Market Comment
Mortgage bond prices finished the week slightly higher, helping mortgage interest rates improve. Rates were considerably better Monday morning tied to stock weakness. Spain debt worries reignited some flight-to-quality buying of US debt instruments and helped rates extend the improvements Tuesday morning. Unfortunately those improvements were wiped away Wednesday as stocks rebounded and news out of Italy and Spain eased default concerns. Higher-than-expected core producer inflation readings were offset by higher-than-expected weekly jobless claims which kept rates relatively in check Thursday.

Retail Sales
Retail sales data is the first indication of weakness or strength in consumer spending released each month. The Bureau of the Census of the US Department of Commerce provides information on how much the consumer spends on the purchase of goods. This data provides the consumption part of the gross domestic product. Retail sales data represents merchandise sold for cash or credit by retailers. Durable goods, such as autos, make up 35% of the figure. The balance consists of non-durables such as gasoline, restaurants, and general merchandise.

There are several drawbacks to the report. The data covers purchases of goods only, not services. It is also not adjusted for inflation and is extremely volatile. Economists are concerned that the current economic uncertainty will continue to curtail consumer spending habits. Consumers have generally been given credit for sustaining the economy even amid the economic turmoil.

Copyright 2012. All Rights Reserved. Mortgage Market Information Services, Inc. www.ratelink.com The information contained herein is believed to be accurate, however no representation or warranties are written or implied.

Market Comment
Mortgage bond prices finished the week higher, helping mortgage interest rates improve. Rates were initially pushed significantly higher following the Fed minutes Wednesday. The Fed basically put on hold any prospect of additional stimulus for now. In addition, some members argued that “the current highly accommodative stance of monetary policy over the medium run could erode the stability of inflation expectations and risk higher inflation.” Fortunately, rates were able to recover the earlier losses and then some following the employment report Friday morning. The payrolls component was weaker than expected which sent mortgage interest rates lower.

Looking Ahead

Consumer Price Index
The Consumer Price Index is widely accepted as the most important measure of inflation. The CPI is a measure of prices at the consumer level for a fixed basket of goods and services. The National Statistics Office and the Bureau of Agricultural Statistics of the Department of Agriculture collect price data for the computation of the CPI. Since it is an index number, it compares the level of prices to a base period. By comparing the level of the index at two different points in time, analysts can determine how much prices have risen in that period.

Unlike other measures of inflation that only factor domestically produced goods, the CPI takes into account imported goods as well. This is important due to the ever-increasing reliance of the US economy upon imported goods. Analysts primarily focus on the core rate of the CPI, which factors out the more volatile food and energy prices. High oil prices remain a concern from an inflation perspective. Record debt levels continue to weigh heavily upon the financial markets as well. Inflation, real or perceived, erodes the value of fixed income securities such as mortgage bonds. Rates have a better chance of falling with lower than expected CPI figures.

Copyright 2012. All Rights Reserved. Mortgage Market Information Services, Inc. www.ratelink.com The information contained herein is believed to be accurate, however no representation or warranties are written or implied.

As you go about your spring cleaning, you may also feel an urge to purge some of your belongings. Some of these things may go to the trash heap, the recycling center, or a local charity…but you can also try to make extra cash with a good old-fashioned garage or yard sale. There are many ways to hold a successful sale, but here are a few basic pointers to keep in mind.

Advertise in Advance – A simple notice on a public bulletin board website like Craigslist (or even one that is set up specifically for your community) can help get the word out, but make sure to post the notice at least a few days before the sale.

Post Clear, Simple Signs – Neon posters and brightly colored markers may be eye-catching, but they can also make your message harder to read for people driving by. Stick with the most important information—dates, times, and either an address or arrow that directs customers to your sale—and make sure it’s in thick, black, legible handwriting. It also might be worth it to invest in plastic or heavier cardboard, since rain or wind will make short work of paper and poster-board.

Be Ready to Make Change – Chances are that most of what you’re selling is priced low, but customers don’t always have small bills on them. Go to the bank and make sure you have plenty of quarters, as well as $1 and $5 bills to start. Depending on how the sale is going, make sure you have somebody available to make another run to get more change, if you need it. Additional Money Tip: Don’t use a cash box…keep the money on you at all times. A cash box can easily be snatched when your attention is diverted.

Be Organized – Even if it’s only for one weekend, you are setting up a store. Items should be organized into a logical layout, and it should be easy for customers to walk around and view everything. More expensive items should be positioned towards the front of the sale, and nothing should be under tables or on the ground. Be clear on pricing with everybody who works the sale—you should be open to haggling, but you don’t want to turn a bargain into a steal.

With the proper amount of preparation and a positive attitude, you could turn a weekend’s worth of work into a relaxing way to turn a little profit. Good luck!

Market Comment
Mortgage bond prices finished the week higher, helping mortgage interest rates improve. Rates were negative Monday morning but got a boost later that day as Italian Prime Minister Monti suggested that Spain may soon become the epicenter of the European debt crisis. This reignited the flight-to-quality buying of US debt as fears grew that Italy and Spain will need a bailout like Greece. Unfortunately for Europe, the economies of Italy and Spain are considerably larger than Greece. Rates were helped later in the week when the durable goods orders data came in weaker than expected and weekly jobless claims were higher than expected.

Looking Ahead

ADP Employment
The ADP employment report is a measure of employment derived from data of roughly 500,000 US businesses. The survey focuses on the private sector of the economy. In contrast, the Bureau of Labor Statistics releases the regular employment report which includes both private and government employment statistics.

The ADP employment report has gained more prominence lately in that it is delivered prior to the Friday employment report. This gives analysts an improved forecast heading into the payrolls component of the employment report later in the week.

The Fed is usually focused on keeping inflation in check. Tightening employment conditions can result in wage inflation. The ADP report provides solid data on these conditions. Despite this, the data still can diverge from the regular employment report. The employment report is derived from a household survey and an establishment survey. These surveys often differ from one another and from the ADP employment report in that they are based on different data sets. There are no guarantees that the most important employment report the first Friday of each month will mirror the ADP report released 2 days prior. With this in mind floating into the data is always very risky. Now is a great time to take advantage of mortgage interest rates at these historically favorable levels to avoid future market volatility.

Copyright 2012. All Rights Reserved. Mortgage Market Information Services, Inc. www.ratelink.com The information contained herein is believed to be accurate, however no representation or warranties are written or implied.

Tax season is upon us, and if you’re a first-time homeowner, you might not be fully aware of the advantages available to you when it comes to property tax deductions. Owning property has numerous benefits when it comes to taxes—even if you have a professional tax preparer, it’s good for you to know what you can anticipate when your return is finally filed.

Mortgage Interest – When you make your monthly mortgage payment, part of it goes towards the loan and part of it goes towards the interest on the loan. Presuming that this home or another owned residence has been designated as collateral for the loan, this interest is deductible. Some conditions may apply. Your lender will send you a form 1098, which lets you know how much you have paid in interest for the previous year.

Home Improvements – If you take out a loan to make any significant home improvements—such as replacing a roof or foundations, or remodeling a room of the house—you may be able to deduct this loan as “home acquisition debt.”

Maintenance Property Taxes – Generally speaking, municipal property taxes may not be deducted, but in some instances local taxes that are used for maintenance or repair, and related interest, could be considered deductible.

Equity Debt – In some instances, your loan amount may have exceeded the amount needed to buy or improve the home. This is designated as “home equity debt,” and the interest from this debt may also be deductible.

Both state and federal governments view home ownership as a positive development and they do much to award new homeowners with tax breaks. Spend time with your accountant and mortgage lender to learn more about the new advantages you’ve gained!