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Rene’ Kneller – nmls 246709, crmlo 10009309

Jeff Kneller

Telephone: 970.513.0934  —  Facsimile: 970.513.0936


  Economic Commentary

November 4, 2013


Last week, several key economic reports were released, plus the Fed met. But did the news spook the markets? Read on to learn more.

Over in the housing sector, the Case Shiller 20-city Index rose to 12.8 percent in August on a year-over-year basis. From July to August there was a 1.3 percent increase. Overall this was a solid report, but note that double digit gains are not expected to continue as the uptick in rates have slowed price appreciation in many parts of the country. In addition, Pending Home Sales declined by more than expected in September. The drop was due in part to declining affordability, higher home loan rates, and consumer uncertainty surrounding the government shutdown.

Also impacted by the shutdown, Consumer Confidence in October came in below expectations and well below the September reading. The Retail Sales Report for September showed that the shutdown also impacted consumer spending habits.

What does this mean for home loan rates? Remember that the Fed has been purchasing $85 billion in Bonds and Treasuries each month to stimulate the economy and housing market via its Quantitative Easing program. The Fed has said that the continuation of these purchases remains dependent on economic data. And recent data shows that the housing sector recovery has slowed in recent months, plus Gross Domestic Product (the broadest measure of economic activity) and employment figures remain weak.

In its Policy Statement after last week’s meeting of the Federal Open Market Committee, the Fed said it has “decided to await more evidence that progress will be sustained before adjusting the pace of its purchases.” This should help keep home loan rates attractive through the remainder of 2013.

The bottom line is that now remains a great time to consider a home purchase or refinance, as home loan rates remain attractive compared to historical levels. 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 November 1st) in which the 30-yr fixed-rate mortgage (FRM) avg. 4.10%.

The 15-year FRM this week avg 3.20%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) avg 2.96%.

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


  Economic Releases

November 4, 2013




No Primary Economic Indicator Releases Scheduled  



ISM Services Index – Impact (Moderate)





No Primary Economic Indicator Releases Scheduled




Gross Domestic Product (GDP) – Impact (HIGH

GDP Chain Deflator – Impact (HIGH)

Jobless Claims – Impact (Moderate)





Personal Consumption Expenditures – Impact (HIGH)

Unemployment Rate – Impact (HIGH)

Hourly Earnings – Impact (HIGH)

Average Work Week – Impact (HIGH)

Non-Farm Payrolls – Impact (HIGH)

Consumer Sentiment – Impact (Moderate)




Industry Essentials                          

For the Real Estate Professional

November 4, 2013



The end of the week features several key reports that have the potential to move the markets.

  • Economic data begins on Tuesday with the ISM Services Index, which measures the service sector of the U.S. economy.
  • As usual, Weekly Initial Jobless Claims will be released on Thursday and have been stubbornly hanging around the 340,000 range.
  • Also on Thursday, we’ll see the second read on 3rd Quarter Gross Domestic Product.
  • Friday brings a full slate of reports, beginning with the much-anticipated Jobs Report for October, which includes the closely watched Non-Farm Payrolls and the Unemployment Rate.
  • Also releasing on Friday are the Consumer Sentiment Index, Personal Income, Personal Spending and the Fed’s favorite measure of inflation, Personal Consumption Expenditures.

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.  Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

Mortgage Bonds continue to trade near multi-month highs. This has helped home loan rates, which are tied to Mortgage Bonds, reach lows not seen since June. The Jobs Report for October could have a big impact on the markets and I’ll be watching all the news closely to see what happens.



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.


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