Real Estate 8/09/2015 @ 10:57AM 1,529 views

What The Employment Report Can Do To Your Home Buying Plans

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No other economic report gets more attention, is more closely watched, analyzed, dismissed, cited as a barometer or has a bigger impact on mortgage interest rates than the Employment Report. I have been in front of a TV at 8:30 in the morning on the first Friday of almost every month for the past 25 years, waiting with great anticipation to see what that number will look like.  This is immediately followed of course with fretting and wondering about how the financial markets will respond and what will happen to interest rates that day.
The mighty jobs report can have an immediate and significant impact on your monthly mortgage payment. Generally speaking; good economic news tends to be bad interest rate news and vice versa.
A strong Employment Report with lots of jobs created, a real increase in hourly wages and a low unemployment rate without a labor force participation asterisk, is often the start of a tough day for interest rates. The financial markets tend to take robust jobs numbers and bolster economic forecasts, reckoning that growth will surely follow and it is now safe to chase riskier equity market assets for bigger returns.

Meanwhile, the safe haven credit markets drain from the flight-to-risky runoff and suddenly there are more Mortgage Backed Securities (MBS) than there are interested buyers. MBS prices move lower and yields move higher. Higher yields mean higher mortgage rates, higher mortgage rates mean higher monthly mortgage payments, higher monthly mortgage payments may alter a well-constructed home buyer decision tree. Every house on the market just got more expensive.

The Best And Worst Cities To Buy A Home Rather Than Rent

Financial markets prognosticators argue that economic forecasts are already “priced-in” to the markets well ahead of the actual report. That would mean of course that the jobs report release would have virtually no impact on trading activities, as long as the results are in line with the forecast.  This past Friday we saw numbers that were near forecasts and interest rates weathered the day virtually unchanged.
Once in a while the actual numbers reported are significantly weaker or stronger than expected and the financial markets can respond dramatically.  An unexpectedly weak jobs report has been known to trigger a rally in the credit markets and drive rates lower, while upward pressure on rates can result from unexpected strength.
Time was, the unemployment rate alone could be market moving, but now all of the economic data contained in the report is digested and assimilated into market force movements. Right now all eyes are on the Fed waiting to see when they will pull the trigger on that long awaited, hyper-analyzed short term rate hike.  Bets are placed on which economic release will be the last piece of the tipping point puzzle and the big daddy is the Employment Report. After seeing the results from this past Friday, the smart people seem to think that September will not be when the Fed’s generously accommodative monetary policy ends.

After 25 years of objective observation, I submit that the headline unemployment rate no longer has the muscle it once had.  It is and always has been just a telephone survey of selected households, until it was coopted as a political football on the eve of the 2012 elections. Now it has become more of a political tactic than an economic indicator and has lost the stand alone market moving credibility it once had.
The financial talking heads tend to gloss over the underemployed, the jobless claims and the newly-retired-because-no-jobs-exist, and talk about how great things are because the unemployment rate is 5.3% today. But ask the downsized class how they are doing after losing long-term employment in their mid-to-late fifties; find out what their prospects are like, show them that blockbuster 5.3% unemployment rate and see what they have to say.
And for now, get used to that higher monthly mortgage payment.

Dollar rises as Fed keeps interest rates on hold

Author Adam Carter Published August 2, 2015 Comments 0

It is imperative to state that the unemployment rate has reached a seven year low of 5.3 percent which is being seen as a huge positive.

“They haven’t made up their minds, but… we’re getting that much closer to satisfying their criteria” for a rate hike, Hanson said.
But Baumohl says not to bet the farm that we’ll see any rate hike at the next meeting, because so many people have been anticipating an increase for the past year.
Although the September meeting, when Yellen is set to hold a news conference, is seen as the most likely time for a rate increase, some analysts think the Fed might wait until December.
“

The addition of a single word “some” in the sentence below is the strongest indication we are indeed creeping closer to a rate hike”,

