Now is a great time to buy a Phoenix area home with very low interest rates on FHA, VA or a USDA loan

I have started the day by floating.  Mortgage rates are bumping against their best since last Spring; both the mortgage driver 10 yr note and mortgages themselves are overbought in the near term; susceptible to selling. The longer outlook remains constructive, the short view slightly bearish. Note; we are changing the time we post for mortgage prices frm 10:00 to 9:30, lenders are pricing earlier these days.

The bond and mortgage markets opened a little soft in early trade this morning; the 10 yr at 8:00 -4/32, mtgs -2/32, the DJIA futures index +70. At 8:30; mtgs -1/32, 10 yr -4/32 and DJIA +65. At 9:00; mtgs -1/32, 10 yr -4/32 and DJIA +61. At 9:30 the DJIA opened +73, 10 yr note -3/32 and mortgage prices at 9:30 -2/32.

No economic data to think about today; rate markets will focus on this afternoon’s (1:00) $39B 3 yr note auction starting three days of Treasury borrowing. The equity markets had a strong day yesterday with the DJIA +112 and S&P +15, starting stronger again today.

Yesterday we reported that Obama is considering another stimulus plan to try and lower the unemployment rate. This morning we hear Obama is considering extending the first time homebuyers’ tax credit and increasing spending in the transportation sector. Won’t be labeled as another stimulus plan of which only 40% of the $787B has been used; taxpayers and consequently the Congress are not in the mood for more government spending that has gotten completely out of hand. So the slight of hand is tax cuts and increased spending; in any other language but government it is more stimulus with only the name changed to protect the guilty.  Administration officials have told allies in Congress that a broader transportation bill, and extensions of a homebuyer tax credit and unemployment benefits are all on the table.

Get started on an Arizona FHA, USDA or VA loan.

A few days ago, at the end of Sept the government fiscal year ended for 2009. Next we will get the 2009 fiscal deficit, the CBO is saying $1.6T with 2010 deficit at $1.4T. It wasn’t more than three years ago the deficit was just $300+B. Much of the exploded deficit was used to save the financial system; it had to be done but probably not to the massive extent the panic required. Congress led by the likes of Barney Frank have little desire to cut any spending programs, actually increasing them where it isn’t necessary other than to be re-elected. Yesterday Frank said he wants to use $2B of TARP loans that have been re-paid for more spending. The price America will pay in the future for the spending now will be high interest rates, likely approaching 8.0% for mortgages by 2011. Don’t worry, be happy; let the next Congress gag on it—-how Congress and administrations think.

Hardly a week goes by without talk of the demise of the dollar as the world’s reserve currency. Today reports of Mid-East oil producers looking to other currencies as payments for oil exports. Oil has always been settled in US dollars. The exploding deficits, the conviction the US does not have the stomach to cut spending, the Fed keeping interest rates low, and foreign investors drowning in dollars are issues that will not easily be ignored much longer. For now however, it is mostly chatter but the rumors are increasing. Every rumor so far has been vehemently denied from the sources.

Australia raised its interest rates by 25 basis points this morning; suggesting their economy is rebounding faster than the US. IN fact most of the world is coming out of their recessions more rapidly than what we are doing here.

The rest of the day will center on this afternoon’s $39B 3 yr note auction and the equity markets that have no intention of rolling over.

Get Started on Arizona Home Loan.  FHA and VA loan rates with a 720 credit score are sitting at 5.125% this morning! USDA loan rates are at 5.375%

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Monday October 5, 2009

Begin the day by floating; technically the rate markets remain bullish but with added underlying volatility. As long as the 10 yr note manages to hold under 3.25%/3.28% yield the technical outlook will remain bullish for the mortgage market in the near term.

