The Weekly Rap! Friday Aug 22nd, 2014

The National Debt is currently: $17,660,164,295,587.00  is Higher by another 7 BILLION.  The interest pay-out alone on the debt is 225 Billion per year!  I post this so we will be aware of what we are leaving to our children.

The Dow last traded at 17,025 about 350 pts higher than where it was a week ago.  The S&P 500 is trading at 1,991.  Gold is trading at $1,280 an ounce, while oil futures at $93.38 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.55/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 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 102.59 about .20 worse than where we were last week.  We have been trading in a fairly tight range since May with the low being 101.75 and the high being 103.00.  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.   

If you have any potential buyers looking for a home, it’s time to get them “approved by an Underwriter” not just “pre-approved.”  Most pre-approval letters are not worth the paper they’re printed on, but “underwriter approved” will make your buyers almost as strong as a cash buyer and significantly speeds up the loan process.  I just closed a loan that was 25 days from contract to funded/recorded.  Think about it; you won’t have to deal with the 17 day removal of the loan contingency because your offer will not have one and you can have a shorter escrow.  If you have clients on the MLS watch list get them approved, and they will be a stronger client and more loyal to you when the time comes to purchase.  Call me today and I will have your clients approved for you. 

In economic news this week; the reader’s digest version is the economy continues to plug along keeping its head above water.  Inflation remains tame.  Construction of new homes is on the rise.  And resale of homes is also on the rise.

Consumer prices rose slightly in July 0.1%, led by highest costs of food and housing, but the overall pace of inflation cooled slightly after a sharp run-up earlier in the year. The core CPI, which excludes volatile food and energy costs, also increased 0.1%.  Consumer prices have risen just 2% over the past 12 months, down slightly from June.  The core rate has risen 1.9% in the same span, unchanged from the prior month.

The Federal Reserve views core prices as a more accurate barometer of underlying inflationary trends. Real or inflation-adjusted hourly wages, meanwhile, were unchanged for the second straight month. Real hourly wages have either been flat or lower for five straight months, so consumers don’t have much more to spend despite an improving labor market. Over the past 12 months inflation-adjusted hourly wages have risen a scant 0.3%. Americans are working somewhat longer hours, however, to bring home a bit more money.

The Fed Gods say the labor market is improving faster than expected, but the majority are still not convinced it’s strong enough to alter their approach on interest rates anytime soon. According to Federal Reserve’s policy meeting minutes released this week they agreed to state that labor market conditions improved … while also stating that a range of labor market indicators suggested that there remained significant underutilization of labor resources.” Officials seemed concerned by the housing market’s weak performance stating the housing market’s recovery has remained slow and “persistent weakness” could hurt the economic outlook.  Officials cited factors such as low expectations for income, high student debt and trouble obtaining mortgages.  At the July 29-30 meeting, the Fed voted 9-1 to maintain its current policy of slowly withdrawing stimulus from the economy. The majority also reiterated the Fed is likely to keep the short-term federal funds rate below what is considered normal for “some time.”

On the Real Estate front:  A gauge of confidence among home builders rose two points to 55 in August, the highest level in seven months, according to National Association of Home Builders/Wells Fargo report. Readings above 50 signals that builders are generally optimistic about sales trends.  August marks the second consecutive month of above-50 readings. Recent optimism among builders is likely due to job growth and low mortgage rates, among other factors, according to NAHB.  NAHB’s gauge of builders’ views on upcoming sales of single-family homes also rose two points to 65 in August, while a barometer of builders’ views on present sales rose two points to 58.  A gauge of prospective-buyer traffic increased three points to 42.

Construction on new homes jumped 15.7% in July to reach the highest level in eight months, offering another piece of evidence that the housing market is recovering after an early-year lull.  What’s more, the decline in new construction in June was much smaller than previously reported.  Initially, the government had reported a 9.3% decline in starts in June, but revised figures show just a 3.9% drop. At the time, the report stoked concerns that the housing market might be weakening because of higher mortgage rates and real-estate prices.  The housing starts report is notorious volatile and often subject to large changes. New construction rose in all regions except the Midwest.

Americans are renting more in part because they cannot afford to buy new homes, a reminder that the economy is still not fully healed after the deep recession of 2007-2009. In a normal economy, the U.S. should be building about 1.7 million new homes a year.  We’re currently at an annual rate of 656,000.

Sales of previously owned homes in July hit the fastest pace in 10 months, suggesting that the housing sector is picking up after a rough start to the year.  The National Association of Realtors said sales of existing homes rose 2.4% in July to an annual rate of 5.15 million, the fourth consecutive month of gains.  “More people are buying homes compared to earlier in the year and this trend should continue with interest rates remaining low and apartment rents on the rise,” said Lawrence Yun, NAR’s chief economist.

On the Employment front:  The number of people applying for unemployment benefits fell by 14,000 to 298,000 in the week of Aug. 10, below 300,000 for the third time in five weeks, signaling once again that layoffs remain at a post-recession low amid a rise in hiring in most major U.S. industries.  The average of new claims over the past month, meanwhile, climbed by 4,750. Although that’s a four-week high, the monthly average is still near the lowest level in eight years. The monthly average is less erratic than the weekly figure and offers a better look at underlying trends in the labor market. Also, the government said continuing claims decreased by 49,000 2.5 million in the week ended Aug. 9. Continuing claims reflect the number of people already receiving benefits.

You can visit my corporate website at:


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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