INFO THAT HITS US WHERE WE LIVE Down in Orlando, Florida, last week there were more housing market forecasts for the year just begun. Bottom line? Housing economists are cautiously optimistic about a recovery during 2011. These economists were presenting their views at the annual meeting of the National Association of Home Builders (NAHB). None of the experts see a robust upturn for housing. But they do feel that home sales, which have been in a bit of a stall, may start to recover soon.
The prevailing opinion is that the residential market should pick up in the spring, thanks to low mortgage rates and home prices at bargain levels. The NAHB's chief economist feels that recent economic indicators are "signifying growing consumer confidence." These indicators include job creations, good retail sales, and increasing purchases of big ticket items like cars and furniture. Freddie Mac's chief economist sees home prices bottoming in the first six months. He expects mortgage rates to edge up slightly but still remain at historically low levels. Overall, home sales are forecast to be up from 4% to 10% year-over-year and for new construction to be up by 20%.
>>> Review of Last Week
THINGS KEEP LOOKING UP... Investors seem to be more positive about the U.S. economy and the European financial situation. They articulate those views by trading stock prices up and last week, they sent the Dow, the broadly based S&P 500, and the tech-heavy Nasdaq UP by solid percentages. Across the pond, Portugal, Italy, and Spain got some much needed support. Over here, Q4 corporate earnings season got off to a good start, supported by some encouraging economic data.
A slight glitch in the proceedings came from an increase in weekly unemployment claims to 445,000. But the four-week moving average is at 417,000 and continuing unemployment claims dropped by 248,000 to 3.88 million, the lowest it's been since October 2008. Strongly positive economic signs came from a shrinking trade deficit, with exports running ahead of imports over the past year. Inflation appears to be in check, as measured by Core CPI, the Fed's key reading on the matter. This means the Fed Funds rate can stay at its current low levels.
Retail sales were up slightly less than expected for December, but they did reach an all-time high, surpassing the November 2007 figure. For the last year, retail sales are up almost 8% and they've been growing at a 13% annual rate the past three months. In corporate Q4 earnings news, major players Alcoa, JPMorgan Chase, and Intel beat estimates and issued better than expected guidance going forward.
For the week, the Dow ended up 1.0%, at 11,787; the S&P 500 went up 1.7%, to 1,293; and the Nasdaq shot up 1.9%, ending at 2,755.
Bond prices went on an up and down trip last week, with varied results at the finish. The FNMA 4.0% bond we watch ended virtually flat, down 4 basis points for the week, closing at $99.14. According to Freddie Mac's weekly survey of conforming mortgages, average fixed-rate mortgage rates dropped for the second week in a row. The national average rate for 30-year fixed rate mortgages hit a four-week low after their slight uptick at the end of last year.
>>> This Week’s Forecast
HOUSING, MANUFACTURING, THE ECONOMY OVERALL... Financial markets are closed Monday in observance of Martin Luther King Day. The rest of the week features some measures of the housing market. Wednesday's December Housing Starts and Building Permits will show us the mindset of home builders. Starts are forecast to be down a little, but the weather wasn't conducive to breaking ground in many regions of the country. Permits indicate starts a month or two out and they should be up a little, the same as December Existing Home Sales, coming on Thursday.
Manufacturing is expected to expand in the New York region, as measured by Tuesday's Empire State Index, but Thursday's Philadelphia Fed Index may show a slight manufacturing contraction. Also that day, the Leading Economic Indicators (LEI) Index for December is forecast to continue to improve, although at a slightly slower rate than the previous month.
>>> The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.
Economic Calendar for the Week of January 17 – January 21
>>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months With inflation still under control, economists expect the Fed to keep the Funds Rate at its super low level well into the year. The experts feel the economy is not yet strong enough to handle a rate hike just yet. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.
