Colorado Home Mortgage Banking

The week’s headline economic report showed that inflation rose far more than expected in July, yet mortgage rates barely reacted and ended the week essentially unchanged. The July Consumer Price Index (CPI), the most widely watched inflation indicator, rose at the fastest annual rate since 1991. The core rate, which excludes the volatile food and energy components, rose at a 2.5% annual rate. The Fed’s perceived comfort level for core inflation is between 1.5% and 2.0%.

Mortgage rates usually move higher after an unexpected increase in inflation. This time they did not. Investors have started to expect that inflation levels will diminish later in the year and point to a couple of factors. First, slower economic growth in major global markets will reduce demand for goods and energy. In addition, a stronger US dollar will lower the cost of imported goods.

Even the Fed’s Stern, noted for his vigilant anti-inflation stance, stated that he expects inflation to come d own after the third quarter. To summarize, economic weakness at home and abroad, a stronger dollar, and a decline in oil prices offer hope that future inflation levels will be lower.

The Economic Calendar will be very light next week. The Producer Price Index (PPI) will come out on Tuesday. PPI focuses on the increase in prices of “intermediate” goods used by companies to produce finished products. Housing Starts will also be released on Tuesday. Leading Indicators and the Philadelphia Fed index will come out on Thursday

The last 4 or 5 days have kept me on edge in anticipation of what was to be reported in the inflationary numbers category. Colorado Home Mortgage Loan rates have reacted negatively so far.  Investors tend to over react mainly to avoid holding on to the short end of the stick if the data comes in unfavorable to what ever position they have taken in the market.  Consumer Price Index reported this morning and the reports were right in line with expectation.  Though many investors consider the data to be unfavorable the data was already priced into the market.  We should see some rebounding in the Mortgage Backed Securities market over the next day or so.  Colorado Mortgage Loan rates should make up some of the losses felt yesterday, however we probably will not recover all the losses until sometime early next week.  We will need a couple more economic reports to come in with negative economic forecasts for that to happen.  Colorado Home Mortgage Loan rates should see about .125% to .25% improvement in rates by the end of the week.  This should make FLOATING a good risk.  Stay tunned and see if the market has any pricing alerts.  Until then Call me with any questions.  Finally the industrial numbers came in and the reports did indicate that we expereinced a mild amount of growth which is off from investor predictions. Normally this would be bad news for Colorado Home Mortgage Loan rates, but we also had the housing starts report come in and that came in at a 17 year low.  All in all we had a number of reports impacting Colorado Home Mortgage Loan rates however the trend is showing improvements for today which will hopefully carry us through the end of the week. 

I did take another quick glance at the Mortgage Backed Securities markets and so far today interest rates are remaining flat, however this may be due to the stock market increases seen so far.  Nothing in the reports show anything that should put up any concerns, but as usual stay tuned.  God Bless:-)  

Daniel

Colorado home mortgage refinance rates remained unchanged with most lenders today.  There were a couple of lenders that did reprice their loans for the worst as the day progressed.  These lenders anticipating a positive response from the FOCM minutes being released today. However the information released today on the FOCM minutes did not have the positive message that these lenders were expecting.  In fact the minutes indicated that our economy would continue to experience the bad economic issues we face today for some time.  Inflation remains the hot topic when it comes to Colorado home mortgage refinance rates, and the Federal Reserve report would not be complete without some type of statement indicating inflationary pressures.  The FOCM indicated that inflation should be moderate and will likely be that way for the next two quarters.  The message was not negative, but it certainly was not positive enough to move rates in any specific direction.  The good news is that rates will probably remain right where they are through tomorrow.  Most lenders have already priced in a small safety net in case rates get worse quickly.  I will be looking for rates to improve by the end of the week.  Nothing on the horizon has indicated that the economy will rebound anytime soon, which should be good for Colorado home mortgage refinance rates in the near future.  Floating should not hurt, but be prepared for a lock recommendation if the data comes in moving rates back up. 

