Archive for November, 2009

WALL STREET JOURNAL ON WALL STREET BONUS SPENDING

Monday, November 30th, 2009

Today’s WSJ reports trader & investment bankers are spending on luxury items on the QT.

The focus was on the parallels between big bonuses and big spending. WSJ used the example of spending from $15,000-a-week-caribbean vacations to $200,000 platinum watches… and of course hi end real estate in NYC and the revered home in the Hamptons.

In the Hamptons the number of home sales in the 3rd Quarter of this year dramatically increased over the 2nd Quarter 2009 as well as increased from the same period (3rd Q 2008).

Bonuses are considerably lower than 2007 figures.

With all the bad PR these bonuses are getting, it seems the receipients are being told to be discrete in their spending.

The good news for the overall economy is they ARE spending it! Undeniably, this fuels the US economy and trickels down to everyone from the home seller to the shop keeper to the tax collector… 

 

Mortgage Market Update

Monday, November 9th, 2009
If you can’t see the newsletter, or would like to view it online, use this link If you have received this newsletter indirectly and would like to be added to our weekly distribution list, use this link
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 Nov 09, 2009 // Vol. 7, Issue 45
 

  Last Week in Review  


     
 

"TIME IS MORE VALUABLE THAN MONEY. YOU CAN GET MORE MONEY, BUT YOU CANNOT GET MORE TIME." Jim Rohn. And while this is certainly true, home buyers and folks receiving unemployment benefits both got the word that a bit more money and time is coming their way.

Just on Friday, President Obama signed into law a bill that extends unemployment benefits and the First Time Home Buyers tax credit, which is also being expanded to include benefits for homebuyers who aren’t on the first time around buying a home. If purchasing a home is in the cards for you or anyone you know, you can get all the details of the homebuyer’s tax credit in this week’s Mortgage Market Guide View article below. But first, here are a few additional highlights from last week…including important job market news.

Last week’s official Jobs Report showed that there were 190,000 jobs lost in October, higher than the 175,000 job losses that were widely expected. In addition, as you can see in the chart below, the Unemployment Rate rose to 10.2%, quite a bit higher than the 9.9% expected, and the highest Unemployment level since 1983.

———————–
Chart: Unemployment Rate

While this number is bad, what is even more concerning is the "real" unemployment rate being closer to 17.5%. This includes those who have not searched for a job for at least four weeks, known as "discouraged or detached" workers, as well as those desiring full time work but having to settle for part time, the "underemployed". The only ray of sunshine within this anemic report were the upward revisions for August and September, showing 91,000 fewer jobs lost than previously reported.

Let’s remember, in order to just keep up with population growth – or to keep the ranks of the unemployed from rising – there must be 125,000 jobs created each month. So the latest report of 190,000 jobs lost, really means we have fallen behind by 315,000 jobs, just last month.

In other news, Pending Home Sales for October were reported up 6.1%, mostly attributable to First Time Home Buyers rushing to get into contract before the original November 30, 2009 expiration date for the $8,000 tax credit – again, see below for details on the tax credit extension and expansion. Also last week, the Fed issued its latest Policy Statement without any big changes or surprises.

Remember, weak economic news typically causes money to flow from Stocks into Bonds, helping Bonds and home loan rates improve. Bonds struggled through the middle part of the week but were able to rally Friday on the heels of the poor Jobs Report. As a result, Bond prices and home loan rates ended the week slightly better than where they began.

TAKING THE TIME TO REALLY UNDERSTAND WHETHER YOU OR SOMEONE YOU KNOW MIGHT QUALIFY FOR THE EXTENDED AND EXPANDED HOMEBUYER TAX CREDIT COULD MAKE A BIG DIFFERENCE…AND MANY PEOPLE ARE STILL UNAWARE THAT THIS CREDIT IS AVAILABLE! TAKE A MINUTE TO CHECK OUT THIS WEEK’S MORTGAGE MARKET VIEW FOR MORE DETAILS, AND PASS THEM ON TO ANYONE YOU KNOW WHO MIGHT BENEFIT.

