ABBA First Mortgage, Inc. - Wilmington, NC

12/18-More up and down swings!

December 18th, 2014

Volatility yesterday after the FOMC statement kind of said rates will go higher, also kind of said the Feds will be “patient.” Janet Yellen said the FOMC will not increase rates in the next two FOMC meetings. The policy statement had something for everyone with the usual confusion left to markets to decide what the Fed will do and when. The reaction yesterday afternoon generated a lot of volatility in stock markets and in the MBS markets while treasures were a comparatively subdued but rates did increase. The DJIA finally ended up 288.00 after wide trading ranges as investors tried to handicap the Fed’s statement. This morning the US stock indexes at 8:00 were trading up 250 points on the DJIA and the other indexes also strong. Presently, at 1:15 PM, mortgage interest rates were slightly higher as the MBS were trading at -20 bps.

12/17-Volatility again!

December 17th, 2014

More volatility this morning; the stock indexes already have been swinging widely; from +100 in the futures to opening +42 and by 9:45 up 102. The 10 and MBS also swinging around, the 10 early at 2.11%, now essentially unchanged as is the MBS market. Every technical model we use and all of the momentum oscillators are bullish for lower interest rates. The slight near term concern is that the momentum of the current rally is approaching oversold levels suggesting a potential pause and slight uptick is possible. Any selling in the treasury and mortgage markets is not likely to change the bullish technical outlook and will open the door for more buying from traders and investors. Our forecast presently is for the 10 yr note to decline to 2.00% before a potential major trend change.

 

12/16- What’s happenning?

December 16th, 2014

The Markets

  • Fixed rates on home loans rose slightly in the past week after decreasing for the previous month.
  • Freddie Mac announced that for the week ending December 11, 30-year fixed rates rose to 3.93% from 3.89% the week before.  ABBA First leads the way with a rate of as low as 3.75% with zero points!
  • The average for 15-year loans increased to 3.20%.  Again ABBA First offers lower rates than the average with a 3.0% rate with as little as .25 collected.
  • Adjustables were mixed, with the average for one-year adjustables decreasing to 2.40% and five-year adjustables rising to 2.98%.  ABBA First is offering a 2.75% 5/1 ARM with no points.*
  • A year ago, 30-year fixed rates were at 4.42%, which is approximately 0.5% higher than today’s levels.
  • Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac — “Fixed rates on home loans rebounded slightly this week with the 30-year fixed mortgage rate increasing to 3.93 percent after declining for four weeks in a row. The rate movement comes on the heels of an uplifting jobs report showing nonfarm payrolls adding 321,000 new jobs in November — 91,000 more jobs than expected. The unemployment rate remained unchanged at 5.8 percent.”
  • *Must meet all banking requirements (credit score, loan amount, LTV, DTI, etc.)

Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

12/12- Twelve Days of Christmas Lights

December 12th, 2014

For the Wilmington and surrounding areas.  Enjoy this special treat during the Christmas season! (Click on picture below to view)Ruxta and Abba #2

12/12- Ideas for you!

December 12th, 2014

As we approach this wonderful joyous season, ABBA First and Ruxta Realty have partnered to bring this list of stocking stuffers that we will give you a few good ideas.  Please have a safe and healthy Christmas this year and we thank you for your business!  (Click on list below to preview.)

Ruxta and Abba

12/12- Ten 2015 Predictions

December 11th, 2014

In January of each year, Bob Doll, the Chief Equity Strategist at Nuveen Asset Management (and the Keynote Speaker for the 2015 CPN Conference) makes his “Ten Predictions” for the coming year.  With the year coming to a close, we can look back at 2014 Financial Performance through the lens of Mr. Doll’s predictions:

1. The U.S. economy grows 3% as housing starts surpass one million and private employment hits an all-time high.

MOSTLY RIGHT:  Housing starts will exceed one million and private employment hit an all time high in May.  It looks as though the U.S. economy will close the year short of 3% growth. There was better than 4% combined growth in the second and third quarters; and this predication would have almost certainly been correct if not for the terrible winter weather that depressed the economy in the first quarter of the year.

2.  10-year Treasury yields move toward 3.5% as the Fed completes tapering and holds short-term rate near zero.

PARTLY RIGHT: The Federal Reserve Board has held short-term interest rates near zero, and it did end tapering (its program of buying $15 million in bonds each month).  This decision came late in 2014, and it will take some time before its impact is felt on rising interest rates.  The 10 Year Treasury yield was at 2.74% a year ago, and is now at 2.33%.

3.  U.S. equities record another good year despite enduring a 10% correction.

ALMOST PERFECT BULLS EYE: The S&P 500 closed 2013 at 1848.  It rose steadily through the year to a mid-September high of 2010, and then fell to 1862 by mid-October – a 7.4% correction.  It then climbed again to reach a new high of 2062.  As of this writing, the S+P 500 is up 12% for the year.

4.  Cyclical stocks outperform defensive stocks.

PROBABLY NOT: Cyclical stocks are those that grow with the economy; while defensive stocks are those that remain steady (like utilities).  From January through October of 2014, the Russell Global Dynamic Index (a good measure for cyclical stocks) was up 10.06% for the year; while the Russell Global Defensive Index was up 11.12%.  It will take a huge end of year push for cyclical stocks to outperform defensive stocks in 2014.

