This Week’s Market Commentary

This week brings us the release of four economic reports for the markets to digest, with three of them being considered important.

One of those three is one of the more important reports we see each month.

There is relevant data or events scheduled for each day except Thursday, so it will likely be another active week for mortgage rates.

May’s Personal Income and Outlays data will be posted early this morning. This report gives us an indication of consumer ability to spend and current spending activity. They are important because consumer spending makes up two-thirds of the U.S. economy.

Analysts are expecting to see an increase of 0.3% in income and a 0.1% rise in the spending portion of the report. Smaller than expected increases should be good news for the bond market and mortgage rates.

June’s Consumer Confidence Index (CCI) is the second report of the week. It will be posted late Tuesday morning. It is important to the financial markets because it measures consumer willingness to spend. If consumers are more confident about their own financial situations, they are likely more apt to make large purchases in the near future.

Current forecasts are calling for a reading of 60.3, down from last month’s 60.8 reading. The lower the reading, the better the news for bonds and mortgage rates.

Friday has two reports scheduled, with the first coming from the University of Michigan who will update their Index of Consumer Sentiment for May. This index gives us a measurement of consumer willingness to spend.
As with Tuesday’s CCI, if consumers are more comfortable with their own financial situations, they are more apt to make large purchases in the near future. Since consumer spending makes up two-thirds of the U.S. economy, any related data has the potential to affect bond trading and mortgage rates.

The second report of the day and the last data of the week is the Institute of Supply Management’s (ISM) manufacturing index for June late Friday morning. This index measures manufacturer sentiment by surveying trade executives on current business conditions. A reading above 50 means that more surveyed executives felt business improved during the month than those who felt it had worsened.

Analysts are expecting a reading of 51.1. That would indicate that manufacturers felt business worsened from the previous month, when we saw a 53.5 reading. Good news for bonds and mortgage rates would be a weaker than expected reading, particularly something below the recessionary threshold of 50.0.
Overall, tomorrow and Tuesday’s data should bring some volatility in trading and mortgage rates, but Friday’s ISM report is definitely the most important of the week.

How to Decorate Using Feng Shui

Feng shui is an ancient Chinese system of aesthetic arrangement believed to help improve life by receiving positive qi, sometimes spelled chi. In a new home, or when rearranging things in your current home, utilizing feng shui principles in decor is not very difficult.

The video below introduces concepts of arranging frniture using the principles of feng shui.

Tagged as: decor, feng shui, stress reduction

Mortgage California Ranked #3 Company to Work For In Bay Area

In the Sunday edition of the Mercury News, the Bay Area News Group published their February survey results of the Top Work Places. We were ranked #3 for mid-sized companies (150 to 500 employees). The rankings were based upon surveys completed by employees which makes this honor even more special.

We also received a special award in the area of Ethics for the way we conduct business. Below are links to the rankings, our profile, the special awards listing, and information about how the rankings were compiled.

Don’t miss the picture of the “worker bees” which was printed on the front page of the special section in the newspaper.


Mercury News Top Workplaces List
Mortgage California Profile
Ethics Award
Mortgage California mentioned in Open Communication article in SJ Mercury
Congratulations, and especially thank you, to all employees and clients for making this one of the best places in the Bay Area to work! Mortgage California is currently hiring loan officers; take a look at our website to get in contact and learn more.

“This is a huge honor, and purely reflective of all of [the employees'] individual efforts and dedication to each other,” said Rob Reid, CEO. “I am very honored to be part of this great team.”

Four Ways to Avoid Getting Outbid

Competition can be stiff when multiple offers are placed on a house or condo.

There are ways to get ahead in the bidding war that will help your offer be selected.

1. Be first
If you are not working with a buyer’s agent, you should be. Make sure that the agent knows that you want to jump on any appropriate properties as soon as it becomes available. Also, put a tight deadline on your offer so the listing agent can’t use it to solicit other offers from interested buyers.

2. Be pre-approved
Although you likely can’t pay all cash, if you have an approval from a lender saying you’ll qualify for the necessary loan, you’ll be in a stronger position. Because lending standards have toughened, be prepared to make at least a 20% down payment. To prove you’re serious about buying, offer the seller a substantial earnest-money deposit as well – up to 3% of the purchase price.

3. Be highest
Obviously, sellers want to the the highest price possible for their property, so a generous offer will trump an all-cash one. But ask your agent to do a comparative market analysis first so you don’t pay more than the market price. If you do, your deal could fall through – or you’ll be asked to put up more cash – once the lender has the property appraised.

4. Be Easygoing
A recent survey done by the California Association of Realtors found that three-quarters of all sellers are putting their property on the market because of financial difficulties. While it isn’t suggesting that you waive an inspection contingency, don’t demand any monetary concessions, like a decorator’s allowance, or help with closing costs.

Similarly, ask your agent to find out if some accommodations on time would suit the seller’s needs – perhaps a quick closing date for a seller who is having trouble paying the mortgage, or conversely, a long rent-back after closing for sellers who need time to find another place to stay.

This Week’s Market Commentary

This week is very light in terms of scheduled economic reports that are relevant to mortgage pricing.
There are also two Treasury auctions taking place that may influence mortgage rates, but we may see the stock markets drive bond trading and changes to mortgage pricing a good portion of the week.

There is no relevant data scheduled for release today or Tuesday. Fed Chairman Bernanke will speak at the International Monetary Conference in Atlanta this afternoon, but I don’t believe we should consider this a highly important event.

There could be reference to the some of the current financial crises overseas. However, unless something said by Chairman Bernanke is highly surprising, I suspect that his speech will have a minimal or no impact on today’s afternoon rates.

The first economic report of the week comes Wednesday afternoon when the Federal Reserve will release its Beige Book. This data details economic conditions throughout the U.S. by region. It is relied upon heavily by the Federal Reserve to determine monetary policy during their FOMC meetings.

If it shows surprisingly softer economic activity, the bond market may thrive and mortgage rates could drop shortly after the 2:00 PM ET release. If it reveals signs of inflation growing or rapidly expanding economic activity in many regions, we could see mortgage rates revise higher Wednesday afternoon.

April’s Goods and Services Trade Balance report will be posted early Thursday morning. This data gives us the size of the U.S. trade deficit and will be released at 8:30 AM ET. It isn’t likely to cause much movement in the markets or mortgage rates, but nevertheless forecasters are expecting to see a $48.7 billion trade deficit. It will take a wide variance from this projection for the data to influence mortgage rates.

The two relevant Treasury auctions scheduled will be held the middle part of the week. The 10-year Treasury Note sale is scheduled for Wednesday while the 30-year Bond sale will take place Thursday.

Results of both auctions will be posted at 1:00 PM ET on the sale days. If investor demand was high, we may see bonds rally during afternoon trading, however, weak demand could lead to selling and an increase to mortgage rates. It is common to see some pressure in bonds right before these sales as investors prepare for them, but as long as the sales are not weak those pre-auction losses are usually recovered once they are completed.

Overall, it likely is going to be a moderately busy week for the mortgage market. The most action will likely come during the middle days, assuming that the stock markets don’t go into heavy selling or buying. In weeks like these where there is little factual economic data being posted to drive bond trading, the stock markets often take center stage.

Sizable stock gains should lead to bond weakness and higher mortgage rates, while stock weakness will likely allow improvements to mortgage pricing. I am considering Wednesday the best candidate for most active day in rates, but that is relying on the assumption the stock markets remain relatively calm this week.
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