Inside Lending Newsletter

Dated: 10/06/2015

Views: 240

Danyal Erickson
Mortgage Loan Originator
NMLS# 1299942
1517 N. Ankeny Blvd, Ste. A
Ankeny, IA 50023
Cell: (515) 491-6861
Office: (515) 965-1707
Fax: (844) 289-7133
[email protected]
For the week of October 5, 2015 – Vol. 13, Issue 40

>> Market Update 

QUOTE OF THE WEEK... "Money is better than poverty, if only for financial reasons." --Woody Allen, American actor, writer, director, and comedian

INFO THAT HITS US WHERE WE LIVE... Making that money, however, can be a challenge in the housing market. We were reminded of that once again last week when Pending Home Sales came in down 1.4% in August, following their steady climb the first half of the year. However, this index of contracts signed on existing homes is still 6.1% ahead of where it was in August a year ago.Pending homes sales in fact remain at a healthy level of activity, having risen year-over-year for the last 12 months in a row. Best of all, the index is ahead of where it was a year ago in all regions of the country, according to the National Association of Realtors (NAR). 
The NAR's chief economist forecasts total existing home sales will gain 7.0% this year to around 5.28 million units. He also feels that even with August's modest decline in pending home sales, demand continues to outpace housing supply and elevate price growth in numerous markets. NAR analysts, in fact, expect the median existing home price to increase 5.8% in 2015. Yet a report from two real estate data firms found that "affordability is actually improving in most markets thanks to falling interest rates and slowing home price growth, which is allowing wage growth to catch up." This puts homes at their most affordable level in two years in the first quarter of 2015.
BUSINESS TIP OF THE WEEK... Comfort is the enemy of achievement. Never get too comfortable in your work. Challenge yourself at every opportunity. Keep raising the bar.

>> Review of Last Week

JOBS SINK, STOCKS SOAR... Friday morning greeted Wall Street traders with the worst monthly jobs report we've seen in a while. The number of new Nonfarm Payrolls added in September sank to a disappointing 142,000. Worse, decent August and July numbers were revised down by 59,000 jobs.Hourly Earnings were flat for the month and even the Average Workweek declined to 34.5, sending weekly earnings down. The Unemployment Rate held at 5.1%, but that was only because the labor participation rate fell to 62.4%, a 38-year low. This dismal jobs report at first sent the Dow down 259 points, but when investors realized it would delay a Fed rate hike, stocks soared. 
The Dow ended up 200 points on the day. This 459-point reversal was the biggest swing in the blue-chip benchmark in four years and it provided a dramatic end to another volatile week of trading in which all three indexes posted gains. Investors, however, still worry about slowing global economic growth, especially in China. Over here, the ISM manufacturing index dropped to 50.2 in September, just barely registering expansion. On the positive side, Personal Income and Spending went up in August, and PCE Prices showed inflation unchanged. This is good for consumers and one more thing to put the brakes on the Fed. They want to see inflation around 2% before hiking rates.
The week ended with the Dow UP 1.0%, to 16472; the S&P 500 also UP 1.0%, to 19551; and the Nasdaq UP 0.5%, to 4708.
The sad September jobs report, and the increased likelihood the Fed will keep rates low into next year, bolstered bond prices. The 30YR FNMA 4.0% bond we watch finished the week UP .14, at $106.27. For the week ending October 1, national average fixed mortgage rates were largely unchanged inFreddie Mac's Primary Mortgage Market Survey. This marks 10 weeks in a row rates have remained at historically attractive levels. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information. 
DID YOU KNOW?...The September employment report wasn't all bad. It included 8,000 new construction jobs, the biggest gain in four months, strong evidence housing supplies will be improving.

>> This Week’s Forecast

SERVICES SECTOR, TRADE DEFICIT GROW, A LOOK INTO THE LAST FED MEET... The week after the monthly jobs report is typically quiet. We get an ISM Services report, expected to show that sector of the economy still growing, though at a slower rate. Unfortunately, the Trade Deficit is also growing, not good since the global economic slowdown quells demand for our exports. FOMC Minutes from the Fed's last meeting might prove academic given last week's downbeat jobs report.>> The Week’s Economic Indicator CalendarWeaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates. 
Economic Calendar for the Week of Oct 5 – Oct 9
Oct 8
 Date Time (ET) Release For Consensus Prior Impact
Oct 5
10:00 ISM Services Sep 58.0 59.0 Moderate
Oct 6
08:30 Trade Deficit Aug -$44.5B -$41.9B Moderate
Oct 7
10:30 Crude Inventories 10/3 NA 3.995M Moderate
08:30 Initial Unemployment Claims 10/3 275K 277K Moderate
Oct 8
08:30 Continuing Unemployment Claims 9/26 2.205M 2.191M Moderate
Oct 8
14:00 FOMC Minutes 9/17 NA NA HIGH

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months... The probability of a Fed rate hike in 2015 plummeted after Friday's weak employment report. Even January is now off the table for most economists.Note: In the lower chart, a 5% probability of change is an 95% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

After FOMC meeting on: Consensus
Oct 28 0.00%-0.25%
Dec 16 0.00%-0.25%
Jan 27 0.00%-0.25%

Probability of change from current policy:
After FOMC meeting on: Consensus
Oct 28       5%
Dec 16       30%
Jan 27
This e-mail is an advertisement for Danyal Erickson. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice, or a commitment to lend. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in this message is the property of Stearns Lending, LLC and cannot be reproduced for any use without prior written consent. This message is intended for business professionals only and is not intended for distribution to consumers or other third parties. The material does not represent the opinion of Stearns Lending, LLC. This is not a commitment to lend. Program restrictions apply. Stearns Lending, LLC offers many loan products. Stearns Lending, LLC is a California Limited Liability Company headquartered at 4 Hutton Centre Drive, 10th Floor, Santa Ana, California 92707. (800) 350-LEND (5363) Company NMLS# 1854 ( Stearns Lending, LLC is licensed, registered, or exempt from licensing to conduct business in the following states which require license disclosure on advertising materials: Arizona Mortgage Banker License #0905413; Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act RMLA# 4130495; Georgia Residential Mortgage Licensee #24066; Illinois Residential Mortgage Licensee #MB.6760686; Kansas Licensed Mortgage Company #MC.0025047; Massachusetts Mortgage Lender/Broker License #MC1854; Licensed by the Mississippi Department of Banking and Consumer Finance; Missouri Residential Mortgage Loan Broker License #12-2052; Licensed by the New Hampshire Banking Department; Licensed by the N.J. Department of Banking and Insurance; Rhode Island Licensed Lender; Registered under Texas SML Mortgage Banker Registration; Virginia State Corporation Commission Lender/Broker License #MC-2184; Washington Consumer Loan Company License #CL-1854. For State of Nevada residents Stearns Lending, LLC is a mortgage lender promoting the loan products or services contained in this article; the business phone number that Stearns Lending maintains on file with the State of Nevada Department of Business and Industry is (714) 513-7777. This information is accurate as of July 24, 2015. © 2015 Stearns Lending, LLC All Rights Reserved. 

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