Archive for October, 2009

WEEKLY MORTGAGE MARKET UPDATE

Friday, October 30th, 2009
The Manhattan Mortgage Company Mortgage Weekly Update
Eve Robin Jarrett
MANAGING DIRECTOR
Senior Mortgage Consultant
Manhattan Mortgage
Office: 631-324-1555 x 25
Blackberry:
e-Fax:
Email: EJarrett@manhattanmortgage.com
631-514-3654
631-697-3366
Eve Robin Jarrett

For the week of Oct 26, 2009 // Vol. 7, Issue 43
 

  Last Week in Review  


     
 

"THE DEVIL IS IN THE DETAILS…" Or so the famous saying goes. And when it comes to really understanding the various reports and events unfolding in the economy, it’s important to take a look at the details – not just the headlines. Here’s what you need to know.

On the inflation front, the Producer Price Index, which measures wholesale inflation, unexpectedly fell due to a drop in energy prices. While that seems like good news on the surface, keep in mind that next month’s number could climb higher again, as oil and natural gas have both been on a tear higher lately.

In housing news, Housing Starts and Building Permits both came in a bit below expectations, but this may be a sign that builders are exercising some caution – particularly in the face of the $8,000 tax credit for first time homebuyers that is presently set to expire on November 30th. Existing Home Sales came in better than expected – and a whopping 45% of those homes were sold to first time homebuyers – rushing to move in on that credit. Recent studies have shown that many who qualify for this tax credit aren’t even aware of it…so please let me know if you or someone you know needs more information – the clock is ticking!

Additionally, the level of existing homes inventory shrunk to a 7.8 month supply, down from a recent high of 10.1 months in April.

———————–
Chart: Existing Home Sales (Supply in Months)

In other news, 3rd quarter earnings season continues, where companies report their status as of the end of September. While many companies are beating expectations, it’s important to realize that many of those companies achieved better earnings by cost cutting and layoffs, not from increased sales. This is a big disconnect between Wall Street and "Main Street". Stocks are rocketing higher based on these "positive" reports, but the cost cutting and job cutting measures can only go so far…you can’t simultaneously grow the ranks of unemployment – and then grow your business, hoping for increased sales to those same people who are without jobs.

Last week’s Jobless Claims numbers seem to confirm this as Initial Jobless Claims rose more than expected. In addition, the number of individuals continuing to receive unemployment benefits fell to the lowest level since March, but this is likely the result of people’s unemployment benefits expiring, without them having been able to find jobs.

Also worth noting is the news that ratings agency Moody’s lead analyst, Steven Hess, said that the US needs to cut its deficit or it could lose its "AAA" rating in the next 3 to 4 years, which we have maintained since 1917! Think of all we’ve been through – two World Wars, the Depression, three Wall Street collapses and major terrorist attacks…yet our credit quality has maintained that AAA rating, allowing us to issue debt at the most favorable rates. Hess went on to say that if the US doesn’t "get the deficit down in the next 3-4 years to a sustainable level, then the rating will be in jeopardy." And just like on a mortgage when the credit rating gets reduced, interest rates move higher. This will definitely be something we’ll keep an eye on in the months ahead.

After all the week’s action, Bonds and home loan rates ended the week slightly worse than where they began.

AS THE PRESIDENT HAS DECLARED H1N1 – "SWINE FLU" – TO BE A NATIONAL EMERGENCY – GETTING THE FACTS IS MORE IMPORTANT THAN EVER. DO YOU KNOW HOW TO TELL WHAT’S JUST A COLD…AND WHAT IS ACTUALLY SWINE FLU? READ THIS WEEK’S MORTGAGE MARKET VIEW – AND PASS ON THE DETAILS TO YOUR FRIENDS AND COWORKERS.

 
 

  Forecast for the Week  


     
 

Another record sized round of Treasury auctions are on tap this week – and the massive amounts of supply that continue to flood the market can cause home loan rates to move higher, if there is ultimately not enough demand to sop up all the supply. Additionally, there are several economic reports which could be market movers. Tuesday brings both the Consumer Confidence and Durable Goods Reports, the latter of which gives us an update on consumer and business consumption and buying behavior via data on items that are non-disposable, such as cars, furniture, appliances, games, cameras, business equipment, etc.

