Clint Hammond

The new website is up and running so please check it out. www.clint-hammond.com. It's a lot more comprehensive than my old one and much more user friendly. Start applications online, get updates on what's going on in the industry and in the rate markets. It's hard enough for me to keep up doing it every day so we need these "go to" sites for answers and information, hopefully I'll be one of those resources for you.

In other news.......

Purchase transactions still closing with pretty solid consistency and even more encouraging is the number of purchase transactions that I am seeing coming dated after April 30....in other words there are still tons of buyers out there that are not 100% "handout seeking" and are looking for low rates on a well priced homes to give themselves a solid investment for their financial future. That's good news to all of us.

Mortgage backed securities have been on a roller coaster, news that should pump stocks up and deflate our bonds are immediately countered with just a strong of an influence in the other direction. It's all timing and it's all the experience of the loan officer monitoring those rates. I'm locking right and I'm floating right so I've got a fairly solid batting average in this unexplored landscape. Here's hoping that continues!

Use knowledge and logic to combat fear, uncertainty. Rational minds will win out over irrational fears so use what you know and close the deal. The best are always working towards the close and are working in the best interest of their clients so arm yourself with knowledge and go get it.

Rates won't be low forever, the Fed will be selling soon to get their balance sheets back in line and when that happens, supply will go through the roof and prices will plummet. Those plummeting bond prices can only equate to one thing, higher rates on your home loans. Strike while the iron is hot and call me if you need help doing so.

Like all markets, interest rates are sensitive to various economic news and events that impact the broader markets. This is a big, big week for those reports. With the Fed exit from the MBS market, these reports will have an impact more than usually. The Fed has softened blows and stabilized things when volatility would have otherwise taken over. We don't have that safety net anymore so watch these reports, not bankrate.com or your local paper, the paper is yesterday's news and bankrate.com (or lending tree or any of them) are all ads and are geared to get you in the door.....Watching the money on the secondary market will tell you where rates will be, not where they were or where we think they should be in order to get you to call in.

here are the on tap reports for the rest of the week and remember, weaker than expected is good for bonds, better than expected is bad. Keep that in mind and check back for more update from me on this:

Wednesday:

Report to be Released: --------------Time of Release--------For------Projections-----Pot. Impact On rates

ADP National Employment Report:........8:15am................March.........40K......................HIGH

Chicago PMI......................................9:45am................March.........61.0.....................HIGH

Crude Inventories.............................10:30am................3/27..........NA.....................Moderate

Thursday:

Jobless Claims.................................8:30am..................3/27...........445k..................Moderate

ISM Index......................................10:00am.................March...........57.0...................HIGH

Friday:

Hourly Earnings..............................8:30am...................March............0.2%.................High

Non Farm Payrolls...........................8:30am...................March...........190k..................High

Unemployment Rate........................8:30am..................March............9.7%.................High

Average Work Week.......................8:30am...................March............33.9..................High

9 economics reports are due out this week, 7 of them are potential rate movers with Good Friday being the big boy; jobs report is a "must watch" this week. The Feds exit from the role of buyer means volatility has ramped up the last few days, wild swings in both directions over a short period time. Shake up type reports like these could firm up the direction bonds are headed near term or could only further the volatility. We'll see, just keep an eye on it or check back here for a break down of the jobs strategy Thursday afternoon and the fallout on Friday after the markets react to the news.

In most things in life and sports (especially Baseball which is right around the corner) we pay a lot of attention to and put a lot of emphasis on averages. We look at average daily expenses for budgeting, we determine what time we leave for work or a trip based on the average time it takes us to get to our destination, we predict most things in our lives, no matter how important or how trivial based on averages. We also will perk up and take notice when those averages start trending in a new direction. For example we might look at our monthly gas expenses. Lets say it takes an average of $40 each time we fill up. Multiple factors play on that average but we subconciously take those into account. Lets say over a few weeks it only takes $35/tank but we also know that by chance over that time frame we were filling up with just under a quarter of tank already there. Then the next few weeks it takes $43/tank but we coasted in on fumes. We will still say that it takes $40 to fill up because we account for those little factors that are playing into small changes in the per tank price. We start paying attention when we notice the $43/tank goes to $45/tank under static conditions and that's when we notice that the per gallon price of gas has gone up and has stayed there and/or continued to move higher. Like all averages we account for, the longer the time period we're pulling our sample from, the more substantial or meaty that average is. For example if I say the average of gas over the last 7 days is $2.60/gallon, that means only so much to you. It's just 7 days. If i say that the average price of gas over the last 200 days is $2.60/gallon, that will carry a lot more weight just because that's a lot more days and a lot more tanks of gas that are being put into that average.

