The Weekly Rap! Friday April 25th, 2014

The National Debt is currently: $17,548,071,962,587.00 is lower by about 34 BILLION. I post this so we will be aware of what we are leaving the next generation.

The Dow last traded at 16,381 right about where it was last Friday. The S&P 500 is trading at 1,866. Gold is trading at $1,300 an ounce, while oil futures at $100.86 a barrel. Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.88/Gal.

Mortgage Backed Securities or “MBS” yields are interest rates at which banks sell their loans into Fannie Mae and Freddie Mac bond programs. The FNMA 30-year fixed 4.0% coupon, containing 4.25% – 4.625% mortgages, pretty much the benchmark or how rate sheets are priced these days is currently trading at 104.5 about .60 better 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 the economy continues to limp along but at least moving in a positive direction. We continue to see small snippets of growth that are often spun into looking like larger growth numbers, but ultimately we are no further than we were a few years ago.

The Chicago Fed National Activity Index, a monthly index designed to gauge overall economic activity and related inflationary pressure, decreased to 0.20 in March from 0.53 in February. In attempting to try to illustrate the positive; the index’s three-month moving average rose to a neutral reading in March from negative 0.14 in February. The CFNAI is a weighted average of 85 existing monthly indicators of national economic activity. A positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend. As you can see we are pretty much at dead even.

The Conference Board’s leading economic index rose 0.8% in March, after a 0.5% rise in February. “This is an optimistic report, but the focus will continue to be on whether improvements in the labor market can be sustained, fueling stronger economic performance over the next few months,” said Ken Goldstein, economist at The Conference Board. Now I love a good economist report as much as the next person but this is why I call them “Economites.” The index rose a tad over ½ of one percent, and he calls it “an optimistic report.” Really??? It’s all in how you spin it folks.

Orders for durable goods such as computers, aircraft and heavy machinery rose by 2.6% in March and while the rise seems small, it was the biggest gain in four months, offering according to the Economites, another sign that the economy might be on the upswing after a winter-induced lull. The increase in bookings for big-ticket items last month was the largest since November, and orders for computers and electronic products, for example, rose by 5.7% to mark the sharpest spike in almost 3 1/2 years, the Commerce Department reported. Small gains can seem large when the overall growth in relatively small as well.

Consumers are the perkiest they’ve been in nine months, according to the University of Michigan and Thomson Reuters’s gauge of consumer sentiment holding brighter views on current and coming economic conditions, hitting a final April reading of 84.1, the highest reading since July, up from a final March level of 80. We watch sentiment levels to get a feeling for the direction of consumer spending. According to UMich’s report, households with top incomes reported improved buying attitudes this month, while lower-income homes reported a slight decline. Next week the government will release its monthly report on consumer spending, and the expectation is for a pickup for March.

Also according to the report, home purchasing is becoming more responsive to mortgage-credit availability stating: “The main attraction of home-buying conditions has shifted in the past few months toward a greater reliance on low mortgage rates and less emphasis on low prices.” Home prices have raced higher over the past year. And while mortgage rates have increased, too, they remain relatively low. Home builders are starting to respond to consumers who are unable or unwilling to pay for a pricey new place.

Consumer sentiment Apr 25, 2014 Cash-out Refinancings Apr 2014 Existing Home Sales Mar 2014

On the Real Estate front: The National Association of Realtors sales reported the pace of existing homes dropped 0.2% in March to the slowest rate since July 2012, showing weakness in the early spring sales season, though underlying trends signal a firming in market fundamentals. Sales rates have trended down since the summer on falling affordability as inventory remained low, and there’s been concern about tepid spring-sales results. Some buyers have been put off by rapidly rising prices. According to NAR, the median sales price of used homes hit $198,500 in March, up 7.9% from the year-earlier period. First-time buyers’ share of existing-home sales rose to 30% last month, up from 28% in February. The long-term average is closer to 40%. Distressed properties’ share of existing-home sales fell to 14% in March from 16% in February.

According to the Federal Housing Finance Agency (FHFA), data based on mortgages sold or guaranteed by Fannie Mae and Freddie Mac, home prices rose 0.6% in February, and were up 6.9% from the year-ago period.

On the Employment front: The number of Americans who applied for unemployment benefits last week rose by 24,000 in April to the highest level since the end of March, but most of the bump may have been related to a seasonal quirk tied to the Easter holiday. Claims often rise around Easter because the holiday falls on different dates each year and that makes it harder for the government to conduct seasonal adjustments. Continuing claims decreased by 61,000 to a seasonally adjusted 2.68 million in the week ended April 10. That’s the lowest level since December 2007, when the Great Recession started. Continuing claims reflect the number of people already receiving benefits.

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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