Monday, February 28, 2011

Market UpDate W/Small Improvement in Mortgage Rates

Monday’s bond market has opened fairly flat despite early stock gains and mixed economic data. The stock markets are starting the week in positive ground with the Dow up 73 points and the Nasdaq up 14 points. The bond market is currently up 2/32, but we should see a small improvement in this morning’s mortgage pricing due to strength late Friday.

January's Personal Income ad Outlays data was posted early this morning, revealing a large jump in personal income but a smaller than expected rise in spending. The data showed that income rose 1.0% last month, greatly exceeding forecasts of a 0.3% increase. However, offsetting this negative news was a 0.2% increase in spending when analysts were looking for a 0.4% rise. This means that consumers earned more money than thought, but did not spend it. That basically makes this data neutral towards mortgage rates.

Tomorrow’s big news is the Institute for Supply Management’s (ISM) manufacturing index for February. This late morning release will help us measure manufacturer sentiment and can have a pretty large impact on the financial and mortgage markets if it varies from forecasts. It is expected to show a decline from January's 60.8 to 60.5 this month. This is important because a reading above 50.0 means more surveyed manufacturers felt business improved during the month than those who felt it had worsened, meaning likely growth in the manufacturing sector. If we see a weaker than expected reading, the bond market could rally as it would mean manufacturer sentiment slipped during the month. But, a higher than forecasted reading could lead to major selling in bonds, causing mortgage rates to rise tomorrow morning.

Wednesday, February 16, 2011

Market UpDate

Wednesday’s bond market has opened relatively flat despite economic news that was highly unfavorable for bonds and mortgage pricing. The stock markets are showing gains with the Dow up 49 points and the Nasdaq up 13 points. The bond market is currently down 3/32, but I don’t believe we will see to much of a change in this morning’s mortgage rates.
January's Housing Starts was the first of this morning’s three pieces of economic data. It revealed a sizable jump in starts of new home construction, indicating future housing sector strength is possible. The 14.6% increase in housing starts greatly exceeded forecasts, but fortunately this data doesn’t usually have a significant influence on the markets and mortgage rates or we would have seen a noticeable increase in this morning’s pricing.

Monday, February 14, 2011

Market UpDate

Monday’s bond market has opened in positive territory with the stocks mixed. The Dow is currently down 24 points while the Nasdaq has gained 5 points. The bond market is currently up 6/32, which should improve this morning’s mortgage rates by approximately .250 of a discount point from Friday’s morning pricing. There is no relevant economic data scheduled for release today, so look for the stock markets to be the biggest influence on bond trading and mortgage rates. The rest of the week brings us the release of six economic reports worth watching in addition to the minutes from the last FOMC meeting and two speaking appearances from Fed Chairman Bernanke.
The week’s first release is one of the highly important ones when the Commerce Department posts January’s Retail Sales data early tomorrow morning. This report is very important to the financial markets because it measures consumer spending. Since consumer spendi ng makes up two-thirds of the U.S. economy, any related data is watched quite closely. If tomorrow's report reveals weaker than expected sales, the bond market should thrive and mortgage rates will fall since it would be a sign that the economy is not as strong as many had thought. However, a stronger reading than the 0.5% increase that is expected could lead to higher mortgage rates.

Wednesday, February 9, 2011

Honolulu Home Sales for January

How nice to see Honolulu's housing market off to a positive start this year. Honolulu Board of Realtors just released their resale figures today for the month of January. Home Resales at 199 with a median sales price of $570,000. Condo resales 265 with a median sales price of $291,000. Compare to same month last year sales up but values have declined just slightly for homes -4.2% and condo -2.7%.
Get the full press release at

Eight Ways to Raise Your Credit Score

Did you know that paying a collection account can actually reduce your score? Here’s why: credit scoring software reviews credit reports for each account's date of last activity to determine the impact it will have on the overall credit score. When payment is made on a collection account, collection agencies update credit bureaus to reflect the account status as "Paid Collection". When this happens, the date of last activity becomes more recent. Since the guideline for credit scoring software is the date of last activity, recent payment on a collection account damages the credit score more severely. This method of credit scoring may seem unfair, but it is something that must be worked around when trying to maximize your score. How is it possible to pay a collection and maximize your score? The best way to handle this credit scoring dilemma is to contact the collection agency and explain that you are willing to pay off the collection account under the condition that the all reporting is withdrawn from credit bureaus. Request a letter from the collector that explicitly states their agreement to delete the account upon receipt/clearance of your payment. Although not all collection agencies will delete reporting, removing all references to a collection account completely will increase your score and is certainly worth the involved effort.

Within the delinquent accounts on your credit report, there is a column called "Past Due". Credit score software penalizes you for keeping accounts past due, so Past Dues destroy a credit score. If you see an amount in this column, pay the creditor the past due amount reported.

