Financial | Milestone - Kentucky Houses

November 12, 2010

Employment Picture Helps Housing

Housing and employment levels are directly linked, so it is great news that our nation’s employment picture has brightened.

The U.S. Labor Bureau reported that their national unemployment rate remained unchanged at 9.6% from the previous month. But the real story is the increase in the private sector. It is the private job growth that is reflective of economic growth. Non-Farm Private Payrolls grew at the best pace in over a year, adding 159,000 jobs. Plus, their last month’s figures were revised upward by 110,000.

This along with very positive manufacturing data has put the final nail into the coffin of the “double-dip” recession theories. After this month’s blistering Existing and New Home sales data, the positive job growth adds further stability to our nation’s housing market.

What Happened to Rates Last Week

What Happened To Rates Last Week

Mortgage backed securities (MBS) gained +29 basis points last week causing 30 year fixed rates to decrease from the previous week. Most of our gains occurred Wednesday afternoon after the Fed’s announcement that they would purchase $600 billion of Treasuries by the end of the 2nd quarter in 2011. But we gave up much of our gains by Friday’s close on the very strong employment data.

What to Watch Out For This Week

The following are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. We will be watching these reports closely for you and let you know if there are any big surprises:

Date	ET	Release	For
9-Nov	10:00	Wholesale Inventories	Sep
10-Nov	7:00	MBA Mortgage Applications	5-Nov
10-Nov	8:30	Initial Claims	6-Nov
10-Nov	8:30	Continuing Claims	30-Oct
10-Nov	8:30	Trade Balance	Sep
10-Nov	8:30	Export Prices ex-ag.	Oct
10-Nov	8:30	Import Prices ex-oil	Oct
10-Nov	10:30	Crude Inventories	6-Nov
10-Nov	14:00	Treasury Budget	Oct
12-Nov	9:55	Mich Sentiment	Nov

It’s extremely difficult to keep track of the economy and other factors that impact Kentucky mortgage and housing markets. We are happy to monitor the live trading of Mortgage Backed Securities for you. They are the only thing government and conventional mortgage rates are based upon.

Mike Dunn, Holleigh Sharp & Jeff Sharp

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Walden Mortgage Weekly Newsletter

November 2, 2010

By Walden Mortgage Group

Banner Week for Housing Data

We had several high-level housing reports that showed surprising gains. We started with Existing Home Sales which shot up 10%. This is the second straight month of big gains in this report, last month it moved up 7.6%. Also, the report showed that the supply of homes listed for sale has edged downward and is another positive sign for housing.

Next up was the national home price index calculated the Federal Housing Finance Agency. They reported that home prices increased 0.4 percent during the month which was double what analysts were expecting.

We rounded out the housing data with New Home Sales. The Commerce Department reported that sales of newly constructed single-family homes rose 6.6 percent. Even more encouraging is that they reported that the amount of inventory on the market is at its lowest levels in 42 years.

Despite all of the “doom and gloom” news reports, the data speaks for itself. Housing is making a comeback.

What Happened to Rates Last Week

What Happened To Rates Last Week

Mortgage backed securities (MBS) lost -31 basis points last week causing 30 year fixed rates to increase from the previous week. We started the week on a downward trend for MBS as the market lost -106 basis points from Monday’s open to Wednesday’s close which pressured mortgage rates upward. This was primarily due to stronger than expected economic data and weaker than expected 2 year and 5 year Treasury auctions. We rebounded to make back some of our loses by Friday on the strength of the 7 year Treasury auction and very weak GDP report.

What to Watch Out For This Week

Date	ET	Release	For
1-Nov	8:30	Personal Income	Sep
1-Nov	8:30	Personal Spending	Sep
1-Nov	8:30	PCE Prices – Core	Sep
1-Nov	10:00	ISM Index	Oct
1-Nov	10:00	Construction Spending	Sep
3-Nov	7:00	MBA Mortgage Applications	29-Oct
3-Nov	7:30	Challenger Job Cuts (y/y)	Oct
3-Nov	8:15	ADP Employment Change	Oct
3-Nov	10:00	ISM Services	Oct
3-Nov	10:00	Factory Orders	Sep
3-Nov	10:30	Crude Inventories	30-Oct
3-Nov	14:00	Auto Sales	Oct
3-Nov	14:00	Truck Sales	Oct
3-Nov	14:15	FOMC Rate Decision	3-Nov
4-Nov	8:30	Initial Claims	30-Oct
4-Nov	8:30	Continuing Claims	23-Oct
4-Nov	8:30	Productivity-Prel	Q3
4-Nov	8:30	Unit Labor Costs	Q3
5-Nov	8:30	Nonfarm Payrolls	Oct
5-Nov	8:30	Nonfarm Payrolls – Private	Oct
5-Nov	8:30	Unemployment Rate	Oct
5-Nov	8:30	Hourly Earnings	Oct
5-Nov	8:30	Average Workweek	Oct
5-Nov	10:00	Pending Home Sales	Sep
5-Nov	15:00	Consumer Credit	Sep

