Welcome back Football!  We’ve missed you. 
Beer and buffalo wings for the next 5 months J

Financial Markets
Mortgage-backed securities sailed through gut wrenching swells throughout Thursday and Friday, essentially losing 100 basis points in just a few hours and then gaining back 100 basis points Friday morning.  To offer perspective, a 30 yr fixed rate of 5% on a $200,000 loan may have had a cost of 0 dollars early Thursday, would have cost the consumer nearly $2,000 in points by the end of the day, only to discover Friday morning it would have cost 0 dollars again.  The recovery in mortgage-backed securities stemmed from comments made by Russia’s leader Vladimir Putin, who stated that he would continue to support Syria with arms in spite of a potential external attack.  A meager jobs report released Friday also helped mortgage rates rally.  The weak job report provides speculation that the Fed will continue its 85 Billion per month bond buying program for a longer period of time. 

So, where are rates going? It’s simple…We just have to make educated guesses on what the implications would be to the markets on the following issues:

·        Fed Tapering: Psychological Impact vs. Supply/Demand Math (overwhelming Fed bid vs. less mortgage supply and less Treasury issuance)

·        Fed Rate Policy:  Fed Funds staying put at 0-25bps? For how long?  Says who?

·        New Fed Chairman: Yellen? Summers? Bernanke staying?

·        U.S. Jobs Data:  Labor Force vs. U/E Rate vs. Monthly Non-Farm Payrolls vs. Automation

·        War: Strike on Syria? Higher oil prices?? 

·        U.S. Inflation Data: Where’s the demand-pull inflation?  Can we afford higher energy costs?

·        U.S. Housing Data:  Nation of Renters vs. Purchase demand. And have recent price appreciations already stalled?

·        Emerging Markets: Slower expansion in Brazil, Russia, India, China?

·        Global Central Bank Policy: Will Abenomics work in Japan?  More ECB easing ahead??

·        Great Rotation: Marginal investor dollars going from bonds to stocks. What about repatriation $$ flows?

·        Stock Bubble: QE Inflated Stock Bubble? Do earnings match forward multiples?

·        U.S. Debt Ceiling: We gonna “default”?  Does it matter?

·        European Debt Contagion: Where is the target painted? Portugal? Italy? Greece? Does anyone still care? Why did you read this far down?

The point is, my advice to our clients will be to lock in the interest rate as soon as they can.   Going back to what I wrote last week, the average 30 yr fixed since 1971 is 8.6%.  5% is less than 8.6%.  Trends like “rates are always lower on Fridays when there is a full moon” is pretty much nonsense.    

Southern Nevada Real Estate Related Data

According to a report released by Zillow, As of June 30^th 2013, roughly 51.6% of home owners in Southern Nevada have positive equity.  This is up significantly from the 1^st quarter of 2012 where only 29% of home owners had positive equity, leaving 71% of home owners underwater. 

http://www.reviewjournal.com/business/housing/rising-prices-lift-half-las-vegas-homes-above-water

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

First Cal's History

Product Alert:

FHA will now allow financing for borrowers who experienced a short sale, bankruptcy, foreclosure or deed in lieu 12 months after the incident, instead of the 2-3 yrs set in the current guidelines.  ***However, the incident must have been triggered by an “Economic Event”.  An “Economic Event” is either a loss of employment or loss of income by more than 20%. 

Financial Markets

The rise in mortgage rates over the past 90 days is well documented by now.  Mortgage rates reached near historic lows towards the beginning of May.  Mortgage-backed securities launched into a free-fall, dropping nearly 1,000 basis points in just 45 days.  400 basis points were lost in just 4 days of trading in the middle of June, the equivalent of nearly .75% in rate.  The sell-off in mortgage backed securities was historic, never in the history of the instruments’ existence had it ever sold off so dramatically in such a short period of time.  Lost in all this is that while rates moved significantly off its low, the 30 yr fixed is still nearly ½ what the average 30 yr fixed rate is over the past 40 yrs.  The average 30 yr fixed rate mortgage since 1971 is 8.6%.  (according to Freddie Mac analysts quoted in USA Today June 28^th, 2013)

 

Southern Nevada Real Estate Related Data

I noticed an interesting statistic reviewing the UNLV Lied Institute for Real Estate Studies, Report on Nevada’s Housing Market for the month of July.  In 2002, non-owner occupied home buyers represented 40% of the home purchases.  By 2009, this class peaked to roughly 90%.  In 2013, year-to-date, non-occupying home buyers represent 60% of the market.  I believe this class includes home buyers purchasing vacation homes with the intent to eventually move to the area. 

http://business.unlv.edu/uploads/files/DEE_NHM_July2013.pdf

Have a great week! BACK TO SCHOOL BABY!!!

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