Alan Ruskin, global head of Group of 10 foreign exchange at Deutsche Bank AG, said in an e-mail.
In determining how long to maintain this target range, the Committee will assess progress-both realized and expected toward its objectives of maximum employment and 2 percent inflation.
Gold fell more than 1 percent to near its weakest level since early 2010 on Thursday, as the dollar jumped ahead of US economic data that is likely to strengthen expectations for an interest rate hike by the Federal Reserve in September. Though the rate-setting committee has not raised rates, as expected by the markets, it, nevertheless, dropped some hints that the rate hike is not far away.
Chris Williamson, chief economist at Markit, said: “The improving job market, alongside the boon to households from low inflation and falling oil prices, has been key to the economy’s ability to sustain strong growth”. He believes a rate hike is still possible in September, but he said the odds are not as good following Wednesday’s statement. Treasury prices were largely unchanged after the Fed statement. U.S. The Fed still expects inflation to rise gradually toward its 2 percent target. The first-quarter figure was revised to a gain of 0.6 percent from a previously reported contraction.
At the same time, inflation has lingered below the Fed’s goal for three years, with the central bank’s preferred gauge rising just 0.2 percent in May from a year earlier.
Brent settled down 7 cents, or 0.1 percent, at $53.31 a barrel, while U.S. crude closed lower by 27 cents, or 0.6 percent, at $48.52. So they do not expect the monthly payroll numbers to shock on the downside.
“Economic activity has been expanding moderately in recent months”, it said in a statement.
“The most important thing the Fed is trying to communicate is not the timing of the first liftoff, but the pace, and continuing to try to counsel the markets about the pace being gradual”, said Roger Bayston, senior vice president and director of fixed income at the Franklin Templeton fixed-income group in San Mateo, California.

The Calamity Of Your Mortgage Interest Rate Edging Higher

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Mortgage interest rates trade every day, they go up, they go down, sometimes they only move sideways but they change.  It is the way it is and it is the way it will be, so understanding how that impacts your personal mortgage repayment future, will help you digest whatever the financial markets throw at you.
Some perspective from my side of the equation; even though mortgage rates are no longer at the historical bottom they were at just a short while ago, they are still historically low.  In fact, as recently as the dawn of the new millennium, mortgage rates were hovering around 8% and sub-5% rates have only been around for less than a decade.  Absent any high interest rate frame of reference, a .25% increase might seem titanic to some, when in fact , historically speaking, maybe not so much.
First, some knowledge; a .25% increase in the interest rate for your $300,000, 30-year mortgage will cost you an additional $43.57/month. So if you could have locked in your interest rate at 4.00%, but you were hoping rates would go down and you waited, $43.57/month was the gamble. Calamitous maybe, but that is a function of the beholder’s perspective.
Mortgage consumers who remember high single digit interest rates in the 1990s and even some who can remember double digit interest rates as high as the teens back in the late 1980s, have a working frame of reference to temper the effects of interest rate movements. First time home buyers who have only ever known the historically low interest rate environment that has become our norm, do not.

And while some financially astute market participants may be able to predict interest rate movements with well researched forecast models that get it right sometimes, mortgage consumers use less sophisticated tools for divining when to lock in an interest rate. The consumer tool most used is hope, and this strategy too often delivers mixed results. Most borrowers I work with hesitate to lock in their rate because they are hoping rates will go down and they want that lower hoped for rate.

Saving $43.57/month when rates move lower is a welcome victory when it happens, but most consumers focus only on the rate and not the monthly dollars and sense.  The rate is the subject of the conversation, not the impact on monthly payments.  For many consumers, it is the up or down movement of the interest rate that will mean success or failure on the mortgage financing scorecard.

Global economic and political interdependence means that an unexpected, no-way-it-could-have-been-anticipated event on the other side of the planet can have a direct impact on how interest rates trade tomorrow.  Sudden troop movements at the border of a country with a hard to pronounce name, or the possibility of a small country defaulting on financial obligations due (Greece for instance), can cause the financial markets to move dramatically and instantaneously.  And then later in that same day, when talk of resolution appears to be diffusing the need for troops or a bailout seems imminent, the financial markets reverse and all the while your mortgage rate zigs and zags.
I watch interest rates almost obsessively, as a boots-on-the-ground mortgage loan originator; it is an integral part of the job. I watch and absorb economic reports as they are released throughout the month and I see how the credit markets process this information.  Sometimes it makes sense, sometimes it does not, and after 25 years of this, I am certain of one thing; interest rates change. Lock in early and get on with the business of your mortgage approval.

Nation’s top 2 mortgage lenders see big jump in originations

MarketWatch

The country’s No. 1 and 2 mortgage lenders are posting solid annual growth for new home loans.

