Mortgage Market Review - 3/29/10

Good morning. It’s no secret that many homeowner’s are having serious problems paying their mortgage payments. On March 26th, the administration revamped the Home Affordability Mortgage Program to assist borrowers with modification of their 1st and in some cases, 2nd mortgages. In some cases they are forgiving certain balances of the loans. Information is still coming out, but there is good information at https://www.hmpadmin.com/portal/index.html. Another good site is http://www.makinghomeaffordable.gov/about.html which has an excellent FAQ page.

I hope you enjoy the “review” this week. Please let me know if you have any questions. Thanks for taking the time to look this over. I hope you find it useful and informative. To Your Success!!!!
Fred

This Morning…Monday, March 29, 2010:
The only data for today has already arrived. Personal Income was expected +.2% but came out as unchanged for February. Personal consumption expenditures were expected to rise, and did, coming out at +.3%. After the data, bonds and stocks didn’t do much. Mortgage rates are about unchanged from Friday’s closing levels.

Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates considerably higher. Two of the three Treasury auctions resulted in poor foreign demand for US debt instruments and unfortunately that carried over into the mortgage backed securities market causing prices to fall and rates to rise. A combination of the increasing US Government budget deficit, continued problems with Greece and European debt were the primary culprits, along with some signs that our economy is picking up a little steam (stocks are hitting 18-month highs). The data hurt us with weekly jobless claims coming in better than expected and existing home sales also beating estimates. Durable goods orders data was mixed with ex-transportation figures considerably stronger than expected. Ouch.

This Week:
This week is an interesting one with the Employment Report on Friday as the most important release. Today (as mentioned above) we had Personal Income & Consumption and the PCE Price Index, Tuesday the S&P/Case-Shiller Home Price Index & Consumer Confidence, Wednesday the Chicago Purchasing Managers Index, Thursday we have Initial Jobless Claims, Construction Spending, and the ISM Manufacturing data, and then on Friday we’ll see the employment data. This is a rather peculiar release date since it is Good Friday and all markets except the bond market will be closed. Unemployment is expected to stay unchanged at 9.7%

EconomicIndicator
Personal Income and Outlays
Monday, March 29,8:30 am, et
Up 0.1%,Up 0.3%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
PCE Prices-Core
Monday, March 29,8:30 am, et
Up 0.1%
Important. An indication of inflationary pressures at the producer level. Weakness may lead to lower rates.
Consumer Confidence
Tuesday, March 30,10:00 am, et
49.0
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
ADP Employment
Wednesday, March 31,8:30 am, et
Up 45k
Important. An indication of employment. Weakness in payrolls may bring lower rates.
Factory Orders
Wednesday, March 31,10:00 am, et
Up 0.5%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Construction Spending
Thursday, April 1,10:00 am, et
Down 1.0%
Low importance. An indication of economic strength. A significant decrease may lead to lower rates.
ISM Index
Thursday, April 1,10:00 am, et
57.0
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
Employment
Friday, April 2,8:30 am, et
Unemp. @ 9.7%,Payrolls +150k
Very important. An increase in unemployment or weakness in payrolls may bring lower rates.


Market Forecast:
Overall, I expect to see the most movement in rates either Thursday or Friday. Friday is the most important day of the week with the employment numbers being released, but we will likely see a fair amount of movement in rates Thursday morning also. I am expecting tomorrow or Wednesday to be the calmest day of the week, but we should still see some changes to rates those days. In general, it will probably be pretty active week. Also worth noting is that fact that the stock markets will be closed Friday in observance of the Good Friday holiday, but the bond market will open for trading until noon. This will likely create additional volatility in bonds Thursday afternoon and especially Friday morning.

Some Humor:
Two elderly women were out driving in a large car, both could barely see over the dashboard. As they were cruising along, they came to an intersection. The stoplight was red, but they just went on through. The woman in the passenger seat thought to herself "I must be losing it. I could have sworn we just went through a red light."
After a few more minutes, they came to another intersection and the light was red again.
Again, they went right through. The woman in the passenger seat was almost sure that the light had been red but was really concerned that she was losing it. She was getting nervous.
At the next intersection, sure enough, the light was red and they went on through. So, she turned to the other woman and said, "Mildred, do you know that we just ran through three red lights in a row? You could have killed us both!" Mildred turned to her and said, "Crap, am I driving?"

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