For the week of Aug 18, 2008---Vol. 6. Issue 34
Last Week in Review
"You can't put a limit on anything." Michael Phelps. And while swimmer Michael Phelps has had a record-setting week at the Beijing Olympics, Bonds and home loan rates have been battling some tough opponents at home.
Bonds began the week trading lower due to inflation fears after crude shipments from Georgia were halted amid the Russian bombardment of the country. However, some poor economic reports (remember bad economic news is bad for Stocks and typically causes money to flow from Stocks into Bonds)... including poor earnings reports from Macy's and farm equipment maker Deere & Co... helped Bonds and home loan rates regain some of the early ground they had lost.
Bonds continued to rally in the latter part of the week despite the hotter than expected read on consumer inflation in the July Consumer Price Index (CPI) report. According to the index, consumer prices increased 5.6% over the last year, which is the biggest year-over-year increase since January 1991. However, Bonds shrugged off the bad inflation news and traded higher because this hot reading came during the time that oil prices spiked to $147 a barrel in the month of July. Since then, oil prices have dropped significantly and are now $113 a barrel, which left traders thinking that next month's CPI reading may be tamer. And Bonds and home loan rates continued their rally on Friday in response to some tame inflation news within the Empire State Index Report.
While inflation has been a tough opponent for Bonds and home loan rates, the technical factor known as the 25-day Moving Average (a moving average is the average closing price of a financial instrument over a given time) has been an even tougher opponent of late. Bonds and home loan rates have attempted to improve past this level several times over the last few weeks, finally succeeding on Friday to end the week nearly unchanged from where they began.
PUTTING A LIMIT ON OVER-CONSUMPTION IS AN IMPORTANT THING TO DO! CHECK OUT THIS WEEK'S MORTGAGE MARKET VIEW TO LEARN HOW GOING GREEN CAN MAKE A DIFFERENCE NOT JUST FOR THE WORLD, BUT FOR YOUR MORTGAGE, TOO!
Forecast for the Week
Tuesday is an especially important day to stay tuned to the markets as two reports...the wholesale inflation measuring Producer Price Index and the state of the housing market measuring Housing Starts and Building Permits Report... could impact the direction of Bonds and home loan rates.
Thursday is another important day to note as the Philadelphia Fed Report will be released. This monthly survey of manufacturing purchasing managers conducting business around the tri-state area of Pennsylvania, New Jersey, and Delaware is one of the most-watched manufacturing reports. If manufacturing is stronger than expected in this area, Stocks could move higher at the expense of Bonds and Home Loan Rates.
Remember when Bond prices move higher, home loan rates move lower... and vice versa. As you can see in the chart below, Bonds and home loan rates were able to battle back and end the week near where they started. However, a new level of resistance at the 50-day Moving Average (seen as the solid black line) may have an affect on the direction of home loan rates.
FOR CHART SEE IMAGE AT TOP OF BLOG POST
The Mortgage Market View...
Green Mortgages Equal Larger Loans Efficient Homes
Tired of heat and energy prices skyrocketing out of your budged? Now you can do something about it... and your mortgage can help!
Energy-efficient improvements, such as installing double-paned windows and additional ceiling insulation, can save you money every month, not to mention pay for themselves in the long run. But how do you come up with the cash to pay for those projects up front or to buy a slightly more expensive house that already has them? One way is with a "green mortgage."
What is a Green Mortgage?
Green mortgages actually come in a couple of different formats. Officially these loans are classified as either Energy Efficient Mortgages (EEMs) or Energy Improvement Mortgages (EIMs).
An EEM essentially allows you to purchase a home that is already energy efficient--even if the prices of that home is larger than you would normally qualify for under your debt-to-income ratio. EIM, on the other hands, allow you to take out a larger loan to make energy efficient repairs and improvements to a house that is not currently rated as energy efficient.
The main benefit of both of these mortgages is that they help you qualify for a larger loan amount and help make it possible for you to live in a better, more energy-efficient home. the basic principle behind this type of financing is that the money you save from the more efficient home will offset the larger mortgage payments.
Qualifying for a Green Mortgage
To qualify for a green mortgage, you typically need to have a Home Energy Rating conducted. This rating provides the lender with an Energy Savings Value, which is estimated monthly energy savings and the value of the energy efficiency measures.
Depending on your unique circumstances, you may qualify for a conventional, FHA, or even a VA green mortgage. Each type of loan is designed to fit a specific situations and, therefore, each loan has specific loan requirements that must be met.
You can learn more about the differences between conventional, FHA, and VA green mortgages at the Energy Star Website. And for more details about green mortgages in general, visit the HUD website.
Steve Papapietro
Senior Financial Assistant
First Horizon Home Loans
No comments:
Post a Comment