5. Dividends, stock buy-backs, capex and M&A all increase at a double-digit rate

CORRECT: In Mr. Doll’s own words: “Dividend payments and stock buy-backs have already increased by a double-digit rate and mergers and acquisitions have been on a tear, with Thomson Reuters data showing M&A activity totaling $2.7 trillion so far this year, a 60% year-over-year increase.”

6. The U.S. dollar appreciates as U.S. energy and manufacturing trends continue to improve.

CORRECT: US Dollar Index has risen from 80.0 on January 1 to 87.3 at the end of November, 2014.  U.S. manufacturing has continued to improve and the growth in the U.S. energy business has been perhaps the biggest financial story of the year.

7.  Gold falls for the second year and commodity prices languish.

CORRECT: Commodity prices have certainly languished, mostly due to the decline in the cost of a barrel of oil.  The Thomson Reuters/Core Commodity CRB Index opened the year at 277 and closed November at 266.  Gold opened the year at $1,202/oz, climbed rapidly and then fell even faster to end November at $1,191/oz; and likely will end 2014 even lower.

8. Municipal bonds, led by high yield, outperform taxable bond counterparts.

CORRECT: Municipal bonds have been the “market darling” for 2014 (in Mr. Doll’s words) and “are comfortably ahead of the taxable bonds” for performance in 2014.

9.  Active managers outperform index funds

LOOKS TO BE INCORRECT: Actively managed funds continued their losing streak against funds tied to a particular index.  In 2013, 40% of large-cap funds with active managers did better than the Russell 1000 Index.  For the first half of 2014, that was down to only 19% .

10.  Republicans increase their lead in the House but fall short of capturing the Senate.

HALF-CORRECT:  Republicans did increase their lead in House of Representatives by 12 seats, but also scored a resounding victory in picking up 8 (or maybe 9) seats to take control of the Senate.

 

12/11- Big up and down swings!

December 11th, 2014

Market volatility is on the increase and will get even more so between now and the end of the year. With stock indexes at record levels, mortgage interest rates near record lows, and crude oil in a freefall so far; those markets are ripe for wide swings but we believe the wider trends in those markets won’t change much. The American stock market is about the only place in the world that offers hope for profits while crude oil is likely to fall more sharply in an extremely volatile trade that we expect to begin any day now with a huge short-covering move (it is way over-sold).  However, mortgage interest rates should remain low and possibly move lower.

12/10

December 10th, 2014

The Markets

  • Fixed rates on home loans fell in the past week.
  • Freddie Mac announced that for the week ending December 4, 30-year fixed rates fell to 3.89% from 3.97% the week before.
  • The average for 15-year loans decreased to 3.10%.
  • Adjustables were also lower, with the average for one-year adjustables decreasing to 2.41% and five-year adjustables falling to 2.94%.
  • A year ago, 30-year fixed rates were at 4.46%, which is over 0.5% higher than today’s levels.
  • Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac — “Fixed rates on home loans were down across the board in a week of underwhelming economic releases. New home sales missed consensus expectations by selling at an annual pace of 458,000 units in October and the National Association of Realtors reported that pending home sales dipped in October by 1.1 percent. The ADP’s estimate for payroll growth in November was 208,000 jobs, below expectations of 225,000.”

Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

12/8- Ownership Costs Are Lower While Rents Rise

December 8th, 2014

Housing cost burdens fell for the third consecutive year, according to the US Census 2013 American Community Survey.  Last year, 39.6 million households spent more than 30% of their income on housing, which is a decrease from 40.9 million in 2012 and down from the peak of 42.7 million in 2010.

However, housing cost burdens are mostly dropping among home owners, while they continue to strain renters, according to a recent analysis by the Harvard Joint Center for Housing Studies of the data. In 2013, 26 percent of home owners were considered burdened by household expenses (i.e.: spending more than 30 percent of their income on housing), compared to half of all renters at 49 percent. The number of renter households is on the rise, which partially explains why renter cost burdens are escalating, JCHS notes. But this group is also plagued by rising rents that are not matching up to incomes. Median renter costs were up about 5 percent in 2013 compared to 2001, even though median incomes were nearly 11 percent lower, according to the report.

That’s contributed to more renters being “severely burdened” by household costs. In 2013, 11.2 million renters were in this category, meaning they were paying more than 50 percent of their incomes toward housing costs. “If past patterns hold and income growth remains stagnant and rental costs continue to climb, then rental cost burdens will only continue to grow,” JCHS researcher Ellen Marya writes on the group’s Housing Perspectives blog.

Meanwhile, the number of cost-burdened home owners is dropping. “After surging during the housing bubble, inflation-adjusted owner costs have dropped about 2.5 percent below their 2001 level,” Marya writes.

11/24- Thanksgiving week!

November 24th, 2014

This week, markets will trade and there are a number of key economic releases as well as Treasury auctions. The 10 continues to hold present levels, neither improving or worsening. The number of analysts that were sure interest rates would be 40 basis points higher by now, have been exiting the building. The 10 is not likely to increase much between now and the end of the year. For all of the talk and discussion, the fixed income market is not buying into the idea the US economy will grow quickly enough to increase inflation concerns. It isn’t something you hear about, but one of the key forces keeping rates low is hedging against the increasing potential of a decline in the equity markets. Large investors and hedge funds should like moving into treasuries; there is very little risk in doing so, and there is an increasing sense the stock market may be close to a big correction.  Of course, that will be tragic to the USA and will affect the economy of the entire globe.

 

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