 
 

  Forecast for the Week  


     
 

This week’s economic report calendar is much quieter than last week’s, but that doesn’t mean there won’t be plenty of action. Thursday brings another Initial Jobless Claims Report, and now that the bill to extend unemployment benefits has been signed into law, the number of Continuing Jobless Claims is likely to rise significantly. This number had been moving lower, which the media and other "experts" have been rejoicing over, not understanding that it is moving lower because so many people have been on unemployment for so long, their unemployment benefits have actually expired before they were able to find work. It’s more important than ever to keep an eye on this information, since the labor market is a key factor in our overall economic recovery.

There are more Treasury auctions ahead, and it’s yet another record amount in debt being issued. As usual, I’ll keep a close eye on how these auctions are received, particularly as some of the longer term maturities being auctioned provide competition for Mortgage Bonds…and a slowing appetite for Mortgage Bonds will contribute to home loan rates moving higher.

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 were able to end the week on an improving note, and I’ll be watching closely to see if this trend continues.

Chart: Fannie Mae 4.5%% Mortgage Bond (Friday Nov 06, 2009)

Japanese Candlestick Chart
 
 

  The Mortgage Market View…  


     
 

Homebuyer Tax Credit Extended and Expanded!

Last week, a new Homebuyers Tax Credit bill was signed into law. The bill extends the tax credit for first-time homebuyers (FTHBs), as well as opens it up to current homeowners who are looking to buy. And even if you aren’t looking to purchase – pass on this article to anyone you think might be in the market to do so. This is information that might benefit them greatly, and I’ll be happy to be of service to them.

Here is a brief overview of the Homebuyers Tax Credit – and its benefits – based on the new bill.

Tax Credit for First-Time Homebuyers

FTHBs (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Tax Credit for Current Homeowners

The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010. Those in the military do have some special extensions on the timelines available.

What’s So Great About a "Tax Credit"?

The benefit of a tax credit is that it’s a dollar-for-dollar benefit, rather than a "tax deduction", or reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a first-time homebuyer who qualified for the entire benefit were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little or no income tax liability. For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!

Higher Income Caps

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible.

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price

Qualifying buyers may purchase a property with a maximum sales price of $800,000.

Remember, the new tax credit program includes a number of details and qualifications. Call or email today if you have questions or would like to see if you can benefit from the tax credit…and email this article along to anyone else you feel it might benefit as well!

 
 

  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 November 09 – November 13

Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Thu. November 12
08:30
Jobless Claims (Initial)
11/07
NA
 
512K
Moderate
Thu. November 12
10:30
Crude Inventories
11/06
NA
 
-3.94M
Moderate
Fri. November 13
08:30
Balance of Trade
Sept
-$31.9B
 
-$30.7B
Moderate
Fri. November 13
10:00
Consumer Sentiment Index (UoM)
Nov
71.8
 
70.6
Moderate
 
 

 
 

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

 
 

US TREASURY REJECTS BID FROM GOLDMAN FOR FANNIE MAE’S TAX CREDITS

Saturday, November 7th, 2009

The billion dollar question is "what is best for the US tax payers"… ask people in Washington and you’ll get a completely different answer than if you asked people on Wall Street.  Either way, the Obama administration rejected Goldman Sachs’s offer on Friday to buy as much as $1billion in tax credits from Fannie Mae. The bottom line is Treasury officials said " It is our view that the proposed sale would result in a loss of aggregate tax revenues that would be greater tahn the savings". Period end of story! While Goldman argued that the capital could have been used by Fannie Mae to finance low-income housing and bring some relief to the bleeding,, it wasn’t enough.

Just the day before, Fannie announced a loss of $19B in the 3rd Q and expected to ask for another $15B from the US Government.

