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Displaying blog entries 51-60 of 60

Does Your Sump Pump Have a Back-up?

by Mike and Pat Simms

Here in St. Louis it has been flooding due to all the rains.  Homes that have never flooded before or had any water in the basement are beginning to see water trickle in one way or another.  With Spring breaks going on and many families leaving town for warmer, dryer weather you need to be sure you have a battery back-up on your sump pump.  You need a back-up in the event the electricity goes out.  Before you leave for the beach, make sure you have a back-up plan to ensure your basement stays dry. 

As a service to our sellers we check on their homes when they are out of town.

Fed Makes Offer That Can't Be Refused

by Mike and Pat Simms

It's that time again for our weekly update from Chris Simms, Certified Mortgage Planner with Pulsaki Bank:

Last Week in Review -

"JUST WHEN I THOUGHT I WAS OUT . . THEY PULL ME BACK IN."  Al Pacino in the 1990 film The Godfather II and if Bonds and home loan rates thought they were out of the days of volatility . . .they got pulled right back in, as last week brought daily price savings of almost historic proportions.  For the week overall, fixed home loan rates improved by about .25%

What led to the dramatic action this week?  The bipolar emotional state of the markets began deeply depressed on Monday, but then were filled with joy Tuesday when the Fed made an interesting move by announcing the creation of the new Term Securities Lending Facility (TSLF)  The TSLF wil provide borrowng banks with $200 Billion to draw on to help inject liquidity into the credit markets, and further, will accept some mortgage-backed securities as collateral, which effectively may helpt to "upgrade" the value and perception of battered Mortgage Bonds.

But in the meantime. . . struggles are still being played out related to the downgrade and losses experienced by companies holding massive amounts of mortgage-backed securities.  Headlines hit on Thursday about The Carlyle Group, which manages a portfolio of mortgage-backed securities, not being able to meet a margin call and being forced to sell off large amounts of mortgage paper into the markets at great financial losses.  Then on Friday, the news broke that financial brokerage and investment banking giant, Bear Steams had suffered enormous losses, and their lack of liquidity endangered them from going out of business . . or "sleeping with the fishes?.  The new aforementioned TSLF is designed to help this type of liquidity problem, but it will not go into effect for a few weeks, and Bear Stearns would not last that long.  Coming to the rescue with loans were both the NY Fed and JP Morgan Chase.  These sure are exciting times.

One bright spot for the financial markets was a low consumer inflation reading.  The Overall and Core Consumer Price Index (CPI) figures were reported unchanged, far cooler that the expected increases of 0.3% and 0.2% respectively.  These tame inflation numbers give the Fed a green light to cut the Fed Funds Rate by another .76% at Tuesday's meeting. .. but read on to understand exactly how this cut may impact YOU.

Forecast for the Week

So if you love all the excitement, drama, intrigue and crazy volatility of late. ...you'll love the week ahead, as it is loaded full with market movers.  We'll get the latest readings on the health of the manufacturing and housing sectors, but the main event will take place on Tuesday when the Federal Reserve announces its latest interest rate decision and Policy Statement.

The Fed is expected to cut the Fed Funds Rate by another .75%.  However, as we've seen following every Fed rate cut in the recent cycle, chances are very good that Bond pricing will worsen following the cut...which results in higher home loan rates.  This happens because Fed rate cust help to stimulate the economy, by makeing it less expensive to financne personal and business purchases...and this is turn fuels inflation, the arch-enemy of fixed return assets like Bonds, which home loan rates are based on.

So a word to the wise - if you or someone you know has been ready to move forward on a purchase or refinance, there's no time like the present.  Be sure to get in touch with me, so I can explain your options and help plan a great strategy for your home loan.

For questions contact Chris at csimms@pulaskbankstl.com or call 314-229-4242.

