Latest Debate in DC and its affect on Mortgage Rates

“The ultimate measure of a man is not where he stands in moments of comfort and convenience but where he stands at times of challenge and controversy”.  –Martin Luther King

Financial Markets

Earnings Season is among us and is the driving force behind the recent bull market trend in the stock market.  The Dow ended the day at 13,649 as many of the blue-chip companies reported earnings that met or exceeded forecaster expectations.  Applying additional pressure on mortgage back securities is the debate on whether or not to raise the debt ceiling.  The most-simple explanation, an indication of elevated risk that the U.S. could default on its debt would have an adverse impact on mortgage-backed securities, which sends mortgage rates to the consumer upward.  With that, the price of mortgage rates worsened by about 25 bps over the past week.  This means that if you were paying say 1 percent of the loan amount to get an interest rate of say 3.5%, today you would pay 1.25% of the loan amount for the same interest rate. 

Southern Nevada Real Estate Related Data

“Shadow Inventory” is a key phrase that we all struggle to wrap our arms around for 2013, in terms of defining it and in terms of how much of it truly exists.  The Shadow Inventory has a direct and significant impact on business plans for the entire real estate community yet industry experts seem to have a difficult time agreeing on what the future holds for Southern Nevada.  Below is an article from the RJ with helpful data as it relates to Shadow Inventory in Southern Nevada.  A potential catalyst to the level at which shadow inventory would be released to the market is the anticipated modification of Assembly B ill 284, which would enable banks to foreclose on delinquent home owners quicker and easier. 

http://www.lvrj.com/business/valley-s-shadow-inventory-smaller-than-forecast-187646321.html

Below, a great article about the ripple effect benefits of what a newly built home provides to the local economy.  Statistics that caught my eye…”For every 3,700 single-family homes built creates 6,384 temporary jobs…which go on to create an additional 3,860 permanent jobs”.  The revenue a new home brings in to local governments is also a noticeable benefit, particularly when in the midst of significant budgeting challenges. 

http://www.lvrj.com/business/analyst-housing-recovery-to-continue-unless-government-screws-it-up-187218551.html

Have a great week!  For more real estate financing information, please visit my website: http://www.matthewtmaltese.com/home.html

What does avoiding the Fiscal Cliff mean for me?

I want to wish you a Happy New Year’s and looking forward to working with you in 2013! 

Financial Markets

The latest and greatest played out economic term, “Financial Cliff”, for the most part came to a conclusion this past week and had a dramatic affect on the markets.  The Dow Jones skyrocketed 400 points on the news that President Obama signed the bill to raise taxes and cut spending. (401k’s win!).  As is often the case when stocks rally, the bond market had a miserable day, and selling pressure sent the FNMA 3.0 coupon (bond most directly related to 30 yr fixed mortgage) down 100 bps.  This essentially equates to a .125% to .25% move in interest rates for 30 yr fixed mortgages. (borrowers lose!)

Much of the tax increases apply to those making $400,000 or $450,000 for married couples.  The tax rate increases from 35% to 39.6% and capital gains increases from 15% to 20%.  However, buried in the bill are limits on tax deductions for those making more than $250,000.  Social security withholdings goes back up to 6.2% (of the first $112,500) AND Medicare Tax goes from 1.45% to 2.35%, again, only applying to married couples making over $250,000 or $200,000 for singles…I guess it’s time to get on match.com….

As most of you I am sure have heard, included in the bill is the extension of the mortgage debt relief act. 

Southern Nevada Real Estate Related Data

Nearly 4,000 home sales transpired for the month of November, and new home builders accounted for nearly 15% of the sales. (596). Developers also pulled 478 permits for the month, nearly twice as many as November 2011.  The median priced home approached $133,000, up from $114,000 this time last year (17%). 

http://www.lasvegassun.com/news/2012/dec/26/las-vegas-housing-market-continues-upward-trend/

Have a great week!  For more real estate financing information, please visit my website: http://www.matthewtmaltese.com/home.html