Weekly Market Forecast

Week of: Monday, April 23, 2007

Present Market Conditions
The Labor Department reported U.S. consumer prices increased 0.6 percent in March which was the biggest increase since April 2006. However, growth in core prices, which excludes food and energy, was minimal with a mere 0.1 percent increase. Though cautious in their zeal, economists see this as good news in the fight against inflation. In a separate report, the Conference Board announced that its index of leading economic indicators rose by 0.1 percent in March following a two month decline.

Expectations
“If you like moderating inflation — the Fed probably does — then you’ll probably jump for joy over the inflation readings for the next few months,” said Ken Mayland, president of ClearView Economics. He went on to say that some large increases in core CPI last April and May will start dropping out of the year-over-year calculations. This will bring about increased confidence on the part of the Fed that inflation is under control.

Guidance
Construction on new homes increased 0.8 percent in March which may be an indication that builders are optimistic that the worst of the correction in the housing market is behind us. In addition, building permits increased and mortgage rates have decreased slightly. Capitalize on this exceptional opportunity by seeking the assistance of a qualified, professional Loan Officer.

Authored by Georgie Cook
Traverse Mortgage Corporation
(231) 947-9700
(800) 968-3680
georgie@traversemortgage.com

Weekly Market Forecast

Week of: Monday, April 16, 2007

Present Market Conditions
March U.S. retail sales rose 0.7 percent, boosting the U.S. economy. With job gains and higher wages, the labor market remains the main reason why consumers have continued to spend. Though consumer spending is on the rise, consumer sentiment fell in early April to figures that are at an eight month low. This drop in sentiment has been attributed to higher gasoline prices and continued declines in the housing market.

Expectations
Albeit we continue to have a mixed bag of economic news, former Federal Reserve chairman Alan Greenspan feels that the world economy will provide a “cushion” to the U.S. economy. As the trade gap narrows for the third month in a row, Greenspan said growth in the rest of the world is creating demand for services from U.S. companies such as Microsoft Corp. It is predicted by the International Monetary Fund the global economy will grow by 4.9 percent this year, following a 5.4 percent expansion in 2006. The IMF said the U.S. would grow 2.2 percent this year.
Guidance
Fixed-rate mortgages remain below 6.5 percent, there has been a robust rise in non-farm payrolls and there have been solid gains in personal income and consumer spending. These factors coupled with the many incredible incentives being offered with home purchases makes this the quintessential time to purchase. To ensure you capitalize on this excellent scenario, always seek assistance from a qualified, professional Loan Officer.

Mortgage of a Different Color

Sometimes as a lender we pay closer attention to the buyer than the seller. Well this one is for you, the seller. When you list your home with International Realty Plus-Michigan, their team of professional Realtors has already done their Current Market Analysis of the area and more importantly your home. You and they have discussed the market value of your home and have established a selling price that is agreeable to you. The agreement is signed, the sign goes up, and the next thing you know your home is being showcased on the Real Estate Channel.

Next comes the open house. Now people are coming into your home and thinking that it is nice. These nice people that have gone through your home now want to put in an offer that is, shall we say “RIDICULOUS,” because it is a “BUYERS MARKET.”

Please keep in mind that my opinion matters not, but here it is anyway, the market is not a buyers or sellers market. It is a market in which homes are bought and sold reasonably. That said, instead of reducing the price why not offer something a little different?

Let me explain: You would like to sell your home for $215,000 but you would settle for $195,000. Great, but why would you not want to help out the buyer by offering a lower price. Sale price is $215,000.00, the buyers 30 year fixed rate would be 6.375% and the loan amount is $172,000.00 (assuming 20% down) and the monthly payment is $1073.06. You come back and say, “I know you like this house and this is what I’m willing to do for you.” For Instance: The first two years your interest rate is 4.375% the third year your interest rate is 5.375% and year 4 through 30 will be 6.375%.” What’s the catch? Instead of reducing the price of your home you’re offering to buy the rate down for the buyer and the cost to you is only $7,513.63 instead of “SETTLING” for a $20,000 hit. The buyer’s payment for the first two years is $858.77, the third year it’s $963.15 and years 4 through 30 the payment is $1073.06. No, this is not an adjustable rate mortgage because the buyers have a 30 year fixed rate mortgage at 6.375% you’ve just provided a “Smart Step Buy Down” for the buyer of your home.
Watch for my next article when I talk about investment properties.

Authored by Guy Cole
Countrywide Home Loans
(231) 941-5767 ext. 226

Weekly Market Forecast

Week of: Monday, April 16, 2007

Present Market Conditions

The Fed’s dilemma seems to be getting tougher. Core consumer prices increased at the fastest pace in six months during February, even as consumer spending slowed to the weakest in six months, according to government data recently released. The Fed’s preferred measure of core inflation — the core personal consumption price index — rose 0.3% in February, the biggest gain since August, the Commerce Department reported.

Expectations

The Fed is thus faced with both accelerating inflation and a slowing economy, a condition that some have called “stagflation.” Fed Chairman Ben Bernanke testified last week that the Fed believes the slowing economy will reduce inflationary pressures over time without falling into recession. According to a Bloomberg report, “Traders expect about a 60 percent likelihood the Fed will cut its benchmark rate by a quarter-point to 5 percent in August, according to fed funds futures.” The central bank has left its overnight lending rate at 5.25 percent since August.

Guidance
Despite the conflicting message of recent week’s economic indicators, mortgage rates have remained stable and attractive. In this peak spring real estate season those shopping for a new home have the best of all worlds: great choices, low rates and a myriad of mortgage options. To ensure you capitalize on this excellent scenario, always seek assistance from a qualified, professional Loan Officer.

Authored by Georgie Cook
Traverse Mortgage Corporation
(231) 947-9700
(800) 968-3680
georgie@traversemortgage.com