PRES OBAMA SIGNS HOUSING BILL

Saturday, November 7th, 2009

The United States Senate added tax credits for home buyers which includes an extension on the $8000 first-time home buyer tax credit. The current tax credit was set to expire the end of this month but now has been extended through June on contracts signed by April 30th 2010. Additionally, the new bill includes a $6500 tax credit for existing homeowners who buy a new home after living in their current home for at least 5 years. Such stimuli for the US housing market shall surely add to the emergence of the next healthy market trend from the tips of Montauk & Orient Point to the shoreline of the West coast!

Westhampton Beach Halloween Parade 2009

Monday, November 2nd, 2009

 

HalloweenTown & Country was a memorable haunting ground for the Trick or Treaters this Halloween Eve. Thousands of kids of all ages came around with their scary costumes to collect treats up and down Main Street. With our orange “Boo” balloons and tons of candy, Town & Country was a favorite spot for all the ghosts and goblins to gather.

 

 

Halloween 1Halloween 4Halloween 5Halloween 6Halloween 8Halloween 9

MORTGAGE MARKET WEEKLY UPDATE

Monday, November 2nd, 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 Nov 02, 2009 // Vol. 7, Issue 44
 

  Last Week in Review  


     
 

"Don’t believe the hype!" The words from Public Enemy’s hit song title rang true once again last week when the Commerce Department reported the Gross Domestic Product (GDP) for the 3rd Quarter. As you can see from the chart below, GDP rose by 3.5% for the first gain in a year and the strongest reading in two years.

While most media outlets were giddy about the news and started the hype that the recession is behind us, it’s important to remember that there’s more to the economic data than just the headlines.

The temporary "Cash for Clunkers" program has now expired, but was a big part of last quarter’s GDP gain. If we remove it from the total, the reading would have been a more modest 1.9%. But there is even more to the rise in the latest GDP number that is just temporary…

Also bolstering the economy has been the $8,000 first-time homebuyer tax credit – which is set to expire at the end of this month. Many home buyers have been taking advantage of this program – and wisely so.

———————–
Chart: US Gross Domestic Product (By Quarter)

New Home Sales were reported last week, showing a 7.5-month supply of inventory. While that number is slightly worse than last month’s 7.3 reading, it’s still a big improvement from where we were in January. Back in January, inventory levels reached a high of 12.4-month supply! The improvement in housing inventories has been due in large part to the $8,000 First Time Homebuyer Tax Credit, which is set to expire on November 30.

There is a real possibility of an extension of this program through a proposed Bill, but it is not yet a certainty. The extension Bill still must be reconciled between the House and Senate, and then voted on for final approval. Under the current extension proposal, sales with signed purchase agreements by April 30th that close before June 30th, 2010 would qualify for the credit.

Another positive element would be the possible addition of $6,500 tax credit for other primary home purchasers, meaning the tax credit would no longer be limited only to first-time homebuyers. There is also a possibility that qualifying income limits could increase from $75,000 to $125,000 for singles, and from $150,000 to $250,000 for joint tax filers.

I will be keeping an eye on this for you, so stay tuned.

After all last week’s news and movement in the markets, Bonds and rates ended the week slightly better than where they began.

DON’T FORGET: THIS WEEKEND MARKS THE END OF DAYLIGHT SAVING TIME. SO MAKE SURE YOU SET YOUR CLOCKS BACK TO AVOID UNEXPECTED PROBLEMS…LIKE THE KIND DESCRIBED IN THE MORTGAGE MARKET GUIDE VIEW ARTICLE BELOW!

 
 

  Forecast for the Week  


     
 

This week brings us new employment numbers…and a chance to see if the labor market is showing signs of recovery. The employment news begins Wednesday with the ADP National Employment Report. Sandwiched between that report and Friday’s Jobs Report, is the Initial Jobless Claims report on Thursday.

The big news comes on Friday, when the all-important Jobs Report will be released. Last month’s report underscored the struggling labor market, as the Labor Department reported 263,000 jobs lost in September and an increase in the unemployment rate to 9.8%. The report due out this week is expected to show 166,000 jobs lost in October, which would be significantly better than the previous month if it happens. However, the Unemployment Rate is expected to continue its climb to 9.9%.

