MMG Weekly 06/23/14

Guy R. Vetrano NMLS# 183357
Certified Mortgage Planning Specialist
Sun West Mortgage USA, Inc. (FN) NMLS#359295
Phone: 602-692-7196
Office: 866-924-4616
License: 866-586-0980
Guy.Vetrano@swmc.com
www.SWMC.com
In This Issue…  
Last Week in Review: Housing is cooling, inflation is warming and the Fedannounced more tapering.Forecast for the Week: Important housing, inflation and consumer confidencereports are ahead. Plus, we’ll get news on the state of our economy with the final

reading for first quarter Gross Domestic Product.

View: Good communication skills are critical to succeeding in business. Mastering

the art of telling a good story is a key component.

Last Week in Review  
“You’re hot then you’re cold.” Katy Perry. Inflation is heating up, while the housing market shows signs of cooling. Meanwhile, the Fed continues to taper its massive Bond-buying program at a steady pace.The hot housing market from 2013 is cooling off as the second half of 2014 approaches. May Housing Starts fell by 6.5 percent from April to an annual rate of 1.001 million units. Housing Starts measure the number of new residential construction projects during any particular month. Meanwhile, Building Permits, a sign of future construction, declined by 6.4 percent to an annual rate of 991,000. In addition, Freddie Mac’s 2014 Economic and Housing Outlook revealed that single-family housing remains weaker than Freddie Mac projected six months ago, while multi-family dwellings appear to be on track.There was some positive housing news, as the National Association of Home Builders Housing Market Index rose to 49 in June, up from 45 recorded in May. The reading for June is one point shy of the 50 threshold, the level that’s considered good for new construction conditions.On the inflation front, the Consumer Price Index for May came in hotter than expected. This is significant because inflation erodes the value of fixed assets like Mortgage Bonds. And since home loan rates are tied to Mortgage Bonds, hotter inflation could spell trouble for home loan rates as we move further ahead this year. Also of note, the Federal Reserve announced that it will continue to taper its massive Bond-buying program. Beginning in July, the Fed will purchase $15 billion in Mortgage Bonds and $20 billion in Treasuries per month, an overall decrease of $10 billion.

What does this mean for home loan rates? Tensions overseas, the Fed’s Bond-buying program and weak economic reports have been key factors in helping Bonds and home loan rates improve this spring. However, hotter inflation could spell trouble and it’s something to watch closely in the weeks and months ahead.

The takeaway is that now remains a great time to consider a home purchase or refinance. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week  
A busy week is ahead, with key reports on housing, inflation, consumer confidence and the state of the U.S. economy.

  • Housing data is plentiful this week, beginning with Existing Home Sales on Monday. Look for theS&P/Case-Shiller Home Price Index and New Home Sales on Tuesday.
  • Also on Tuesday, we’ll get a read on how consumers are feeling with Consumer Confidence for June. The Consumer Sentiment Index will be released on Friday.
  • On Wednesday, the final reading for first quarter Gross Domestic Product will be closely watched. Also look for Durable Goods, which measure orders for products that last an extended period of time.
  • Weekly Initial Jobless Claims will be announced on Thursday, along with Personal Income,Personal Spending, and Personal Consumption Expenditures, a key inflation measure.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving—and when they are moving lower, home loan rates are getting worse.

To go one step further—a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bonds have been holding steady in a sideways pattern. Home loan rates remain near historic lows and I’ll continue to monitor them closely.

 

Chart: Fannie Mae 3.5% Mortgage Bond (Friday June 20, 2014)
Japanese Candlestick Chart
The Mortgage Market Guide View…  
Inspire Clients and Colleagues With Better Business StorytellingTelling a good story isn’t always easy. But learning to tell a good story is imperative for leadership, improved communication skills and succeeding in business today.In fact, Daniel Goleman sheds some light on this in the opening paragraph of his book, Primal Leadership. Goleman writes, “Great leaders move us. They ignite our passion and inspire the best in us.”Speaker, agent for social change, catalyst and author Kevin Carroll says that one of the main ways leaders move us is through their ability to tell stories. As he explains it, leaders must communicate a variety of information to people, but the best leaders have learned to attach meaning to the information they communicate, so their listeners become invested and motivated by what’s said.

The bottom line: Storytelling helps great leaders reach people, inspire people and galvanize people around an idea so that the idea becomes a reality.

Need some storytelling help? Turn to the pros: Pixar’s 22 Rules of Phenomenal Storytelling are listed right here on a handy, easy to read infographic.

As always, feel free to pass these tips along to your team and colleagues to help them improve their storytelling and communication skills!

Economic Calendar for the Week of June 23 – June 27
Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Mon. June 23
10:00
Existing Home Sales
May
NA
4.65M
Moderate
Tue. June 24
09:00
S&P/Case-Shiller Home Price Index
Apr
NA
12.4%
Moderate
Tue. June 24
10:00
New Home Sales
May
NA
433K
Moderate
Tue. June 24
10:00
Consumer Confidence
Jun
NA
83.0
Moderate
Wed. June 25
08:30
Gross Domestic Product (GDP)
Q1
NA
-1.0%
Moderate
Wed. June 25
08:30
GDP Chain Deflator
Q1
NA
1.3%
Moderate
Wed. June 25
08:30
Durable Goods Orders
May
NA
0.6%
Moderate
Thu. June 26
08:30
Jobless Claims (Initial)
6/21
NA
312K
Moderate
Thu. June 26
08:30
Personal Income
May
NA
0.3%
Moderate
Thu. June 26
08:30
Personal Spending
May
NA
-0.1%
Moderate
Thu. June 26
08:30
Personal Consumption Expenditures and Core PCE
May
NA
0.2%
HIGH
Thu. June 26
08:30
Personal Consumption Expenditures and Core PCE
YOY
NA
1.4%
HIGH
Fri. June 27
10:00
Consumer Sentiment Index (UoM)
Jun
NA
81.2
Moderate

All products are subject to credit and property approval. Program terms and conditions are subject to change without prior notice. Not all products are available in all states or for all amounts. Other restrictions and limitations apply. The content in this flyer is for informational purposes only and not meant for legal, tax or professional accounting advice.Sun West Mortgage Company, Inc. (NMLS ID 3277) in Arizona is licensed as Sun West Mortgage USA, Inc. (FN) and holds a Mortgage Banker License (# 0909624) and a Mortgage Banker Branch License %u2013 Other Trade Name #1 (#0116436) for the Scottsdale, AZ Branch Office (NMLS ID 359295) approved by the Arizona Department of Financial Institutions, Phone: (602) 771-2800. Please refer to www.swmc.com and www.nmlsconsumeraccess.org to see where Sun West Mortgage Company, Inc. (NMLS ID 3277) is a licensed lender and servicer. In all jurisdictions, the principal (main) licensed location of Sun West Mortgage Company, Inc. is 18303 Gridley Road in Cerritos, CA 90703, Phone: (800) 453-7884.