Mike Dunn, Holleigh Sharp & Jeff Sharp

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Walden Mortgage Weekly Newsletter

October 19, 2010

By Walden Mortgage Group

Retail Sales Jump

The Commerce Department reported that Retail Sales jumped 0.6%. This was a much stronger reading that what analysts expected and was the best reading since December 2009.

This is important to the housing market because home demand is strongly tied to how the consumer feels about the economy. While there are numerous studies and surveys that attempt to monitor consumer sentiment, nothing gives us a clearer picture than their actual spending at retail stores. This pick up in consumer demand along with exceptionally low mortgage rates are both positives for the housing market.

What Happened to Rates Last Week

What Happened To Mortgage Rates Last Week

Mortgage backed securities (MBS) lost -57 basis points last week causing 30 year fixed rates to increase from the previous week. We actually lost -104 basis points from last Friday’s all-time highs to this Friday’s close. We had an action-packed and holiday-shortened week. MBS pricing eroded (causing mortgage rates to go up) on the very strong Retail Sales and relatively weak demand for the ten year and thirty year Treasury auctions.

What to Watch Out For This Week

Date	ET	Release	For
18-Oct	9:00	Net Long-Term TIC Flows	Aug
18-Oct	9:15	Industrial Production	Sep
18-Oct	9:15	Capacity Utilization	Sep
18-Oct	10:00	NAHB Housing Market Index	Oct
19-Oct	8:30	Housing Starts	Sep
19-Oct	8:30	Building Permits	Sep
20-Oct	7:00	MBA Mortgage Applications	15-Oct
20-Oct	10:30	Crude Inventories	16-Oct
20-Oct	14:00	Fed’s Beige Book	Oct
21-Oct	8:30	Initial Claims	16-Oct
21-Oct	8:30	Continuing Claims	9-Oct
21-Oct	10:00	Leading Indicators	Sep
21-Oct	10:00	Philadelphia Fed	Oct

Mike Dunn, Holleigh Sharp & Jeff Sharp

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Walden Mortgage Weekly Newsletter

October 12, 2010

By Walden Mortgage Group

Pending Home Sales Rise

What Happened To Mortgage Rates Last Week

On the heels of the prior week’s surprise monthly gain of 7.6% in Existing Home Sales, The National Association of Realtors® reported last week that Pending Home Sales also increased.

The number of people who signed contracts to buy homes rose 4.3% in August, it was the second straight month of increases. Typically it could take up to 2 months for those newly signed contracts to turn into closed deals. The unexpected increase was driven mainly by big gains in the South (up 7%), the West (up 6%), and in the Midwest (up 2%). Pending Home Sales fell 3% in the Northeast.

While this data is low by longer-term historical standards, this report along with other recent housing reports are showing some pickup in housing demand over the last two months.

What Happened to Rates Last Week

Mortgage backed securities (MBS) gained +62 basis points last week causing 30 year fixed rates to decrease from the previous week. We actually reached a new record low for thirty year fixed rates on Friday but then pulled back from those levels. MBS shot up to record levels on Friday just after the Unemployment report was released. While the Unemployment rate remained unchanged at 9.6%, the market was very disappointed with the very small gain in the Non-Farm Private Sector area. Investors feel that this weakness will spur the Federal Reserve to begin another round of quantitative easing which would temporarily lower rates. At this point it is purely speculation as the Federal Reserve has not definitively stated what they are willing to do and in what increments.

