Mortgage Pros, Inc.

Gross Domestic Product rose at a 5.6% 4Q09 Final, revised from 5.9%.  Corporate profits climbed 8.2% in the fourth quarter, lower than the 13.8% surge in the third quarter. Year-over-year, earnings were up 51.8%. Gauges measuring inflation remained subdued but were revised slightly higher. The government’s price index for personal consumption increased 2.5% October through December, compared to the previously estimated 2.3% climb, reflecting upward revisions to the price of financial services, insurance and health care. The core PCE gauge, which excludes volatile food and energy prices, rose 1.8%, compared to the previously estimated 1.6% increase. Efforts to stabilize inventories provided the biggest boost to growth last quarter, contributing 3.8 percentage points to GDP.   Business investment in new equipment advanced at a 19 percent pace last quarter, the biggest gain since 1998.

Michigan Consumer Sentiment Index Unchanged at 73.6 in March. Compared to February, a small increase in assessments of current conditions was offset by a small decline in expectations. Both components were revised up from the preliminary report. Inflation expectations were also unchanged from February.

Treasury 10-Year Yield at Almost 9-Month High on Signs of U.S. Recovery and Debt Fears. Unease at Deficit Hurts Demand for Treasurys; Mortgage Costs on the Rise.   A sudden drop-off in investor demand for U.S. Treasury notes is raising questions about whether interest rates will finally begin a march higher—a climb that would jack up the government’s borrowing costs and spell trouble for the fragile housing market.  The move up in its yield coincides with the impending end of the Federal Reserve’s program to support the mortgage market. A drop in the 10-year note this week has driven the yield up 19 basis points, the biggest increase since the week ended Dec. 25, as record-tying $118 billion note auctions drew lower- than-average demand.  U.S. interest-rate swap spreads plunged this week to the lowest levels in more than two decades after Fitch Ratings’ downgrade of Portugal sparked concern that European nations will struggle to contain deficits.  The gap between the rate to exchange floating- for fixed- interest payments and comparable-maturity Treasury yields for 10 years was negative for a fourth day after reaching negative 10.19 basis points yesterday, the lowest level since at least 1988.

Economy Still Needs Near-Zero Rates, Bernanke Says. “The economy continues to require the support of accommodative monetary policies,” Mr. Bernanke said, according to a prepared text of his testimony. “However, we have been working to ensure that we have the tools to reverse, at the appropriate time, the currently very high degree of monetary stimulus.”

New York Fed purchases $8 billion net ($8.3 billion gross) in agency mortgage-backed securities

U.S. Plans Big Expansion in Effort to Aid Homeowners.  Many of these loans have been bundled together and sold to investors. Under the new program, the investors would have to swallow losses, but would probably be assured of getting more in the long run than if the borrowers went into foreclosure. The F.H.A. would insure the new loans against the risk of default. The borrower would once again have a reason to make payments instead of walking away from a property.   Many details of the administration’s plan remained unclear Thursday night, including the precise scope of the new program and the number of homeowners who might be likely to qualify.   One administration official cautioned that the investors might not be willing to volunteer any loans from borrowers that seemed solvent. That could set up a battle between borrowers and investors.

Economic Indicator News Release Calendar for the week ahead

Posted in HEADLINE NEWS, MORTGAGE NEWS, MORTGAGE RATES | 2 Comments »

This message is a reminder of the
upcoming change in the FHA upfront mortgage insurance premium.
On FHA loans after April 4, 2010, FHA will
collect an upfront mortgage insurance premium of 2.25 percent. This is an increase from the 1.75% currently. This change will increase premiums for purchase money and refinance transactions, including FHA-to-FHA credit-qualifying transactions. For more detailed information on this premium increase, please see Mortgagee Letter 2010-02 at: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-02ml.pdf

Posted in HEADLINE NEWS, MORTGAGE NEWS | 2 Comments »

