Karl's Blog

It's still early, but the Bond is down 50 Bp for the day and 12 since pricing came out. If you have a signed contract, it may be best to lock for the short term before we get hit with a re-price for the worse. I will talk about it more in the daily bond report today.

Karl Menzer

Tuesday, May 27, 2008

Since pricing came out this morning the bond is down 4 Bp. The negative there is that it is down 31 Bp since the market opened. This means that most of the damage done to rates happened before lenders came out with rates. In short, if the loan wasn't locked Friday, it may be best to sit and wait today out.  Market movers today are mixed. Today consumer confidence came in at 57.2, the lowest in 16 years. Housing data came in very mixed with a jump in sales, but a 14.1% decline in sales price. This is the lowest price drop since they started tracking in 1988. Oil is down to the $130 mark after larger portion staying home for the holiday as opposed to taking the memorial weekend jaunt. They can be taught. With most investors waiting for the GDP report to come out Friday, expect the market to be somewhat tame until then.  As always, if anything changes, I will be sure to re-post.

Karl Menzer

435-849-0212

http://www.karlmenzer.com

THE JOB MARKET

Weekly Jobless claims were down 6,000 from the previous week. A good drop in numbers but with 365,000 NEW claims filed in a week we are still a long way from recovery. The 4 week average is up 72,250 from a year ago. With Companies like Ford Motors looking to lay off more employees, chief U.S. economist Ian Shepherdson is predicting the numbers to climb to 400,000. The new Fed forecast is predicting unemployment to rise to 5.7% by year's end. Utah is still holding its own with unemployment still at an anemic 3.1%. Remember, there can be too much of a good thing.

BOND MARKET

Remember when bonds go down rates go up

With oil still making the news, bonds have been trying to keep gains made earlier on in the week. With the Core Producer Price Index (PPI) double what economists were expecting, the sound of inflation is becoming louder. This was echoed by the Federal Reserve who is predicting higher inflation and lower economic growth. In short, don't look for anymore rate cuts soon.  Even with a weakness in the stock market, bonds are still having hard times making gains as the mortgage debacle has weakened confidence in the market.  Let's hope the latest bailout package gets approved and consumers become more confident in the housing industry.

 HOUSING MARKET

  Housing starts jumped last month, however with the increase coming from multi-family housing i.e. apartments, most investors looked at it as bad rather than good news for the housing market. Existing home sales fell a full percentage point for April. This put housing inventories to a 20 year high of a 10.7 months' supply. Median sales prices also dropped 8% last month. Utah is still in good company with the Office of Federal Housing Enterprise Oversight putting us at # 2 in appreciation with a 5.6% appreciation rate from the 1^st quarter 2007 and 2008. It may not be big, but I'll take it.

Karl Menzer

Cell: (435) 849-0212

E-mail:karl@karlmenzer.com

www.karlmenzer.com

With the number of foreclosures on the rise, it is inevitable to know of at least one person who has received a NOD (notice of default) and is in serious risk of foreclosure. I know of at least 2, one of which is less than 5 days from the courthouse steps. With guidelines tightening up, we have sometimes taken on the hat of grievance consular rather than lender/Realtor. My clients are first and foremost friends. After hearing all the obstacles and trials they have been through, even taken a few classes on it, here are a few nuggets to pass along to them. They are basic, but you would be amazed how many people don't know their options.

The first one is real important...THEY DON"T WANT YOUR HOUSE!!!!. Re-assure them that in this market, the last thing the bank wants is your home. They need to actually talk to the lender and see what they can work out. This takes time and numerous phone calls on hold, but sometimes it may be as little as 1 payment.

Have them talk to a Realtor who understands a short sale. Yes they loose the home, and they may still have a balance, but it will be much less damaging than a foreclosure. Refer back to option 1.

If none of this is working, bankruptcy (13) can prevent a foreclosure up to the time it is on the courthouse steps being sold. I have heard that if you have $1 million or more in assets, this is null, but anything is worth a try. Still damaging, but still better than a foreclosure. It is not an all inclusive list, but it's hope. For a family with children, sometimes that is all you need.

Finally, give them the knowledge that was given to Joe Dirt. Home is where you make it. Family is the most important thing, and at the end whatever kind of day you have had, don't forget that. They may be the only thing between you and permanent insanity.