Mortgage Update for the Week of March 10

by Mike and Pat Simms

Chris Simms one of our  "A" Team and Certified Mortgage Planner is here with his weekly mortgage update:

Last Week in Review:

"I'M GOING OFF THE RAILS ON A CRAZY TRAIN . . . "  OZZY OSBOURNE  . . .And speaking of going off crazy ... bonds and home loan rates just experienced one of the most volatile, crazy weeks ever seen, fixed home loan rates rising by about .375% by the time the smoke cleared.

During the first four days of last week, Bonds underwent a crazy 313 basis point sell-off - more than they sometimes move over the course of six months.  Why the insane action?  Uninspiring commentary from Reserve officials, renewed fears of inflation . . .  and another very interesting story playing out last Thursday.  Losses from the Carlyle Capital Group and Thornburg Mortgage decreased their capital to to the point their financial backers had asked for cash back in the way of a "margin call".  What does this mean?

Imagine a home that received a loan for 50% of the value . . but a provision in the loan stated that under no circumstances could the equity fall below 50%.  And the home would need to be appraised every day to evaluate this.  If the home lost significant value, the lender would be entitled to an immediate payment to retain the 50% equity position.  so if the home did indeed decline in value, thelender would make a call for captial to make sure their 50% margin of loan-to-value remains intact . . . hence the name margin call.  If the home had the case to meet this call - all is well.  But if the homeowner did not have the cash, the only way to satisfy the lender would be a sale of the home.  And that is basically what Carlyle Capital Group and Thornburg Mortgage had to do last Thursday . . . they didn't have enough cash on hand to meet their margin call, and were forced to sell home loans that they were holding.  This flood of mortgage paper on the market pushed Mortgage Bond prices lower . . much lower.

The week was shaping up to be one of the worst in history for Bonds and home loan rates - but then remembering that weak financial news is good for Bonds and home loan rates, Friday's utterly dismal monthly jobs report came to the rescue.  On the report that there were a net loss of 63,000 jobs in the US last month as well as negative revisions to previous months reports - Bonds rocketed back higher, at least enough to erase the previous days losses, but still ended significantly worse off for the week overall.

Forecast for the Week

And don't think the wild ride is over . . . bonds and home loan rates are probably not pulling into the stations yet, so stay strapped in and keep your hands on the safety bar.  Another week of potential volatility lies with several key economic reports due for release, including Retail Sales, Initital Jobless Claims, Consumer Sentiment and the inflation-measuring Consumer Price Index.

Remembering that when Bond prices move lower, home loan rates move higher the news in the days ahead will dictate which way Bonds will head next and could determine the trend for the next several weeks . . . and perhaps even months.

To reach Chris for questions you may e-mail him at csimms@pulaskibankstl.com or call 314-229-4242.

Mortgage Update March 3, 2008

by Mike and Pat Simms

It's that time again where we ask Chris Simms of Preferred Home Lending Powered by Pulaski Bank,  and our "A" team member to fill us in on what the market has been doing.  This is what Chris had to say:

Last Week in Review

"I DON'T MEASURE A MAN'S SUCCESS BY HOW HIGH HE CLIMBS . . .  BUT HOW HIGH HE BOUNCES WHEN HE HITS BOTTOM."  General George S. Patton  And the General himself would certainly consider Bonds to be a success last week, as they moved lower to hit a technical "bottom" at the 200-day Average, but then bounced significantly higher throughout the course of the week, helping fixed home rates improve by about .25 to .375%.

What caused all the acitivty?  Remember that weak economic news trends to be bad for Stocks, but good for Bonds and home loan rates, as money flows out of Stocks and into Bonds.  And last week had its share of weak economic news, combined with testimony before Congress by Fed Chairman Ben Bernanke.

The news included higher wholesale inflactio withthe Producer Price Index (PPI) jumping to its highest level since October 2004 on surging energy and food prices.  But price inflation on the producer or wholesale side can't always get passed directly on to the consumer on the retail side.  Friday's Personal Consumption Expenditure (PcE) reading showed consumer inflation to be higher, but just slightly as expected.  The Federal Reserve's most highly watched measure of inflation and the current overall rate of year-over-year inflation at 2.2% does remain just above the Federal REserve's comfort zone for consumer inflation.