The bond and mortgage markets opened a little better this morning after a volatile session last Friday on the larger decline in Sept job losses than expected. At 8:30 the 10 yr note +5/32, mortgages +2/32, the DJIA index futures +20. At 9:00 the 10 +9/32, mortgages +4/32 and the DJIA +18. At 9:30 the DJIA opened +21, 10 yr +10/32 3.18% -4 BP, mortgage prices at 9:30 +5/32. (see below for 10:10 levels) These are good signs for any FHA, VA or USDA loan

This week is headlined with more borrowing from Treasury, today its one yr bills (no problem for markets) and at 1:00 Treasury will auction $7B of 10 yr inflation-indexed notes. It really gets underway tomorrow and through Thursday with $71B of notes to be sold. Recent strong demand for treasuries is expected to continue so we are not experiencing any price declines in the treasury market. For three months now demand for the record borrowing from Treasury has been exceptionally strong surprising many; now it is taken as gospel the demand will continue from domestic and foreign investors. No inflation fears out there and we believe investors behind the scenes are increasingly concerned the economic recovery will not be a V but a W, expecting stocks to trade back lower. So far however the stock market stands tall with only minor setbacks as investors continue to step on any declines in the key indexes. Investors are extending duration by stepping into the long end of the curve; amazing how strong the bond market are given the recent decline in rates over the last few weeks.

Monitor Arizona FHA, VA and USDA loan interest rates by bookmarking this site.

Friday’s larger decline in job losses (-263K) has prompted Pres Obama to think about another stimulus package. A huge mistake according to former Fed chief Greenspan, once considered the best Fed chief ever before the economy caved in. Greenspan was on ABC’s “This Week” yesterday pointing out that only 40% of the $787B stimulus plan passed last spring has been put in place; he warns Obama to hold off and let the rest of the stimulus plan work. “We are in a recovery and I think it would be a mistake to say the September (unemployment) numbers alter that significantly,” he said. Still, to stop unemployment from rising the economy needs to add jobs at a rate of “more than 100,000 a month,” the former Fed chief said, adding he is “particularly concerned” about the number of people unemployed for six months or longer. The BLS report said 5.44 million people have been unemployed for 27 weeks or longer, a 9% increase over August.

At 10:00 the Sept ISM services sector report, the overall index was expected to have increased to 50.0 frm 48.4 (50 is pivot from contraction to expansion). The services sector overall index increased to 50.9; new orders component at 54.2 frm 49.9, prices pd declined to 48.8 frm 63.1 and employment component increased to 44.3 frm 43.5. Any index under 50 is considered contraction, over 50 expansion. No initial movement on the report.

This week the economic calendar has little to chew on, but what there is is significant in the running debate on the future of the economy. Only two more series to draw focus.

Tuesday;

1:00 $39B 3 yr note auction

Wednesday;

7:00 MBA weekly mortgage applications

1:00 $20B 10 yr note auction ($20B)

2:00 Sept Treasury budget statement (N/A)

3:00 August consumer credit (-$9.5B from -$21.6B in July)

Thursday;

8:30 weekly jobless claims (-9K to 540K)

10:00 August wholesale inventories (-1.0%)

1:00 30 yr bond auction ($12B)

Friday;

8:30 Aug trade deficit ($33B)

Friday the rate markets fell to their lowest levels since last April on the employment report, but by the afternoon the rally reversed and yields increased slightly on the session. The bellwether 10 yr note fell to 3.10% and mortgages slid under 5.00% before both ended the day a little higher in rate—but not much. Still an extremely uncertain economic outlook; although the stock market is betting on continued and quick economic recovery, the bond market appears to be betting the other way with demand for long term debt very strong. The recent decline in rates has most market thinkers scratching heads to explain the strong demand while equity market gurus are scratching heads wondering why the equity markets haven’t rolled over in a long awaited and expected correction.  Arizona FHA, VA and USDA loans have seen significant improvement in interest rates.

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Given the huge double barrel shock to the equity bulls; the Chicago PM index and the ADP employment estimate, we suggest floating to start the day. Yesterday we locked all rate locks overnight in preparation for the employment report and the 10 yr note failing to break its resistance. Still has not done it this morning but with the stock market getting hammered we will reload and float. Keep tuned for our rate alerts through the session.

At 8:00 this morning the 10 yr note -4/32 at 3.30%, mtgs started -2/32 frm yesterday’s close. At 8:15 the Sept ADP jobs report down 254K jobs; for August ADP increased its original estimate by 20K to 277K. At 8:30 Q2 GDP final hit at -0.7%, up frm the preliminary -1.0% reported in last month’s GDP release; the reaction to the better quarter put the 10 yr -6/32 and mortgages -5/32; the DJIA index +38. At 9:00 the 10 yr -7/32, 30 yr mtgs -5/32, DJIA +35. At 9:30 the DJIA opened +14, the 10 yr -6/32 and mortgages at 9:30 -4/32. (see below for 10:00 levels).

