Brentwood TN Real Estate/Homes - Vanessa Stalets REALTOR®

Brentwood TN Real Estate

Mortgage bond prices fell last week pushing mortgage interest rates significantly higher. The spread between Treasuries and mortgage-bonds continued to widen as banks and portfolio investors sold mortgage bonds to raise cash for battered balance sheets. This selling pressure coupled with investors already leery of mortgage related debt sent prices through the floor pushing rates considerably higher.

For the week, interest rates on government and conventional loans rose by 3/8% to 1/2% in rate.

The consumer price index data Friday will be the most important event this week. Trade data, retail sales, and consumer sentiment also have the real potential to cause mortgage interest rate volatility. This is the last full week of data heading into the March 18th Fed meeting.

Economic Factors

Economic Indicator Release Date Time Consensus Estimate Analysis

Trade Data Tuesday, March 11, 2008 $59.5 billion deficit Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.

Retail Sales Thursday, March 13, 2008 Up 0.1% Important. A measure of consumer demand. Weakness may lead to lower mortgage rates.

Business Inventories Thursday, March 13, 2008 Up 0.3% Low importance. An indication of stored-up capacity. A significantly larger increase may lead to lower rates.

Consumer Price Index Friday, March 14, 2008 Up 0.3%, Core up 0.2% Important. A measure of inflation at the consumer level. Lower than expected increases may lead to lower rates.

U of Michigan Consumer Sentiment Friday, March 14, 2008 70.5 Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates.

Consumer Price Index

The Consumer Price Index is widely accepted as the most important measure of inflation. The CPI is a measure of prices at the consumer level for a fixed basket of goods and services. The National Statistics Office and the Bureau of Agricultural Statistics of the Department of Agriculture collect price data for the computation of the CPI. Since it is an index number, it compares the level of prices to a base period. By comparing the level of the index at two different points in time, analysts can determine how much prices have risen in that period. Unlike other measures of inflation, which only factor domestically produced goods; the CPI takes into account imported goods as well. This is important due to the ever-increasing reliance of the US economy upon imported goods. Analysts primarily focus on the core rate of the CPI which factors out the more volatile food and energy prices.

High oil prices continue to weigh heavily upon the financial markets. The health of the economy remains uncertain. Stocks continue to bounce up and down. Fed Chairman Bernanke recently indicated that inflation could complicate the Fed's next move. He specifically noted the risk of higher energy and a weak dollar eventually passing into the core rate. The Fed has itself in a precarious position of wanting to stoke the economy amid the real possibility of increased inflation.

Market participants expect the consumer price index to be critical heading into the Fed's meeting next week. Inflation friendly data may lead to improvements in mortgage interest rates. However, unexpected consumer price spikes may push interest rates higher in the short-term. The flight to quality purchasing of mortgage bonds has all but dried up and only the Treasury market has benefited from the continued global economic uncertainty.

A cautious approach to lock decision is prudent considering the uncertainty surrounding the release and the continued mortgage interest rate volatility.
*Information courtesy Tonya Esquibel WR Starkey Mortgage, FranklinTN*

Vanessa Stalets
Brentwood TN Real Estate

RE/MAX Elite

615-957-6333

615-661-4400

Brentwood TN Real Estate

Everyday seems to bring more bad news for the Housing Industry. Lenders caught in the sub-prime melt down are closing their doors while banks and prime lenders are tightening loan requirements. Mortgage rates are rising and PMI (private mortgage insurance) showing industry wide narrowing of guidelines and options all contribute to the general "panic" atmosphere buyers perceive in the Brentwood TN Real Estate market as well as other areas.

Add to that increasing tax, foreclosures and sellers who have not yet seemed to see the light and you have one big roller coaster ride, complete with stomach dropping fluctuations in the stock and bond markets. The FED has slashed rates attempting to hold off a recession that some say is already here. Too little too late? Will it get worse from here?

Maybe so, but I think the bottom is much closer than buyers may guess.

Now is the time to buy, before interest rates rise substantially. I foresee 3rd and 4th quarter rises as the market adjusts and evens out more.

The spring season is almost here, now is the time to take the plunge.
There will not be a better time for months, possibly a year or more. With FHA and conforming loan limits being raised for 2008 and Fannie and Freddie speculated to not be offering these until June or so there will be a small window in which buyers can scoop these "treats" up.

Buyers educate yourselves on the "real" numbers and take a pass on the news headlines decrying doom and gloom for buyers in general. The media is in full panic monger mode and nothing sells like recession fear!

Look deeper, engage the services of knowledgeable and integrity bound lenders and Realtors. We are here to help clear away the fog of fear and show the very real opportunities for the smart buyer in the current market.

So buyers, take your fingers off the panic button, pick up the phone,
grab your mouse and keyboard and start
looking for the the facts in your area!

The sky is NOT falling!

Those who move now will be ahead of the pack come next year!

Vanessa Stalets
615-957-6333
Brentwood TN Real Estate

RE/MAX Elite
615-661-4400

Brentwood TN Real Estate

President Bush signed HR 5140 aka: The Economic Stimulus Act of 2008 into law on February 13th. The law took effect immediately and is effective through December 31st of this year. A major point of the bill for those of us in the mortgage industry is that it significantly increases mortgage lending limits in certain areas of the country but the bill leaves a lot of questions on the table and leads to a great deal of confusion as everyone seems to be asking the question "So what does this mean for loan limits in my area?" Let's take a closer look and see if we can make more sense of HR5140.