On Wednesday, there will be more news on the housing front with the New Home Sales Report, while Thursday brings another Initial Jobless Claims Report. Thursday also brings a read on the economy with the Gross Domestic Product (GDP) Report, which is the broadest measure of economic activity. And the week could end with a bang, as Friday brings the Fed’s favorite gauge of inflation, the Core Personal Consumption Expenditure (PCE) Index, found within the Personal Income Report.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

As you can see in the chart below, Bonds held their ground for most of the week but ultimately were unable to remain above a key technical support level. I’ll be watching closely to see what happens in the week ahead – and as always, reach out to me if you or others in your network need more information or questions answered…I’m here to help.

Chart: Fannie Mae 4.5%% Mortgage Bond (Friday Oct 23, 2009)

Japanese Candlestick Chart
 
 

  The Mortgage Market View…  


     
 

H1N1: Information is the Best Defense!

Despite predictions from researchers at Purdue University that the H1N1 outbreak will peak this week, the reality is that it won’t be going away any time soon. Let’s not forget that the news is filled with shortages of the vaccine, as the number of H1N1 cases continues to surge across the country. And federal officials have warned that a second, larger outbreak could occur in early January.

The reality is that the best way to stop the spread of H1N1 is to know the symptoms and to take steps to protect yourself-and others-from it. The following information can help.

What are the symptoms of H1N1… and how are they different from the common cold?

Symptom Cold H1N1 Flu
Fever Fever is rare with a cold. Fever is usually present with the flu in up to 80% of all flu cases. A temperature of 100°F or higher for 3 to 4 days is associated with the flu.
Coughing A hacking, productive (mucus- producing) cough is often present with a cold. A non-productive (non-mucus producing) cough is usually present with the flu (sometimes referred to as dry cough).
Aches Slight body aches and pains can be part of a cold. Severe aches and pains are common with the flu.
Stuffy Nose Stuffy nose is commonly present with a cold and typically resolves spontaneously within a week. Stuffy nose is not commonly present with the flu.
Chills Chills are uncommon with a cold. 60% of people who have the flu experience chills.
Tiredness Tiredness is fairly mild with a cold. Tiredness is moderate to severe with the flu.
Sneezing Sneezing is commonly present with a cold. Sneezing is not common with the flu.
Sudden Symptoms Cold symptoms tend to develop over a few days. The flu has a rapid onset within 3-6 hours. The flu hits hard and includes sudden symptoms like high fever, aches and pains.
Headache A headache is fairly uncommon with a cold. A headache is very common with the flu, present in 80% of flu cases.
Sore Throat Sore throat is commonly present with a cold. Sore throat is not commonly present with the flu.
Chest Discomfort Chest discomfort is mild to moderate with a cold. Chest discomfort is often severe with the flu.

If you think you have the H1N1 flu, you should take a few common-sense steps to protect your friends, family members, and coworkers. For instance, if you feel sick, stay home until you feel better and have gone at least 24 hours without relying on medicine to break your fever.

In addition, wash your hands, linens, dishes, and so on thoroughly. And cover your mouth and nose with a tissue when you cough or sneeze–and then throw the tissue away immediately. Finally, if you have to share a small space with other people, consider wearing a facemask to help make sure you don’t spread the flu to the people around you.

Follow these steps and monitor your symptoms to help stop the spread of H1N1…and remain happy and healthy!

 
 

  The Week’s Economic Indicator Calendar  

     
 
Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

Economic Calendar for the Week of October 26 – October 30

Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Tue. October 27
10:00
Consumer Confidence
Oct
53.5
47.7
53.4
Moderate
Wed. October 28
08:30
Durable Goods Orders
Sept
1.0%
1.0%
-2.6%
Moderate
Wed. October 28
10:00
New Home Sales
Sept
440K
402K
417K
Moderate
Wed. October 28
10:30
Crude Inventories
10/23
NA
0.78M
1.31M
Moderate
Thu. October 29
08:30
GDP Chain Deflator
Q3
1.4%
0.8%
0.0%
HIGH
Thu. October 29
08:30
Gross Domestic Product (GDP)
Q3
3.2%
3.5%
-0.7%
Moderate
Thu. October 29
08:30
Jobless Claims (Initial)
10/24
525K
530K
531K
Moderate
Fri. October 30
08:30
Personal Consumption Expenditures and Core PCE
YOY
NA
1.3%
1.3%
HIGH
Fri. October 30
08:30
Personal Consumption Expenditures and Core PCE
Sept
0.2%
0.1%
0.1%
HIGH
Fri. October 30
08:30
Personal Spending
Sept
-0.5%
-0.5%
1.4%
Moderate
Fri. October 30
08:30
Personal Income
Sept
0.0%
0.0%
0.1%
Moderate
Fri. October 30
09:45
Chicago PMI
Oct
48.5
 
46.1
HIGH
Fri. October 30
10:00
Consumer Sentiment Index (UoM)
Oct
70.0
 
69.4
Moderate
Fri. October 30
10:00
Employment Cost Index (ECI)
Q3
0.5%
 
0.4%
HIGH
 
 

 
 

Eve Robin Jarrett
Manhattan Mortgage
75 Main Street, 2nd Floor
East Hampton, NY 11937

 
 

Morgage Market Update

Tuesday, October 27th, 2009
  Provided to you Exclusively by Eve Robin Jarrett
Eve Robin Jarrett
Eve Robin Jarrett
MANAGING DIRECTOR
Senior Mortgage Consultant
Manhattan Mortgage
Office: 631-324-1555 x 25
Blackberry:
e-Fax:
Email: EJarrett@manhattanmortgage.com
631-514-3654
631-697-3366
  Manhattan Mortgage
   

For the Month of October 2009 — Vol. 4, Issue 10

 

  IN THIS ISSUE…  

     
 

It’s My Life… It’s Now or Never! The lyrics from Bon Jovi’s hit song say it all. This month’s edition is all about understanding and taking advantage of opportunities now… before it’s too late.

You’ve probably heard a lot about the $8,000 tax credit for first-time homebuyers. But did you know the $8,000 tax credit is about to end? The first article below provides details about the tax credit that you need to know. Another opportunity you don’t want to miss is a low interest rate. Interest rates have dipped near historic lows, but the second article below explains how you can avoid a costly mistake when it comes to rates.

This information is important for anyone who has even thought about purchasing a home or refinancing. So please forward this newsletter to friends, family members, and coworkers who may benefit from this information. And if you need any assistance at this time, just call or email.

 
 

  $8,000 Tax Credit Nears End  

     
 

The government is offering an $8,000 tax credit for first-time homebuyers – that is, folks who haven’t owned a home during the past three years. According to the plan, first-time homebuyers who purchase a home may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit.

However, the program is scheduled to end soon. In fact, the Internal Revenue Service recently reminded potential first-time buyers that they must complete their first-time home purchases before December 1, 2009 to qualify for the special credit, which means the last day to close on a home and qualify for the credit is November 30, 2009. In other words, right now is the time to take advantage of this opportunity.

Here’s some information to help you understand what the tax credit benefits are and who qualifies.

Benefits of the Tax Credit

It’s important to remember that the $8,000 tax credit is just that… a tax credit. It’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if you were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, you would owe nothing.

Better still, the incentive is refundable, which means you can receive a check for the credit even if you have little income tax liability. For example, if you’re liable for $4,000 in income tax, you can offset that $4,000 with half of the tax incentive… and still receive a check for the remaining $4,000!

Who Qualifies?

The $8,000 incentive starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000 and is phased out completely at incomes of $170,000 for couples and $95,000 for single filers. To break down what this phase-out means, the National Association of Homebuilders (NAHB) offers the following examples:

Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phase-out threshold is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer incentive to this couple, multiply $8,000 by 0.5. The result is $4,000.

Example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible to reduce the tax liability by $2,800.

Remember, these are general examples. Borrowers should consult a tax advisor to provide guidance relevant to their specific circumstances.

What Type of Home Qualifies?

The tax credit is applicable to any home that will be used as a principal residence. Based on that guideline, qualifying "homes" include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured homes and houseboats used for principal residence also qualify. Buyers will have to repay the credit if they sell their homes within three years.

