No fireworks for last Friday's jobs report. Mortgage rates remain at historic levels!

Ed Dorame

Loan Production Manager

Over 20 years experience!


Direct Line:  206-510-2118


555 Dayton Street, Suite A1

Edmonds, WA  98020


Competitive Rates!     Fast Approvals!     Trusted Experience!


If you or anyone you know is thinking about purchasing or refinancing a home, please give me call!

Home affordability is at historic levels!


For the week of July 9, 2012 – Vol. 10, Issue 28

>> Market Update


QUOTE OF THE WEEK... "Most people never run far enough on their first wind to find out they've got a second." --William James, American philosopher and psychologist

INFO THAT HITS US WHERE WE LIVE... The housing market sure seems to be getting a second wind. The latest forecast from the National Association of Realtors predicts a 9.5% gain in existing home sales in 2012 and a 6.9% boost in 2013, to almost 5 million units. New home sales are projected to jump 29% this year and 62% (!!) in 2013, to 629,000 units. Median prices for existing homes should be UP 3% in 2012 and UP 5.7% in 2013. New home median prices are expected UP 4% this year and UP 4.6% in 2013.

Want some corroboration for this good news? No less an authority than the Joint Center for Housing Studies of Harvard University asserts in "The State of the Nation's Housing 2012" that "...there is reason to believe that 2012 will mark the beginning of a true housing market recovery." The report cautions: "Sustained employment growth remains key,..." adding: "If the broader economy weakens in the short term, the housing rebound could again stall."

BUSINESS TIP OF THE WEEK... Do what you tell people you're going to do. This includes what you tell yourself you'll accomplish. You'll be seen as reliable and productive, two great business traits.


>> Review of Last Week


NO FIREWORKS... There was nothing much to celebrate on Wall Street as the Labor Department reported that the U.S. economy created just 80,000 jobs in June, about one third of them temporary. Hiring slowed sharply in the second quarter, job gains averaging only 75,000 per month.In response to this tepid data, investors sold off stocks, sending the Dow and the S&P 500 down for the week. However, the tech-heavy Nasdaq managed its fifth straight weekly gain, albeit by a minuscule 0.1%.

Adding to the disappointment, ISM Manufacturing came in below 50, signaling contraction in the factory sector for the first time since mid-2009. But the ISM Non-manufacturing index, while dropping in June, stayed just above 50, indicating slight expansion. Unfortunately, June Same Store Sales came in below expectations, with 14 retailers missing estimates, the most since May 2011. Finally, China and the European Central Bank cut interest rates and the Bank of England stepped up its asset purchase program to stimulate growth.

For the week, theDow ended down 0.8%, at 12772; the S&P 500 closed down 0.5%,to 1355; and the Nasdaq was up 0.1%, to 2937.

With the world worried about another economic slowdown, investors flocked to the safe haven of bonds. The weak U.S. Employment Report gave prices a final boost. The FNMA 3.5% bond we watch finished the week UP 0.20, at $105.25. National average mortgage rates on 30-year and 15-year fixed rate mortgages plunged to record lows in Freddie Mac's weekly survey. Purchase loan demand edged up slightly for the week, according to the Mortgage Bankers Association.

DID YOU KNOW?... Quantitative easing is the process of increasing the money supply to ease a credit crunch and, hopefully, boost the economy. It is usually employed only after interest rates are already at zero.


>> This Week’s Forecast


TRADE DEFICIT, FED DEFICIT, FED MINUTES...After the big focus on last Friday's jobs numbers, we have a relatively quiet week ahead. Tuesday's Trade Balanceshould show the deficit in May still hovering near the $50 billion level. Thursday's Federal Deficit for June is also worth watching, having been up past $43 billion.

Wednesday it may be instructive to check out the FOMC Minutes from the Fed's meeting on June 20. We could get a clearer idea of if and when the central bank will start printing more money ("Quantitative Easing") in an effort to stimulate the economy.


>> 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 Jul 9 – Jul 13

Date Time (ET) Release For Consensus Prior Impact
Jul 11
08:30 Trade Balance May –$48.9B –$50.1B Moderate
Jul 11
10:30 Crude Inventories 07/07 NA –4.270M Moderate
Jul 11
14:00 FOMC Minutes 06/20 NA NA HIGH
Jul 12
08:30 Initial Unemployment Claims 07/07 375K 374K Moderate
Jul 12
08:30 Continuing Unemployment Claims 06/30 3.300M 3.306M Moderate
Jul 12
14:00 Federal Deficit Jun NA –$43.1B Moderate
Jul 13
08:30 Producer Price Index (PPI) Jun –0.6% –1.0% Moderate
Jul 13
08:30 Core PPI Jun 0.2% 0.2% Moderate
Jul 13
09:55 Univ. of Michigan Consumer Sentiment Jul 73.5 73.2 Moderate

>> Federal Reserve Watch


Forecasting Federal Reserve policy changes in coming months... In the current economic environment, economists expect the Fed to keep the Funds Rate exceptionally low 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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