Charge offs and liens barely affect your credit score when older than 24 months. Therefore, paying an older charge off or a lien will neither help nor damage your credit score. Charge offs and liens within the past 24 months severely damage your credit score. Paying the past due balance, in this case, is very important. In fact, if you have both charged off accounts and collection accounts, but limited funds available, pay the past due balances first, then pay collection agencies that agree to remove all references to credit bureaus second.

Contact all creditors that report late payments on your credit and request a good faith adjustment that removes the late payments reported on your account. Be persistent if they ref use to remove the late payments at first, and remind them that you have been a good customer that would deeply appreciate their help. Since most creditors receive calls within a call center, if the representative refuses to make a courtesy adjustment on your account, call back and try again with someone else. Persistence and politeness pays off in this scenario. If you are frustrated, rude, and unclear with your request, you are making it very difficult for them to help you.

Make sure creditors report your credit limits to bureaus. When no limit is reported, credit scoring software scores the account as though your current balance is "maxed out". For example, if you know that you have a $10,000 limit on your credit card, make sure that the limit appears on the credit report. Otherwise, your score will be damaged as severely as if you were carrying a balance of the entire available credit. Credit scoring software likes to see you carry credit card balances as close to zero as possible. If it is difficult for you to pay down your balances, read the following guidelines to maximize your score as much as possible under the circumstances.
• There are different degrees that scoring software can impact your score when carrying credit card balances.

• Balances over 70% of your total credit limit on any card damages your score the most. The next level is 50% of your balance, then 30% of your balance.

• In order to maximize your score without having to pay down your balances, evenly distribute your credit card balances among all of your credit cards, rather than carry a large balance on one credit card. For example, if you are carrying a $9000 balance on a credit card with a $10000 limit, and you have two other credit cards with a $3000 and $5000 limit, transfer your balances so that you have a $1500 balance on the $3000 limit card, a $2500 balance on the $5000 limit card and a $5000 balance on the $10000 limit card. Evenly distributing your balances will maximize your score.

Closing a credit card can hurt your credit score, since doing so effects your debt to available credit ratio. For example, if you owe a total credit card debt of $10,000 and your total credit available is $20,000, you are using 50% of your total credit. If you close a credit card with a $5,000 credit limit, you will reduce your credit available to $15,000 and change your ratio to using 66% of your credit. There are caveats to this rule: if the account was opened within the past two years or if you have over six credit cards. The magic number of credit card accounts to have in order to maximize your score is between 3 and 5 (although having more will not significantly damage your score). For example, if a card was opened within the past two years and you have over six credit cards, you may close that account. If you have more than six department store cards, close the newest accounts. Otherwise, do not close any at all.

Most business credit cards do not report to the personal credit report unless the person pays the card late. Given that fact, any debt carried on these cards does not hurt the credit score if it is not reported. You can carry credit card debt on these cards without hurting your credit score. Just apply for business credit cards now to start building this segment of your credit.

15% of your credit score is determined by the age of the credit file. Fair Isaac's credit scoring software assumes people who have had credit for a longer time are at less risk of defaulting on payments. Therefore, even if your old credit cards have horrible interest rates, closing those cards will decrease the average length of time you’ve had credit. Use the old card at least once every six months to avoid the account rating to change to "Inactive". Keeping the card active is as simple as pumping gas or purchasing groceries every few months, then paying the balance down. An inactive account is ignored by Fair Isaac's credit scoring software, so you won’t get the benefit of the positive payment history and low balance that card may have. The one thing all credit reports with scores over 800 have in common is a credit card that is twenty years old or older. Hold onto those old cards, trust me! Preparing credit is a slow and time consuming process. Full knowledge of your credit profile and how it represents you to creditors and credit bureaus is pivotal to full credit restoration success. Credit bureaus always advise individuals that they have a right to dispute their own credit files, but when the rights of the Credit Bureaus slow you down; you know where to ask for help, Right!
If not CALL ME 808-457-2455

Tuesday, February 1, 2011

Market UpDate W/ an Increase in Mortgage Rates

Tuesday’s bond market is in negative territory following early stock gains and stronger than expected results from an important economic report. The Dow is currently up 89 points while the Nasdaq has 37 points. The bond market is currently down 19/32, which will likely push this morning’s mortgage rates higher by approximately .250 of a discount point.

The Institute of Supply Management (ISM) released their manufacturing index for January late this morning. They announced a reading of 60.8 that exceeded forecasts of 57.5 and that December’s reading was revised higher by 1.5 points. This indicates that more surveyed manufacturers felt business improved during the month than did last month- a sign of a strengthening manufacturing sector and economic growth. That means this data is negative for bonds and mortgage rates because economic growth makes long-term securities such as mortgage related bonds less attractive to investors.
Tomorrow has no government reports scheduled for release or data that is considered likely to impact mortgage rates. However, there are a couple of private sector employment-related reports due to be posted. They normally would not be of much concern, but one of them showed an unexpected spike in new hires recently that caused selling in bonds and an increase in mortgage rates. I still am not too concerned about their results, but the potential does exist that a significant variance in the numbers could lead to changes in mortgage pricing.