Karl's Blog

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

Wednesday, May 14, 2008

 After yesterday's dismal drop, today's market works just fine for me. We are still in a lock mode, meaning that if a client signs that purchase contract, it's best to have them take the rate out there and not bet on better rates tomorrow.  Making the market move today is the CPI (consumer price index), a gauge of inflation came in a bit lower than expected even with a .9% jump in food prices. This helped open the flood gates on the DOW, which started the day up 100 points and has yet to drop. Foreclosures are still making big news. RealtyTrac Inc. came out today stating that foreclosures are up 65% from the same month a year ago. What this translates into in terms that make sense is that about 1 in every 519 homes in america received a forclosure notice last month. It's not pretty, but definatly gives banks inscentive to work things out. The bond is up 15 Bp for they day but lost most of it's early morning gains when the stock market opened.  Althoug we are not in a position to get re-priced for the worse, it may still happen today.

Karl Menzer

435-849-0212

http://www.karlmenzer.com

Tuesday, May 13, 2008

 Citing better customer service and internal cost savings, Wal-Mart reported that their profits rose 6.9% in the first quarter of 2008... better customer service??? Riiight.... More likely that many Americans hit by the latest squeeze have become box shoppers to stretch their dollar more. On a positive note (see Steve it can happen), although many of the mortgage based companies reported major losses yesterday, investors bought stock as a sign that the worst has passed for them and they have turned the corner. Retail sales have posted  a loss today and with investors still worried about a possible recession,  stocks and bonds are both down for the day as oil once again teeters with the $126 price.  Bonds (5.5% FNMA 30 yr) are down 34 Bp for the day, but flat from when pricing came out this morning. The potential for pricing to get worse for today exists so keep a keen eye on the market.  We are still loking at a 6% rate on a 30 year FHA, but one more nudge will put us in the 6.125% range. As always, if anything changes I will let you know.

Karl Menzer

435-849-0212

Http://www.karlmenzer.com

THE JOB MARKET

  Weekly Jobless claims dropped dramatically last week. Initial jobless claims came in at 365,000 down 15,000 from the prior week, and 5,000 less than expected. In Utah, labeled as one of the most recession proof cities in America, unemployment edged down to 3.1% in April. Approximately 24,000 new jobs have been created in Utah over the past year, proof that although we are slowing in our growth, our economy is still much stronger than most of the nation.

BOND MARKET

Remember when bonds go down rates go up

For the most part, the market has taken a neutral stance on the bond. While we have seen large losses in the morning (sometimes more than 100Bp), investors continue to buy back into the market later in the afternoon, wiping most if not all of the early losses. The same applies to early gains. A number of mortgage based companies cane out Monday with larger than expected losses, but as investors tend to buy more on the future than the present, stocks of the companies actually rose on the news. I don't know if the worst is over, but with new guidelines in place, future losses do seem to be limited.       

HOUSING MARKET

  Freddie Mac released the results of the Primary Mortgage Survey showing little movement in rates overall last week. Even with the market as volatile as it has been rates on average only dropped .3%. FHA is looking to implement a new up front premium scale to replace the flat up front 1.5%. Slated to Begin July 14^th, the new program will base the up-front MIP on Credit risk.

Karl Menzer

435-849-0212

http://www.karlmenzer.com

Retail sales came lower than expected but with most of that due a drop in auto sales and the dow futures pointing up, if someone signed a REPCE yesterday and there is still overnight price protection, they should lock. The bond is down over 32 Bp for the morning and has fallen below most levels of support. I will have more in this afternoons bond report.

Karl Menzer

http://www.karlmenzer.com

ZERO MONEY DOWN!!!! NO MONEY DOWN!!!! 100% FINANCING!!! Things of the past right? Wrong.... An article caught my eye today that for lack of a better word dogged the gift program process. Although there may be some less than honest lenders who will push an appraiser to boost numbers, many more are doing the due diligence and providing well valued loans to well valued clients. Down Payment assistance programs have had the heat turned on to them recently and have almost lost their ability to do business altogether. Most may be familiar with them as Nehemiah, but there are many others out there that have the same function. What they do is allow the seller to contribute the down payment to a non-profit program that in turn, for a small fee, gifts the money to the borrower. Currently around 36% of all FHA purchases are closed with this type of program. There are a number of different options for those who want to try different routes. In Utah for example, we do have the Utah housing program which is essentially an FHA loan with a state sponsored 2^nd to pay for the remaining balance and even closing costs, USDA has many areas which their rural housing program can be used, relatives can gift money to family members as well as gift equity (if selling a relative a home), or the ever famous sweat equity where the buyer agrees to finish off part of the home in exchange for a down payment. These are tough times, and guidelines change faster than my 4 year old changes clothes (about 4 times a day last time I counted), but there are really still programs that will allow a qualified borrower to get into a home with little more than the earnest money deposit.

Karl Menzer

435-849-0212

Http://www.karlmenzer.com

Bonds have fallen under the stress of the Stock Market Rally. Currently the stock Market is up over 120. This is forcing the Bond down 25 for the day, but 34 Baisi points since pricing came out this morning. If you know of someone who is still floating, it would be best to have them lock, for the short term, before pricing deterioriates. If they missed the re-rice already, tomorrow is another day.

Karl Menzer

435-849-0212

Http://www.karlmenzer.com