Friday, May 23, 2008

Existing home sales fell 1% with the largest portion coming from condos. This is a real strong indicator that 1^st time homebuyers have been hardest hit by guideline changes or have been spooked by the media. Median home sales also dropped 8%. Although housing inventories are at the highest since 1985, the numbers today were expected.  The DOW is down well over 100 points today on the pre-holiday weekend, which is helping the Bond out. It seems that they are both completely intertwined today, as the DOW recovers, the bond drops, so any rally in stocks can spell bad news for rates. Currently the FNMA 30 yr 5.5% is up 12 Bp for the day and floating between the 50 and 100 day moving average, trying to find a level of support.  As always, if anything changes, I will be sure to re-post.

Karl Menzer

435-849-0212

http://www.buyatooelehome.com

The big fear of oil has calmed down for the moment. This morning investors woke up to $135 a Bbl in overnight trading. Oil has since retreated back to the $130. The 2 big market movers today are unemployment home prices. Unemployment beat estimated by a mere 5,000 last month, but it was enough to give investors the needed boost to start buying stocks again. Home prices also dropped a record 3.1% last quarter, the lowest since they started recording the numbers 17 years ago.  Both of these drops have caused havoc to the Bond market, which is down 48 Bp for the day. Since most of that happened before pricing came out, the rates we have already reflect the drop. With a shortened day tomorrow, bond traders are more than likely going to sell rather than buy today and tomorrow.  With the bond now below the 100 day moving average, locking rates on any purchase contracts that have been signed is probably the best bet.  As always, if anything changes I will let you know.

Karl Menzer

http://www.karlmenzer.com

Wednesday, May 21, 2008

Last week mortgage applications fell 7.8%, with purchases falling to a five year low of -6.9%.  Oil is fast approaching $132 a Bbl today, putting a hard hammer to both the Bond and Stock market. The minutes from the last Federal Open Market Committee are released this afternoon.  As soon as it is dissected and review by investors for comments on the economy and inflation, expect a move in one direction or another. With oil still climbing, inflation is becoming the concern in the trading pits. Currently the bond is down 28 Bp since trading opened and 15 since pricing came out, putting us near a re-price for a worse. Minutes will be out after 2 pm eastern time. Any changes I will let you know. For the time now, I recommend that any client you have a signed purchase contract on to think seriously about locking the rate today.

Karl Menzer

435-849-0212

http://www.karlmenzer.com

It's another rodeo ride for the bond market today. The biggest market news is OIL (again), and it's push to the $130 mark. Economists' have been predicting $200 a bbl by year's end and it is starting to look like it may happen. Anyone have a Moped for sale? The Labor department's Producer Price Index(PPI) came out today, and the core (taking out energy and food) rose to .4% doubling what economists had expected. The overall PPI actually dropped, which has been a head scratcher given the cost of fuel and food recently. In mortgage news, the senate approved a bi-partisan bill today, backed by Fannie and Freddie, which would give relief to as much as 500,000 soon to be homeless borrowers. Although expected to get the veto by the president, this may be the first bill to have enough backing to overrule the veto.  The 30 yr 5.5% bond is up 15 for the day, but has been bouncing up as much as 20 and down as much as -7. I will keep a keen eye on this, but we are officially in the upper 5's in rate.

Karl Menzer

435-849-0212

http://www.buyatooelehome.com       

Friday, May 16, 2008

When I first saw the layout to our new home I thought "how smart to have the laundry on the second floor", then I moved a washer and dryer. Now all I think is "OUCH!!!" The market is much nicer than that today.  With most economists feeling that the mortgage mess and home sales declines coming to an end by late 2008, AND the economy weakening further, the bond is on a small rally today even with the DOW up  more than 125. Oil has fallen just below $126 a Bbl, which is good news considering the thumbs down the President got from the Middle East last week about opening the valves a little more. We have already seen a few programs come back that were yanked during the fall-out. Harder guidelines, but none the less they are there, with more promised in the future.  With Memorial Day weekend coming up, expect a shortened trading week unless big news comes and bites us where it hurts. As always, if anything changes, I will let you know.

Karl Menzer

435-849-0212

http://www.tooelehomeloans.com

Friday, May 16, 2008

 Big moves yesterday... for me that was. Moving can be a pain both physically and mentally. Today though, FHA Repealed their declining market rule they put into effect last December that required homebuyers to pay a larger down payment in "declining markets".  Housing starts jumped last month to 1.03 million. Good news for the market, but the big jump came from multi-family housing i.e. rental properties. We actually saw a drop in SFR construction. The University of Michigan's Consumer sentiment came in at a 28 year low with our big friend oil taking most of the blame (it snuck past $127 a Bbl today). It is looking like a long hot summer at home with the price of fuel.  The bond has remained positive for most of the day, and it is expected to stay there unless oil lunges forward again. As always, if anything changes, I will let you know.

Karl Menzer

435-849-0212

http://www.karlmenzer.com