By

RuthMantell

Economics reporter

The country’s No. 1 and 2 mortgage lenders reported strong growth for new home loans, according to financial reports released Tuesday that point to a housing market that’s picking up some steam.
Wells Fargo WFC, +0.90% the largest U.S. mortgage producer, reported that second-quarter originations hit $62 billion, up 32% from a year earlier. Meanwhile, J.P. Morgan Chase JPM, +1.40%  said its originations reached $29 billion, up 74% from a year earlier.
“It was a strong quarter” for the purchase market, John Shrewsberry, Wells Fargo’s chief financial officer, told analysts on a Tuesday call. “California, New York, Southern Florida, Denver are particular markets where we’ve seen a lot of strength.”
He added that housing was affordable in the second quarter, supporting mortgage applications.
“While home prices have moved, they are still affordable. While rates have moved, they’re still affordable, so that’s helping a lot,” Shrewsberry said. “And we’ve had an improving jobs market which brings more people into eligibility for a purchase or refinancing.”
Read more: Why most U.S. housing markets are undervalued even as prices climb
Because of the hot spring- and summer-sales market for homes, analysts expect to see the number of mortgages to buy a residence increase in the second quarter from the first quarter. For example, the share of Wells’s originations that went to purchase a home rose to 54% in the second quarter from 45% in the first quarter.
Tracking annual growth for mortgages gives a sense of trends for lending and sales. Of note, Wells reported that the share of originations made up by purchase loans fell by 20 percentage points over the past year, while the dollar value of these loans declined by 4%.
Looking at the broad U.S. mortgage marketplace, loan applications to buy a home recently climbed close to the highest level in two years. Various factors are contributing to fast lending growth, including that mortgages are rising from post-crash lows. Also, as the jobs market strengthens, more families are becoming willing and able to buy a home. A stronger economy has also inspired more confidence in lenders.
Recent economic reports show that home sales are running at the fastest pace in eight years. Deals for new and used homes are on the upswing, with young families and other first-time buyers making more home purchases.
Read more: Housing has ‘turned a corner’ as sales fastest in eight years
Despite lending growth, it’s still tough for many families to get a home loan. Recent readings on mortgage-credit availability show that access is still far below pre-bubble levels. In the wake of the financial meltdown, lenders erected high hurdles for borrowers to get a loan, looking to protect themselves from the financial and legal fallout tied to mortgages that go bad.
Trying to spur lending activity, federal officials have taken steps to lower mortgage costs and deepen the pool of potential buyers. Still-low but rising mortgage rates may also encourage some fence-sitters to buy a home in coming months.

Robert Darvish of Platinum Lending Solutions

- 14 unit apartment refinance in Laguna Beach CA

Refinance Case:

     This property is a 14 unit apartment building located on Pacific Highway in Laguna Beach with full ocean view. The owner needed emergency funds to pay an IRS tax lien on the subject property that was caused by inheritance issues, and also to complete sudden repair issues on other properties. We obtained an emergency bridge loan to pay off the IRS, provide the borrowers with enough funds to complete the repairs on other properties, and avoid the additional penalties.

     The borrowers were still showing loses globally on their tax returns, even though the federal tax lien was paid and all the repairs were completed on other properties. However, due to the fact that the subject property was able to stand on its own merits and by using few other compensating factors, we were able to obtain an A paper interest rate long term financing on the subject property.

Contact Information:

PLATINUM LENDING SOLUTIONS

BRE #01247595, NMLS#365504

Robert Darvish

Certified Mortgage Planner

CMPS, CMC, BFC, BROKER

BRE #01255375, NMLS#327777

- Residential Mortgage

- Commercial Mortgage

- Real Estate Investment

TEL:   714.384.3000

FAX:   714.384.3001

CELL: 714.612.6000

ROBERTDARVISH@PLATINUMLENDING.COM

2901 W. COAST HIGHWAY, STE. 272-273

NEWPORT BEACH, CA 92663

Website:

http://www.platinumlending.com/

LinkedIn - Platinum Lending Solutions: 

https://www.linkedin.com/company/platinum-lending-solutions-orange-county

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https://www.linkedin.com/in/robertdarvish

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Brief Introduction about Platinum Lending Solutions by CEO, Robert Darvish

Robert Darvish - Platinum Lending Solutions

Contact Information:

PLATINUM LENDING SOLUTIONS

BRE #01247595, NMLS#365504

Robert Darvish

Certified Mortgage Planner

CMPS, CMC, BFC, BROKER

BRE #01255375, NMLS#327777

- Residential Mortgage

- Commercial Mortgage

- Real Estate Investment

TEL:   714.384.3000

FAX:   714.384.3001

CELL: 714.612.6000

ROBERTDARVISH@PLATINUMLENDING.COM

2901 W. COAST HIGHWAY, STE. 272-273

NEWPORT BEACH, CA 92663

Website:

http://www.platinumlending.com/

LinkedIn - Platinum Lending Solutions: 

https://www.linkedin.com/company/platinum-lending-solutions-orange-county

LinkedIn - Robert Darvish: 

https://www.linkedin.com/in/robertdarvish

Twitter:

https://twitter.com/robert_darvish

Facebook Page:

https://www.facebook.com/platinumlending

Instagram:

https://instagram.com/platinumlendingsolutions/

Tumblr:

https://www.tumblr.com/blog/platinumlendingsolutions

YouTube - Platinum Lending Solutions:
https://www.youtube.com/channel/UCumspageHRPmcQZophAwiJA

YouTube - Robert Darvish:
https://www.youtube.com/channel/UCYMMAxogoDXaaBJge-w_D2Q

Big question: Will the Greek crisis delay a Fed rate hike?

Greece could start a domino effect that hits Washington D.C. this summer. It could even knock the Federal Reserve off course.

Here's the problem: The Federal Reserve is on course to raise interest rates in September, but Greece's ongoing crisis could create enough uncertainty in U.S. markets or with the U.S. dollar to make the Fed delay its long-awaited rate hike.

Even Fed Chair Janet Yellen has warned that Greece is a factor.
"To the extent that there are impacts on the euro-area economy or on global financial markets, there would undoubtedly be spillover to the United States that would affect our outlook as well," Fed Chair Janet Yellen said at her press conference on June 17.
Related: The Greek Crisis...in 2 minutes
A big enough factor? Fed policymakers and some economists believe the blow back from Greece could eventually force the Fed to hold off raising rates until December or next year.
Other experts say Greece's debacle is unlikely to impact the Fed. The U.S. economy has very little direct exposure to Greece, and even big European banks have far less exposure to Greece now than they did just a few years ago.
"Greece is not a big deal for the Fed," says Sal Guatieri, chief economist at BMO Capital Markets. A CNNMoney survey of economists found that most don't think Greece is a big enough factor yet to delay a rate hike.
Related: Fed: hints of a September rate hike
Game changers: But Guatieri and other economists point out two things that Greece could trigger that would change that scenario:
1. The dollar becomes even stronger.
2. The U.S. stock market starts heading south.
European economies are still tied to the Greek economy and the U.S. is tied to Europe.
Greece's decisive 'no' vote on Sunday makes the country's -- and potentially the continents' -- economic future this summer much more uncertain. If that uncertainty -- which would probably spark volatility in stocks -- spreads throughout Europe, it could eventually impact America's economic growth.
Related: IMF criticizes the Fed (again)
"Since the [Fed's committee] has cited 'international concerns' as a risk factor for policy, yes, the situation in Greece will impact Fed thinking," says Marie Schofield, chief economist at Columbia Threadneedle.
Put another way: If Europe's economy slows down even more from Greece, it would likely boost the already strong U.S. dollar. That puts a drag on corporate profits and keeps inflation anemic.
The Fed pays A LOT of attention to inflation -- it's a key indicator for wage growth, something many Americans still aren't seeing 6 years into the economy's recovery. Flat inflation means little or no wage growth. Inflation in May was flat on a yearly basis, and wages barely budged in June.
If America's wage and inflation landscape doesn't improve soon, any impact from Greece could take a September rate hike off table, economists say.
"Holding all else constant, the Greece crisis probably pushes out the first Fed Funds target increase past September," says George Mokrzan, director of economics at Huntington National Bank.
While Greece is a factor, what's going on in the U.S. is more important to the Fed. If America's economic data continues to be strong this summer, the Fed will be more likely to act.
There's still "plenty of opportunity" for the job market to pick up the momentum before September, according to a Morgan Stanley report. But if the economy's progress is tepid or even modest, the Greek ripple effect could take place.