Current Fed Funds Rate: 0%–0.25%:
Probability of change from current policy:
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© 2011 PrimeLending, A PlainsCapital Company. Trade/service marks are the property of PlainsCapital Corporation, PlainsCapital Bank, or their respective affiliates and/or subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved. PrimeLending, A PlainsCapital Company (NMLS no: 13649) is a wholly-owned subsidiary of a state-chartered bank and is an exempt lender in the following states: AK, AR, CO, DE, FL, GA, HI, ID, IA, KS, KY, LA, MN, MS, MO, MT, NE, NV, NY, NC, OH, OK, OR, PA, SC, SD, TN, TX, UT, VA, WV, WI, WY. Licensed by: AL State Banking Dept.- consumer credit lic no. MC21004; AZ Dept. of Financial Institutions- mortgage banker lic no. BK 0907334; Licensed by the Department of Corporations under the California Residential Mortgage Lending Act- lender lic no. 4130996; CT Dept. of Banking- lender lic no. ML-13649; D.C. Dept. of Insurance, Securities and Banking- dual authority lic no. MLO13649; IL Dept. of Financial and Professional Regulation- lender lic no. MB.6760635; IN Dept. of Financial Institutions- sub lien lender lic no. 11169; ME Dept. of Professional & Financial Regulation- supervised lender lic no. SLM8285; MD Dept. of Labor, Licensing & Regulation- lender lic no. 11058; Massachusetts Division of Banking– lender & broker license nos. MC5404, MC5406, MC5414, MC5450, MC5405; MI Dept. of Labor & Economic Growth- broker/lender lic nos. FR 0010163 and SR 0012527; Licensed by the New Hampshire Banking Department- lender lic no. 14553-MB; NJ Dept. of Banking and Insurance-lender lic no. 0803658; NM Regulation and Licensing Dept. Financial Institutions Division- lender license no. 01890; ND Dept. of Financial Institutions- money broker lic no. MB101786; RI Division of Banking- lender lic no. 20102678LL and broker lic no. 20102677LB; TX OCCC Reg. Loan License- lic no. 7293; VT Dept. of Banking, Insurance, Securities and Health Care Administration- lender lic no. 6127 and broker lic no. 0964MB; WA Dept. of Financial Institutions-consumer lender lic no. 520-CL-49075. PrimeLending, A PlainsCapital Company is an Equal Housing Opportunity Lender.
Things to know about buying a home now...
With the start of the new year, there's lots of talk about where home prices, mortgage rates and home sales in general are headed. If you're thinking about buying a home in the near future, here are some points to ponder:
Prices are now at all-time lows. According to the National Association of Realtors (NAR) housing affordability index, home prices are more affordable now than during any other time in our history going back to 1970. In addition, this time of year is especially good for buyers, because activity has slowed down. The school year in full swing and the holiday season cuts the number of active buyers, so sellers are especially motivated to make a deal.
It's a good time to buy if you plan to stay awhile. A home is still a good investment, just don't expect the house you buy today to deliver a big jump in value right away. The NAR's chief economist says, "Despite very attractive affordability conditions, a housing market recovery will likely be slow and gradual...." But if you plan to stay in your home more than a few years, your investment should beat inflation. According to Department of Labor statistics, for the ten years from 7/1/2000 to 6/30/2010, the average home increased in price 3.4% per year in the US. Inflation measured by the CPI (Consumer Price Index) went up 2.4% per year in the same period.
Mortgage rates are still at historic lows. National average mortgage rates are at their lowest levels in history. You may have heard about rates inching up a little lately, but "inching" is truly the operative word. National average mortgage rates are still below where they were at the start of last year. The important thing to remember is that lower rates increase your buying power by allowing you to qualify for a larger loan amount.
You're in the driver's seat. It's still a buyer's market, so many sellers are prepared to negotiate to close the sale and move on with their lives. Price and appliances for instance are all things that can be up for discussion – you just have to test the waters. But remember, when home prices stabilize and start to head up, sellers won't be in the same bargaining mood. At that point, sellers could regain the upper hand as buyers compete with each other to purchase before prices go up more.
Don't forget the tax benefits. Buying a home gives you some nice tax breaks. Interest on your mortgage and real estate taxes are both tax deductable. If you pay points to reduce your loan's interest rate, that money may also be deductible. Please consult with a tax advisor to find out how these deductions apply to your circumstances.
You want choice? Now you've got it! In many areas of the country, home buyers are feeling like kids in a candy store. There are many nice options to explore. Just don't get overwhelmed. Figure out what you want in a home, a neighborhood that's right and what you can afford to pay – then go enjoy the shopping experience.
It's easy to get started. The first thing to do is to get qualified for a mortgage. This tells you how much money a lender is willing to loan you, so you know exactly what you can afford. Being qualified also strengthens your position when making an offer because the seller knows you're a pre-approved borrower. Please contact us and we'd be happy to help you through this process.
There may never be a better time to buy. One thing's for sure, mortgage rates and home prices won't stay at these historic levels forever. When you find a home you fall in love with, don't let it get away. Remember, you want the best home, not just the best deal, and holding off on a purchase for things to improve, could lose you the home of your dreams.
Feel free to contact PrimeLending about these or any matters relating to home financing or refinancing. We're glad to talk further about any of these topics. Visit us at http://www.primelending.com/. Have a great day!
