The Weekly Rap! Friday June 19th 2015

The National Debt is currently: $18,272,639,132,587.00  is Higher by another 9 BILLION.  The interest pay-out alone on the debt is 244 Billion per year!  I post this so we will be aware of what we are leaving to our children.

The Dow last traded at 18,860 higher by 180pts over where it was last Friday.  The S&P 500 is trading at 2,114.  Gold is trading at $1,201 an ounce, while oil futures at $58.96 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $2.93/Gal.

The FNMA 30-year fixed 3.0% coupon (interest rates at which banks sell their loans into Fannie Mae), containing 3.25% – 3.625% mortgage rates, the benchmark or how rate sheets are priced these days is currently trading at 100.03 about .75 (in price) over where we were last week.  Our current trading range has now shifted lower and is about 98.5 to about 100.5.  Each .50 change in the price of the security translates to about 0.125 in rate.  If we can hold at these levels I expect that we will trend back to higher levels.  Basically the 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 lower the rate.     

If you like this commentary please visit and “Like” my Facebook pageI put all of my prospective buyers through underwriting so that when they place their offer, it is as close to “cash” as you can get.  So to get your clients “underwriter approved”, please contact me and get your offer accepted!

I just learned of a great home improvement loan from Home Depot that is not secured.  In other words, it is not a lien on your home.  Loan amounts are up to $40,000 and are based on qualifying which can be done from their website.  You have 6-months to spend the money (interest only payment period) and then the balance is amortized over 7 years at a fixed rate of 7.99%.  There are no loan fees or annual fees.  This is a great program for both Buyers who would like to do some improvements after purchasing the home, as well as Sellers who need to improve the home prior to selling.  Installation and labor can even be part of the project.  Contact me for additional information or click on the link above.

In economic news this week; It was another busy week of economic data, and the reader’s digest version is the economy is still trudging along.  The Fed Gods got together.  Business and factory conditions are lower.  Inflation is still muted.  And household rents are higher and the homeownership rate fell to the lowest proportion since the end of 1989.

Business conditions in the New York region worsened slightly, the New York Fed reported Monday. The Empire State manufacturing index for June sank to negative 2.0 from 3.1 in May. This is the second negative reading in the past three months for the index, which is a first reading of manufacturing conditions in the month. Orders fell into negative territory while shipments retreated slightly but stayed positive. The six-month outlook worsened to 25.8 in June from 29.8 in May. This is the lowest level since January 2013.

In addition to Business conditions; the U.S. factory sector, ailing from the strong dollar, global weakness and lower oil prices, has slipped into a technical recession.  The Fed reported that industrial production dropped 0.2% unexpectedly in May and hasn’t increased since November.  The six-month drop in output, adjusted for inflation, puts the sector in a technical recession.  Compared to 12 months ago, industrial production was up 1.4%, compared to 4.8% growth as recently as November.

The Fed Gods got together this week and as anticipated, held their benchmark interest rate near zero, but according to analysts (the statement did not say this exactly), the Fed Gads believe improving economic growth is likely to warrant one or two interest rate increases before the end of the year. In their statement at the end of two days of talks, Fed officials were cautiously optimist about the economy.  Fed Chairwoman Janet Yellen said economy has managed to escape the “soft patch” of the first quarter.  The labor market is improving and some of the downward pressure on inflation from energy prices is abating, Yellen said, but added that more progress is needed before the central bank would be ready to pull the trigger and raise rates.

A spike in gasoline costs boosted consumer prices in May by the most in more than two years, though overall inflationary pressures in the economy have remained muted. The consumer price index rose 0.4% last month, almost entirely because of a surge in gas prices ahead of the summer driving season.  Gas prices shot up 10.4% to mark the largest gain in six years.  Gas prices have leveled off in June, however, and the cost of a gallon of gas is much lower compared to last summer.  The overall cost of food, meanwhile, was unchanged for the second month in a row

Stripping out the volatile food and energy categories, so-called “core” consumer prices rose a much milder 0.1% in May.  The cost of housing, airline tickets and medical care all rose while clothing prices declined.  Despite the increase in prices in May, consumer inflation is basically zero over the past 12 months. The muted level of inflation mostly reflects sharply lower gasoline prices compared to a year ago.  The core rate has risen 1.7% in the same span, down slightly from the prior month. But that’s still a low level historically and less what the Fed would like to see. The central bank has held off from raising interest rates even as the economy has improved partly because of unusually low inflation.

