Power Financial Group

JOBS REPORT STRATEGY

2008-12-04T23:49:00.001-08:00

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Today's CPI Numbers

2008-08-14T10:33:00.000-07:00

Why is today's dismal reading on inflation creating a positive bond environment...

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"Covered Bonds"

2008-07-29T09:40:00.000-07:00

Many have recently heard the term "Covered Bonds" getting financial media coverage...what does it mean...so hear it is in a nutshell..

Friday Market Wrap

2008-06-28T11:36:00.000-07:00

Like a broken record, bond traders once again played off of soaring oil prices and a plunging stock market. Our benchmark 6.0% FNMA coupon bond responded by jumping 50bp higher to close at $100.91, powering its way above a pair of tough resistance levels at $100.46 and the 25-day MA ($100.73) in the process. The day's economic news was mostly bond-friendly. PCE Core Inflation in May was relatively tame with an increase of just 0.1% vs. the consensus estimate of 0.2%. Overall, the Core PCE has risen by 2.1% over the past year and is just above the Fed's target range between 1 and 2%. Personal Income jumped by 1.9% in May, the largest gain since Sept. 2005, and was largely due to the arrival of $48 billion in government tax rebate checks. Consumer Spending increased by 0.8% vs. a 0.7% expectation, the highest level since last November. The revised Reuter's/ Univ. of Michigan's Consumer Sentiment Index for June came in at 56.4 vs. expectations of 56.9. It was the lowest reading in 28 years when a 51.7 was recorded in May 1980. Meanwhile, crude oil slammed its way to a new intraday record high of $142.99 a barrel before closing at $140.21 while stocks extended their losses from yesterday's heavy sell-off. The Dow dropped close to 107 points to finish at 11,346 while the NASDAQ Composite Index fell almost 6 points to close at 2,315. The broader S&P 500 Index finished about 5 points lower to close at 1,278.

What is Normal Anyway...

2008-04-23T10:47:00.000-07:00

"Go on, take the money and run"...Steve Miller.

This morning, Bond prices ran up and touched a ceiling of resistance at the 25-day Moving Average. But then Traders quickly sold Bonds, took some money by grabbing the profits gained and ran to the sidelines.
We literally saw Bond prices drop 38bp in a 15 minute time span. But this is becoming
a very common occurrence, as huge intra-day price swings and rapid directional changes
are now the norm.

CLICK HERE FOR UP TO DATE MORTGAGE MARKET INFORMATION

Interesting article...to expalian the Jumbo Rate Mess

2008-04-23T10:11:00.000-07:00

Jumbo mortgages caught up in subprime fallout

Apr 21, 2008 - McClatchy Tribune Business News Author(s): By Brendan M. Case

DALLAS _ For months, mortgage lenders have been backing away from borrowers with spotty credit, all but closing down the so-called subprime mortgage market.
More surprisingly, they've also been increasingly loath to lend to high-end borrowers who might want to finance a high-cost home. That means doctors, lawyers, business owners and corporate execs looking for jumbo mortgages _ those more than $417,000 _ are apt to pay significantly higher interest rates than people with similar credit scores in line for smaller loans. "When the subprime mess came to full fruition, jumbo loans got thrown in with all the subprime loans," said Tom Parker, president of Home Team Mortgage, the in-house mortgage company of Ebby Halliday Realtors in Dallas. "The liquidity not only for subpr me loans dried up, but also for jumbo loans." That's reflected in the divergence of two key interest rates over the last 12 months.
A year ago, a 30-year fixed-rate jumbo came with an average rate of about 7 percent in Dallas, according to Bankrate.com. That was only slightly higher than the 6.75 percent someone might pay on a smaller mortgage with otherwise comparable terms, known in the industry as "conforming" loans. Since then, conforming loans have gotten cheaper, with average interest rates at 5.87 percent last week. But jumbos have become pricier, with interest rates ranging above 7.5 percent in recent weeks before dropping to 7.19 percent last week. The difference adds up, and many say higher jumbo costs are contributing to a growing slump in some high-end home markets that are seeing declines in sales and prices.
If jumbo loans had drifted down to 6 percent, a person taking out a $500,000 fixed-rate mortgage for 30 years would pay just under $3,000 a month in principal and interest, or nearly $1.08 million over the life of the loan. At 7.5 percent, the same borrower would shell out almost $500 more each month _ and an extra $180,000 over the life of the loan. That math made Clayton Roberts think twice about taking out a 30-year fixed-rate loan when refinancing his home recently, even though that was the only kind of mortgage he had used in 15 years of home ownership. Roberts, 48, a Dallas anesthesiologist, wanted to combine two home loans to cut his monthly payment.
He had taken out a loan last year to build a pool and pay for a landscaping project. But with the high interest rates on fixed-rate jumbos, "it just doe n't make sense," he said. Instead, the doctor ventured into unfamiliar territory, opting for a jumbo loan on which he pays only interest for five years, at a rate of about 6 percent. After that, he will have to pay off the outstanding principal and interest over 25 years, at an nterest rate that will be determined later. Roberts knows such adjustable-rate mortgages have gotten many borrowers in trouble. But by reducing his monthly payments during the next five years, he thinks he can apply the savings to reduce the loan's principal by a greater amount.
"I'm going for the ARM to pay down the principal balance," he explained. Roberts is not the only one following that strategy, despite the risk that interest rates could rise, said Gary Akright, president of Dominion Mortgage Corp. in Dallas. "One way you can do it is to take an interest-only feature," he said. "Are you subject to rate volatility? Absolutely." Prime jumbo mortgages are actually less risky than conforming mortgages of the same quality. In January, about 1.3 percent of prime jumbo mortgages were 60 days or more past due, compared with 2.2 percent of prime conforming mortgages, according to First American CoreLogic Inc.'s LoanPerformance, which tracks mortgage data.
But jumbo delinquencies are rising rapidly. In January 2007, less than 0.6 percent of prime jumbo loans were delinquent by 60 days or more. That means the percentage of troubled jumbo loans has more than doubled in 12 months. Moreover, lenders feel safer making the smaller conforming loans because they can sell them to government-sponsored entities such as the Federal National Mortgage Association, or Fannie Mae, and the Federal Home Loan Mortgage Corp., Freddie Mac. Congress is temporarily allowing government-sponsored entities to buy mortgages of up to $729,750 in pricey markets such as Los Angeles and New York (and even larger loans in a few other markets).
But many investors now shy away from mortgage-backed securities, given the recent credit problems. About $19 billion in private-label securities backed by jumbo mortgages was issued between October and December last year, according to government data. That was less than half the amount issued between July and September. "There's no appetite on Wall Street to buy those notes anymore," said Mike Anderson, CEO of Reliance Mortgage Co. in Dallas. "I don't care what the quality is." ___ (c) 2008, The Dallas Morning News. Visit The Dallas Morning News

