Mortgage Insight


Mountain Equity Mortgage, Inc.




Knowledge is Power – Action Makes The Difference!



Rene’ Kneller – nmls 246709, crmlo 10009309

Jeff Kneller

Telephone: 970.513.0934  —  Facsimile: 970.513.0936


  Economic Commentary

October 14, 2013


This week, actions will speak louder than words as we wait for decisive action on both the government shutdown and the debt ceiling debate. Read on for details.

Economic reports continued to be delayed last week as both the Retail Sales Report and the wholesale inflation measuring Producer Price Index for September were not released due to the government shutdown. One report that was released was weekly Initial Jobless Claims, which jumped by 66,000 in the latest week to the highest level in six months. However, the Labor Department said that ongoing application processing problems in California and government shutdown related layoffs accounted for nearly two-thirds of the increase.

There was also some important housing news to note last week as research firm CoreLogic reported that foreclosure inventories in August dropped by 33 percent nationally compared to August 2012. This was the twenty-second consecutive month with a year-over-year decline. As of August 2013, the foreclosure inventory represented 2.4 percent of all homes with a mortgage, compared to 3.3 percent in August 2012.

The minutes from the Fed’s September meeting of the Federal Open Market Committee were released, showing that all FOMC members except one want to see more evidence of sustainable economic progress before they trim their Bond purchases. Remember that the Fed has been purchasing $85 billion in Bonds and Treasuries each month to stimulate the economy and housing market. With key economic reports delayed due to the shutdown, there is not much chance the Fed will taper its purchases in the near future.

But the biggest news continues to be the ongoing debate regarding the debt ceiling. Reminder that the debt limit, currently at $16.7 trillion, is the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments. If an agreement is not reached by the October 17 deadline and the U.S. defaults on its debt, the results could be catastrophic for our economy. This is a key story that needs decisive action in the days ahead.

The bottom line is that home loan rates remain attractive compared to historical levels and now remains a great time to consider a home purchase or refinance. Let me know if I can answer any questions at all for you or your clients.


Rate Review

In Freddie Mac Primary Mortgage Mkt Survey (for the week ending October 11th) in which the 30-yr fixed-rate mortgage (FRM) avg. 4.23%.

The 15-year FRM this week avg 3.31%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) avg 3.05%.

The one-year Treasury-indexed ARM avg 2.64%.


  Economic Releases

October 14, 2013




No Pending Economic Indicator Releases  



Empire State Index – Impact (HIGH)  



Core Producer Price Index – Impact (HIGH)

Housing Market Index – Impact (Moderate)

Beige Book – Impact (Moderate)




Philadelphia Fed Index – Impact (HIGH)

Building Permits – Impact (Moderate)

Housing Starts – Impact (Moderate)

Jobless Claims – Impact (Moderate)





No Pending Economic Indicator Releases  


Industry Essentials                          

For the Real Estate Professional

October 14, 2013



This week brings news on manufacturing and housing, and possibly inflation.

  • Manufacturing data from the Empire State Index and the Philadelphia Fed Index will be released Tuesday and Thursday, respectively, as they are not government reports.
  • Unless the government reopens, the Consumer Price Index will not be reported by the Bureau of Labor Statistics, though it is scheduled for Wednesday.
  • Housing data begins Wednesday with the National Association of Home Builders Housing Market Index. This will be followed by Housing Starts and Building Permits Thursday. Investors will be looking to see if higher rates have impacted improvements in the sector.
  • As usual, Weekly Initial Jobless Claims will be reported on Thursday. This comes after claims spiked last week due to computer glitches and fallout from the shutdown.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.  When you see these Bond prices moving higher, it means home loan rates are improving — and when they are moving lower, home loan rates are getting worse.

Bonds were able to regain some losses late last week as the Fed’s Bond purchase program continues to support the markets. Home loan rates remain attractive and I’ll be monitoring them closely.



The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.

As your trusted advisors, We are sending you MORTGAGE INSIGHT because we are committed to keeping you updated on the economic events that impact interest rates and how they may affect you.


Thank You! – We always want to take time out to thank you for all the referrals you have sent our way.            Rene’ & Jeff Kneller

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