Mortgage rates are no different. A very important measuring stick is 200 day moving average. When bond prices are above that average, the 200 day is a very strong floor of support for prices and therefore a very strong guardian to low mortgage rates. When bond prices are below that 200 day average, it's very tough to break through and therefore it's very difficult to see interest rates move any lower without some seismic shift in the market or some Fed announcment/piece of legislation/etc., that changes the rules of the game.

On Feb. 23rd mortgage bonds made a break to the upside of that 200 day moving average and therefore we saw rates drop and stay very low. Almost 1 month to do the day later as the Fed began to exit the market as a big time buyer coupled with the passage of this Health Care bill, mortgage bonds dropped WELL BELOW that 200 day moving average on March 24th. With the Fed program gone and seeing rates rise and bond prices stay below that moving average for the past week, it is highly unlikely that interest rates will revisit those lows of 2010 that we were enjoying just a week and a half ago. So if you sat on the fence, you may have missed the boat. Rates are up compared to earlier this year and unless acted on by some as of now unknown force, they are going to stay there. As I said, that 200 day moving average is a tough cookie to break regardless of what side of it we're sitting on.

That said, rates are still VERY low when you look at those AVERAGES. That word keeps popping up huh? Since 1972, the average 30 year fixed rate mortgage is 9.04%, I locked loans today at 4.875%....comparing that to the average over the last 38 years, that's pretty strong isn't it? Compared to the 4.5% 30 year fixed loans I locked and closed a few months ago, it "feels" a lot higher. It has to be kept in perspective. The point is that we're not going to get any better on rates for the most part. Just like with gas, $2.60/gallon might be the average and for some reason one day you notice it's only $2.55/gallon one day, you're not immediately going to say that's the price of gas, it's going to have to stay there for awhile. There are always little blips on the radar. So there MAY be a little drop in rates for a day but on the whole rates are up and headed only higher. Make a move, either get that refinance closed that you've been waffling over and secure your money, long term, at historically low rates or get moving on that purchase so you can buy the new house at a 10% or more discount also at historically low rates (not to mention you still have 30+ days to get the tax credit) and don't "wait for thiings to get better."

If you wait, the average says you're playing a losing hand. Call me for further details but I will do my best to help you secure that rate, long term, at lowest cost possible. Calling me to find out is free, finding out too late is a very expensive mistake.

Lets chat, it's a quick and easy conversation and it could save or make you thousands in the long run.

Keeping these 3 simple "'key thoughts" in mind:

Mortgage rates go up when the price of mortgage backed securities (MBS) go down.
Mortgage rates go down when the price of MBS go up.

So if you've been half way paying attention you know that The Federal Reserve has been buying mortgage backed securities by the truck load since Jan. 2009.

If you half way paid attention in your high school economics class you'll remember that price is driven by supply and demand and something that changes one or the other without an equal change in the other price of that "widget", borrowing the term, but that price will go up or down accordingly.

Putting those three strands together; the Fed has "artificially" increased the demand of mortgage backed securities which has in turn pushed higher and held higher the price of those mortgage backed securities, which has kept rates at historically low for an extended period of time.

That program ends one week from yesterday and as always, the market moves before the actual end date. You may have heard the phrase "buy the rumor, sell the news." Well the news got sold in the last 2 days of trading.

here's what happened;

For the last year, various technical factors that would have normally pushed rates up, i.e. money flowing into the stock market or better than expected economic news, those things have had a dampened impact on bonds because the US Government is a HUGE buyer and those dollars in volume like that are insanely persuasive to say the least.

That support is gone, only 4 more trading days of MBS purchases by the Fed so support is gone. 2 bad treasury auctions in a row, basically saying there is not much interest in foreign investment in US debt, plus the health care impact, real or imagined it's working on the market, and money flowing to stocks, MBS started down the hill yesterday and there was no backboard to stop it. 5 rate sheets since yesterday morning and we're looking at almost a .5% jump in home mortgage interest rates in less than 48 hours. Literally we went from the lowest rates of 2010 on Tuesday to the highest rates of 2010 on Wednesday afternoon. This is the least enjoyable "I told you so" that I've ever had in my pocket. I'm having a lot of very painful conversations with a lot of the wishy washy buyers that have been "just looking, making sure it's exactly right, prices may drop a little more, rates may get a little better...." you know the ones I'm talking about. Well guess what? It's midnight Cinderella and you aren't under contract. Oops.

All that said, late today in trading, there was a huge boost to MBS after news from the Euro Zone played buzz kill to stocks and sent money back into mortgage backed. We may get a little of the pricing back tomorrow and I have literally every 30 min block filled tomorrow starting at 8am through the end of the day. I will be taking advantage of the mornings first rate sheets and locking on 45/60/90 day locks because if it does get better, it won't be much better and it has PLENTY of room to get worse.