An speaking of the Fed, Chairman Ben Bernanke testified before Congress last week, making comment that prompted Stock investors to sell of and move money over into Bonds.  The Bond market also enjoyed comments made by Gentle Ben about inflation and the recent aggressive cuts made by the Fed, testimony was largely responsible for the improvement in Bonds and home loan rates.  But read on, and learn how the next official Fed Meeting and Rate Decision on March 18th could impact home loan rates . . . it might surprise you. 

Forecast for the Week

Here we go again, another action packed week in store, with themain event being Friday's monthly Jobs Report.  This report is always of high interest, as it gives a good read on the health of the economy.  Boiled down simply - if businesses are hiring, it means their outlook is good for the future growth business and the economy overall.  Additionally, the more employed workers there are, the more dollar earned that can be used to buy goods and services - also good for keeping the economy thriving.

But the headline number often comes with "revisions" of past numbers - which is often the wildcard within the report.  Some past revisions have actually added more jost to the count than the current month's numbers total.  And for added excitement, in advance of Friday's official Jobs Report, gigantic payroll company ADP will release their own count on job growth on Wednesday.  And while the numbers are not "official" and are sometimes seen as unreliable - the markets won't be able to help but take notice of their findings, and may react to their release.

Bottom line - volatility remains in vogue.  Bonds improved significantly over the past week helping home loan rates improve as well.  But remember - another Fed Cut is likely in the cards just a few short weeks away.  As we've discussed in the past, a Fed Rate Cut can often result in a move higher for home loan rates, as a Fed Rate Cut often spurs on spending and therefore inflation, the arch-enemy of Bonds and home loan rates.  So while Bonds and home loan rates have seen nice improvement of late, they are heading towards both a technical "ceiling of resistance", as well as a March 18 Fed meeting that could cause rates to worsen.  If you - or one of your friends, family members, neighbors or coworkers - have been considering a refinance or purchase, feel free to reach out to me to discuss taking advantage of current low rates.

To contact Chris Simms call 314-229-4242 or e-mail Chris at csimms@pulaskibankstl.com

Spring Rains - Is Your Sump Pump Insured?

by Mike and Pat Simms
As spring approaches April showers will soon be upon us.  If they have been anything like some of the torrential down pours we have had in January and  February here in St. Louis you may be thinking about whether or not your basement will be dry.  A few of our clients were glad to know that their Sump Pump was insured when their Sump Pumps failed.  Do you know if your Homeowners insurance cover's failure of your Sump Pump?  You may want to review your coverage with your agent to understand the terms and what is covered.   You may also visit our website www.ExploreSaintLouisHomes.com for contact information on our "A" Team member and Insurance Agent.

Spooky Old Cellars? No way - start there first!

by Mike and Pat Simms
We can't count the number of buyers we have observed either at an open house, with another agent, or our own buyers who peer around the corner and pretend to peer down the basement and see all that they can see.  If you really want to know what is going on in a home, before you fall deeply in love with all of the lovely things it has to offer upstairs, go into the guts of the home and give it a once over, and even two with your real estate agent to determine what issues may exist.   It is here that you will know if there are cracks in the foundation, or settling, if the stack needs replacing, whether or not the electric has too many wires for the number of circuits in the box.  Our first time home buyers start their boot camp training down in the depths of cellars and basements.  For more tips or our complimentary reports on buying a home visit our website at www.ExploreSaintLouisHomes.com or e-mail us with your questions at mikeandpat@trails2openspaces.com.
We've heard how bad the market it is but did you know that in St. Charles county we are holding our own as reported by the St. Charles County Association of Realtors.  Although appreciation slowed, home values continued to rise.  The Association reported an average home sales price of $214,483 for the year which was an increase of $2,150 in 2007 over 2006.  This means the homeowner that held a home for the past 5 years has incurred approximately an average increase in value of $54,000 which results in a 7% per year tax free increase on your investment.  Want to know what's going on in "your neck of the woods"?  E-mail us at MikeandPat@trails2openspaces.com for a complimentary monthly "Market Snapshot" in the area you want to buy or sell, or if you want to know the value of your home go to www.greaterstlmarketvalues.com

