MMG Weekly 12/27/17

Guy R. Vetrano NMLS# 183357
Senior Loan Officer
Bay Equity Home Loans
Phone: 480.500.6000 x 6017
Mobile: 602-692-7196

In This Issue  
Last Week in Review: Home sales, new construction data and economic growth were solid while inflation remains low. Plus, markets reacted to the passage of the tax bill.

Forecast for the Week: Housing reports and Consumer Confidence highlight a shortened trading week.

View: Need to make a return to Check out these important details.

Last Week in Review  
“I wish I was homeward bound.” Simon and Garfunkel. Home sales and construction data were on the rise in November, helping more buyers head toward new homes.

November Housing Starts rose 3.3 percent from October to an annual rate of 1.297 million units, above expectations. Housing Starts are also up nearly 13 percent when compared to November 2016. Single-family starts, which account for the biggest share of the housing market, surged 5.3 percent from October to the highest level since September 2007. Multi-family dwellings saw a slight gain from October.

Building Permits, a sign of future construction, did fall 1.4 percent from October to an annual rate of 1.298 million units, though this figure was above expectations.

Home sales were also strong, as November Existing Home Sales hit an 11-year high, surging 5.6 percent from October. The National Association of REALTORS® reported that Existing Home Sales reached an annual rate of 5.81 million units, with three of the four major regions of the country producing gains. November New Home Sales rose 17.5 percent from October to an annual rate of 733,000 units, a 10-year high, per the Commerce Department. That was the biggest monthly gain since January 1992. Sales of new homes were also up nearly a whopping 27 percent from November 2016.

However, low inventory remains a challenge in many areas, as total inventories slumped nearly 10 percent from last year to just a 3.4 month supply for existing homes. Inventories of new homes also remained on the low end with just a 4.6-month supply. A 6-month supply is considered a normal inventory level.

Economic growth remained solid in the third quarter of 2017, spurred on by robust business spending that was well above weak levels experienced at the beginning of the year. The final read on third quarter Gross Domestic Product rose 3.2 percent, just above the 3.1 percent from second quarter.

The Fed’s favorite inflation reading, Core Personal Consumption Expenditures, showed that inflation remains tame, as the November reading was in line with expectations. Low inflation typically benefits fixed assets like Mortgage Bonds, and the home loan rates tied to them.

Last, but certainly not least, the House and the Senate passed the Tax Cuts and Jobs Act, which sent the major Stock indexes to fresh record highs, while Mortgage Bond prices edged lower. Looking ahead, it is still unclear what long-term impact the bill will have, but with the corporate tax cuts included, the bill could favor Stock markets.

At this time, home loan rates remain attractive and near historic lows.

If you or someone you know has questions about home financing or home loan rates please contact me. I’d be happy to help.

Forecast for the Week  
Just a few economic reports highlight an otherwise shortened trading week. All markets will be closed on Monday for the Christmas holiday. On Friday, the Bond markets will close early at 2:00 p.m. ET, while Stocks are open for a normal session.
  • Economic data gets underway on Wednesday with the release of the S&P/Case-Shiller Home Price Index, Pending Home Sales and Consumer Confidence.
  • On Thursday, look for weekly Initial Jobless Claims.
  • Regional manufacturing news via the Chicago PMI will be delivered on Friday.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, 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. When Bond prices 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 are 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 stabilized in recent days. Home loan rates remain attractive and near historic lows.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Dec 22, 2017)
Japanese Candlestick Chart

The Mortgage Market Guide View…  
11 Things You Can’t Return to Amazon
Before you add any of these items to your shopping cart, be absolutely sure you want them.
By the Editors of Kiplinger’s Personal Finance

You made your holiday shopping list and checked it twice, yet you’re still concerned that someone will get stuck with an unwanted holiday gift that you ordered on You’re not alone. After free shipping, ease of returns is the most important policy shoppers look for in a retailer, according to Deloitte’s 2017 Holiday Survey.

If you’re one of the millions of Amazon Prime members, you already have the free shipping covered. Returns are free, too, unless otherwise specified on the product detail page. Just be aware that some items can’t be returned to Amazon. Ever. Before you add another gift to your online shopping cart, be sure you fully understand Amazon’s return policy.

Let’s start with the basics: Amazon’s standard return policy allows customers to return most items that are sold and fulfilled by Amazon within 30 days of receipt for a full refund. The return policy is more generous for holiday purchases. Most items shipped by Amazon between Nov. 1 and Dec. 31 can be returned through Jan. 31, 2018. Return policies for merchandise sold and shipped by third-policy sellers on can vary, so read the fine print.

Sometimes, though, there are Amazon purchases that simply can’t be sent back. If you’re thinking about buying any of these items from Amazon, you might want to check your list a third time before adding them to your online shopping cart. Amazon won’t accept returns of the following items: downloadable or open software; online subscriptions that have been accessed; gift cards; prepaid phone cards; prepaid game cards (for World of Warcraft, Xbox, Wii, etc.); groceries (including Prime Pantry items, though refunds are possible in cases of spills or spoilage); hazardous materials including flammable liquids or gases; fresh flowers; live plants; live insects (Amazon sells everything from ladybugs to Madagascar hissing cockroaches); and wine.

Amazon can be a stickler about returns of certain high-value items including jewelry, collectibles and electronics. Review the product detail page for specifics. If you’re returning a gift that was purchased for you from Amazon, you’ll need the 17-digit order number from the packing slip. The refund will usually be issued in the form of an gift card.

So what can you do if an item isn’t returnable or you miss the return window? Re-gifting is one option. Another is giving the items to charity, which could allow you to get a tax break for your donation. Amazon also operates a trade-in program that lets you sell back eligible items including videogames, Kindles and books. Shipping is free, and you’ll be paid with gift card. Of course, if you prefer to receive cash for your items try selling them on or Sites such as and specialize in buying used electronics. Card-swap sites such as and buy unwanted gift cards.

As for the live insects you can’t return to Amazon? Sorry, you’re on your own.

Reprinted with permission. All Contents © 2017 The Kiplinger Washington Editors.
Economic Calendar for the Week of December 25 – December 29
Economic Report
Wed. December 27
S&P/Case-Shiller Home Price Index
Wed. December 27
Consumer Confidence
Wed. December 27
Pending Home Sales
Thu. December 28
Jobless Claims (Initial)
Fri. December 29
Chicago PMI
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As your mortgage professional, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.
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