in seven months, but still remains relatively low. September expectations increased for employment and business conditions, while consumers’ views on the present situation also rose.

The government chopped its estimate of growth in the second quarter, as consumers and businesses spent and invested less than initially believed.  Gross domestic product or GDP, in the April-to-June period increased by 1.3% instead of 1.7% as previously reported.  A severe drought in the Midwest, which reduced crop yields, has resulted in lower farm inventories. That accounted for much of the downward revision.

And now for the Rant:  I’m sure we’ve all seen the replay by now of the ridiculously blown call that ended the Monday Night Football game, awarding the game to the Seahawks following a blatant pass interference call and an interception by the Packers.  The “replacement referees had one signaling touchdown and the other signaling interception and they were four feet apart.  The NFL called the professional Referees’ insignificant and simply a commodity.  I wont get into the intricacies of the dispute but if they could solve it in a couple days following Monday night’s disaster, then why couldn’t they solve the dispute before the season began?  Personally I think every strike could be solved simply by sequestering both sides in a large room with beds, a bathroom and enough basic food to keep them going (hey, McDonalds serves Breakfast, Lunch, and Dinner) until they come to an agreement.  It’s my opinion and I’m sticking to it!

If you know anyone who can benefit from my services, please call me.  My greatest goal is to see clients and friends happy.  I guess that’s why I love providing mortgage financing.  It’s an immediate gratification when you can help someone purchase a home, or lower their payment on their existing home.  For additional information please visit my Stanford Mortgage website :http://bill.bartok.stanfordloans.com/agents/Blog
Sincerely,

Bill Bartok

Mortgage Advisor

The Weekly Rap! Friday Sept 14, 2012

The Dow is currently trading at 13,227 higher by 323 pts over last week  The S&P 500 is trading higher at 1,469.  Gold is trading at $1,777 an ounce, while oil futures at $98.96 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.91/Gal.

Yields on 10-year notes, which move inversely to prices, are trading at 1.86%.  30-year bond yields are trading at 3.08%.

Mortgages or FNMA 3.5% MBS (Mortgage Backed Security) is currently at 106.28.  On July 25 we reached an all time high (Price) of 106.31, But yesterday, on a gift from the Fed Gods, we broke that record when the price reached 106.63.  We’ve pulled back from there as expected but not much.

In the next month the government is raising the Guarantee fee (the fee charged to protect against credit-related losses in the mortgage portfolio; think of it like MBS insurance) b .125% in rate or .5 in fee.  This will effectively worsen rates by an 1/8.th  Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate.

In economic news this week; Wholesale prices in August rose by the largest amount in more than three years after a late-summer resurgence in the price of oil.  The producer-price index rose 1.7% last month.  That’s the biggest increase since June 2009.  The advance in wholesale costs stemmed from a spike in the price of gasoline and natural gas.  The wholesale cost of gasoline rose by 13.6% while natural gas climbed 11.9% both three-year highs. An increase in energy prices makes it more expensive for companies to produce their goods and services and could hurt profits unless businesses pass along the costs to customers.

The consumer price index jumped 0.6% last month to mark the biggest advance since June 2009.  The bulk of the increase stemmed from a 9.0% gain in the gasoline index, which also rose by the fastest amount in more than three years. As a result, energy prices surged 5.6%, marking the first increase in five months The cost of food rose at a much slower 0.2% pace. Despite the big increase in August, consumer prices have only risen 1.7% over the past 12 months.

The big news this week was the Fed’s announcement following their 2 day meeting yesterday.  The Fed Gods, worried that improvement in the unemployment rate has stalled, announced a third round of bond purchases in an effort to bring down long-term interest rates and spur economic growth.  The Fed said it would buy mortgage-backed securities at a pace of $40 billion per month.  On a positive note; this caused mortgage rates to hit a new all-time historical low.

In addition to bond purchases, the Fed said it intends to keep the benchmark short-term interest rate, known as the federal funds rate, at nearly zero until mid-2015. The prior guidance on the first rate increase had been late 2014. Bernanke commented, “Even after the economy starts to recover more quickly, even after the unemployment rate begins to move down more sizably, we are not going to rush to tighten policy. We are going to give it time to make sure the recovery is well established”.

And now for the Rant:  Really?  A federal judge in Boston recently ordered the Massachusetts Department of Corrections to provide sex-change surgery to a transgender inmate, serving a life sentence without the possibility of parole for murdering his wife in 1990, ruling that failure to do so violated the prisoner’s Eighth Amendment right to adequate treatment.  Ok, so I get that the term “adequate” is a vague term, but really?

