|For the week of February 13, 2017 – Vol. 15, Issue 6|
>> Market Update
QUOTE OF THE WEEK… “There are no traffic jams on the extra mile.” –Zig Ziglar, American author, salesman and motivational speaker
INFO THAT HITS US WHERE WE LIVE … Put in that extra effort and good things will happen. Good things are happening in the housing market, as Fannie Mae’s Home Purchase Sentiment Index (HPSI) reported that housing confidence in December reversed its five-month decline, heading up 2 percentage points, with personal finance optimism reaching a seven-year high. Their chief economist noted: “Three months after the presidential election, measures of consumer optimism regarding personal financial prospects and the economy are at or near the highest levels we’ve seen in the nearly seven-year history of the National Housing Survey.”
Reflecting that increased housing confidence among consumers, the Mortgage Bankers Association reported purchase mortgage applications up 2% for the week ending February 3. The National Association of Realtors (NAR) report for Q4 of 2016 saw the best quarterly sales pace for the year, which drove inventory to record lows. But the NAR president pointed out this should boost sales activity now: “There are fewer listings…but also a little less competition than what’s expected this spring. The prospect of higher mortgage rates and more home shoppers in coming months should be enough of an incentive for those serious about buying to start their search now.”
BUSINESS TIP OF THE WEEK… Be passionately dedicated to serving the spoken and unspoken needs of your clients. This dedication produces a high level of value to clients, which will differentiate you in the marketplace.
>> Review of Last Week
TAX RALLY… Last Thursday President Donald Trump said he would deliver on his campaign pledge to move quickly on tax reform, promising to announce a “phenomenal” tax policy in a few weeks. What was “phenomenal” immediately was Wall Street’s reaction. Investors sent the three main stock indexes to record highs by the end of the day–and followed that by pushing all three indexes up to another set of record highs on Friday. Many observers believe tax reform has the potential to jolt the economy out of the frustratingly slow growth we’ve seen since the recession–by boosting personal incomes, corporate earnings and well-paying jobs.
The week ended with the Dow UP 1.0%, to 20269; the S&P 500 UP 0.8%, to 2316; and the Nasdaq UP 1.2%, to 5734.
As investors scurried over to stocks on Thursday, bond prices fell, but recovered Friday thanks to some dip-buying. The 30YR FNMA 4.0% bond we watch finished the week UP .06, at $104.95. National average 30-year fixed mortgage rates dropped in Freddie Mac’s Primary Mortgage Market Survey for the week ending February 9, their chief economist noting, “rates are at about the same level at which they started the year.” Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW?… The homeownership rate for Hispanics increased to 46% in 2016, up from 45.6% in 2015. This happened while the overall homeownership rate dropped to 63.4% in 2016, from 63.7% in 2015.
>> This Week’s Forecast
HOME BUILDING OK, INFLATION AND RETAIL UP, MANUFACTURING SO-SO… January reports are expected to show Housing Starts off, but Building Permits increasing, indicating builders are ramping up for the spring selling season. CPI and Core CPI inflation should rise, but consumers are still spending. Retail Sales are forecast up a tad overall and Retail Sales ex-auto, excluding volatile auto sales, up by a bigger amount. Pretty good for January. Manufacturing has mixed predictions, down by the Philadelphia Fed Index, but up or flat in other reports.
>> 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 Feb 13 – Feb 17
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months… Most economists can’t see a rate hike at the next two meetings, but the majority does expect a quarter percent bump in June. Note: In the lower chart, a 13% probability of change is an 87% certainty the rate will stay the same.
Current Fed Funds Rate: 0.5%-0.75%
Probability of change from current policy:
| Ron Schulz
Senior Loan Officer
13140 Coit Rd # 502
Dallas, TX 75240
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