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Fed purchased more mortgage backed securities (MBS)

03-02-09
Christy O'Connor

Supply Concerns Boost Mortgage Rates

All the economic news released during the week indicated that future inflation concerns should be minimal. In addition, the Fed purchased more mortgage-backed securities (MBS) than in any prior week. Despite these favorable events, however, mortgage rates rose slightly during the week. The reason is that concerns about the enormous supply of debt that the government will need to issue outweighed the other factors.

The amount of money the US Treasury will need to borrow to fund government spending seems to rise every week. Two weeks ago, it was the $787 billion Economic Stimulus Plan. Last week, the government announced the $275 billion Financial Stability Plan. This week, the Obama administration proposed a $3.6 trillion budget plan, with an estimated deficit of $1.75 trillion, which is enormous by historical standards. The Treasury will need to issue debt to borrow money to fund all of this. As the government issues more debt, the interest rate offered generally must rise to attract additional investors. Interest rates on similar investments such as MBS then move higher as well to compete for funds from investors.

Reflecting their concerns about an increase in supply, investors required higher interest rates at the large Treasury auctions during the week. The auction results showed that demand from foreign investors remained strong, which was very good news. If foreign investors should ever reduce their purchases of US bonds, then interest rates in the US would be likely to rise.

Also Notable:

  • January Existing Home sales fell 5% to the lowest level since 1997
  • Continued Jobless Claims rose above five million to a new record high
  • The Dow stock index dropped to the lowest level since 1997
  • The Fed purchased $25 billion in agency MBS during the week ending 2/26

Average 30 yr fixed rate:

Last week:

dn 0.05%

This week:

up 0.14%

Stocks (weekly):

Dow:

7,300

-200

NASDAQ:

1,380

-60

Week Ahead

The important Employment report will come out on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Early estimates are for a loss of over 600K jobs in February. Before the Employment Data, the ISM national manufacturing index and Personal Income will come out on Monday. Pending Home Sales, a leading indicator for the housing market, is scheduled for Tuesday. Productivity will be released on Thursday. Factory Orders, Construction Spending, and the ISM Service index will round out a busy week.

To learn more about news impacting interest rates and mortgage markets, go to www.mbsquoteline.com
To learn more about sending news letters to those you wish to inform please call 800-627-1077
All material Copyright © Ress No. 1, LTD and may not be reproduced without permission.

This post was provided by Joe Long at Waterstone Mortgage Corporation. jlong@waterstonemortgage.com.

0 Comments
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Contact more of your leads. Make more sales. Simple right?

02-04-09
Christy O'Connor

We've all had 100's of contact ratio discussions. I feel like this piece is one discussion I had with myself; it's a subject that comes up all the time. I'm sitting here at my comuter at 11 pm at night wondering what I want to do with the 3 debt settlement leads that just came in. And it dawns on me because I just got finished writing an e-mail to one of my website visitors 5 minutes ago. Here's how it hit me (pretty much in this order too)

It's 11pm; I can't call this guy even though he applied 15 seconds ago. Bummer.

I tell myself "Christy he's online now, send him an e-mail right now! Send him an e-mail that says Jonathan Smith I got your message" ( I just exchanged 4 e-mails with the other guy, that responded to my e-mail solicitation with "NO THANKS" We're helping him pull is credit tomorrow).

I mean it hits me, it really hits me. Companies hire bloggers all the time, set up auto-responders and buy instant messaging software; usually lacking greatly installed with automated messages that basically tell you have to wait forever. We go through great pains to fill 20 seats, 50 seats, 300 telemarketing seats. Lots of these poor chaps are working third shift from over seas to accommodate the American 'prime time calling hours'.

so I think further..

Transform the answering service system into a late night e-mail quality control process. The goal is to only tickle the applicant. Put a little bait out there and then give him just enough to double verify the lead to get a firm phone appointment for the debt settlement representative. Now I mean tickle him not make the entire presentation so the consumer just ignores the rep's call because he was given too much information that allows him to actually make a decision. The scripting would need a keen eye just as telemarketing scripts do. Create scripts and boundaries for your 'late night typers' perhaps a message to the consumer like: "Hi Jonathan, I got your message about wanting to reduce your debts. I am here now processing your online form submission. Please write back with the time you would for us to call you tomorrow." - if he replies through e-mail, then I would go so far as to reply back to him one more time to reward his response (I believe he will, in some sense, feel rewarded and also obligated to answer the call the next day). "Ok Jonathan, Mark will be calling you tomorrow at that time. Thank you for replying back to me so late. You have a nice night."

Now my Indian friends don't take offense. There will be an import consideration for this business process if outsourced. It will be imperative that the typers have a good handle on the English language in written form. Good conjugation is a MUST otherwise I believe it will kill leads not breath more life into them.

Maybe I'm just full of myself but I believe this will work to increase overall contact ratios and most importantly, sales ... You don't have to talk to someone over the phone to contact them. I have to guess that if done properly the contact ratio on leads submitted after calling hours will go up 20%, possibly more.

Christy O'Connor
President

OCONCO Marketing, Inc.
Berkshire County, MA
http://www.oconcoMarketing.com
http://www.Real-Estate-yogi.com
http://www.VistaLendingGroup.com
http://www.dyogi.com

2 Comments