Rates up last week...

2008-04-21T10:29:00.000-07:00

"THERE IS NOTHING WRONG WITH CHANGE, AS LONG AS IT IS IN THE RIGHT DIRECTION." ~ Winston Churchill.
And there were some big changes indeed for Bonds and home loan rates last week - but not necessarily all in the "right direction". For most of the week, Bond prices were pummeled lower, causing home loan rates to rise - and even after a Friday afternoon rally, home loan rates worsened by about .25% for the week overall.

Mortgage Rates Stay Unchanged Last Week...

2008-04-07T10:38:00.000-07:00

"I KNEW THE RECORD WOULD STAND UNTIL IT WAS BROKEN." ~ Yogi Berra

A record was broken on the job front last Friday as the Labor Department reported a much worse than expected loss of 80,000 jobs in March - the greatest jobs loss reported in five years. In addition, revisions to both January and February's Jobs Report delivered an additional loss of 67,000 jobs - that's on top of the previously reported loss of 85,000 jobs for that two-month period.

And...the story might be even a bit gloomier than it already appears. The Labor Department uses a lot of averaging to help it come up with its numbers more quickly, but this practice can skew the current picture significantly. Think of it this way - and because it's now baseball season, here's a Baseball analogy - let's say that mid-way through the season, a red-hot hitter with a batting average of 340 declines into a bad slump for several weeks. While he now can't even hit a basketball thrown underhand to him, his average - while lower to 300 - is still very strong due to his previous hot performance. So someone looking at just the statistics may think that this batter is still absolutely terrific, but he is really someone the fans are booing as he approaches the plate. This is not very different from current numbers being reported by the Labor Department - previous averaging is likely causing an understating of the ACTUAL number of job losses...which somewhat masks how bad the job market really is.

Understand Why Mortgage Rates Went Up After A .75% Cut

2008-03-18T16:40:00.000-07:00

Team Fed slashed the its key lending rate(Fed Funds Rate).75% today. Bringing the prime rate down to 5.25% the lowest it has been since December of 2004. You might have been on the fence waiting for this well publicised rate cut before you pulled the trigger on refinancing, only to find out tonight when call your Loan Officer that mortgage rates actually got worse today. Hopefully that Loan Officer can explain to you why this keeps happening time and time again after the Fed cuts rates. If your loan officer does not have the right answer you may want to look into finding a Mortgage Specialist who understands what moves the mortgage rate markets and how preparation can save you thousands of dollars. Click play on "Fed Rate Cuts Do Not Equal Lower Mortgage Rates" in the side bar to the right or below this text.

Rates Improve .25% last week....

2008-03-17T10:13:00.000-07:00

JUST WHEN I THOUGHT I WAS OUT...THEY PULL ME BACK IN." Al Pacino in the 1990 film, The Godfather III And if Bonds and home loan rates thought they were out of the days of volatility...they got pulled right back in, as last week brought daily price swings of almost historic proportions. For the week overall, fixed home loan rates improved by about .25%.

Jobs Report Flop

2008-03-07T11:17:00.000-08:00

The Jobs Repot today was a real stinker and has help us get back the upper hand on the 200day moving average battle...as a word of caution the battle is far from over...listen in to find out what happened today.