The U.S. leading economic index rose 0.7% in May for the second month in a row, the Conference Board said Thursday. “The U.S. LEI increased sharply again in May, confirming the outlook for more economic expansion in the second half of the year after what looks to be a much weaker first half,” said Ataman Ozyildirim, director of business cycles and growth research, in a statement.

On the Real Estate front: Home builders see a bright future for the market, with sales ramping up, according to the National Association of Home Builders/Wells Fargo reported Monday, even as plans for a merger show that major construction companies are trying to cut costs.  The home builders’ index rose five points to 59 in June, hitting a nine-month high.  Readings above 50 signal that home-construction companies, generally, are optimistic about sales trends, and June marks the 12th consecutive month of above-50 readings.  Gauges of builders’ views on present and upcoming home sales each hit their highest level since late 2005, shortly before the housing bubble burst. Confidence among home builders is higher than levels typically seen at recent building rates. Builders that survived the meltdown may feel particularly confident in their ability to navigate the market.

Landlords kept financial pressure on tenants last month, as annual rent growth far outpaced households’ other costs, according to data released this morning.  The cost to rent a primary residence rose 3.5% over the year through April, while the overall consumer inflation CPI dropped 0.2%, dragged down by plunging energy costs, the U.S. Labor Department reported.  The homeownership rate, which shows the share of occupied homes in which an owner lives, fell to 63.8% in the first quarter, the lowest proportion since the end of 1989, the U.S. Census Bureau said.  Families with income both above and below the median have seen drops in homeownership rates over the past year.  With homeownership at the lowest rate in 25 years, and the rental-vacancy rate close to the slimmest proportion in more than two decades, 2015 is seeing a continuation of a landlord’s market, and letting landlords to charge more.

Just how hot is rent inflation? Annual growth in tenants’ payments has been between 3.4% and 3.5% for the past six months, higher than an average of about 3% for the past two decades. Builders have ramped up apartment construction, a trend that should ease price pressure, but it will take time for that new supply to become available.  As long as demand remains high for apartments, landlords will be able to continue to raise families’ housing costs.  High rent prices may be affecting other areas of the economy as well, keeping households from spending their savings from falling gas prices. Market analysts had expected a stronger labor market and cheaper gas to lead to more shopping, but that effect hasn’t exactly panned out. While energy prices have crept up in recent months, consumer costs for gasoline in April were down more than 30% from a year earlier.

On the Employment front: The number of jobless workers seeking unemployment benefits fell again in mid-June and stood near a 15-year bottom, reflecting the steady pace of hiring across the nation and the unusually low level of layoffs.  Initial jobless claims last week fell by 12,000 to 267,000, the Labor Department said Thursday.  New claims are 15% lower compared to one year ago and they just slightly above a post-recession low of 262,000.  The economy added a preliminary 280,000 jobs in May and hiring picked up in the spring, suggesting the labor market has recovered after a winter soft patch. The U.S. is creating more than 200,000 jobs a month, more than enough to gradually reduce the nation’s official 5.5% unemployment rate over time.


Fun for the day: 

Under the age of 40? You won’t understand. Part 2 of 2

Ø  I thought that I was supposed to accomplish something before I was allowed to be proud of myself.

Ø  I just can’t recall how bored we were without computers, Play Station, Nintendo, X-box or 270 digital, and TV cable stations. We weren’t!!

Ø  Oh yeah … And where was the antibiotics and sterilization kit when I got that bee sting? I could have been killed!

Ø  We played “King of the Hill” on piles of gravel left on vacant building sites and when we got hurt, mom pulled out the $1 bottle of iodine and then we got our backside spanked. Now it’s a trip to the emergency room, followed by a 10 day dose of antibiotics and then mom calls the lawyer to sue the contractor for leaving a horribly vicious pile of gravel where it was such a threat.

Ø  To top it off, not a single person I knew had ever been told that they were from a dysfunctional family.

Ø  How could we possibly have known that?

Ø  We never needed to get into group therapy and/or anger management classes.

Ø  We were obviously so duped by so many societal ills, that we didn’t even notice that the entire country wasn’t taking Prozac!

Ø  How did we ever survive?

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!


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s