Inside Lending Newsletter Dec 10



Geralann Tabet
Production Manager
619 S. Bluff St. Tower 1, Ste 2012
St. George, UT 84770
Direct: 435.215.7342
Fax: 877.371.4777
Cell: 435.619.2452

Dec 10, 2012 – Vol. 10, Issue 50

>> Market Update

QUOTE OF THE WEEK… “Our greatest glory is not in never falling, but in rising every time we fall.”–Confucius

INFO THAT HITS US WHERE WE LIVE… What are rising now are asking prices for homes. A major Web real estate portal reports prices for homes listed there were up 3.8% in November versus a year ago. This is the largest year-over-year gain since the housing downturn began. In addition, the listing prices for the three months ending in November were up 0.8% from the prior three months. And the good news was widespread: annual gains were reported in 76 of the 100 largest metros. Finally, asking price gains are now beating rent price gains in the 25 largest rental markets.

The Wall Street Journal reports five factors influencing rising home prices: housing affordability, with price-to-rent and price-to-income ratios favoring home ownership in many markets; increased household formation; rising rents; a decrease in distressed sales; and record low inventories. The Fed’s recent Beige Book reported improving markets for single-family homes in 10 of the 12 Federal Reserve districts across the country. But one of the two exceptions still showed declining inventories and the other had been hurt by Hurricane Sandy.

BUSINESS TIP OF THE WEEK… Sitting too long at a computer dulls your mental sharpness. Take a break every hour or so and be active: take a 10-minute walk, do a few sets of push-ups or sit-ups.
>> Review of Last Week

PARACHUTES, ANYONE?… It’s hard for investors to get enthusiastic about buying stocks as they wait for the politicians to agree on how to save us from going over the fiscal cliff on January 1. Maybe Washington will just issue everyone parachutes to soften the landing. The political deadlock, along with good and bad economic data, left the Dow up a tad for the week, the S&P 500 virtually flat, and the tech-heavy Nasdaq off just a bit. The week began disappointingly, with the ISM Manufacturing index dipping below 50 for November, indicating contraction.

But, hey, the November ISM Services index rose nicely to a 54.7 growth reading and Q3 Productivity was up at a 2.9% annual rate. Best of all, Friday’s November employment report delivered a better than expected 146,000 new jobs and a drop to 7.7% in the unemployment rate. Unfortunately, the prior reading was revised down from 171,000 to 138,000 new jobs. Another negative was the big drop from 82.7 to 74.5 in University of Michigan Consumer Sentiment.

For the week, the Dow ended up 1.0%, to 13155; the S&P 500 was up 0.1%, to 1418; and the Nasdaq was down 1.1%, to 2978.

Mixed economic reports plus the fiscal cliff stalemate contributed to little price movement in bonds. The FNMA 3.5% bond we watch ended the week down .01, at $106.23. National average fixed mortgage rates stayed at or near record lows as the Fed continued its program to buy $40 billion a month of mortgage bonds to keep prices up and rates down. The Mortgage Bankers Association reported demand for purchase loans even for the week.

DID YOU KNOW?… Bush Tax Cuts refers to the reduced income and long-term capital gains taxes, marriage penalty reduction, expansion of the child tax credit, and lowered maximum gift and estate tax exemptions enacted under President George W. Bush.
>> This Week’s Forecast

THE FED, THE CONSUMER, THE INFLATION… The Fed meets Wednesday for the last time this year. Coming out of the FOMC meeting no one expects any change in the Funds Rate, but the Policy Statement will be studied for its view of the economy. Chairman Bernanke’s press conference follows the meeting.

Important news about the consumer’s role in the recovery comes Thursday. Overall November Retail Sales are expected back in growth territory from last month’s dip. But Retail Sales excluding autos are predicted to be flat. Wholesale PPI and consumer CPI inflation numbers are forecast to stay within Fed guidelines.
>> The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of Dec 10 – Dec 14

