Inflation Declines

Apr 15 2016

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While the U.S. economic data released over the past week generally was a bit weaker than expected, it was offset to some degree by stronger than expected data in China. The net effect was small, and mortgage rates ended the week just a little higher, up from the lowest levels of the year. 

While explaining why the Fed plans to move gradually to tighten monetary policy, Fed Chair Yellen said that she was concerned that the recent increase in core inflation may be due to temporary factors. The consumer price index (CPI) report for March released on Thursday might be a sign that her concerns are justified. 

Core CPI inflation, which excludes the volatile food and energy components, was 2.2% higher than a year ago, down from a 2.3% annual rate in February, and below the consensus forecast. This follows four straight months of increasing levels of core inflation and may be the start of a trend lower. It would be good for mortgage rates if inflation continues to decline.

Retail sales in March were a good deal weaker than expected. The results were decent, but investors were looking for better. Excluding the volatile auto component, retail sales increased 0.2% from February, which was the largest increase in four months, but it was half the expected level. Consumer spending is an important component of gross domestic product (GDP), and it was somewhat surprising that the report caused so little reaction. 

Looking ahead, the biggest event next week may be Thursday's European Central Bank (ECB) meeting. Bond purchases by the ECB have helped keep global bond yields low, so comments about future policy could have an impact on U.S. mortgage rates. Before that, the NAHB housing index will be released on Monday. Housing starts will come out on Tuesday. Existing home sales will be released on Wednesday.

Topics: Ali Vafai, The Money Source, mortgage industry, mortgage news, consumer price index, economic data, mortgage rates, retail sales, inflation, consumer spending

What's Up With the Pink Unicorn?

Feb 19 2016

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The Pink Unicorn is a mythical creature no one has actually seen and most believe does not exist. The same could be said for a mortgage company with highly motivated employees who are committed to providing the best customer service each and every day.

At The Money Source Inc., we strive to create a positive and strong company culture, anchored by our Core Values

  • People Matter.
  • Inspiring Leadership
  • Strength of Character
  • Rock Solid Service

The Money Source Inc. adopted the whimsical, and yes imaginary, Pink Unicorn as its mascot with the intent of turning what some consider a fantasy workplace into reality; we are building an army of Pink Unicorns to prove it’s possible!

Partner with The Money Source Inc. to experience what sets us apart from other companies - Become a Partner today!

Topics: The Money Source, Grow Happiness, Core Values, mortgage industry, Pink Unicorn

Higher Inflation

Feb 19 2016

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Mortgage rates spiked higher late last week, as investors bought stocks and sold bonds. The volatility continued this week, but the net effect was favorable for mortgage rates. Despite an upside surprise in the CPI inflation data and stock market gains, mortgage rates ended the week a little lower. 

The Consumer Price Index (CPI) is the most widely followed monthly inflation indicator, and the readings for January were higher than expected. CPI was 1.4% higher than a year ago, which was the highest level since October 2014. 

Core CPI, which excludes the volatile food and energy components, was 2.2% higher than a year ago, which was the highest level since June 2012. Economists often look at core inflation rather than the overall rate to get a clearer sense of the underlying trend. 

While some forces have helped hold down inflation over the past year, including the stronger dollar and lower oil prices, the service sector has remained strong and costs have been rising. In particular, shelter and medical costs have increased over the past year. Mortgage rates are highly influenced by the outlook for future inflation. If the trend toward higher inflation accelerates, it would be negative for mortgage rates.


Looking ahead, Existing Home Sales will be released on Tuesday and New Home Sales on Wednesday. Durable Orders, an important indicator of economic activity, will come out on Thursday. The Core PCE price index, the Fed's preferred inflation indicator, and the second estimate of fourth quarter GDP will be released on Friday. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday. 

All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline)


 

Topics: Ali Vafai, The Money Source, mortgage industry, mortgage news, consumer price index, Pink Unicorn, service sector, mortgage rates

Wage Growth Picks Up

Feb 05 2016

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Most of the economic data released over the past week fell short of expectations. However, strong wage growth in Friday's employment report offset some of the weakness perceived in the other data. Mortgage rates ended the week a little lower.