Initial Claims Decreased to 442,000 for the week ending March 20 from 456,000, a larger drop than expected and the lowest level in six weeks, bringing the four-week moving average to 453,750. Continuing claims for the week ending March 13 decreased to 4.648 million the lowest level since December 2008. The decline brought the four-week moving average to 4.689 million.
Treasury Two-Year Note Rises as Bernanke Says Low Rates Are Still Needed Treasury two-year notes rose as Federal Reserve Chairman Ben S. Bernanke said in prepared congressional testimony that the U.S. economy still needs low interest rates.
A 1st for Booming Swaps Market: Seven Year and Ten-Year Swap Spreads Turns Negative to US Treasuries as Flood of Debt Continues, but it is not a statement on Uncle Sam’s credit quality by the derivatives market. Rather, it’s a reflection of the massive supply of new corporate debt hitting the capital markets in the U.S. and Europe currently. The cost of exchanging interest payments for 10 years was 0.023 percentage point below low-risk Treasury yields, which on the surface implies that investors see more risk in holding triple-A-rated 10-year Treasury notes than in swapping rate payments with private counterparties. At the height of the credit crisis, when investors were in panic-mode about counterparties, that cost shot up to as much as 0.780 percentage point above the 10-year Treasury yield. Tighter swap spreads indicate investors’ confidence (or complacency) about credit risk, and vice versa, but typically the spread is positive relative to Treasuries. But this time, the swaps market reflects demand to receive fixed rates as a hedge, especially by corporations issuing new bonds. At least $20 billion of new issues are expected Wednesday alone in Europe and the U.S., according to Dow Jones Newswires. That’s resulted in the 10-year swap spread moving to negative 5.5 basis points from minus 2.50 yesterday. At the short end, two-year swap spreads have come in to plus 12.25 basis points from 17.25 basis points. The spread also is being pressured from higher Treasury yields from this week’s heavy slate of auctions. Wednesday’s five-year sale was disappointing, which has sent the price of the benchmark 10-year note tumbling 1 5/32, pushing its yield up sharply, to 3.82%, the high end of the trading range going back to last summer. Another factor boosting the swaps market: uncertainty as the Fed is set to complete its $1.25 trillion mortgage-bond purchase end-March. Investors had expected the Fed’s exit to lead to lower prices in the mortgage-bond market, but that has so far failed to happen. “Dollars earmarked for mortgage bonds are being put to work” in the swaps market. In another sign of how far credit markets have recovered, risk premiums in the interest-rate swaps market—in which investors exchange fixed-interest payments for floating payments—turned negative on the 10-year sector for the first time on record.
MBA’s National Secondary Market Conference & Expo 2010 in New York City, May 23-26. Attend to get the latest updates from front-line experts and share ideas with colleagues from all sectors of the secondary mortgage market. The secondary mortgage market is being reconstructed. The players and the rules are changing rapidly. This is a time of tremendous opportunity for those with the knowledge and the drive to establish new relationships, enter new arenas and expand on new ideas. At the same time, unprecedented fluidity increases the challenges for businesses to keep up with shifting government policies and their impact on capital markets, small and large companies and even individual participants.
Mortgage Lender To Reduce Mortgage Principal Amounts Due By Up to 30% in $3 billion Deal that will help as many at 45,000 homeowners. Qualified borrowers whose mortgage debt is 20 percent or more above the value of their homes are eligible for a mortgage reduction over a five-year period.
Hoenig Says Removing Fed’s Oversight of Banks Would Worsen Future Crisis Federal Reserve Bank of Kansas City President Thomas Hoenig said a proposal to strip the Fed of supervision over 5,000 banks would worsen the next financial crisis by denying policy makers information about the firms.

Economic Indicator News Release Calendar for the week ahead
Monday, March 22
United States
Date Value Consensus Forecast Previous
8:30 AM Chicago Fed National Activity Index February n/a n/a 0.02

Tuesday, March 23
United States
Date Value Consensus Forecast Previous
7:45 AM Chain Store Sales Snapshot 3/20/2010 n/a n/a -0.4%
10:00 AM Existing-Home Sales February 5.00 mil 4.95 mil 5.05 mil
10:00 AM Mass Layoffs February n/a n/a 1,761
10:00 AM FHFA Purchase-Only House Price Index January n/a -1.9% -1.5%
10:00 AM Richmond Fed Manufacturing Survey March n/a n/a 2
5:00 PM ABC News/Washington Post Consumer Comfort Index 3/21/2010 n/a n/a -43

Wednesday, March 24
United States
Date Value Consensus Forecast Previous
7:00 AM MBA Mortgage Applications Survey 3/19/2010 n/a n/a 620.9
8:30 AM Durable Goods (Advance) February 0.0% 1.8% 3.0%
10:00 AM New-Home Sales (C25) February 310,000 310,000 309,000
10:30 AM Oil and Gas Inventories 3/19/2010 n/a n/a 344.0 mil barrels

Thursday, March 25
United States
Date Value Consensus Forecast Previous
8:30 AM Jobless Claims 3/20/2010 n/a 450,000 457,000
8:30 AM State Personal Income 2009Q4 n/a n/a 0.3%
10:30 AM Weekly Natural Gas Storage Report 3/19/2010 n/a n/a -11.00 bcf
11:00 AM Kansas City Fed Manufacturing Survey March n/a n/a 19

Friday, March 26
United States
Date Value Consensus Forecast Previous
8:30 AM GDP 2009Q4 5.9% 5.7% 5.9%
10:00 AM Regional and State Employment February n/a n/a N/A
10:00 AM University of Michigan Consumer Sentiment Survey March 72.5 74.0 72.5
10:30 AM ECRI Weekly Leading Index 3/19/2010 n/a n/a 130.6

Posted in HEADLINE NEWS, MORTGAGE NEWS, THE FED | 2 Comments »