What to Watch Out For This Week

Date	ET	Release	For
12-Oct	14:00	Minutes of FOMC Meeting	21-Sep
13-Oct	7:00	MBA Mortgage Applications	8-Oct
13-Oct	8:30	Export Prices ex-ag.	Sep
13-Oct	8:30	Import Prices ex-oil	Sep
13-Oct	10:30	Crude Inventories	9-Oct
13-Oct	14:00	Treasury Budget	Sep
14-Oct	8:30	Initial Claims	9-Oct
14-Oct	8:30	Continuing Claims	2-Oct
14-Oct	8:30	PPI	Sep
14-Oct	8:30	Core PPI	Sep
14-Oct	8:30	Trade Balance	Aug
15-Oct	8:30	CPI	Sep
15-Oct	8:30	Core CPI	Sep
15-Oct	8:30	Retail Sales	Sep
15-Oct	8:30	Retail Sales ex-auto	Sep
15-Oct	8:30	NY Fed – Empire Manufacturing Survey	Oct
15-Oct	9:55	Mich Sentiment	Oct
15-Oct	10:00	Business Inventories	Aug

Mike Dunn, Holleigh Sharp & Jeff Sharp

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Walden Mortgage Weekly Newsletter

September 28, 2010

By Walden Mortgage Group

Home Picture Brightens

The constant “doom and gloom” news reports might make you feel as if everyone is in foreclosure and that no one is buying any homes. Of course, that is the farthest thing from the truth. In fact, there are some bright spots in the housing market.

The National Association of Realtors® reported that sales of existing (previously owned) homes shot up 7.6% in August to a seasonally adjusted annual rate of 4.13 million units. Another sign of strength is that the median sales prices actually increased, which shows that homes are not being moved due to lower prices. The median sales price rose 0.8% to $178,600.

Sales grew in every region of the country. They rose by 14% in the West, 8% in the Northeast and 5% in the Midwest and South.

What Happened to Rates Last Week

What Happened To Mortgage Rates Last Week

Mortgage backed securities (MBS) gained +34 basis points last week causing 30 year fixed rates to decrease from the previous week. However, once we reached our best pricing on Tuesday, we pulled back -47BPS by Friday. The reversal from Tuesday’s highs was in reaction to very strong Existing Home Sales, Business Inventories, and Durable Goods Orders.

What to Watch Out For This Week

Date	ET	Release	For
28-Sep	9:00	Case-Shiller 20-city Index	Jul
28-Sep	10:00	Consumer Confidence	Sep
29-Sep	10:30	Crude Inventories	25-Sep
30-Sep	8:30	GDP – Third Estimate	Q2
30-Sep	8:30	GDP – Deflator	Q2
30-Sep	8:30	Initial Claims	25-Sep
30-Sep	8:30	Continuing Claims	18-Sep
30-Sep	9:45	Chicago PMI	Sep
1-Oct	8:30	Personal Income	Aug
1-Oct	8:30	Personal Spending	Aug
1-Oct	8:30	PCE Prices – Core	Aug
1-Oct	9:55	U Michigan Consumer Sentiment – Final	Sep
1-Oct	10:00	Construction Spending	Aug
1-Oct	10:00	ISM Index	Sep
1-Oct	14:00	Auto Sales	Sep
1-Oct	14:00	Truck Sales	Sep

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to us, we monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

Mike Dunn, Holleigh Sharp & Jeff Sharp

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Walden Mortgage Weekly Newsletter

September 14, 2010

By Walden Mortgage Group

Jobless Claims Drop

Nothing impacts demand for housing more than employment levels. Quite simply, if someone is out of work or is concerned that they could lose their job, they are not going to make a major purchase such as a home. So, it is good news that for the second week in a row that the Initial Jobless Claims have decreased.

Initial Weekly Jobless claims dropped by 27,000 which was much larger than expectations. Continuing Claims also dropped slightly. The stock market rallied on this positive economic news.

What Happened to Rates Last Week

What Happened To Mortgage Rates Last Week

We started our holiday-shortened week with with a nice rally as traders returned from the long weekend on Tuesday but then pulled back a huge -93 basis points causing 30 year fixed mortgage rates to reach their highest levels since August 18th.

Mortgage backed securities (MBS) pulled back (causing mortgage rates to increase) due to a much stronger than expected Initial Jobless Claims and Wholesale Inventories reports.