 
 

  Avoid This Costly Mistake  

     
 

If you’ve been following the financial news, you’ve probably heard that the Fed’s been buying Mortgage Backed Securities. Unfortunately, people have picked up on the news and mistakenly discussed how these purchases will continue to cause rates to drop lower. But is that really what it means? No.

The following information can help set the record straight and help you make smart decisions that lead to a low interest rate for your home loan.

How is the Fed’s Bond Purchase Related to Rates?

The Fed has been buying Mortgage Bonds. BUT… more precisely, they’re buying a lot of FNMA 30-yr 5.0% and 5.5% Bonds. Many of the mortgages in these pools are outstanding home loans with rates between 6.0% and 6.5%, as the rate that a borrower pays is different than the coupon rate given to an investor buying into that mortgage pool, with the difference being taken by Wall Street firms and government agencies. The loans in these pools are likely to be refinanced and paid – because current rates make it very attractive to refinance a loan over 6.0%. Thus, giving the Fed a quick recoup on some of its investment.

Bottom line: The Fed’s purchase of higher rate coupons will not necessarily help rates to move lower, as their actions do not impact the loans being originated at today’s low rates.

The Problem Is…

Many consumers are in situations where they can refinance now and save hundreds of dollars a month on their mortgage payments. But if they hear people throwing around teases of lower rates ahead, they may decide to hold off on making the decision to save, in the hopes of gaining a few more dollars of savings per month if a lower rate came their way. Of course, while they’re waiting, rates could turn higher – especially when you consider that the Fed is scaling back its purchases of Mortgage Backed Securities – and this window of opportunity could pass them by entirely.

Is the Fed Scaling Back? And What Will It Mean to Rates?

Last week, the New York Fed began to scale back their Mortgage Backed Security purchase program. The Fed has been buying about $25 Billion worth of Mortgage Backed Securities per week, but the new plan to drag out these purchases over a longer period of time means that they will be reducing both the frequency and amounts of their purchases. This will cause higher levels of volatility, as the Fed will be purchasing less often and less consistently. As a result, rates will probably rise gradually over time.

Here’s the Clincher

Even if consumers are ultimately able to time the market perfectly and save another few bucks per month, they could still end up losing. That’s because while they delayed, they lost the savings each month they could have gained by taking action sooner. In other words, they may have lost hundreds of dollars for every month they waited. So even if they got lucky and obtained the rate they were looking for, it could take years to make up what they lost by waiting.

I don’t want anyone to miss an opportunity by either waiting or misunderstanding the media headlines. Let’s talk further on this. Call or email me, and let’s discuss what this might mean for you.

 
 

     
 

Jonathan Pearlroth, Owner of Famous Double-Diamond Oceanfront House on Dune Road, Helps Rescue Fisherman

Sunday, October 25th, 2009
 
Pearlroth"On Thursday, October 22, I had one of the most adrenaline fueled and humbling days of my life."
 
Jonathan Pearlroth
 
 
Lawyer, towboat captain rescue angler from frigid waters

October 23, 2009 By ANDREW STRICKLER
 
A Manhattan lawyer and a South Shore towboat captain pulled a onetime correction officer out of frigid waters after he had fallen overboard and drifted for an hour.
 
"I was thinking about my kids and not seeing them anymore," said John Signer, 45, from the hospital Friday where he was being treated for severe hypothermia.
 
Signer, an avid angler from Holbrook and onetime city correction officer, was pulled Thursday from the drink, numb and disoriented, after falling overboard off Moriches Inlet.
 
Towboat captain Mark Grivas was fishing for stripers in the inlet and waiting for a tow call when his radio squawked: man in the water, and close by.
 
The alert reached attorney Jonathan Pearlroth, 49, about 2:30 p.m. as he pounded in a fence outside his Westhampton Beach home. "I heard a scream but I thought it was a bird until my neighbor said there was a guy way, way out there," he said.
 
Signer was fishing alone about a mile offshore when he said he reached to untangle a fishing line from his propeller and went overboard. For an hour, he paddled and drifted.
 
"My left leg was totally numb, like one big cramp, and my right leg wasn’t far behind," he said. A bay constable later said a private plane pilot spotted him and made the first emergency call, Signer said.
 
