Continued European uncertainty helps mortgage rates hit new historic lows!  

Ed Dorame

Loan Production Manager

Over 20 years experience!


Direct Line:  206-510-2118



Competitive Rates!     Excellent Service!     Trusted Experience!


If you or anyone you know is thinking about purchasing or refinancing, please give me call.


For the week of June 25, 2012 – Vol. 10, Issue 26

>> Market Update

QUOTE OF THE WEEK..."It's not that I'm so smart, it's just that I stay with problems longer." --Albert Einstein, German-born theoretical physicist

INFO THAT HITS US WHERE WE LIVE... Those of us who toil in the U.S. housing market have certainly stayed with our problems a long time. But you don't have to be Einstein to see light at the end of the tunnel. Housing starts were down slightly in May but are UP 28.5% over a year ago. Single-family starts were actually up 3.2% for the month and are UP 26.2% versus a year ago. New Building Permits went up 7.9% for the month and are UP 25% versus a year ago. Total number of homes under construction gained for the ninth month in a row, which hasn't happened since 2003-2004!

This good news in home building was followed by more positive signs. Existing Home Sales dipped just 1.5% in May and are UP 9.6% over a year ago. The median price is UP 7.9% versus a year ago -- the biggest annual gain since 2006 -- and the third consecutive month of yearly gains in the median price of existing homes. Additionally, April's FHFA index of prices for all homes financed by conforming mortgages was up 0.8%. These prices are UP 2.4% the last two months, the fastest two-month gain on record.

BUSINESS TIP OF THE WEEK... Show people your value by going beyond their expectations in everything you do. Even if they're not clients, you'll generate good will and build a reputation as someone people like and trust.


>> Review of Last Week

TECHNICALLY UP... The tech-heavy Nasdaq stock index ended the week up nicely, but the Dow and the S&P 500 were down after posting gains the last two weeks. The drop was all due to Thursday's trading, which saw the worst one-day decline in stock prices since December. There was good news from Europe, as the Greeks elected leaders who want to stay in the Eurozone. But the Fed meeting on Wednesday featured a lackluster forecast for the rest of the year, with GDP growth a measly 1.9% to 2.4% and unemployment staying up in the 8.0% to 8.2% range.

The Philadelphia Fed Index of manufacturing activity dropped in June to its worst reading since August. This was followed by Weekly Initial Jobless Claims up to 387,000 and continuing claims at 3.30 million. Some economists think these figures point to weak payroll growth for June, as some firms wait for the Supreme Court's health care ruling before deciding how many workers to hire. Yet the housing data reported above was encouraging, as was the May Leading Economic Indicators Index, UP 0.3% after its prior decline.

For the week, theDow ended down 1.0%, at 12641; the S&P 500 closed down 0.6%,to 1335; but the Nasdaq was UP 0.7%, to 2892.

Weak economic reports, plus the Fed's downbeat forecast, kept plenty of investors flocking to the safe haven of bonds. The FNMA 3.5% bond we watch slipped a little, finishing the week down 0.75, at $104.28.Nevertheless, national average mortgage rates eased back into record-low territory in Freddie Mac's weekly survey. Demand for purchase mortgages were off a tad, but remain within the range of the last three years.

DID YOU KNOW?... Currency trading is the buying and selling of world currencies by financial institutions and sophisticated individual investors trying to benefit from variations in currency exchange rates.


>> This Week’s Forecast

NEW AND PENDING HOME SALES, GDP, INFLATION...Recent housing data has brightened an otherwise dreary economic picture and this week we'll see if that continues. Monday's May New Homes Sales should maintain their upward trend. Wednesday we'll scope where existing home sales may be a few months out, with May Pending Home Sales, a measure of contracts signed. The forecast is for a bounce back from the prior month's dip.

Thursday's 3rd Estimate of Q1 GDP is expected to show overall economic growth still at an anemic 1.9%. Friday's Core CPE Prices should be up a little but still within the Fed's inflation 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 Jun 25 – Jun 29

Date Time (ET) Release For Consensus Prior Impact
Jun 25
10:00 New Home Sales May 350K 343K Moderate
Jun 26
10:00 Consumer Confidence Jun 64.0 64.9 Moderate
Jun 27
08:30 Durable Goods Orders May 0.5% 0.0% Moderate
Jun 27
10:00 Pending Home Sales May 0.5% –5.5% Moderate
Jun 27
10:30 Crude Inventories 06/23 NA 2.861M Moderate
Jun 28
08:30 Initial Unemployment Claims 06/23 385K 387K Moderate
Jun 28
08:30 Continuing Unemployment Claims 06/16 3.290M 3.299M Moderate
Jun 28
08:30 GDP–3rd Estimate Q1 1.9% 1.9% Moderate
Jun 28
08:30 GDP Deflator–3rd Estimate Q1 1.7% 1.7% Moderate
Jun 29
08:30 Personal Income May 0.1% 0.2% Moderate
Jun 29
08:30 Personal Spending May 0.1% 0.3% HIGH
Jun 29
08:30 PCE Prices–Core May 0.2% 0.1% HIGH
Jun 29
09:45 Chicago PMI Jun 52.4 52.7 HIGH
Jun 29
09:55 Univ. of Michigan Consumer Sentiment–Final Jun 74.1 74.1 Moderate

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months... Last week's Fed policy statement said they expected an "exceptionally low" Funds Rate "at least through late 2014." 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
Aug 1 0%–0.25%
Sep 13 0%–0.25%
Oct 24 0%–0.25%

Probability of change from current policy:

After FOMC meeting on: Consensus
Aug 1 <1%
Sep 13 <1%
Oct 24 <1%

This e-mail is an advertisement for Ed Dorame. 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 Guarantee Home Mortgage and cannot be reproduced for any use without prior written consent. The material does not represent the opinion of Guarantee Home Mortgage. MLO-57774; WA License CL850501; Guarantee Home Mortgage dba of Golden Empire Mortgage, Inc. NMLS #2427

  • Ed Dorame / Guarantee Home Mortgage
    555 Dayton St. #A-1
    Edmonds, WA 98020
    Phone: 2065102118
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