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Housing And Mortgage Predictions For 2011

Tommy — Wed, 29 Dec 2010 13:52:02 +0000

With 2010 coming to a close, the “experts” are out in full force, making predictions for next year’s housing and mortgage markets on business television and in the papers.

Predictions for 2011 are wide-ranging:

Some say home prices will rise in 2011
Some say home prices will fall in 2011
Some say mortgage rates will rise in 2011
Some say mortgage rates will fall in 2011

The problem with housing and mortgage predictions is that — like all predictions — they’re just educated guesses about the future. Nobody knows what will really happen with the housing and mortgage markets in 2011. All anyone can do is theorize. As laypersons, though, it can be hard to separate theory from fact.

Television can make that task even more difficult at times.

As an example, when a well-dressed economist goes on CNBC and presents a clear, succinct argument for why home prices will fall on 2011, we’re inclined to believe the analysis and conclusion. After all, the outcome seems plausible outcome given the facts. But then, immediately after, a different economist presents an opposite argument — that home prices will rise in 2011 – and her analysis seems sound, too.

Even Freddie Mac can’t see the future.

Last year, the government group predicted mortgage rates to 6 percent in 2010. That never happened, of course. Instead, conforming mortgage rates dropped over a 7-month period this year to levels best be described as “historic”. Freddie Mac couldn’t have been more wrong.

So, what’s a San Antonio homeowner to believe?

About the only thing that’s certain right now is that mortgage rates remain low by historical standards, and that home prices do, too. Also, that both housing and mortgage markets appear to be riding momentum higher into 2011. This suggests that it will be more expensive to buy and finance a home by the end of 2011.

Until that time, however, predictions are just guesses.

Consumer Confidence Report In

Tommy — Tue, 29 Dec 2009 16:29:10 +0000

CC came in at 52.9, very close to the predicted 53.

Rates are stable at the moment and are not changing leading into the auction here shortly.

Rates Not Taking a Break

Tommy — Mon, 28 Dec 2009 15:13:14 +0000

Currently down 34 bps for the morning, rates may start .125% higher this morning.

We’re teetering right under the 200 DMA and in volatile territory, so hopefully you’ve taken advantage of our FREE advice of locking in your loan programs a while ago. Right now is not a time to be risking your rate, and a locking stance is what I see to be of most benefit.

Sound risk management is a strategy that I use when advising clients of whether it is more beneficial to lock in or float their mortgage loan, and let me be the first to tell you, this is extremely crucial when you are dealing with the biggest debt of your life. Analyzing economic reports and their effects on the mortgage bond market is something that you have to keep on top of, and without this data (yes, I sound like a nerd), you and your loan are gambling!

Guys, another holiday week, so that means its short in terms of economic reports and its time for YOU to enjoy! Lock in your mortgages and spend some QT with your family.

Rates Testing Support

Tommy — Wed, 23 Dec 2009 19:27:41 +0000

MBS very volatile today due to all the reports.

The New Home sales dropped 11.3% in November to 355K as opposed to the 438K that was expected, and while this helped MBS, the Treasury is now going to auction off $122B instead of the $118B that was expected, so this brought them back down.

If you have a new transaction in the works today, I’d go ahead and just lock it and play it safe.

Morning Market Update 12/18/09

Tommy — Fri, 18 Dec 2009 14:27:02 +0000

Currently down around 12 bps, there are no economic reports coming out today.

Yesterday was a decent day in terms of mortgage bonds, as we were in the green practically all day.

Bernanke got voted in for a second term as Fed Chairman, and the Fed stated that they intended to keep rates low for an extended period of time, however, the MBS purchase program is going to end on March 31, 2010. The MBS (mortgage backed securities program) is where the Fed buys pools of various mortgage bonds in case you didn’t know.

Let’s clear something up very quickly.

When speaking to several clients, I hear “Oh the Fed is ‘reducing’ rates” or “I heard the Fed is keeping rates at 0%” and expect a 0% mortgage rate on their home loan- THIS DOES NOT MEAN MORTGAGE RATES FOLKS.