For conforming lending, the bill raises current conforming loan limits from the current $417000 cap to 125% of the median home price in high-cost areas with a new cap at $729750. This statement leads to several questions which I am including answers for:

1. What is "median home price" and how do I find out what it is in my area?

The National Association of Realtors aka: NAR releases a report of statistics on state-by-state existing- home sales and metropolitan area median home prices each quarter. The state existing-home sales report includes single-family houses, condos and co-ops. The price report reflects sales prices of existing single-family homes by metropolitan statistical area (MSA). MSAs are defined by the U.S. Office of Management and Budget and include the specified city or cities and surrounding suburban areas.

You will find the 4th quarter 2007 median home price reports by state at

http://www.realtor.org/Research.nsf/files/STATES.pdf/$FILE/STATES.pdf.

You will find the 4th quarter 2007 median home price report for metropolitan areas at

http://www.realtor.org/Research.nsf/files/MSAPRICESF.pdf/$FILE/MSAPRICESF.pdf.

2. What is a high cost area and how do I know if my area is considered such? High cost areas as those areas of the country where the trend of median sales prices has been appreciating at a rate higher than the average rate in other areas of the country. For these areas, the new conforming loan limit will be 125% of the median sales price for the area as of 12/2007. My understanding is that the following are those areas considered as "high cost areas" that will be affected by the new conforming loan limit increases:

· CA MSAs: Los Angeles, Napa, Oxnard, Riverside, Sacramento, Salinas, San Diego, San Francisco, San Jose, San Luis Obispo, Santa Barbara, Santa Cruz, Santa Rosa, Stockton, and Vallejo

· CT MSA: Bridgeport

· DC MSA: Washington

· FL MSA: Naples

· HI MSA: Honolulu

· MA MSAs: Barnstable and Boston

· MD MSA: Baltimore

· NJ MSAs: Atlantic City, Ocean City and Trenton

· NY MSAs: Poughkeepsie and New York City

· OR MSA- Bend

· VA MSA: Charlottesville

· WA MSA: Seattle

Other areas of the country are not considered high-cost areas and thus, will not be affected by the new conforming loan limits provided from HR5140.

It is being reported that we should not expect to be able to use lenders using these new limits until June or July because Fannie Mae and Freddie Mac need ample time to adjust their guidelines to accommodate these higher loan sizes. Therefore, in reality, with the current bill set to expire December 31st, we may have limited time to take advantage of these loan limit opportunities. It is being widely speculated, however, that the current expiration date is likely to be extended when it's proposed for renewal later this year.

The stimulus bill also increases the loan limit for most FHA loan programs in high-cost market areas from the current limit of $372,790 to 125% of the median sales price of each area not to exceed $729,750.

So when can we expect to hear of further clarification from Fannie Mae, Freddie Mac and the Department of Housing and Urban Development aka: HUD as to the new loan limits for all areas? HUD is given 30 days from the date of bill passage in which to update their systems so we should expect an announcement regarding FHA limits to come no later than March 14th. Speculation is that it may take Fannie and Freddie longer than 30 days to work through the changes they need to implement with their guidelines and systems.

*Information courtesy Tonya Esquibel, WR Starkey Mortgage, Franklin TN*

Vanessa Stalets
Brentwood TN Real Estate

RE/MAX Elite
615-957-6333
615-661-4400

Brentwood TN Real Estate

Mortgage bond prices fell last week pushing mortgage interest rates higher. Stock strength the beginning of the week hurt mortgage bonds. Stronger than expected inflation data also pressured bonds. Inflation erodes the value of money received in the future. Bond investors require a higher rate of return as inflation rises. Fortunately bonds bounced back erasing some of the earlier losses towards the end of the week with some stock weakness Thursday afternoon and a significantly weak Philadelphia Fed survey. For the week, interest rates on government and conventional loans rose by 3/8 of a discount point.

The gross domestic product data Thursday will be the most important event this week. Producer price index, consumer confidence, durable goods, new home sales, income, outlays, and sentiment data also have the real potential to cause mortgage interest rate volatility.

Economic Factors

Economic Indicator Release Date Time Consensus Estimate Analysis

Existing Home Sales Monday, Feb. 25, 2008 Down 1.8% Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates.

Producer Price Index Tuesday, Feb. 26, 2008 Up 0.4%, Core up 0.2% Important. An indication of inflationary pressures at the producer level. Lower figures may lead to lower rates.

Consumer Confidence Tuesday, Feb. 26, 2008 83.0 Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates.

Durable Goods Orders Wednesday, Feb. 27, 2008 Down 3.5% Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.

New Home Sales Wednesday, Feb. 27, 2008 Down 0.6% Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.

Preliminary Q4 GDP Thursday, Feb. 28, 2008 Up 0.7% Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.

Personal Income and Outlays Friday, Feb. 29, 2008 Up 0.2%, Core up 0.2% Important. A measure of consumers' ability to spend. Weakness may lead to lower mortgage rates.

U of Michigan Consumer Sentiment Friday, Feb. 29, 2008 None Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates.

Preliminary GDP

The Gross Domestic Product (GDP) is one the most important reports during any given quarter. GDP is a measure of US economic output and spending. The report is significant in that it provides investors, analysts, traders, and economists with a comprehensive report of the direction of the economy. In addition, it also influences the decisions of Federal Reserve policy makers, Congressional budget employees, and corporate financial planners.

GDP is the sum total of goods and services produced by the United States. The initial report is often based on incomplete data. Therefore, additional revisions are released over the following two months. There are often substantial differences between the initial release and the revisions. The mortgage-backed security market generally responds favorably to weaker GDP growth.

The preliminary fourth quarter gross domestic product data this week has the potential to move mortgage interest rates. A cautious approach is necessary to protect against market volatility
*Information courtesy Tonya Esquibel, WR Starkey Mortgage, Franklin TN*

Vanessa Stalets
Brentwood TN Real Estate

RE/MAX Elite
615-957-6333
615-661-4400.