Mortgage Newsletter- October 22nd, 2012 Dana Bain Premiere Mortgage 978-422-2311

By
Mortgage and Lending with Premiere Mortgage Services Inc. MLO 18693

http://www.bainmortgage.com/MortgageMarketWeekInReview

Newsletter-October 22nd, 2012
Provided by
Dana Bain & Robin Dunbar Bain

Dana Bain
Premiere Mortgage Services

www.BainMortgage.com

11 Malvern Hill Road
Sterling, MA 01564
Phone: (978) 422-2311
Fax: (978) 422-2313
E-Mail: dana@bainmortgage.com

 
 
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Market Comment

Mortgage bond prices finished the week lower which pushed rates significantly higher. Most of the data releases were not rate friendly. Retail sales rose 1.1%, considerably higher than the expected 0.7% increase. This started the week on terrible footing and was followed by higher than expected inflation and housing data. The consumer price index rose 0.6%, higher than the expected 0.5% increase. Inflation, real or perceived, erodes the value of fixed income securities such as mortgage bonds which causes prices to fall and rates to rise, which is exactly what we saw last week. Housing starts came in @ 872k versus the expected 769k mark. Mortgage interest rates finished the week worse by about 7/8 of a discount point.

LOOKING AHEAD

Economic
Indicator

Release
Date & Time

Consensus
Estimate


Analysis

2-year Treasury Note Auction

Tuesday, Oct. 23,
1:15 pm, et

None

Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
New Home Sales

Wednesday, Oct. 24,
10:00 am, et

365k

Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
5-year Treasury Note Auction

Wednesday, Oct. 24,
1:15 pm, et

None

Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Fed Meeting Adjourns

Wednesday, Oct. 24,
2:15 pm, et

No rate changes Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting.
Weekly Jobless Claims

Thursday, Oct. 25,
8:30 am, et

386k

Important. An indication of employment. Higher claims may result in lower rates.
Durable Goods Orders

Thursday, Oct. 25,
8:30 am, et

Down 0.2%

Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates.
7-year Treasury Note Auction Thursday, Oct. 25,
1:15 pm, et
None Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Q3 GDP Advance Estimate Friday, Oct. 26,
8:30 am, et
Up 1.2% Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment Friday, Oct. 26,
10:00 am, et
77 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

Fed Meeting

The United States central bank, the Federal Reserve, coordinates the borrowing and lending activities of federally chartered banks. The principal reason the Federal Reserve was created was to reduce severe financial crises. One way of accomplishing this goal is to control the amount of money that flows through the economy. By manipulating the US money supply, the Fed influences inflation, unemployment, and the level of US economic activity. The Fed has a variety of tools that it uses to control the money supply, but its chief policy tool is the manipulation of short-term interest rates.

The Federal Reserve can adjust two distinct short-term interest rates. The discount rate is the interest rate which banks pay the Fed for primarily overnight loans. Despite its name, the Fed funds rate is the rate banks pay to borrow from other banks. The Federal Reserve has direct control over the level of short-term interest rates. The Fed’s influence over longer-term interest rates is less certain. All eyes will be focused on the Fed meeting Wednesday. Most analysts predict no rate change. Keep in mind that a Fed rate change does not automatically mean mortgage interest rates will change. A cautious approach to float/lock decisions is prudent.


 

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MORTGAGE MARKET IN REVIEW Newsletter-October 22nd, 2012

Dana Bain Premiere Mortgage Services Inc. www.BainMortgage.com 978-422-2311 or 800-480-0545

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Rainmaker
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John Pusa
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Dana - Thank you for sharing detailed quality information about mortgage newsletter October 22nd, 2012 Dana Bain Premiere mortgage.

October 22, 2012 12:27 PM
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Rainmaker
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