At 9:45 the Chicago purchasing mgrs index, expected at 52.0 frm 50.0, unexpectedly fell to 46.1. The much weaker index flipped stocks over to -90 on the initial reaction for the DJIA. The new orders component fell to 46.3 frm 52.5 (any read under 50 is contraction). The 10 yr note jumped to +1/32 frm -6/32 and mortgage prices which were -4/32 at 9:30 jumped to +5/32 on the session. A major shock to the stock market running investors and traders into safety trades. A double blow for economic bulls this morning.

Earlier this morning at 7:00 the weekly MBA mortgage applications. Apps declined 2.8% from the previous week, purchase apps were down 6.2% while re-fi apps were down 0.8%. The four week moving average for the market Index is up 3.9%.  The four week moving average is down 0.6% for the purchase Index, while this average is up 6.8% for the refinance Index. The refinance share of mortgage activity increased to 65.3% of total applications from 63.8% the previous week. The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.94% from 4.97%, with points decreasing to 0.94 from 1.12 (including the origination fee) for 80% loan-to-value (LTV) ratio loans. The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.34% from 4.41%, with points decreasing to 1.01 from 1.05 (including the origination fee) for 80% LTV loans. This is the lowest 15-year fixed-rate ever recorded in the survey.

Mortgage re-finances may have peaked. Credit is tight and FICO scores over 750 to get the best rate; while we can’t be certain, most of those qualified for re-finances may have already done it. Something to keep an eye on given purchases are still very sluggish.

This morning’s ADP estimate of job losses at 254K was worse than what markets were expecting, but since it isn’t the official BLS report which occurs Friday it isn’t getting the negative reaction that the BLS report will have if it shows more jobs lost than what markets are expecting (-180K to -200K). The ADP data does not include government job changes, thus if government jobs increased by say 25K the ADP would be closer to the BLS forecasts but still more lost jobs than markets are expecting now.

No additional data through the rest of the day; all about trading off stocks through the rest of the day, and monitoring the 10 yr note ability to break technical resistance at 3.28%.

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I have held rate locks into this morning to confirm that the 10 yr had held its technical resistance, but warned not to hold locked loans taken yesterday on the re-price improvements. We will float again to start the session but will likely lock at the end of the session if not before. The 10 yr and mortgages are likely to edge lower in price today and into the employment report—technical selling in a well defined range. Keep alert for our alerts.

Treasuries and mortgages started weaker this morning, as we noted in the 4:30 comments yesterday, the 10 yr note hit its solid resistance at 3.28% and once again (so far) has failed to crack it. Mortgages and the 10 yr still are technically positive but the 10 remains in its 3.50% to 3.28% range. At 8:30 the 10 yr  -7/32 at 3.30% and mortgages -5/32; the DJIA futures -6. At 9:00 the 10 yr -13/32 to 3.33% +5 BP, and mortgage prices -7/32; the DJIA up 10 points. At 9:30 the DJIA opened +4, 10 yr -13/32 and mortgage prices -6/32. (see below for 10:10 levels)

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Yesterday the stock market got a little too excited about the acquisition by Xerox of Affiliated Computer Services; the excitement based on the view that M&A and acquisitions are signs businesses are about to invest more, leading to the thought that the economic outlook is improving. Many traders and market participants were off yesterday for Yom Kippur increasing market volatility. This morning though, in early activity the stock market in pre-market trading, while slightly weaker is holding most of the gains of yesterday. The remainder of the week will focus on the unfolding economic releases and Friday’s Sept employment figures.

At 9:00, the first of two reports today; Case/Shiller home prices for July, expected to be a little better than June at -14.2% frm -15.44%, prices were down just 13.3% the smallest decline in prices in 17 months; 17 of the 20 areas covered showed an increase, led by a 3.1% jump in Minneapolis and a 2.9% increase in San Francisco. Las Vegas suffered the biggest one-month decrease at 1.9%. The reaction sent treasury and mortgage prices lower. Increasing home prices, while likely an anomaly as July generally has increases, combined with the 10 yr failing again at is resistance (3.28%)  flipped short term sentiment; likely the note will track back to 3.41% now, its fist level of support.