Against a consensus forecast of 190K, the economy added 151K jobs in January. This was down from average gains of about 280K over the prior three months. The unemployment rate declined from 5.0% to 4.9%, the lowest level since February 2008

While job gains in January were a little lower than expected, investors focused more on the surprisingly strong wage growth. Average hourly earnings, an indicator of wage growth, rose 0.5% in January, which was well above the consensus forecast. Investors raised their outlook for future inflation based on the wage data, forcing mortgage rates a little higher after the report.

By contrast, nearly all of the data released earlier in the week was positive for mortgage rates. U.S. manufacturing activity has slowed sharply in recent months. The ISM national manufacturing index is at the lowest level since 2009. The stronger dollar and weakening demand in other countries have hurt the sector. Manufacturing makes up a relatively small portion of U.S. economic activity, though. More disturbing to investors, the ISM national services index declined to the lowest level since early 2014. The service sector represents over 80% of the U.S. economy.

Looking ahead, additional labor market data, the JOLTS report, will come out on Tuesday. JOLTS measures job openings and labor turnover rates. Retail Sales will be released on Friday. Consumer spending accounts for about 70% of economic output in the U.S., and the retail sales data is a key indicator. Fed Chair Janet Yellen will be speaking on Wednesday and Thursday. There will be Treasury auctions on Tuesday, Wednesday, and Thursday. 

All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline)

Topics: Ali Vafai, The Money Source, mortgage industry, mortgage news, Pink Unicorn

Rocky Balboa: The Ultimate Underdog

Dec 08 2015

I wanted to dedicate this month’s blog to one of the great fictional heroes of this century. His name is the Italian Stallion aka Rocky Balboa. Some of you may be laughing as you read this, others of you are more than likely nodding your head in agreement, you know who you are! Over this holiday weekend I had the pleasure of watching the seventh movie in the Rocky franchise called Creed. It is a great movie, pays homage to the city of Philadelphia, which is essentially a character in the movie, and has some classic Rocky moments. All in all, I give it two thumbs up. But I am not writing a movie review of Creed. I wanted to share with all of you a few great things that I think we can all learn from Rocky - and trust me there are a few.

Being a child of the 80’s, I fell in love with the Rocky movies at a very young age. In fact, my brother and I would watch the Rocky I – IV marathon when it was on each and every year. We would end each movie with a faux fight that inevitably turned into a real fight. We were twin brothers who needed to keep one another entertained and this became a tradition for us. I realized that the reason I loved the Rocky movies so much was because I have always had a fond connection with the idea of the underdog. It is this strange connection that had drawn me to Rocky as a character and as I grew up I found this to be a common thread in my life. If there was a sporting match, I wanted the underdog to win. Come from behind victory, I am all in! The idea of the underdog has always resonated with me whether I was a spectator or the actual underdog. I also believe this is what has drawn me and probably many of us to an industry like ours.

Whenever I am asked what theme song best represents me, the answer is always the same, “Easy….Eye of the Tiger.” I don’t say this to be funny, I say it because I mean it. We are in an industry that can be volatile and unforgiving. Whether we are attacked with 10,000 new pages of regulation, incessant audits, knee-jerk movements in pricing, an unexpected and sustained spike in call volume, or something like TRID, our industry can leave us with our head spinning. I have seen some great people come and go from the mortgage business over the years and I am convinced that it attracts a certain type of person, one in my opinion who can relate to this idea of an underdog. I see this right now as we head into the winter months with loan volume down industry wide from TRID, and the effects of winter looming overhead. It is times like these that we can be our best selves. We can step up to the occasion and take advantage of the market that unfolds when others question their resolve. This is probably the underdog speaking in me right now, but I believe in times of volatility come our biggest and best opportunities. But the key to success is to stay the course and to fight the good fight. With that said I will end with the great words of The Italian Stallion:

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Topics: The Money Source, Darius Mirshahzadeh, The Money Source Inc., TRID, mortgage industry, Rocky Balboa

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