What to Watch Out For This Week

Date	ET	Release	For
13-Sep	14:00	Treasury Budget	Aug
14-Sep	8:30	Retail Sales	Aug
14-Sep	8:30	Retail Sales ex-auto	Aug
14-Sep	10:00	Business Inventories	Jul
15-Sep	8:30	NY Fed – Empire Manufacturing Survey	Sep
15-Sep	8:30	Export Prices ex-ag.	Aug
15-Sep	8:30	Import Prices ex-oil	Aug
15-Sep	9:15	Industrial Production	Aug
15-Sep	9:15	Capacity Utilization	Aug
15-Sep	10:30	Crude Inventories	11-Sep
16-Sep	8:30	Initial Claims	11-Sep
16-Sep	8:30	Continuing Claims	4-Sep
16-Sep	8:30	PPI	Aug
16-Sep	8:30	Core PPI	Aug
16-Sep	8:30	Current Account	Q2
16-Sep	9:00	Net Long-Term TIC Flows	Jun
16-Sep	10:00	Philadelphia Fed	Sep
17-Sep	8:30	CPI	Aug
17-Sep	8:30	Core CPI	Aug
17-Sep	9:55	Mich Sentiment	Sep

We know that it’s extremely difficult to keep up with economy and other factors that impact the Kentucky mortgage and housing markets. That is why we monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

Mike Dunn, Holleigh Sharp & Jeff Sharp

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Walden Mortgage Weekly Newsletter

September 7, 2010

By Walden Mortgage Group

Pending Homes Sales Soar

Pending sales of previously owned U.S. Homes rose unexpectedly in July, according to the National Association of Realtors® as seen in our Bluegrass home’s market update posted last week. This index which is based upon contracts signed in July but not yet closed, increased 5.2 percent after the previous month saw a decline of -1.6%. The market was expecting another decline in the -1.5% range considering that the home buyer tax credit does not apply to any of these new purchase contracts.

While the housing market is far from being fully recovered, this is a very strong reading and is indicative of a market where we enjoy the lowest 30 year fixed rates that we have ever seen and a pool of very good inventory to select from.

What Happened to Rates Last Week

What Happened To Rates Last Week

Mortgage backed securities (MBS) reached another new record on Tuesday which caused conventional mortgage rates to fall to their lowest levels in history. However, before the market was aware of the great new pricing, we lost it as we pulled back -81 basis points from our best levels.

The reason for the pull back? After several weeks of very weak economic news, we finally had some economic data that beat market expectations. These positive reports included very strong ISM Manufacturing, Initial Jobless Claims, Pending Home Sales and Unemployment levels.

What to Watch Out For This Week

Date	ET	Release	For
8-Sep	10:30	Crude Inventories	4-Sep
8-Sep	14:00	Fed’s Beige Book	Sep
8-Sep	15:00	Consumer Credit	Jul
9-Sep	8:30	Initial Claims	4-Sep
9-Sep	8:30	Continuing Claims	28-Aug
9-Sep	8:30	Trade Balance	Jul
10-Sep	10:00	Wholesale Inventories	Jul

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the Kentucky mortgage and housing markets. Just leave it to us, we monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

Mike Dunn, Holleigh Sharp & Jeff Sharp

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Lunch With Dr. Crowe

August 26, 2010

By Becky Locknane

Dr. David Crowe, NAHB Chief Economist

On Monday, August 23, 2010, The Homebuilders Association of Lexington was fortunate to have Dr. David Crowe, NAHB Chief Economist speak to the local Home Builders and Bankers with an overview on the industry and outlook for the economy. He also addressed how Kentucky homes are weathering the downturn.

I was in attendance at his presentation and would like to share with you some “take aways” from the event.

His top 10 Reasons There Won’t Be a Double Dip are as follows:

45 of the Top economists in the Blue Chip arena say so in their forecast.
Consumers are repairing their balance sheets and debt burdens.
Consumer spending has increased since 2009 back to where it was in 2006.
Pent up demand will continue to reveal itself.
Corporate earnings and corporate taxes are up since beginning of 2010 .
Economic indicators are better at this point in the recovery than they were in prior two recessions.
Productivity has increased for 8 quarters and can’t keep going that way.
Employment has increased in every month in 2010.
ARRA (Stimulus Package) spending is coming to the market later rather than sooner.
Because, DR. CROWE SAYS SO!

According to Dr. Crowe, there are approximately 111 million households in the country today. There are 6 million homes in mortgage distress today and foreclosures make up about 1/3 of homes for sale.

Of course, all of this is National data and here in Kentucky we are fortunate that our foreclosure rate is way below the National average.

Crowe says, “ The economy must get rolling before the housing does”. While it is said that housing is what determines the economy we won’t see home sales and new home starts to rise until consumer confidence is in check.

New homes for sale are the lowest since 1968 and Crowe states the reason being because consumers are prudent and can’t get loans. He does report that new home starts are up in 2010 by 14% and he predicts they will continue to rise to 45% in 2011 and 39% in 2012.

