Robert Rauf

Last week had its share of fairly large up and downs, but ultimately we ended up with a pretty decent gain for the week with Fannies trading up 19/32nds by the close on Friday... That translates to a noticeable improvement in Mortgage rates last week (but some bumps and bruises along the way) Most of the improvement in Mortgages was due to the sell off in the stock market.

Well this week has its share of challenges. Here is this weeks calendar:

• MondayNovember 2: (can you believe it is November already??) October Institute of Supply Mgt was expected at 53.0. Well we lost about 7/32nds today. which is not a good way to start the week!
• Tuesday November 3: DON'T FORGET TO VOTE!
• Tuesday: September Factory Orders expected up 1%. Not likely to do much more than take up space on this page.
• Tuesday: First day of the Fed Meeting.
• WednesdayNovember 4: October Institute of Supply Mgt Supply index expected 51.8. If this comes in near expectations it is not likely to move rates. If it pops higher than 52, we most likely will see rates bump up a bit.
• Wednesday: Fed meeting over at 2:15. No one expects the Fed to change rates... The analysts will certainly read every word of the post meeting statement for hints at what is coming. This is most likely a non event unless we are surprised by an exceptionally weak or strong view of the economy. Facts are the economy is slowly improving. The question is: "how fast?" and will the Fed move sooner than anticipated.
• ThursdayNov 5: Initial Jobless claims expected down 6,000. Zzzzzz look at Friday. This is just a shadow in comparison to Friday's number.
• Thursday: Third Quarter Productivity expected +5.5% and Unit Labor costs -4.5%. Productivity up and costs down... No fear of inflation in this report! But unfortunately not enough to move interest rates down.
• Friday November 6. October Non farm Payroll expected -175,000 and Jobless rate 9.9% and an average 33.1 hour work week. The Jobless rate is up, but the non farm number has been improving based on the beginning of the year. It is not likely we will see a bump up in rates with out a 9.7% jobless rate and 150k job loss. As forecast this is not likely to do much more than be supportive of steady interest rates.
• Friday: September Wholesale Inventories expected -1%. Even with this being an old number it will be looked at to see if there is any demand in wholesalers rebuilding inventory. This is most likely going to swept under the rug since it comes out right after the employment report.

The biggie of the week is hands down Friday's employment report. Leading into Friday's report we are most likely going to see stock market fluctuations be the driving force in the credit markets this week. If we have improvement in stocks we will lose some ground in the credit markets.

That's this weeks movers and shakers, Have a great week!

Rob

Robert Rauf

Mortgage Banker

www.RobertRaufHomeLoans.com or my blog: http://activerain.com/blogs/rrauf

(732)223-1630 x102

Since 1987 I have been helping my clients fulfill their dream of home ownership!

Real Estate Mortgage Network

NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey

The last 3 weeks have not been good ones for the Mortgage world. Last week was a crazy up and down week that ended up only slightly negative by the close on Friday, but bumpy enough along the way that it left many feeling queasy. almost every day last week had some VERRRRY negative moments but the market was able to come back to almost even each day.

The initial sell off a few weeks ago that has rates up now was mostly because of stocks jumping above the 10k mark. This piece of positive news was not taken well in the credit markets. and if you read any of my blogs on the subject, you will know that Good News is BAD news for interest rates.

This weeks calendar is a busy one:

• MondayOctober 26: Treasury auction of $7Billion 5 year IIS. This is an inflation indexed security so it is typically well accepted. Ahead of the auction the market was not doing well, but it regained some of its ground since it started.
• TuesdayOctober 27: October Consumer Confidence expected 53.5. It really doesn't matter what consumers think. What matters most is what they are actually doing. So this number is not expected to move things in the market. You can feel bad, but still spend money!
• Tuesday: Second auction of the week with $44Billion in 2 year notes. The shorter term notes have been fairly well received, and this one is likely to draw decent bidding from foreign and domestic investors. Not likely to move things today.
• WednesdayOctober 28: September Durable Goods Orders expected +1% ex auto +0.7%. There have been surveys that may point towards a surprise in factory activity. If we get surprised with a number stronger than the forecast here it will not be a good day for rates.
• Wednesday: Auction #3 for the week with $41Billion in 5 year notes. This one is a nail-biter. We need this to be well bid. There is enough supply here that a poorly bid auction will send ripple effects through the entire credit market... (which is NOT good for mortgage rates). If it is well bid we will see steady rates.
• ThursdayOctober 29: 1st estimate of third quarter GDP, expected +3.2%. As I have mentioned in previous blogs... Inventory has been bled dry over the first half of the year, that is why this number looks so strong, it is due to businesses replacing inventory. As forecast it is most likely supportive of steady to possibly a slightly higher rate, it would take a number weaker than 2.5% to help bring rates lower.
• Thursday: Initial Jobless claims expected down 6,000. likely to be supportive of steady rates.
• Thursday: Auction #4 with $31 Billion in 7 year notes. This one may be more important than the 5 year. We will see what the investment world thinks about prospects for the economy into the future based on how well bid this auction is. If poorly bid, that means they think the economy is improving and want a higher yield to commit to a rate for 7 years. So that "Good News" is a bad thing for interest rates. This one could fall on either side of the fence.
• FridayOctober 30: September personal income expected to be flat, Spending to be -0.5% and PCE index +0.2%. The PCE piece of this is the exact number that Trumps Tuesday's confidence number. if consumption is up more than forecast it will not be good. But a weaker PCE will definitely be supportive of lower rates.