BREAKING NEWS

2008-03-06T10:24:00.000-08:00

HUD Announces New FHA and Agency Loan Limits

More than a week early, the Department of Housing and Urban Development (HUD) released the new FHA and GSE (Fannie/Freddie) loan limits for 2008 today.

Authorized by The Economic Stimulus Act of 2008, which was signed into law on February 13, 2008, the new FHA limit is based on 125% increase of each county's median price, with a minimum of $271,050 and a maximum of $729,750. The increased Fannie Mae and Freddie Mac loan limit follows the same formula, with a minimum of $417,000 and a maximum of $729,950. For the most part, these numbers are the same as the FHA limits except in lower-cost counties, where the Fannie/Freddie limits will be higher.

Understanding the Higher Loan Limits

2008-03-05T09:38:00.000-08:00

The bill passed Congress on February 7, 2008 and was signed into law by the President on February 13, 2008...so what does this all mean? Click on "Understanding the Higher Loan Limits" to the right in the side bar and listen in to all the details.

Stimulus Package Passes Senate: What Now?

2008-02-07T15:38:00.000-08:00

Stimulus Package Passes Senate: What Now?

With an 81 to 16 vote, the Senate passed an amended version of H.R. 5140, a $150 billion plan to jumpstart the economy with temporary tax breaks for consumers and businesses, extended benefits, and most importantly, two provisions designed to assist the housing market.

According to CNN, the House is expected to consider and pass the amended bill as early as tonight, which could put the bill on the President’s desk as early as Friday.

The bill temporarily increased the size of loans that may be purchased by Fannie Mae and Freddie Mac, raising the current level of $417,000 to reportedly up to $730,000 in the highest cost regions of the housing markets. The bill also increases the size of loans the Federal Housing Administration could insure.

LOCKING

2008-02-06T10:45:00.000-08:00

AS FAST AS IT WAS HERE YESTERDAY ITS GONE TODAY...AS THE MORTGAGE MARKET MOVES INTO NEGATIVE TERRITORY THE GAINS FROM YESTERDAY ARE WIPED OFF THE TABLE...AGAIN. LETS KEEP FORGING AHEAD AND BE READY TO LOCK ON DAY LIKE YESTERDAY.

LOWEST LEVELS SINCE 2005

2008-02-05T08:59:00.000-08:00

CLICK BELOW TO LISTEN IN ON WHAT HAPPENING AND WHY...

LATEST NEWS ON THE CONFORMING LIMIT

2008-01-30T09:56:00.000-08:00

Higher loan limits inching toward reality!

Yesterday, the US House of Representatives overwhelmingly passed HR 5140 – an economic stimulus package that includes a temporary increase in the conforming loan limit and the upper threshold for FHA loan programs to as much as $729,750 in high-cost areas. The temporary increase would last only until the end of 2008. The bill would also restrict Fannie Mae, Freddie Mac and the Federal Housing Administration from guaranteeing or purchasing loans above 125 percent of the median home price for a given area. That means that the existing $417,000 conforming loan limit for mortgages eligible for purchase by Fannie and Freddie would not increase in areas where the median home price is $333,600 or less. The problem of course, is that as of right now, no one knows what the median home price is in different markets because this data has never been published by HUD!

Therefore, it would be up to the Secretary of Housing and Urban Development to determine the median home price for different housing markets "as soon as practicable," but no later than 30 days after passage of the bill, relying on existing commercial data where needed. In other words, if median home prices in your marketplace are $336,000 or less, this bill won't really affect you; and there's no way to tell if median home prices in your area are higher than $336,000 until HUD publishes this data. Nevertheless, jumbo relief is certainly on the way for places like California where median home prices are certain to be above $336,000.

In order to make higher limits a reality, the next step is for the Senate to pass the bill and for the President to sign it into law. The target date for final passage set by the White House and Congressional leaders is February 15, so let’s hope for the best and I’ll be sure to keep you posted as I have more information.

Tyson

FED DAY...FIND OUT WHY ITS NOT WHAT...

2008-01-30T08:53:00.000-08:00

DO YOU THINK YOU KNOW WHAT A FED CUT MEANS FOR YOUR MORTGAGE RATE? CLICK AND LISTEN BELOW ITS NOT WHAT YOU MIGHT THINK...

RUMORS GATHERING STEAM

2008-01-24T15:22:00.000-08:00

Conforming loan limit increase rumors are gathering steam tonight as more officials are publicly hoping that the upcoming "Stimulus Package" contains and a temporary increase in conforming loan limit to $730,000.

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LOCK...PULL THE TRIGGER...FIND OUT WHY

2008-01-23T18:22:00.001-08:00

SURPRISE FED FUNDS CUT .75%

2008-01-22T09:10:00.000-08:00

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One Hand Tied Behind...

2008-01-21T12:32:00.000-08:00

Understand why the Fed is in tough spot when it comes to the rate cuts...

Economy: Hot or Not

2008-01-21T12:29:00.000-08:00

2008-01-17T16:40:00.000-08:00

WHATS UP WITH BIG SWINGING BEN BERNANKE...CLICK AND FIND OUT BELOW