Mortgage News
Weekly Mortgage News from Rodney Anderson – September 18, 2006
"Inflation has made me so poor I can not even afford to pay attention "(Anonymous) … But the Fed's sure been mindful of inflation. It has been called unwanted, unwelcome and uncomfortable – but little inflation is not a bad thing, according to Fed Chairman Ben Bernanke, who has a target range of 1 to 2% inflation. So, like Goldilocks, not too much and not too some are just what the Fed looks to see. And last Friday we all saw the latest read on inflation, which showed that the features and services we buy as consumers typically cost us 2.8% more than they did a year ago. So inflation at consumer level is up 2.8%, which is a bit higher than the Fed ideally want. Bond Prices and home loan rates bumped around a little reaction to the news, but rates ended only slightly worse for the week as a whole.
So what's the big deal with that? 2.8% sounds pretty close to 2.0%, it means so much? The answer is a big YES, it sure does not matter. Bold is not only watching over the economy today, but for many years and generations down the road. And what may seem a modest amount of inflation above the Fed's target range could amount to a very great difference in the lives of tomorrow's adults.
Here is an example – costs $ 30,000 today at any one car would probably cost more in the future because of inflation. Just 2% inflation per year would make that $ 30,000 car cost $ 54,000 thirty years from now. But if inflation were 4%, car would cost nearly $ 100,000. And at 6% inflation, a car that cost $ 30,000 today would cost about $ 170,000 in three decades! Of course, cars are not the only thing that will increase in price – almost all would. So the Fed tries to guard against too much inflation by hiking rates to slow the economy. In this way, the value for money and quality of life for our future generations will be better preserved.
WHAT IF RIGHT NOW as you read these words, POWER broken … and was OFF for a week. WILL you and your family BE prepared? AND POWER GOING OFF is a low-LEVEL EMERGENCY compared to many that have occurred in the U.S. over the last several years. Crises are never expected … but you can be prepared. Do not miss the Week IMPORTANT mortgage market VIEW.
Forecast for the Week
In this week will be full of action and information … including a look at the housing market, with building permits and Housing Starts – and a reading on inflation at the wholesale side of the economy, by the producer price index. But all the reports will pale in comparison to the big enchilada, the highly anticipated Fed Rate Decision and Statement to be delivered at Wednesday. The last time the Fed got together in August, they made a decision to pause in their two-plus year rate hike cycle … a decision was not unanimous. And since last meeting, individual Fed members were on the road discussing their views on inflation and the economy, some say that inflation is still outside the range desired, the Fed. So what can the Fed do on Wednesday, and how will it harm you?
Well, let's take a look. Most expect that the Fed will keep its "break" status, in order to let the effects of the past 17 hikes in full force in the economy, slow it down, and reduce the risk of inflation. Like a parent give their sick child medicine they have to exercise patience and wait for medication to take effect, rather than immediately expected child to be good. So if they actually decide to stay in pause position, many will breathe a sigh of relief knowing that their home equity line of credit and other short-term debt would not rise further in interest. What will be most interesting to dissect will tone and wording of the policy statement, and to discover if the vote is again not unanimous. The taste of the declaration alone can move the market very quickly, and this meeting is under particular scrutiny. If more Fed members disagreed with the vote to break, because of their concern about inflation in the economy – This may cause Bond prices and home loan rates to worsen in a voyages.
Bottom line – the upcoming week's actions could also mean that href = "http://rodneyanderson.com/mortgage_calculator.php"> home loan rates being thrown through the bumpers.
Mortgage Market View …
READY OR NOT …
Crises are never planned, but can happen in a split second. Ever had a blackout in your home … and as you waited for an opportunity to return to, began to wonder what would happen if minutes turned into hours or days? Will you and your family be prepared? Department of Homeland Security (DHS) wants to ensure that you are and have identified September as National Preparedness Month. An emergency could be an earthquake, hurricane, potential terrorist threat, or just blackout.
Hopefully you will never be confronted with an emergency in your home, but if you have an emergency kit will help ensure that you and your loved ones are just necessities such as food, water, and elements to keep you warm. And decide all the right elements for each member of your family, pets, and people with special needs can usually be a very exhausting process. But DHS has made this process very simple.
To help you start preparing your emergency kit, The Department of Homeland Security has developed a user friendly website, allows you to download and print all the elements you need to assemble. Visit the DHS Emergency Kit site, and you can get a quick list of basic, such as water, food, radio, flashlight and batteries – including a printable list of the quantities and types that should be purchased based on your families needs. There is also valuable information about "Unique family needs, which includes items for babies, pets, and people with special needs.
So Take a few minutes to visit the spot and forward this article on to your friends, family and colleagues … or better yet, develop a starter kit for them as a gift. When the power break unexpectedly … or worse … not be unprepared.
Remember that as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.
About the Author
Rodney Anderson is Division Vice President and Branch Manager for CTX Mortgage Company in Dallas, Texas. Rodney has helped arrange mortgage financing for more than 13,000 families in the last 12 years with CTX Mortgage Company. Over the last three years, Rodney originated more than 5,000 loans for Texas families. Rodney is the #1 producing loan officer in the state of Texas, as well as in CTX Mortgage Company, and is well-known for his extensive knowledge in all areas including FHA, VA, Conventional and Jumbo Financing.