The biggie of the week has to be the record $123 Billion in the auctions. Supply is always an issue in any market. So far this year we have been lucky with enough activity and enough investment in the auctions to keep rates from being hurt along the way. Keep your fingers crossed for these. The numbers themselves are most likely priced into the market and not likely to be big movers unless there is a surprise. The Auction is an unknown and unpredictable event that we will have to wait and see.

The trend over the last 3 weeks has bee towards higher rates, could be be due for a positive week? It is hard to tell. I would play it safe and Lock in.

Have a great week!

Rob

Robert Rauf

Mortgage Banker

www.RobertRaufHomeLoans.com or my blog: http://activerain.com/blogs/rrauf

(732)223-1630 x102

Since 1987 I have been helping my clients fulfill their dream of home ownership!

Real Estate Mortgage Network

NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey

Finally, some good news in the form of relaxed guidelines.

This is some great news. PMI Companies have caused many of the guideline changes we have experienced over the past few years since they were not willing go offer PMI on anything that had risk at all.

Just a few weeks ago we got news that we can do 10% down second homes. Here are the requirements:

• 720 Minimum credit score
• $417,000 Max Mortgage

Even if you don't dabble much in the Vacation Home market, this is a great sign. This news came from one of the more conservative PMI Companies. The fact that they are willing to insure vacation homes shows that they have a renewed confidence in the Real Estate Market. This confidence must mean that they see a stable improving market or they would not add any risk to their portfolios

Have a great week!

Rob

Robert Rauf

Mortgage Banker

www.RobertRaufHomeLoans.com or my blog: http://activerain.com/blogs/rrauf

(732)223-1630 x102

Since 1987 I have been helping my clients fulfill their dream of home ownership!

Real Estate Mortgage Network

NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey

I don't even want to talk about last week, but I guess I need to.Friday was a horrific day in the credit markets and fannies lost 29/32nds by the close of business. That was a total loss of 26/32nds for the week. that may not sound like much, but that is an ugly number! WHY? Well it had a lot to do with comments that came from the Fed Chair. Bernake said that the Fed is ready to raise short term rates when they see sustainable growth. Here is the fun part: This is nothing new, this is what he has said over and over this year.. Basically "if we need to we will". This time the market seems to have taken the words and read between the lines and now think we will see the Fed begin to raise rates in the first quarter of 2010. prior to Friday they seem to have thought things would stay the same until the 3rd quarter of 2010. If you have been reading any of my blogs you may remember me saying I thought we wouldn't see any sustainable growth until the end of the first quarter at that time we will probably see the Fed begin to move.

Well, if you were wondering why the world blew up on Friday, that is why. the good news is we gained back 11/32nds when the market opened and we have pretty much stayed there most of the day.

Here is what we have in store for this week:

• Monday: the market was closed, that's why I am a day late on this!
• Tuesday October 13, 2009: No significant news today, but a happy credit market and some improvement in rates
• Wednesday: I will be speaking at the OCBR's fall round table in Toms River.
• Wednesday October 14: September Retail sales expected -2.1% ex auto +0.2%. This is a pretty weak number, but it was the end of the cash for clunker program and is likely to be dismissed because of that.
• Wednesday: August Business inventories expected -0.9%. August numbers are old and not likely to be market movers. But eventually the decrease in inventories will lead to increased production to re-stock the shelves, so the inventory number doesn't matter that much now, but it may effect a production number down the road.
• Wednesday: September Fed Meeting Minutes released. Expect this report to be read, and re-read looking for clues. It is not likely that there will be anything new, but a hint at sustainable growth will be bad for rates (good news is bad news in the credit markets folks)
• Thursday, October 15: September CPI expected +0.2% with a core of +0.1%. If the core stays below +0.2% it should be a non event. If we get surprised with a big increase in the core CPI we will see a sell off in the credit markets leading to higher rates.
• Friday, October 16: September Industrial Production expected +0.2% and Capacity Utilization 69.7. This bump up is mostly inventory rebuilding, as forecast it is not a sign of a boom, so not a likely market mover.