At 10:00, a few minutes ago, Sept consumer confidence from the Conference Board, expected at 57.0 frm 54.1 in August, was a little weaker at 53.1 and gave a nice boost to the bond and mortgage markets, the 10 yr prior to the 10:00 release was off 16/32, mortgages off 8/32. After the lesser confidence the 10 and mortgages climbed to -8/32 and -2/32 respectively. The stock market traded better until the report then rolled over a little.

Weekly Johnson Redbook retail sales were down 2.2% at a year-on-year pace that extends an improving trend, but still declining. The report said low temperatures helped move seasonal items and that Halloween sales are off to a good start. Vehicle unit sales, to be posted Thursday, will be the next key piece of information for the September retail sales report.

Short term the run is likely over; the 10 yr went where we expected and failed where it has on three previous occasions at 3.28%, a rock of resistance. Still the 10 and mortgages hold slight bullish bias but not in the near term. Since late July the bellwether 10 yr has traded in a 23 basis point range, mortgages about the same. Last week’s FOMC meeting statement said the Fed would keep short tem rates low for quite awhile as the economic recovery is fragile. Since then however various Fed officials have been speaking more hawkishly, saying repeatedly that the Fed will act aggressively and with surprise when it has to tighten. Likely a plus for the long end of the curve in that investors can find solace that the Fed will not let inflation get a toe hold.

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Need to know your mortgage payment? Visit the best online Mortgage Calculators here.

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For more information call my office at (602) 291-4362

This is the second part of my blog from about 10 days ago on improving your credit score;

Piggyback on someone else’s good credit

The fastest way to establish a credit history can be to “borrow” another’s record, either by being added to a credit card as an “authorized” or joint user or by getting someone to co-sign a loan for you.  Keep in mind though it is a two edged sword.  You can gain good credit, however if either of you default, both parties suffer. (The co-signer has basically promised to make good on this account, so any delinquencies will show up on her credit report as well.)

Keep in mind that even if you get added to someone’s credit card, you may not be able to piggyback on his or her credit. Some credit issuers won’t report authorized users to the credit bureaus, particularly if the user is not married to the original card holder. If the point is to give you a credit history, the person who’s adding you as an authorized user should call the issuer and ask how (or if) your status as a user will be reported.

Apply for a secured credit card

If you can’t get a regular credit card, apply for the secured version. These require you to deposit money with a lender and your credit limit is usually equal to the deposit.

You’ll want to screen your card issuer carefully because there are a lot of bad guys in this particular niche of the credit world. Some charge outrageous application or annual fees and really high interest rates.

The first place you should look is your credit union if you belong to one. You can also check at www.bankrate.com for a list of secured credit card issuers.  You may also call my office for a list of cards I recommend.  Ideally, the card you pick would:

• Have no application fee and a low annual fee

• Convert to a regular, unsecured credit card after 12 to 18 months of on-time payments

• Be reported to all three credit bureaus.

If the issuer doesn’t report to the credit bureaus, the card won’t help build your credit history.

Get a finance company card

Gas companies and department stores usually use finance companies, rather than major banks, to handle their credit transactions. These cards don’t do as much for your credit score as a bank card (Visa, MasterCard, Discover, etc.), but they’re usually easier to get.

Again, don’t go overboard. One or two of these cards is enough. If you get many more, you may find that later in your life these accounts could prevent you from getting the highest possible credit score. That’s not a reason to avoid them completely, because right now they’ll do you some good. Just don’t apply for half a dozen.

Get an installment loan

To get the best credit score, you need a mix of different credit types including revolving accounts (credit cards, lines of credit) and installment accounts (auto loans, personal loans, mortgages).

Once you’ve used plastic responsibly for a year or so, consider applying for a small installment loan from your credit union or bank. Keeping the duration short — no more than a year or two — will help you build credit while limiting the amount of interest you pay.

Apply for credit while you’re a college student

There’s no easier time to get a card than while you’re a college student.  Lenders are willing to take risks with you that they won’t once you graduate, probably because they know that your parents’ willingness to bail you out will end once you get your diploma.

Be careful, though. Look for a card with a low or nonexistent annual fee and low interest rates. For now, just get one: Opening a slew of credit accounts in a short period of time can make you look like a risky customer.

Use revolving accounts lightly but regularly

For a credit score to be generated, you have to have had credit for at least six months, with at least one of your accounts updated in the past six months.

Using your cards regularly should ensure that your report is updated regularly. It also will keep the lender interested in you as a customer. If you get a credit card and never use it, the issuer could cancel the account. Just remember the credit tips mentioned earlier:

• Don’t charge more than 30% of the card’s limit.