The judge stated that surgery is the “only adequate treatment” for the inmate’s “serious medical need.”  The inmate who identifies as female, has received hormone treatments and lives as a woman in an all-male prison.  I agree that our prison systems have an obligation to provide medically necessary health care.  But let’s define “medically necessary.”  How about saving life!  What’s next plastic surgery?  This is called by the insurance industry as “elective” surgery.  Question; Who’s going to pay for this?  Taxpayers?  And in just which prison is this prisoner going to be placed?  It’s my opinion and I’m sticking to it!

If you know anyone who can benefit from my services, please call me.  My greatest goal is to see clients and friends happy.  I guess that’s why I love providing mortgage financing.  It’s an immediate gratification when you can help someone purchase a home, or lower their payment on their existing home.

Bill Bartok

Mortgage Advisor

The Weekly Rap! Friday Sept 7, 2012

The Dow is currently trading at 13,227 higher by 177 pts over last week  The S&P 500 is trading lower at 1,435.  Gold is trading at $1,739 an ounce, while oil futures at $96.10 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.87/Gal.

Yields on 10-year notes, which move inversely to prices, are trading at 1.65%.  30-year bond yields are trading at 2.81%.

Mortgages or FNMA 3.5% MBS (Mortgage Backed Security) is currently at 106.00.  On July 25 we reached an all time high (Price) of 106.31.  Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate.

In economic news this week; The Institute for Supply Management manufacturing index, a gauge that measures the strength of the factory sector fell to 49.6% and remained below the 50% mark for the third straight month, stirring fears that a slowdown in manufacturing is lingering. It’s the first time there have been three-straight sub-50% readings since the summer of 2009. Faced with soft consumer and foreign demand, manufacturing production has slowed notably in the past six months.

The Labor Department reported that workers were slightly more productive in the second quarter than initially thought as inflation remained tame.  Productivity of the U.S. nonfarm business sector rose at a 2.2% annualized rate in the second quarter, stronger than the 1.6% pace estimated a month ago.  Productivity, defined as output per hour worked, is perhaps the most important long-term variable in economics.  Higher productivity can mean higher profits, wages and living standards and can keep inflationary pressures at bay.

Job growth slowed sharply with Nonfarm payrolls growing by a only 96,000 in August well shy of estimates and down from 141,000 jobs added in July. The report is reinforcing concern about the weak labor market and triggering speculation that the Fed Gods may take aggressive action to support the U.S. economy which is helping to drive interest rates lower.

Since the beginning of the year, job growth has averaged 139,000 per month, compared with an average monthly gain of 153,000 in 2011.  The disappointing report also came as unwelcome news for President Obama, who actually knew of the news before he gave his acceptance speech at the National Democratic Convention last night. I have to say, he has a great poker face!

Meanwhile, the nation’s unemployment rate fell to a seasonally adjusted 8.1%, down from 8.3% in July.  The decline in the jobless rate hardly came as good news, however, because it reflected 368,000 people dropping out of the labor force. In other words so many people gave up on looking for employment that it affected the rate.

And now for the Rant:  OK it’s time to talk politics!  Really? you ask.  Is he really going to commit to one side?  Am I going to risk alienating some readers?  Not so fast, I’m going to keep you guessing.  My rant today is directed at both major parties.  I actually watched both national conventions trying to analyze both objectively.  And here’s the rant; please keep an open mind, always do your homework, never trust an advertisement, and this is a biggie…  Please read between the lines and see how the truth could be twisted before you instantly believe something!

What I noticed was there were a lot of grey areas mentioned, duh no surprise there.  There were very few solid promises made, again, duh no surprise there either.  But there was a lot of thunderous applause.  I think when you sift through all the political stuff, when voting for president it doesn’t matter if you’re Democrat, Republican or Independent, it comes down to what they can control and whom will be a better overall leader.  Believe me, the truth often gets buried under an avalanche of money and advertising.  Please feel free to chime in and voice your opinion.  I love feedback and you can’t offend me.  This is my reality show!  It’s my opinion and I’m sticking to it!

If you know anyone who can benefit from my services, please call me.  My greatest goal is to see clients and friends happy.  I guess that’s why I love providing mortgage financing.  It’s an immediate gratification when you can help someone purchase a home, or lower their payment on their existing home.

Bill Bartok

Mortgage Advisor