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Market Update January 20
>> Market UpdateQUOTE OF THE WEEK... "Do not let what you cannot do interfere with what you can do."--John Wooden, American basketball player and coachINFO THAT HITS US WHERE WE LIVE... We might not be able to make the housing market recover as fast as we would like, but we can each do our part to keep things moving in the right direction. Evidence of that came last week when the Mortgage Bankers Association (MBA) reported a surprising 49% surge in mortgage applications for the week ending January 9. Best of all, purchase applications were up by 24%, at their highest level since September 2013. The MBA's chief economist explained: "In addition to the drop in rates, and news of improvement in the job market, there was additional positive news for prospective home buyers with evidence that credit availability has increased somewhat."Even more encouraging, the Federal Housing Administration (FHA) cut 50 basis points (0.5%) from the annual mortgage insurance premium for FHA backed loans with terms greater than 15 years. For most FHA loans, this will reduce the annual premium from 1.35% of the loan balance to 0.85% for case numbers assigned on or after January 26, 2015. Click here for the Mortgagee Letter which shows the current and new annual MIP rates by amortization term, base loan amount, and loan-to-value ratio. For the typical FHA applicant, the reduction in premiums means a savings of about $80 on their monthly payment, according to CoreLogic's chief economist.BUSINESS TIP OF THE WEEK... Write a mission statement you could tweet. If you can't say what you do in 140 characters, your business may be too broadly focused to easily grow. >> Review of Last WeekTHE SWISS WERE THE BIG CHEESE... The week's major financial market mover was the Swiss National Bank, which shocked everyone Thursday by lifting its cap on the value of the Swiss franc versus the Euro. This spiked the value of that country's currency but slammed others, causing panic among global money market players. Calmer heads prevailed Friday and stocks rallied, but the three major indexes wound up with their fourth straight week of losses. The stock market has been crazy volatile this month and last, as dropping oil prices batter energy stocks and stagnant European and Asian economies raise fears that global deflation could infect the U.S. economy.Economic reports over here delivered the usual good news/bad news mix. It was disappointing to see Retail Sales off 0.9% during the holiday season. Manufacturing in the New York area was back in growth mode after its dip in December, but factory activity in the Philadelphia region registered slower growth for the month. The Core Producer Price Index (PPI) recorded wholesale prices up hotter than expected, though the Core Consumer Price Index came in cooler, at 0.0%. Initial Unemployment Claims shot up to 316,000, yet Continuing Claims dropped to 2.424 million. Michigan Consumer Sentiment hit its highest level since 2004.The week ended with the Dow down 1.3%, to 17512; the S&P 500 down 1.2%, to 2019; and the Nasdaq down 1.5%, to 4634.With stocks slipping, U.S. economic data mixed, and the European currency shocks, investors flocked to the safety of bonds. Unfortunately, the 30YR FNMA 4.0% bond we watch still finished the week down .79, at $106.24. Nonetheless, national average fixed mortgage rates dropped for the third week in a row in Freddie Mac's Primary Mortgage Market Survey for the week ended January 15. Many hit levels not seen since May 2013. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information. DID YOU KNOW?... The property economist for a major economic research consultancy noted that housing affordability was "unchanged over 2014 at a level that is favorable by historical standards" and that homes are "around 9% undervalued." >> This Week’s Forecast HOME BUILDERS MORE ACTIVE, EXISTING HOME SALES UP... With a holiday shortened week, there are only a smattering of economic reports, mostly covering housing data. December is expected to show home builders a little busier, with both Housing Starts and Building Permits remaining above the one million unit annual threshold. Existing Home Sales are also predicted up for the month, seen to edge back over the five million unit yearly rate. Also of interest will be the Leading Economic Indicators (LEI) index, forecast up again in December. The stock and bond markets are closed Monday, Martin Luther King Jr. Day.>> 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 Jan 19 – Jan 23 DateTime (ET)ReleaseForConsensusPriorImpactWJan 2108:30Housing StartsDec1.040M1.028MModerateWJan 2108:30Building PermitsDec1.060M1.035MModerateThJan 2208:30Initial Unemployment Claims1/17300K316KModerateThJan 2208:30Continuing Unemployment Claims1/102.380M2.424MModerateThJan 2211:00Crude Inventories1/17NA5.389MModerateFJan 2310:00Existing Home SalesDec5.10M4.93MModerateFJan 2310:00Leading Economic Indicators (LEI)Dec0.4%0.6%Moderate >> Federal Reserve Watch Forecasting Federal Reserve policy changes in coming months... The Fed is expected to begin raising the Funds Rate this year, but can't start until the economy shows more signs of strength. Fed-watching economists don't see those signs just yet. Note: In the lower chart, the probability of change is rated "Low" if few economists think the rate will rise, "Moderate" or "High" if more think it will go up.Current Fed Funds Rate: 0%–0.25%After FOMC meeting on:Consensus Jan 280%–0.25%Mar 180%–0.25%Apr 290%–0.25%Probability of change from current policy:After FOMC meeting on:Consensus Jan 28 LowMar 18 LowApr 29 Low
THE CHIODO TEAM - Ralph Chiodo Broker / Owner 610-792-4800 x 111 Karen Chiodo Realtor / Owner 610-792-4800 x 102 Together Ralph and Karen (and their dedicated Tea....
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