Mortgage rates back down to historic levels!  All eyes on this Friday's unemployment report. Time to lock-in? Maybe....

Ed Dorame

Loan Production Manager

Over 20 years experience!


Direct Line:  206-510-2118



Competitive Rates!      Excellent Service!      Trusted Experience!


If you or anyone you know is thinking about purchasing or refinancing, please give me a call.


For the week of July 2, 2012 – Vol. 10, Issue 27

>> Market Update


QUOTE OF THE WEEK... "Energy and persistence conquer all things." --Benjamin Franklin

INFO THAT HITS US WHERE WE LIVE... Getting ready to celebrate our nation's independence, it's appropriate to note this sage advice from a founding father, as we see more signs that our energy and persistence are finally paying off in the housing market. New home sales were expected to be the last to recover, yet they were UP 7.6% in May to a 369,000 annual rate and are UP almost 20% over a year ago! Plus, the median price was up 5.6% from a year ago and the supply dropped to 4.7 months!

The Case-Shiller index of home prices in the 20 largest metros was UP 0.7% in April (seasonally-adjusted), the third consecutive monthly gain.The chairman of the index committee said, "I would call this very encouraging." Pending home sales, measuring contracts on existing homes signed in May, were UP 5.9%, after their April drop. This suggests a bit of a rebound in existing home sales in the coming months.

BUSINESS TIP OF THE WEEK... When you get stuck on a problem, instead of fixating on solutions that don't seem to work, try redefining the problem.


>> Review of Last Week


ANOTHER EUROPEAN TRIP... Stock prices traveled 278 points north on Friday, as investors reacted to an agreement among European leaders to bolster the economies of troubled Eurozone nations. This included sweeter deals for the Spanish banks and Italy, plus a proposed $149 billion economic growth plan for the region. On this side of the pond, positive news featured Durable Goods Orders for May UP 1.1%, although this was balanced by a –3 reading in the Richmond Fed index, suggesting manufacturing contraction in the mid-Atlantic region.

In addition, the Q1 GDP number showed the overall economy growing at a weak 1.9% annual rate. We also had new weekly jobless claims still nearing the 400,000 mark. Other economic reports revealed that Personal Income was up a tad more than expected in May (good) but Personal Spending stayed flat (not so good). Core PCE Prices measured inflation up a mere 0.1% for the month, but the Michigan Consumer Sentiment index dipped disappointingly in June.

For the week, theDow ended UP 1.9%, at 12880; the S&P 500 closed UP 2.0%,to 1362; and the Nasdaq was UP 1.5%, to 2935.

There was a mid-week rally in the bond market, but investors' buying enthusiasm waned on Friday, as Europe took steps to minimize risk in the Eurozone debt crisis. When all was said and done, the FNMA 3.5% bond we watch finished the week UP 0.77, at $105.05. With mortgage bonds up, national average mortgage rates stayed down near their all-time lows in Freddie Mac's weekly survey. But purchase loan demand was off slightly from a year ago.

DID YOU KNOW?... The Eurozone is the group of 16 countries whose common currency is the Euro. It does not include every member of the European Union, because some EU countries do not yet use the Euro as their sole legal currency.


>> This Week’s Forecast


NO ECONOMIC CELEBRATIONS...We'll have fireworks on Wednesday, but there's still not much to celebrate when it comes to our economy. Today, the ISM Index of manufacturing is forecast to be down a little for June, though still holding over 50, indicating expansion.

The big focus is on Friday's June Employment Report. Job growth is expected to remain anemic, with just 100,000 new nonfarm payrolls and the Unemployment Rate holding at 8.2%. This is worrisome, as a healthy employment situation is necessary to sustain a housing recovery. The markets are closed Wednesday in observance of the Fourth of July.


>> 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 Jul 2 – Jul 6

Date Time (ET) Release For Consensus Prior Impact
Jul 2
10:00 ISM Index Jun 52.2 53.5 HIGH
Jul 5
08:30 Initial Unemployment Claims 06/30 385K 386K Moderate
Jul 5
08:30 Continuing Unemployment Claims 06/23 3.283M 3.296M Moderate
Jul 5
10:00 ISM Services Jun 53.0 53.7 Moderate
Jun 28
11:00 Crude Inventories 06/30 NA –0.133M Moderate
Jul 6
08:30 Average Workweek Jun 34.4 34.4 HIGH
Jul 6
08:30 Hourly Earnings Jun 0.2% 0.1% HIGH
Jul 6
08:30 Nonfarm Payrolls Jun 100K 69K HIGH
Jul 6
08:30 Unemployment Rate Jun 8.2% 8.2% HIGH

>> Federal Reserve Watch


Forecasting Federal Reserve policy changes in coming months... As the overall economy continues to languish, the Fed is expected to keep the Funds Rate at its exceptionally low level at least through late 2014. 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%

After FOMC meeting on: Consensus
Aug 1 0%–0.25%
Sep 13 0%–0.25%
Oct 24 0%–0.25%

Probability of change from current policy:

After FOMC meeting on: Consensus
Aug 1 <1%
Sep 13 <1%
Oct 24 <1%

This e-mail is an advertisement for Ed Dorame. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice, or a commitment to lend. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in the newsletter is the property of Guarantee Home Mortgage and cannot be reproduced for any use without prior written consent. The material does not represent the opinion of Guarantee Home Mortgage. MLO-57774; WA License CL850501; Guarantee Home Mortgage dba of Golden Empire Mortgage, Inc. NMLS #2427.

  • Ed Dorame / Guarantee Home Mortgage
    555 Dayton St. #A-1
    Edmonds, WA 98020
    Phone: 2065102118
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