| In This Issue... |
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| Last Week in Review: The potential government shutdown dominated the headlines. How did home loan rates react? Forecast for the Week: Important inflation news will end the week, plus retail sales and consumer sentiment will give us some hints on the mood in the country. View: What’s in your inbox? That’s an especially important question after a recent security breach. See this week’s View for details about safeguarding your information. |
| Last Week in Review |
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| There’s a Chinese proverb, which is sometimes referred to as a curse, that says, "May you live in interesting times." And last week was certainly an interesting one, as much of the week was spent wondering whether there would be a government shutdown. Read on to learn what happened... and what the impact was on home loan rates. But all the uncertainty leading up to this decision was just one factor that caused Bonds and home loan rates to worsen through the week. On Thursday, as expected the European Central Bank (ECB) raised their benchmark rate in an effort to curtail rising inflation, meaning the Euro now trades at its highest level against the US Dollar since January 2010. Despite the weakness in the Dollar, the disparity between the two is somewhat surprising, given the economic headwinds and problems that Europe has been facing. But as the saying goes, "Markets can remain irrational longer than we can remain solvent." At some point, we should expect weakness in the Euro and a rebound in the US Dollar. The passing of the US Budget agreement should help. So the question remains: Why does this matter when it comes to home loan rates? A weak US Dollar typically helps Stocks, as it makes our goods and services relatively cheaper for foreigners, thus helping our export business and GDP. And when Stocks are boosted, investors typically move their money from safe-haven investments like Bonds into Stocks to take advantage of gains there. And since home loan rates are tied to Mortgage Backed Securities (MBS), which are a type of Bond, when these Bonds worsen, home loan rates worsen, too. That said, home loan rates are still relatively incredible, but keep in mind that before long, the Fed and the Treasury will both be selling off their MBS holdings accumulated through their first round of Quantitative Easing (QE1), and it will be tough to see Bonds and home loan rates make meaningful ground once that selling starts. If you have been thinking about purchasing or refinancing a home, call or email me to learn more about how you can benefit from today’s historically low rates. Or forward this newsletter on to someone you know who may benefit. |
| Forecast for the Week |
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| The second half of the week is chock full of important economic reports. Be sure to look for:
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As you can see in the chart below, Bonds and home loan rates worsened through the week due to a variety of factors. I’ll be watching closely this week to see if they are able to change direction.
Chart: Fannie Mae 4.0% Mortgage Bond (Friday Apr 08, 2011) |
| The Mortgage Market Guide View... |
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| Watch Your Inbox! You may have heard some vague reports about a security breach at a company called Epsilon. But, if you’re like many Americans, the news didn’t strike you as fairly relevant to your life. After all, you probably didn’t recognize the company’s name or didn’t think you had any affiliations with it. Or do you? The reality is, the news wasn’t just about the company Epsilon, but instead was about the more than 40 companies - from Walgreens and TiVo to J.P. Morgan Chase and Ameriprise Financial - who have said their customers were among the email addresses stolen. In other words, even if you don’t know the name Epsilon or have anything to do with that company, your email address may be part of this important news story. The good news... It appears only names and email addresses were stolen as part of the breach. Most of that information is fairly public - and isn’t as sensitive as, say, a social security number. The bad news... Clever criminals can put together very convincing email scams to steal the rest of your personal information... right from you, rather than the company. What should you do? Whether you were informed that your email address was stolen or not, here are some important tips to ALWAYS KEEP IN MIND when dealing with unsolicited emails... even from companies that you do business with regularly. 1. Never email personal information... even if the company or email looks legitimate! Cyber criminals today can create very sophisticated and convincing emails that ask you to reply with your password or social security number. In fact, some criminals may be creating emails that look as if they’re informational emails about the Epsilon breach as a way to seem even more legitimate. So, if you receive an email asking for any personal information - including your password, account number, date of birth, social security number, and so on - do NOT respond. Instead, look up the company’s phone number on a recent bill, receipt, or other paperwork, and call the company about the email. If it’s a scam, they’ll want to know that it’s going on. 2. Be careful which links you click. Today’s cyber criminals often don’t ask you to reply with personal information, but instead build and link you to fake company websites - in the hopes that you’ll let your guard down and enter your information for them there. Don’t be foolish. Legitimate businesses will not ask for your information - they already have it. Moreover, they won’t collect personal data outside of a secure website. So if it’s not the normal website URL that you use, be extremely skeptical and contact the company by phone if you even suspect it may be fake. 3. Don’t download. If an email looks suspicious be very careful about attachments. Email scams can include malicious programs that look harmless, but once downloaded can either infect your computer or steal your personal data without you even really knowing. The best word of advice is simply: Don’t download anything that seems even the slightest bit out of the ordinary. Those tips are good advice any time of the year, but they are especially pertinent after widespread breaches. So be extra vigilant when it comes to reading, responding, and clicking on your emails in the weeks ahead.
Economic Calendar for the Week of April 11-15, 2011 Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise. Economic Calendar for the Week of April 11 - April 15
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