Dr. Crowe predicts a 3-3 ½ % growth in home sales in the next two years and for interest rates to be at 6% in 2012. As for homes in Kentucky, we should see a modest return to shallow home appreciation.

We are recovering, but we aren’t quite there yet. Hang in there !

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Walden Mortgage Weekly Newsletter

By Walden Mortgage Group

New Home Owners In The Waiting

A new survey by Trulia.com found that 72% of all renters wish to eventually own their own home.

Of those that want to own their own home, one third are ready to buy now and two thirds say that they will wait two years or more. One-third is a very sizable number and combined with consistently low mortgage rates at or near their historic lows, the stage is set for entry-level home sales to continue to surge. As the entry-level market continues to improve, that provides demand for those that are moving up to the next price level. While renters are eager to own, they are concerned about the unemployment picture, the economy, and down payment options.

What Happened to Rates Last Week

What Happened To Mortgage Rates Last Week

Mortgage backed securities (MBS) lost -19 basis points last week causing 30 year fixed rates to rise. MBS neared their best all-time pricing levels on Thursday. After we reached those great levels, we pulled back -47 basis points by Friday. The gains in mortgage backed securities (the only thing 30 year conventional mortgage rates are based on) were primarily the result of very weak Initial Jobless Claims and Philadelphia Fed Manufacturing data. We pulled back from our best pricing on Friday due mainly for profit taking as no one wanted to hold MBS at their highs.

What to Watch Out For This Week

Date	ET	Release	For
24-Aug	10:00	Existing Home Sales	Jul
25-Aug	8:30	Durable Orders	Jul
25-Aug	8:30	Durable Goods -ex Transportation	Jul
25-Aug	10:00	New Home Sales	Jul
25-Aug	10:30	Crude Inventories	21-Aug
26-Aug	8:30	Initial Claims	21-Aug
26-Aug	8:30	Continuing Claims	14-Aug
27-Aug	8:30	GDP – Second Estimate	Q2
27-Aug	8:30	GDP Deflator – Second Estimate	Q2
27-Aug	9:55	U Michigan Consumer Sentiment – Final	August

Mike Dunn, Holleigh Sharp & Jeff Sharp

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Walden Mortgage Weekly Newsletter

August 18, 2010

By Walden Mortgage Group

High End Home Sales Surge

A significant decline in jumbo mortgage rates (loans above $417,000) are helping to move some of the highest-end inventory. Sales volumes of homes worth more than $1 million across the country are up more than 35% from this time last year according to the National Association of Realtors®. They also stated that homes between $700,000 and a million were up 29% from last year.

There is no question that high unemployment and concern about the economy is pressuring the housing market at all price points, but it is clear that the ultra-low mortgage rates are having a dramatic impact on the highest end of the price spectrum.

Conventional lenders (Fannie Mae and Freddie Mac) do not make jumbo loans. Those loans usually are held by banks. These banks are becoming more comfortable making higher end loans these days and are looking to take advantage of a premium that they just can’t earn with a conventional mortgage where their margins are simply too thin.

What Happened to Rates Last Week

What Happened To Mortgage Rates Last Week

Mortgage backed securities (MBS) lost -3 basis points last week but reached their best all-time pricing levels on Tuesday. After we reached those great levels, we pulled back -31 basis points by Friday. The gains in mortgage backed securities (the only thing 30 year conventional mortgage rates are based on) were primarily the result of the Federal Open Market Committee (aka “The Fed”) rate decision and policy statement on Tuesday afternoon. While they did leave their rates alone, their downwardly revised economic outlook and decision to reinvest their profits from maturing mortgage backed securities into Treasuries drove down rates.

What to Watch Out For This Week

Date	ET	Release	For
16-Aug	8:30	NY Fed – Empire Manufacturing Index	Aug
16-Aug	9:00	Net Long-Term TIC Flows	May
16-Aug	10:00	NAHB Housing Market Index	Aug
17-Aug	8:30	Housing Starts	Jul
17-Aug	8:30	Building Permits	Jul
17-Aug	8:30	PPI	Jul
17-Aug	8:30	Core PPI	Jul
17-Aug	9:15	Industrial Production	Jul
17-Aug	9:15	Capacity Utilization	Jul
18-Aug	10:30	Crude Inventories	14-Aug
19-Aug	8:30	Initial Claims	14-Aug
19-Aug	8:30	Continuing Claims	7-Aug
19-Aug	10:00	Leading Indicators	Jul
19-Aug	10:00	Philadelphia Fed	Aug

Mike Dunn, Holleigh Sharp & Jeff Sharp

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