In addition to employment news, we’ll also see the ISM Index on Monday. This is the king of all manufacturing indices and is considered the single best snapshot of the factory sector.

Finally, the Federal Open Market Committee (FOMC) holds its two-day meeting this week, with an announcement of the Fed Rate Decision and Policy Statement due on Wednesday at 2:15 p.m. (ET).

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, Mortgage Bonds were able to bounce back last week with help from weakness in the Stock markets.

Chart: Fannie Mae 4.5%% Mortgage Bond (Friday Oct 30, 2009)

Japanese Candlestick Chart
 
 

  The Mortgage Market View…  


     
 

Turning Back the Hands of Time

This weekend, the sun set on another season of Daylight Saving Time. The extra daylight we now enjoy was actually the result of the Energy Policy Act, which was enacted by Congress back in 2005. But did you know that throughout its long history, Daylight Saving Time has had a remarkable and sometimes unexpected impact?

A man was actually able to avoid the draft for the Vietnam War using a Daylight Saving Time loophole. When he was born, it was just after midnight, DST. When he was drafted, he successfully argued that in his home state of Delaware, standard time – not DST – was the official time for recording births. So he was technically born on the previous date–which had a much higher draft lottery number – and he was able to avoid being drafted.

In September 1999, the West Bank was on Daylight Saving Time, while Israel had switched back to standard time. A group of West Bank terrorists prepared some timed bombs – but misunderstood the time change – and the bombs exploded early, killing the terrorists themselves, rather than the intended victims – two busloads of innocent citizens.

In the 1950s and 60s, each state and locality was permitted to choose start and end DST dates as they desired. During 1965, Minneapolis and St. Paul – which are considered one metropolitan area – didn’t agree on start dates, and for a period of time, these Twin Cities had a one hour time change between them. And on one Ohio to Virginia bus route, passengers technically had to change their watches seven times in 35 miles!

To keep to their published timetables, Amtrak trains cannot leave a station before the scheduled time. So when the clocks "fall back" in the fall, all trains that are running on time actually stop at 2 am – the official time of DST change – and wait one hour before resuming their routes. In the spring, the routes instantaneously become one hour behind schedule, but they just keep going and do their best to make up the time.

So Daylight Saving Time sure can have some unexpected impact.

As we enter the first week of Daylight Saving Time, be sure to double-check all of your electronic devices and confirm that the time is correct. Although you may be accustomed to your computer and maybe even your digital clock in your car automatically updating, the recent change of dates for Daylight Saving Time may require that these devices be manually changed, as they now may NOT be ready to update to the correct time on the correct date!

 
 

  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 November 02 – November 06

Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Mon. November 02
10:00
ISM Index
Oct
53.0
 
52.6
HIGH
Mon. November 02
10:00
Pending Home Sales
Sept
0.4%
 
6.4%
Moderate
Wed. November 04
10:30
Crude Inventories
10/30
NA
 
0.78M
Moderate
Wed. November 04
08:15
ADP National Employment Report
Oct
-190K
 
-254K
HIGH
Wed. November 04
02:15
FOMC Meeting
11/4
unch
 
.25%
HIGH
Wed. November 04
10:00
ISM Services Index
Oct
51.5
 
50.9
Moderate
Thu. November 05
08:30
Productivity
Q3
5.8%
 
6.6%
Moderate
Thu. November 05
08:30
Jobless Claims (Initial)
10/31
520K
 
530K
Moderate
Fri. November 06
08:30
Average Work Week
Oct
33.1
 
33.0
HIGH
Fri. November 06
08:30
Hourly Earnings
Oct
0.1%
 
0.1%
HIGH
Fri. November 06
08:30
Non-farm Payrolls
Oct
-175K
 
-263K
HIGH
Fri. November 06
08:30
Unemployment Rate
Oct
9.9%
 
9.8%
HIGH
 
 

 
 

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