The Weekly Rap! Friday Dec 6th, 2013

The National Debt is currently: $17,216,209,495,584.00  I post this so we will be aware of what we are leaving the next generation.

The Dow last traded at 16,014 higher by about 200 pts after the positive employment report.  The S&P 500 is trading at 1,805 also another all-time high.  Gold is trading at $1,229 an ounce, while oil futures at $97.55 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.35/Gal.

Yields on 10-year Treasury notes, which move inversely to prices, last traded at 2.87%.  30-year Treasury Bond yields last traded at 3.90%.  Rates on 30-year fixed-rate mortgages are a hair above 4.625% this week. MBS yields are interest rates at which banks sell their loans into Fannie Mae and Freddie Mac bond programs. Rising yields mean higher consumer-mortgage rates.

The FNMA 30-year fixed 3.5% coupon, containing 3.75% – 4.125% mortgages, pretty much the benchmark or how rate sheets are priced these days  is currently trading at 99.90 about a 1.25 points (fee) worse in price than where we were last Friday at this time.  Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate.  The higher the number (price), the better the rate.

In economic news this week; the reader’s digest version is thing are looking better as shown by today’s employment report.  Construction spending as well as Consumer spending is on the rise and manufacturing is improving.  3rd quarter GDP was revised up to 3.6% and real estate is still 20% to 40% below peak levels.

Manufacturing conditions improved in November to their best level in more than two years, according to the Institute for Supply Management’s manufacturing index which climbed to 57.3% from 56.4% in October, reaching the highest level since April 2011.

The Commerce Department reported that Construction spending rose 0.8% in October after falling 0.3% in September.  In October, spending on public construction jumped 3.9%, offsetting declines in the private sector. Residential construction fell 0.6% in October.

Consumer spending rose by 0.3% in October, the Commerce Department reported, indicating that Americans continued to spend at a modest rate despite the government shutdown.  Personal income however fell 0.1%. Since incomes fell and spending rose, the personal savings rate dropped to 4.8% from 5.2%.  Also, inflation as gauged by the PCE price index (Personal Consumption Expenditure) was unchanged in October.  The core rate excluding food and energy edged up 0.1%. Over the past year, the PCE has risen a scant 0.7% overall and just 1.1% on a core basis.

The U.S. economy, GDP upon revision, expanded by a 3.6% from an initial reading of 2.8% annual pace in the third quarter to mark the fastest increase in a year and a half, but the revised gain was fueled by the largest buildup in inventories since 1998. Growth could fall sharply in the fourth quarter if companies stockpile goods at a slower rate as expected.

On the Real Estate front: Years after the bubble burst, home prices in 12 states remain at least 20% below local peak levels, pointing to a lopsided recovery for the housing market.  Nevada’s home prices in October, including distressed sales, were 41% below a 2006 peak, the largest drop from bubble levels, despite explosive growth of 26% over the past year, according to CoreLogic, an Irvine, Calif.-based provider of financial and consumer information. Prices in California in October were more than 22% below local peak levels.  But the picture on the national level is much milder. In October, national home prices were down 17% from a bubble peak.

Apparently buyers of newly built homes evidently brushed off concerns about the government shutdown in October, pushing up sales to their highest level in fourth months on the lure of lower prices. New homes sold at an annual rate of 444,000 in October, up 25.4% from 354,000 in September. Part of what drove sales was a decline in prices and more demand for lower-priced homes, a trend that typically emerges in the colder months. The median price of new homes fell 4.5% on a monthly basis, and dropped 0.6% year-on-year, to $245,800 in October.  That’s the lowest level since November 2012.  The supply of new homes on the market, at the national level, sank to 4.9 months in October at the current sales pace from 6.4 months in September. New home sales are 21.6% higher compared to one year ago.

On the Employment front:  The economy generated 203,000 jobs in November and the unemployment rate fell to 7.0% from 7.3.  The drop in unemployment largely reflects the return of federal workers after the end of the government shutdown in October, but the jobless rate is now at the lowest level since November 2008.  The latest employment report shows that hiring picked up in the fall after a midsummer slowdown, suggesting the economy will continue to grow at a moderate pace. The expectation was for a gain of 180,000 nonfarm jobs.

Hiring in November was strong in most industries, including transportation and warehousing, professional and business services, manufacturing, health care, construction and retail, the Labor Department reported. The federal government cut employment again and has shed 92,000 jobs in the past 12 months. Average hourly wages, meanwhile, rose 4 cents to $24.15 while the average workweek edged up 0.1 hour to 34.5 hours.  The number of new jobs created in October was trimmed to 200,000 from 204,000, while September’s figure was raised to 175,000 from 163,000.  Let’s hope for a few more reports like this one.  We truly need about double this number for a period in order to sustain real growth.

I have been working with a great credit repair specialist for some time and she shares a “tip or the week” that I thought I would also share.  Please let me know what you think.  Her name is Pamela Standlee, Owner of CreditComeBack and can be reached at (916) 357-6700, Pam@CreditComeBack.org in Folsom Ca.

Are the alternatives to foreclosure any better as far as your credit scores are concerned??

The common alternatives to foreclosure, such as short sales, and deeds-in-lieu of foreclosure are all “not paid as agreed” accounts, and are considered the same by the credit scoring models. This is not to say that these may not be better options for you from a financial perspective, just that they will be considered no better or worse for your credit scores.

If you are considering bankruptcy as an alternative to foreclosure, that may have a greater impact to your credit scores. While a foreclosure is a single account that you default on, declaring bankruptcy has the opportunity to affect multiple accounts and therefore has potential to have a greater negative impact on your credit scores.

You can visit my corporate website at: http://bill.bartok.stanfordloans.com
Sincerely,

Bill Bartok

Mortgage Advisor MLO# 445991

The nicest compliment I can receive is the referral of your family, friends and co-workers.

Thank you!

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