Date Time
Release For Consensus Prior Impact
Dec 11
08:30 Trade Balance Oct –$42.7B –$41.5B Moderate
Dec 12
10:30 Crude Inventories 12/8 NA –2.357M Moderate
Dec 12
12:30 FOMC Rate Decision Dec 0%–0.25% 0%–0.25% HIGH
Dec 12
14:00 Federal Deficit Nov –$113.0B –$137.3B Moderate
Dec 13
08:30 Initial Unemployment Claims 12/8 375K 370K Moderate
Dec 13
08:30 Continuing Unemployment Claims 12/1 3.200M 3.205M Moderate
Dec 13
08:30 Retail Sales Nov 0.4% –0.3% HIGH
Dec 13
08:30 Retail Sales ex-auto Nov 0.0% 0.0% HIGH
Dec 13
08:30 Producer Price Index (PPI Nov –0.5% –0.2% Moderate
Dec 13
08:30 Core PPI Nov 0.1% –0.2% Moderate
Dec 13
10:00 Business Inventories Oct 0.4% 0.7% Moderate
Dec 14
08:30 Consumer Price Index (CPI) Nov –0.2% 0.1% HIGH
Dec 14
08:30 Core CPI Nov 0.1% 0.2% HIGH
Dec 14
09:15 Industrial Production Nov 0.4% –0.4% Moderate
Dec 14
09:15 Capacity Utilization Nov 78.0% 77.8% Moderate

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… This Wednesday we’ll see if the Fed says anything different about keeping the Funds Rate at super low levels “at least through mid-2015.” Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

After FOMC meeting on: Consensus
Dec 12 0%–0.25%
Jan 30 0%–0.25%
Mar 20 0%–0.25%

Probability of change from current policy:

FOMC meeting on:
Dec 12     <1%
Jan 30     <1%
Mar 20     <1%


This e-mail is an advertisement for Geralann Tabet. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice, or a commitment to lend. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in the newsletter is the property of PrimeLending, A PlainsCapital Company and cannot be reproduced for any use without prior written consent. It is designed for real estate and other financial professionals only. It is not intended for consumer distribution. The material does not represent the opinion of PrimeLending, A PlainsCapital Company. © 2012 PrimeLending, A PlainsCapital Company. Trade/service marks are the property of PlainsCapital Corporation, PlainsCapital Bank, or their respective affiliates and/or subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved. PrimeLending, A PlainsCapital Company (NMLS no: 13649) is a wholly-owned subsidiary of a state-chartered bank and is an exempt lender in the following states: AK, AR, CO, DE, FL, GA, ID, IA, KS, KY, LA, MN, MS, MO, MT, NE, NV, NY, NC, OH, OK, OR, PA, SC, SD, TN, TX, UT, VA, WI, WY. Licensed by: AL State Banking Dept.- consumer credit lic no. MC21004; AZ Dept. of Financial Institutions- mortgage banker lic no. BK 0907334; Licensed by the Department of Corporations under the California Residential Mortgage Lending Act- lender lic no. 4130996; CT Dept. of Banking- lender lic no. ML-13649; D.C. Dept. of Insurance, Securities and Banking- dual authority lic no. MLO13649; IL Dept. of Financial and Professional Regulation- lender lic no. MB.6760635; IN Dept. of Financial Institutions- sub lien lender lic no. 11169; ME Dept. of Professional & Financial Regulation- supervised lender lic no. SLM8285; MD Dept. of Labor, Licensing & Regulation- lender lic no. 11058; Massachusetts Division of Banking– lender & broker license nos. MC5404, MC5406, MC5414, MC5450, MC5405; MI Dept. of Labor & Economic Growth- broker/lender lic nos. FR 0010163 and SR 0012527; Licensed by the New Hampshire Banking Department- lender lic no. 14553-MB; NJ Dept. of Banking and Insurance-lender lic no. 0803658; NM Regulation and Licensing Dept. Financial Institutions Division- lender license no. 01890; ND Dept. of Financial Institutions- money broker lic no. MB101786; RI Division of Banking- lender lic no. 20102678LL and broker lic no. 20102677LB; TX OCCC Reg. Loan License- lic no. 7293; VT Dept. of Banking, Insurance, Securities and Health Care Administration- lender lic no. 6127 and broker lic no. 0964MB; WA Dept. of Financial Institutions-consumer lender lic no. CL-13649; WV Div. of Financial Institutions- lender license ML31704 and broker license MB-31703. PrimeLending, A PlainsCapital Company is an Equal Housing Opportunity Lender. NMLS# 316594

Equal Housing Lender

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