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Valley Central Bank

Bob Paola
Vice President- Residential Lending
NMLS #754101
Valley Central Bank
8160 Corporate Park Drive, Suite 135
Cincinnati, OH 45242
Office: 513-868-5357
Cell: 513-702-2029
E-Mail: bpaola@valleycentral.org

Bob Paola

 

 

For the week of Aug 13, 2018 | Vol. 16, Issue 33

 

 

 

 

 

 

For the week of Aug 13, 2018 | Vol. 16, Issue 33

 

 

In This Issue  

 

 

 

 

Last Week in Review: Home price gains were strong in June. Did inflation heat up in July?

Forecast for the Week: Key reports on housing, manufacturing and Retail Sales will be delivered in the second half of the week.

View: Stay protected from the latest phone-based tax scam.

 

 

 

 

 


Last Week in Review  

 

 

 

 

"Home. Home on the range. Where the deer and the antelope play." Bing Crosby. A discouraging word was heard by many potential homebuyers, as home prices continue to rise across much of the country.

Research firm CoreLogic reported that home prices, including distressed sales, rose 6.8 percent from June 2017 to June 2018. Prices were up 0.7 percent from May to June. However, gains could slow over the next year if further increases in home prices and home loan rates erode affordability. CoreLogic forecasts a 5.1 percent increase in home prices from June 2018 to June 2019.

The National Association of Home Builders also reported that rising home prices and higher home loan rates caused housing affordability to hit its weakest level in a decade in the second quarter of this year.

There was news on consumer inflation, as the July Consumer Price Index (CPI) rose 0.2 percent from June, which was in line with estimates. Core CPI, which strips out volatile food and energy prices, also matched estimates with a 0.2 percent monthly increase. While these monthly numbers were tame, on an annual basis Core CPI rose 2.4 percent when compared to July 2017, which was the largest 12-month increase since the period ending September 2008.

Inflation at the wholesale level was tame in July, as the Producer Price Index was unchanged from June.

The bottom line when it comes to inflation is that fixed investments like Mortgage Bonds lose value when inflation rises. Home loan rates are tied to Mortgage Bonds, so rates can tick up when Mortgage Bonds worsen. That's why inflation reports are always some of the most important to monitor.

For now, home loan rates remain attractive and near historically low levels.

If you or someone you know has questions about home loans, please reach out. I'm here to help.

 

 

 

 

 


Forecast for the Week  

 

 

 

 

Housing, manufacturing and Retail Sales data could move the markets later in the week.

  • Housing data will be in the spotlight with the NAHB Housing Market Index on Wednesday and Housing Starts and Building Permits on Thursday.
  • Also on Wednesday, look for data on Retail Sales and Productivity.
  • Manufacturing numbers will come via the Empire State Index on Wednesday and the Philadelphia Fed Index on Thursday.
  • As usual, weekly Initial Jobless Claims will be released on Thursday.
  • The Consumer Sentiment Index will be delivered on Friday.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bonds moved higher in recent days. Home loan rates remain attractive.

Chart: Fannie Mae 4.0% Mortgage Bond (Friday Aug 10, 2018)

Japanese Candlestick Chart

 

 

 

 

 



The Mortgage Market Guide View...  

 

 

 

 

 

   

 

 

 

 

Scam Alert: Spoofed IRS Phone Numbers

The Internal Revenue Service recently issued warnings regarding a new variation on an old phone scam: Criminals can spoof telephone numbers belonging to IRS Taxpayer Assistance Centers (TACs) to dupe taxpayers into paying fake tax bills.

In this version of the phone scam, criminals program computers to display TAC telephone numbers, which then appear on consumers' caller IDs when the criminals call. When consumers question the illegitimate demand, they are directed to IRS.gov to look up the local TAC office telephone number to verify it. Scammers hang up, call back a short time later and demand immediate payment.

According to the IRS, tax scams are common all year long so it's crucial to be aware of the following:

The IRS will mail you a bill if you owe any taxes. The IRS does not contact taxpayers by telephone to notify them of overdue taxes.

The IRS will not ask for debit or credit card numbers over the phone or demand specific payment methods to pay taxes that are owed (e.g. prepaid debit cards, gift cards or wire transfers).

The IRS will never threaten to bring in local police, immigration officers or other law enforcement nor can the agency revoke anyone's driver's license, business license or immigration status.

If you receive a scam phone call, report it to the Treasury Inspector General for Tax Administration at the IRS Impersonation Scam Reporting site or email phishing@irs.gov with the subject line "IRS Phone Scam."

Source: IRS

Economic Calendar for the Week of August 13 - August 17

Date

ET

Economic Report

For

Estimate

Actual

Prior

Impact

Wed. August 15

08:30

Retail Sales

Jul

NA

 

0.5%

HIGH

Wed. August 15

08:30

Retail Sales ex-auto

Jul

NA

 

0.4%

HIGH

Wed. August 15

08:30

Productivity

Q2

NA

 

0.4%

Moderate

Wed. August 15

08:30

Empire State Index

Aug

NA

 

22.6

Moderate

Wed. August 15

10:00

Housing Market Index

Aug

NA

 

68.0

Moderate

Thu. August 16

08:30

Philadelphia Fed Index

Aug

NA

 

25.7

HIGH

Thu. August 16

08:30

Jobless Claims (Initial)

8/11

NA

 

213K

Moderate

Thu. August 16

08:30

Building Permits

Jul

NA

 

1.273M

Moderate

Thu. August 16

08:30

Housing Starts

Jul

NA

 

1.173M

Moderate

Fri. August 17

10:00

Consumer Sentiment Index (UoM)

Aug

NA

 

97.9

Moderate

 

 

 

 

 

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.

 

As your mortgage professional, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.

Bob Paola
8160 Corporate Park Drive, Suite 135
Cincinnati, Ohio 45242

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