As expected the Colorado home mortgage market was off to a tough start, mainly still affected by the news from yesterday.  We had a couple of new economic reports come out today, both coming in lower then expected.  This should start sending Colorado home mortgage rates downward through today.  I expect that this movement will continue through early to mid next week sending Colorado home mortgage rates even lower.  If the economic data continues to be negative we will see much of the increases experienced this week go away by next week.  With that said we need to focus on historical data and historically Colorado home mortgage rates continue to come in lower then the two year average.  Colorado home mortgage rates reporting under 6% is still good, we have just become so accustom to low rates that we believe that this is the norm and it just isn’t.  I am still putting in a FLOAT recommendation, but be prepared to lock if we get anywhere near the 5.5% range.  Locking at 5.5% will always be a win win for you.  By looking at the economic data released today, our fear of inflation got some good news. Personal income and outlays were reported this morning.  This report measures a consumers personal income and the source of that income while calculating a persons spending habit and what they are spending their income on.  This report is generated once a month and is a good measurement with other reports to help gauge which direction inflation will move.   Rising income and spending numbers can depict a growing economy, however it will also indicate inflation is on the rise.  Colorado home mortgage rates do not respond well to inflation and luckily for Colorado home mortgage rates the news worked to its advantage today.  However we will need to continue to monitor these  reports closely, because it also sends a message to those impacting Monetary Policy (Feds) that we still have room for more short term interest rate reduction.  When the Fed’s lower short term interest rates investors begin to respond to their fears on inflation.  Investors know to well that making money cheaper will only create more spending, which is what the Federal Reserve wants to do.  If spending becomes too prevelant inflation will get out of control, making a fixed investment less valuable and in return increasing Colorado home mortgage rates.  The Federal Reserve has taken the position that they will do just about anything to keep us spending including lowering interest rates to an unhealthy level.  Colorado home mortgage rates will respond well to the level of concern related to the economy, but if inflation runs wild expect a very large increase to Colorado home mortgage rates.  So far so good, but lets keep a very close watch on any report signaling inflationary pressures.  Recommendation: FLOAT lets see what next week brings us.  Remember to check out www.coloradohomemortgageloan.net Daniel

Bad Colorado credit home loan programs have been available in our market for as long as I can remember.  Lenders became even more aggressive 3 and 4 years ago, finally letting up about a year ago.  These Bad colorado credit home loan programs did serve a purpose, but only if the mortgage broker knew what the impacts of a Bad Colorado credit home loan.  These loans were what I referred to as a temporary relief program designed to get out of in 2 or 3 years depending on how long the short fixed rate period lasted.  Bad Colorado credit home loan programs are often referred to as Subprime loans.  These Bad Colorado credit home loan programs have an adjustment period 2 or 3 years after the loan orginated.  Once the fixed period expired these Bad Colorado credit home loan programs will adjust 2% every 6 months until they hit the market cap rate which is around 10%.  These loans were good to get high risk buyers into a home who previously could not qualify for a loan however credit counseling would be manditory to avoid the risk of future foreclosure situations.  This is where we in the mortgage profession failed.  I made it a point to follow up with these clients at least 10 -12 times a year and when the counseling is effective clients only needed to have a clean credit history for one year to qualify for a FHA loan.  FHA loans are fixed for 30 years and have a rate around 5.5% today, much better then the Bad Colorado credit home loan rate around 6.5% even during the best of times.  Another obsticle in refinancing today comes in the value of the home, but FHA requires only 5% equity and provides a perfect solution to Bad Colorado credit home loan programs offered in the past.  Congress also passed a program that will even help people currently situated in a Bad Colorado credit home loan program with current mortgage lates or if you are currently behind on your mortgage.  There is a condition the lates on the mortgage must have appeared after the adjustment period.  It is designed for Bad Colorado credit home loan programs that have adjusted out of control.  Long story short talk to someone who knows the industry, who understands the programs and a person who can offer you a solution.  I won’t say that these Bad Colorado credit home loan programs are bad, the served a purpose and allowed more people to enter home ownership then ever before, but with this came a responsibility that those that need a program like this needed to focus on their credit during the fixed rate period, if not your bad Colorado credit home loan became more of a liability then and asset.  Please take time to visit my other two websites www.coloradohomemortgageloan.net which holds my 2nd blog site, and www.nostresshomeloans.com which has all the primary information to include my bio.  Have a great day:-)  I hope the weather gets better soon summer is my favorite time of the year:-)

Daniel