• Don’t charge more than you can pay off in a month. Keep in mind, you don’t have to pay interest on a credit card to get a good credit score, and it’s a smart financial habit to pay off your credit cards in full each month.

• Make sure you pay the bill, and all your other bills, on time.

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Hold rate locks and continue floating this morning; while not much change from Friday’s closing levels, holding in the face of a strong stock market this morning. Keep focused on our rate alerts; we have nice profits from floating last week and we are not willing to give them back on any potential reversal in sentiment.

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Treasuries and mortgages opened fractionally lower this morning after two strong days to end last week, taking the 10 yr to 4 basis points from its key resistance. At 8:30 the 10 yr -2/32, mtgs -2/32, the DJIA futures +20. At 9:00 the 10 unchanged, mtgs -1/32 and the DJIA +27. At 9:30 the DJIA opened +33, the 10 yr +1/32 and mortgages unchanged. (see below for 10:10 levels)

No economic data to think about today, but the week has a lot to consider with the Sept employment anchoring all of it on Friday.

Still no confidence that the equity markets are ready to roll over in the long-awaited and overdue correction that even the most bullish are expecting. Last week the three key indexes were lower on the week and there was a technical reversal on the DJIA but the NASDAQ and S&P, broader measures, didn’t demonstrate that weakness. After today the markets will have a lot to work from.

This Week’s Economic Calendar:

Tuesday;

9:00 July Case/Shiller Housing price index (-14.2%, June -15.44%)

10:00 Sept consumer confidence index (57.0 frm 54.1 in August)

Wednesday;

7:00 weekly MBA mortgage applications

8:15 Sept ADP jobs estimate (-200K)

8:30 final Q2 GDP (-1.2% frm -1.0% on the preliminary report)

9:45 Sept Chicago purchasing mgrs index (52.0 frm 50.0, 50 is equilibrium)

Thursday;

8:30 August personal income and spending (+0.1% on income, +1.1% on

spending)

Weekly jobless claims (+5K to 525K)

10:00 August construction spending (-0.2%)

ISM manufacturing index (54.0 frm 52.9, 50 is equilibrium)

August pending home sales (+1.0%)

11:00 Treasury will announce the details next week’s 3 yr, 10 yr and 30 yr auctions (likely in the neighborhood of $72B)
2:00 Sept auto and truck sales

Friday;

8:30 Sept non-farm job losses (-180K)

Sept unemployment rate (9.8% frm 9.7% in August)

10:00 August factory orders (+0.5%)

The Fed will raise its target interest rate for overnight loans between banks by April, based on futures data compiled by Bloomberg. Central bank officials said in a statement last week after leaving borrowing costs unchanged that data indicates “economic activity has picked up following its severe downturn.” Most dealers forecast that yields will remain near current levels into 2010 with consumer prices falling 1.5% from a year earlier and foreign buyers increasing the pace of Treasury purchases as issuance of alternatives such as so-called agency securities decrease. We report it, but we don’t agree with it yet; yes the economic bottom has been achieved but a recovery isn’t likely to be at the pace markets and The Street are believing now. We do not believe the markets are correctly anticipating increased consumer spending, since consumer spending accounts for most of the growth in GDP, markets are expecting consumers are going to return to increased discretionary spending, we disagree but won’t fade the market for now.

The stock market is rallying this morning, fortified with Xerox’s announced purchase of Affiliated Computer Services for $6.4B. Not important that its Xerox or the purchase itself; it is however juicing up thoughts that acquisitions and mergers will increase. Mergers and acquisitions are evidence of recovery in the business sector and increasing optimism that the road ahead is paved with opportunity.

With demand for US Treasuries strong, interest rates are as low now as back in early July. The 10 yr note found very strong support at 3.50%, now trying to test its strong resistance at 3.28%. A full calendar of data this week with employment the key on Friday. Technically the bond and mortgage markets are bullish, but equity markets still rule.

Bookmark this blog if you need to follow interest rates on a daily basis.  Not sure when to lock your loan? Follow my posts on Twitter

Visit this site to apply for an Arizona Home Loan

Need to know your mortgage payment? Visit the best online Mortgage Calculators here.

Buy AZforeclosures homes for $100 Down

For more information call my office at (602) 291-4362