After grabbing a loose boat bumper, Pearlroth said he jumped into the water and was able to get through the breaking waves to reach Signer, whom he described as "blue, with pink spots."
 
The pair clung to the makeshift flotation device for about 20 minutes before Grivas was able to secure his boat and get them on board. "The guy was shaking, he was blue, I thought he was going into cardiac arrest," said Grivas, 54, who piloted the boat to a Coast Guard station in East Moriches.
 
At Brookhaven Memorial Medical Center in East Patchogue, where Signer was being treated for hypothermia, he said he’s not in the habit of wearing a lifejacket.
 
"It was my own fault for not wearing the jacket when I lean over the back of the boat. It was a bonehead move," Signer said.
 

 

OCTOBER 2009 WESTHAMPTON BEACH EVENTS

Monday, October 5th, 2009
 
Thursday, October 8, 7:30 p.m.
Quogue Wildlife Refuge’s 75th Anniversary Celebration
3 Old Country Road, Quogue
Join the Quogue Wildlife Refuge staff and board members for a friendly gathering inside the Nature Center to celebrate the 75th anniversary of this wonderful wildlife haven! Enjoy some refreshments and a short narrated slide show presentation. Everyone is invited and admission is free. Reservations are requested please.
 
Saturday, October 10, 12:00 p.m.
Westhampton Beach Annual Harvest Festival
Westhampton Beach Historical Society
85 Mill Road
Come and have fun at the annual fall Westhampton Beach Harvest Festival, sponsored by the Westhampton Beach Historical Society. Featuring horse and wagon rides through the village, face painting, Colonial music, and refreshments that your whole family will enjoy. Bring your decorated pumpkin and enter it in the annual Pumpkin Contest. Don’t miss this fun-filled day in Westhampton Beach!
 
Saturday & Sunday, October 10 & 11, 10:00 a.m. – 6:00 p.m.
Greater Westhampton Chamber of Commerce Fall Arts & Crafts Show
The Westhampton Beach Village Green
Main Street & Mill Road
The Annual Greater Westhampton Chamber of Commerce Fall Arts & Crafts Show will feature over 45 artisans in the Westhampton Beach Village Green the second weekend of October 2009. Come with your friends and family and enjoy this fun day of arts and crafts for everyone.
 
October 2, 3, 4 & 5, starting at 11:00 a.m.
October 9, 10, 11 & 12, starting at 11:00 a.m.
Westhampton Beach Fall Fling Sidewalk Sale
Main Street, Westhampton Beach
The merchants on and around Main Street in Westhampton Beach will be displaying their splendid goods for you to see as you walk along Main Street. So come to Westhampton Village and enjoy eight fantastic days of delightful shopping "en plein air". We are looking forward to seeing you at our Fall Fling Sidewalk Sale. Town & Country Real Estate is one of the many sponsors of this event.
 
Halloween ParadeFriday, October 30, 3:15-4:30 p.m.
Greater Westhampton Halloween Parade
Starting at Westhampton Beach Elementary School to Main Street
The Annual Halloween Parade led by the WHB HS Marching Band, includes hundreds of community children dressed up in their favorite scary costumes walking through town. Sponsored and organized by the Westhampton Beach Elementary Parent Teachers Association. Immediately following is the annual “Trick-or-Treat”.
 
Trick or TreatFriday, October 30, 4:00-5:30 p.m.
Greater Westhampton Main Street “Trick or Treat”
Main Street
The Annual Westhampton Beach Main Street “Trick-or-Treat” is organized by the Greater Westhampton Chamber of Commerce, WHAM – Westhampton Alliance of Merchants, the Westhampton Beach Elementary School Parent Teachers Association in cooperation with the Westhampton Beach Main Street Retailers and Businesses. Loads of candy will be given out by several local businesses and area sponsors. So come by in your scariest costume!
 
Farmers' MarketEvery Saturday, 9:00 a.m.1:00 p.m. until the middle of November.
The Westhampton Beach Farmers’ Market 2009 
Mill Road @ Glovers Lane
Enjoy buying locally grown fruits and vegetables while enriching the local economy and enhancing your own health and well-being. You can’t beat eating fresh, delicious fruits and veggies picked that day and at the same time helping support your local farmer.