The Fed does not control mortgage rates. Mortgage Backed Securities are what determine mortgage rates and it depends on how those securities are traded and at what price that result in the current market mortgage rates.

What the Fed controls is the “Fed Funds Rate” or “Discount Rate” and that is it. These are both very short- term rates that impact credit cards, Home Equity credit lines, auto loans, and most importantly the rate in which banks charge one another to lend money to each other overnight (overnight lending rate). This is basically for one day loans that banks facilitate between themselves to ensure liquidity. When the Fed announces a “cut in rates”, mortgage rates most often will actually move in the opposite direction as the Fed change, as this has to do with the dynamics within the financial markets.

Please read this as it is very important!

MBS Program set to expire soon
Tax Credit Ending soon
FHA Guidelines possibly tightening up
RESPA Changes

Folks, if you are looking to buy a home or refinance, NOW IS THE TIME TO DO IT while rates are still low and the incentives are still here. This is not going to last forever!

Take advantage while you can, and have a fantastic Friday!

Morning Market Update 12/17/09

Tommy — Thu, 17 Dec 2009 16:07:28 +0000

Good morning folks,

Currently we up about 36 basis points (bps) as of this morning, as stocks are in negative territory and the Philadelphia Fed Index (an indicator of manufacturing sector trends) came in higher than expected.

We’re bouncing back from some of the losses from the past week, but I wouldn’t expect MBS to move enough to improve mortgage rates today by a significant amount, if any. Stay tuned for any updates.

Morning Market Update 12/16/09

Tommy — Wed, 16 Dec 2009 15:21:48 +0000

Currently up around 6 bp for the morning and hovering around the 100 Day Moving Average (DMA), the CPI (Consumer Price Index-average price of basket of goods spanning over 200 categories) came in at the estimated 0.4% as well as the Housing Starts (number of new monthly residential construction projects that are underway) which came in at 574k.

The FOMC meeting is scheduled for 2:15pm EST later today. Basically what’s going on here is that the Fed will likely state that they intend to keep the Federal Funds Rate at 0% for an extended period of time into 2010. This will ease fears on inflation as we approach the new year, and hopefully keep mortgage rates stable for a little while longer.

I’d stay where you’re at on any rate locks for the moment as we enter the FOMC meeting later this afternoon.

Cheers, and have a great day!

Morning Market Update 12/15/09

Tommy — Tue, 15 Dec 2009 15:53:40 +0000

Top of the morning to everyone!

So this morning’s economic reports swung mortgage rates in the direction you’re not wanting to hear.

The PPI (Producer Price Index- measures wholesale inflation) came in higher than expected, and the NY Empire manufacturing index came in much lower than expected.

Since we’ve seen the hits this morning, there would be no point in locking in losses, so continue to float if you have a transaction going on.

Folks, interest rates change daily and due to the economic environment that we are currently in, we are seeing these great low mortgage rates. You must understand that in 2010, you will undoubtedly see higher mortgage rates come across because we can’t be in a recession forever.

Take advantage of what you have in front of you and don’t look back. There are WAY too many incentives to cash in on!

30 Year Bond Results In

Tommy — Thu, 10 Dec 2009 18:14:27 +0000

And another auction hits the dust.

30 Year Bond results are in and, like yesterday, not good news. Currently down 28 bps for the day currently hedging both levels of support.

I would play it safe and lock in any transactions, folks.

Morning Market Update

Tommy — Mon, 07 Dec 2009 14:02:07 +0000

Good morning all…

MBS is currently up 16bp on the morning and hovering around the 1st level of support.

As for today, there are no economic reports set to come out, so looks like what will be a quiet Monday. (Kind of like what Tim Tebow’s experiencing today…)

2 important days this week are Thursday (Jobless Claims) and Friday (Retail Sales). On Thursday we will also see the auction of the 3 and 10 year notes, as well as the 30 year bonds.

Stay put and if anything changes, I’ll be back.