I have my best Realtors hitting the phones this afternoon and tomorrow morning and cracking the whip on the fence sitters and hopefully we can secure 1 or 2 stragglers into the lowest rates left out there. Everyone has been so fixated on 4/30 for the tax credit but I haven't been able to think about anything but 3/31 and the MBS program winding down....turns out that the rate hikes are there, hopefully that will be a wake up call and buying at 5.25% is still better than buying at 5.825%.

It's going to be a volatile spring and summer, the recover is on the horizon but it's not here yet. Our Government is assuming an unprecedented debt load, and though minimal now, inflation has got to be the elephant in the room.

Make your calls, talk plainly with your clients, take care of as many people as you can and get the deal done and done right. You've got to prove you belong in this industry, the future of the industry is still somewhat undefined, and the only way to do that is know what you're talking about and use that knowledge to truly help your base of business. it will come back to you at some point and be that much more rewarding.

take care friends, I'm going to sleep....I have a very long day tomorrow.

I lost a quote today, not real worried about it but it brings up something that always has left a bad taste in my mouth. For better or for worse, I monitor and study the market as much as if not more than any other loan officer out there. I know where we are, have a decent idea on where things are headed (in the short run anyway and definitely in the long run....it's that middle ground that's always tricky, but I digress.) Point being, if I am being put up against another quote by a potential borrower, I know first of all whether I'm going to be competitive on the sheer numbers before I even know what the other quote looks like. Basically I know whether my pricing today is in line with the market. Secondly, if I find out what the other quote is, I also know whether it is legit or not based on the market. I know I am not always the cheapest but I also know that I will always close when I say that will at the terms I say I will deliver.

That said, here is my issue that is prompting this little vent session and the issue is two fold. First of all, I know that the quote I lost to is never going to close. I know that because I was up on a broker and they cant find an outlet for the product at the rate they offered and at the terms that it was offered. It just wasn't there at the time of the quote and I know it's either an originator betting on the come and he/she may get lucky....most likely they are going to have to find a way to crayfish out of it or they are going to take a loss. Small sliver of hope that between now and closing the market will come to them and they can close this all the same with the borrower none the wiser. I wouldn't bet on that though because it's deceitful and it's wrong because the more likely scenario will be a minuscule market improvement that will not be enough to compensate the outrageous quote given or the market will deteriorate and the problem will be magnified. So why is it that even in this new world of lending that we're in, are there still originator out there that just don't get it? I know that before it's all said and done, the wheel will come around and they will not be happy with the way that will play out.

My second issue is actually with the borrower themselves. I don't blame ANYONE for looking for the best deal, lowest rate, lowest fee, etc., don't get me wrong. But just follow me on this for a second. I have a couple, both wearing "top shelf" clothing, driving a BMW, purchasing a very expensive piece of property, and so on. So it is obvious that in literally every aspect of their life they discriminate. They are willing to pay a premium for everything from what they wear to where they live. HOWEVER.....they go with "Bargain Basement" for the biggest ticket financing they have. I will never understand that. Quality is right there and my quote is legit and deliverable not to mention that they know for a fact I deliver (they were referred by several very happy borrowers). So assuming that the lower quote was in line with the market and just better than mine was at that time, the total savings was around $29.43/month....On a half a million dollar house. Even if you take that savings out 30 years it's $10,500 which is 2% of the transaction and it's doubtful they will be there 30 years. So the bottom line is $30/mo was worth decreased service, decreased knowledge, decreased guarantee, etc., for people who regularly are willing to pay 20% premium on ever other good/service in their lives. I am truly at a loss.

Oh well, another day and that little vent eliminated some frustration. MBS finished up for the 3rd day in a row, we have $21b in 10yr Treasury notes being auctioned tomorrow and the Fed's Beige Book will be out. Can we break through our overhead resistance at the 25 and 200 day moving average and get an improvement in mortgage rates again? If we do, then it's time for action because anyone that continues to sit the fence is going to be in for a rude awakening at the end of the first quarter. The artificial cap on interest rates will die when the Fed MBS purchase program is gone and it's not "Doomsday speak" to say that we could literally see 1%+ jump in home loan rates almost overnight.

Educate and inform your clients first, it's the only way to truly do your job. If you're so focused on just securing the business then you run the risk of severely hurting a families well being and financial security. Helping, educating, long term planning, that doesn't get you one closing, that gets you a lifetime of closings from a borrower/client that is a true fan of yours and that will help you succeed long run the way you helped them succeed.