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© 2011 PrimeLending, A PlainsCapital Company. Trade/service marks are the property of PlainsCapital Corporation, PlainsCapital Bank, or their respective affiliates and/or subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved. PrimeLending, A PlainsCapital Company (NMLS no: 13649) is a wholly-owned subsidiary of a state-chartered bank and is an exempt lender in the following states: AK, AR, CO, DE, FL, GA, HI, ID, IA, KS, KY, LA, MN, MS, MO, MT, NE, NV, NY, NC, OH, OK, OR, PA, SC, SD, TN, TX, UT, VA, WV, WI, WY. Licensed by: AL State Banking Dept.- consumer credit lic no. MC21004; AZ Dept. of Financial Institutions- mortgage banker lic no. BK 0907334; Licensed by the Department of Corporations under the California Residential Mortgage Lending Act- lender lic no. 4130996; CT Dept. of Banking- lender lic no. ML-13649; D.C. Dept. of Insurance, Securities and Banking- dual authority lic no. MLO13649; IL Dept. of Financial and Professional Regulation- lender lic no. MB.6760635; IN Dept. of Financial Institutions- sub lien lender lic no. 11169; ME Dept. of Professional & Financial Regulation- supervised lender lic no. SLM8285; MD Dept. of Labor, Licensing & Regulation- lender lic no. 11058; Massachusetts Division of Banking– lender & broker license nos. MC5404, MC5406, MC5414, MC5450, MC5405; MI Dept. of Labor & Economic Growth- broker/lender lic nos. FR 0010163 and SR 0012527; Licensed by the New Hampshire Banking Department- lender lic no. 14553-MB; NJ Dept. of Banking and Insurance-lender lic no. 0803658; NM Regulation and Licensing Dept. Financial Institutions Division- lender license no. 01890; ND Dept. of Financial Institutions- money broker lic no. MB101786; RI Division of Banking- lender lic no. 20102678LL and broker lic no. 20102677LB; TX OCCC Reg. Loan License- lic no. 7293; VT Dept. of Banking, Insurance, Securities and Health Care Administration- lender lic no. 6127 and broker lic no. 0964MB; WA Dept. of Financial Institutions-consumer lender lic no. 520-CL-49075. PrimeLending, A PlainsCapital Company is an Equal Housing Opportunity Lender.
FOR IMMEDIATE RELEASEContact: Kristen Ridgway214-252-4025, kristen.ridgway@plainscapital.comPhotography available upon request.
Todd Salmans Named President and CEO of PrimeLending
Founder of PrimeLending Roseanna McGill named chairman, Keith Klein named COO
DALLAS, TX (Jan. 11, 2010) – Dallas-based residential mortgage originator PrimeLending, a PlainsCapital Company, today announced Todd Salmans has been promoted to president and CEO. PrimeLending founder Roseanna McGill has been named chairman of the board and Keith Klein has been promoted to executive vice president and chief operating officer.
Effective Jan. 1, 2011, Salmans is responsible for the strategic direction and day-to-day management of PrimeLending including financial performance, compliance, business development, board and strategic partner communications and team development. Since joining the company in 2006, Salmans has helped grow PrimeLending, a member of the PlainsCapital Corporation family of companies, into one of the nation’s leading residential mortgage originators; ranking as the No. 10 FHA lender in the United States for 2009.
“I began laying the groundwork for these changes five years ago when I hired Todd,” said McGill. “Since then, we’ve worked like partners and I am looking forward to continuing to work together toward PrimeLending’s continued success.”
PlainsCapital Corporation Chairman and CEO Alan B. White added, “Roseanna’s entrepreneurial spirit led her to found PrimeLending 25 years ago and is one of the many reasons why the company has grown and prospered since then. Under Roseanna and Todd’s leadership, PrimeLending reached nearly $8 billion in production in 2010 even in these challenging economic times. Now we are positioning PrimeLending for what we expect will be significant industry-wide changes in the near future.”
Prior to joining PrimeLending, Salmans served in regional vice president positions at CTX/Centex, Chase Manhattan/Chase Home Mortgage Corp., and First Union National Bank/First Union Mortgage Corp. Salmans is currently a board member of the Texas Mortgage Bankers Association.
McGill, who founded PrimeLending in 1986, will serve as chairman of the PrimeLending board and will continue to provide strategic, financial and operational guidance to Salmans. In November, McGill was named executive vice president of strategic initiatives for PlainsCapital Corporation; a role in which she will focus on potential expansion opportunities and develop new growth strategies such as cross-selling initiatives within the Corporation and employee recruitment programs.
Keith Klein assumed his role as executive vice president and COO on Jan. 1. Klein joined PrimeLending in 2007 as chief financial officer and will also retain his CFO duties until a replacement is found. During his time with PrimeLending, Klein has improved commission structure, reporting and evaluation models and has also played a pivotal role in assessing new federal regulations within the mortgage industry.
About PrimeLending
PrimeLending, a PlainsCapital Company, is a Dallas-based residential mortgage originator with more than 200 locations in 34 states and more than 1,900 employees. Offering fixed, adjustable rate, FHA, VA and JUMBO loans, permanent construction financing, refinancing and relocation programs, PrimeLending is licensed to originate and close loans in 50 states. Founded in 1986, PrimeLending was ranked as the top FHA lender in Texas and 10th in the nation for 2009. Find more information at PrimeLending.com.
Sources: FHA rankings obtained from MortgageDataWeb.com and are determined from data collected by the Department of Housing and Urban Development.
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