Well, that's what we have in store for the week. The biggie is most likely the CPI number on Thursday. If this is as forecast it is likely to be a quiet week for rates and we may actually see a little improvement in the market after the big sell off last week. We do appear to be a bit over sold and it is not unusual to get a bit of a bounce back. I just doubt the bounce back will be to levels as "nice" as we had unless we are surprised by an exceptionally weak number or Fed comments that counteract the Friday Leak.

By the end of the week I bet we look pretty much unchanged, but wouldn't be surprised by a slight improvement.

I hope this is a useful tool for you

Have a great week!

Rob

Robert Rauf

Mortgage Banker

www.RobertRaufHomeLoans.com or my blog: http://activerain.com/blogs/rrauf

(732)223-1630 x102

Since 1987 I have been helping my clients fulfill their dream of home ownership!

Real Estate Mortgage Network

NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey

Whats happening to Mortgage Rates this week?

Last week was an overwhelmingly "happy" week for mortgages after an unchanged day on Monday we ended up with a gain of 29/32nds in Fannies by time the closing bell rang on Friday. This is mostly because word leaked out that The Fed stimulus will not abruptly stop as we originally thought in October. It is more likely to taper off over the next few quarter... Great news since Uncle Sam will stay in the market as a buyer.

This week is a busy one with everything crunched into a few days at the end of the week.

Here is what we have on the schedule:

• Monday and Tuesday September 28 & 29th: No News days. In the absence of any news we have continued on last weeks rally with the market up 7/32nds as we approach the close.
• Wednesday, September 30: final estimate of the second quarter GDP, expected -1.1%. The economic decline is tailing off, but the inventory reduction this year will make things look better as industry tools up to replace inventory. This number would have to be significantly stronger to cause an upward move in rates.
• Thursday, October 1: ( OCTOBER ALREADY???) September Personal income, Spending and PCE expected +0.1%, 1.0% and +0.1%. The consumption index is always the biggie here since it truly shows what the consumer is doing. As forecast it is supportive of steady to possible lower rates.
• Thursday: Initial Jobless claims, expected up 5,000. Not a mover especially since Friday is the big number.
• Thursday: Bernake (supreme ruler of the money world) testifies on financial reform in front of the House Finance Committee. Ben will probably be grilled by the panel like a pork chop! Investors will look for any new insight but it is not likely that there will be anything new released in this format.
• Thursday: September institute of Supply mgt, Manufacturing index expected at 54.0. This should be factored into any trading already, so it is not a likely market mover.
• Friday October 2nd: The jobless report with Non farm payroll expected at -188,000, Un Employment at 9.8% and average hourly earnings at +0.2%. While we continue to see businesses lay off workers it is not at the same pace as the rest of the year andthe non farm number is reflective of that. The average loss in the first quarter was 691,000 jobs/month, so you can see it is much better now. This report should be supportive of steady rates unless we see a loss of 150,000 jobs or less and the jobless rate come in at 9.7% or better. If it becomes a good news report, rates WILL go up, almost instantly.
• Friday: August Factory Orders expected +1.1%, This is an old number at this while the forecast is quite a bit weaker than last months report, it is not likely to do much than use up toner if you print this.

Well the week has started off quite well, and we have a lot to chew on this week. I expect we will probably see fairly quiet trading for most of the week unless the stock market has significant swings up or down. Stocks up will be bad for rates, stocks down will be good for rates.... If we have a calm stock market it will be quiet in the credit markets (bonds and mortgages) as the markets await Friday's Employment report which is most likely the "biggie of the week" With no surprises in the data, we may actually see slight improvement in rates this week, but a surprise will likely cause a knee jerk reaction to the up side.

I hope you find these reports to be useful, as you can see there is a lot more than just an individuals whim that makes the Mortgage Rate world move.

Have a great week!

Rob

Robert Rauf

Mortgage Banker

www.RobertRaufHomeLoans.com or my blog: http://activerain.com/blogs/rrauf

(732)223-1630 x102

Since 1987 I have been helping my clients fulfill their dream of home ownership!

Real Estate Mortgage Network

NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey