The Weekly Rap! Friday Dec 28, 2012

I would like to wish you and your family a wonderful and prosperous New Year!

The Dow is currently trading at 13,030 lower by 135 pts compared with last Friday.  The S&P 500 is also trading lower at 1,411.  Gold is trading at $1,657 an ounce, while oil futures at $90.61 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.23/Gal.

Yields on 10-year Treasury notes, which move inversely to prices, are trading at 1.71%.  30-year Treasury Bond yields are trading at 2.88%.  The MBS (Mortgage Backed Security) FNMA 30-year fixed 3.0% coupon, containing 3.25-3.625% mortgages, pretty much the benchmark or how rate sheets are priced these days, is about 75% of the over-all production.  This security is currently at 104.83 a bit better than where we were last week.  Since October 4 We’ve been trading in a range of 104.13 to 105.53 hitting the low twice and the top twice.  I would expect trading to remain conservative through New Years.  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; It was a slow week for economic indicators with the holidays.

Home prices according to Case-Shiller’s data on 20 cities was down a slight 0.1% in October, but were up 4.3% from the same period last year, the fastest annual growth since May 2010.  The drop has been blamed on seasonal weakness, while a longer-term trend shows a sustained recovery. Other recent housing data, such as sales of existing homes and sentiment among home builders, have also shown a market gaining strength.

New home sales were higher by 4.4% in November, the highest level since April 2010. The median price of new homes climbed 3.7%.  New home sales are 15.3% higher compared to one year ago and the median sales price is 14.9% higher.

A gauge of consumer confidence dropped in December to the lowest level in four months as short-term expectations plunged with fiscal-cliff concerns outweighing positive jobs news. We saw a similar decline in expectations in August 2011 during the debt ceiling discussions. The Conference Board said its consumer-confidence index fell to 65.1 in December from 71.5 in November.

As far as the “fiscal Cliff” goes, it looks like our politicians will not reach an agreement (read compromise).  I actually don’t think it’s possible.  This can has been kicked down the road too many times and now they’ve hit the wall.  We have this fiscal cliff because the politicians couldn’t agree on how to balance the budget over the last four years.

In January we’ll have a new set of politicians that won’t look much different than we have now.  My guess is that nothing will be solved and the current congress will push the decision off to the new congress who could make changes and make them retroactive, or they will just raise the debt ceiling again and continue to kick the can.

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

NMLS#445991

 

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