Mortgage Update for Week Ending January 26, 2008

by Mike and Pat Simms

Chris Simms, Certified Mortgage Planner, with Pulaski Bank in St. Louis has been providing us with valuable information on the Mortgage Industry.  We asked Chris to give us a quick update since we have seen quite a bit of activity in the market this week. 

"It is amazing how much History repeats itself.  On Tuesday of this week the Fed made a surprise move and cut rates by 75 basis points to show foreign markets and us investors that they are still in the game of helping to save us from a recession.  This was an emergency move because they are expected to meet next week and also make another cut to rates.  The last time the Fed did this was on September 18th.  They made an amergency cut then by 50 basis points.  That day mortgage bonds traded higher. 

On Tuesday of this week mortgage bonds did the same thing and traded 53 basis points higher.  This is huge, first of all as you have heard me talk before, when the fed cuts rates it hurts mortgage bonds.  This time it didn't.  This is the reason why.

The Fed told everybody that they were right and that we are heading near a recession so they needed to move, thus confirming all of the fears.  So investors pulled their money out of the stock market and threw it into bonds (yeah).  The next day following on September 19, the mortgage bonds started trading better and then all of a sudden fell and fell hard.  The same thing happened on Wednesday.  They opened an additional 39 basis points higher and then in a blink of an eye fell 94 basis points.  The stock market gained 600 points. 

Thursday the stock market continued to gain strength and investors pulled money out of bonds and poured them into the stock market hoping to find some bargain stocks cheap.  It was so dramatic that at 10:00 a.m. Wednesday rates were at 5.25%, by 1:00 p.m. they were at 5.625%.  Then by the end of the day they had hit 5.75%.  On Thursday rates finished at 5.875% on a thirty year rate.  That's insane to move 75 basis points higher in 24 hours.

So what do we expect for the next couple of weeks:  Well just as it happened in September, I expect the next several weeks to follow suit.  We will continue to have a lot of volatility.  But we do expect rates to continue to come back down.  How low, I don't know and if I did I would be in Tahiti enjoying a beer on the beach.  So hang in there and just be patient.  Besides since when was 5.875% on a 30 yr loan bad?

In other news, it appears that congress and the White House are agreeing on a stimulus package that could be interesting.  They are wanting to raise the conforming loan limits to $729,750.  This would save jumbo loans below $729, 1- 1 1/2% in interst rates.  This could be a big deal for real-estate in St. Louis.  Especially since St. Louis was rangked in the top 5 cities with appreciation last year and a great place to own real estate.  (something we knew all along)  By the way, if you haven't checked we still had positive appreciation in the metro area last year as opposed to the rest of the country dropping 1.8% in value last year.  This was the first nationwide decline in Real Estate since Realtors started tracking this 40 years ago.  Although that might sound bad, think of it this way.  Many parts of the country saw gains of over 100% in a five - six year period.  If the stock market rose 100% iin five years and then dropped 1.8% for the next two years, would anybody talk about it?  I don't think so.  Not like the doom and gloom we are hearing now about real estate.  I will say that every commentator I have heard from is saying that real estate is a great place to park your money!  So get on the stick, start saving and buy a home or two!"

Questions may be addressed to csimms@pulaskibankstl.com or by calling 314-229-4242.

Quick Update on Mortgage Rates

by Mike and Pat Simms

We asked Chris Simms, Certified Mortgage Planner of Preferred Home Lending, powered by Pulaski Bank to give us a quick update on mortgage rates.  This is what he had to say:

"Home sales and building permits came out at a 16 year low.  Believe it or not this has helped the bond market a little bit.  In addition the first auction the Fed had yesterday went very well.  On the foreign side, the European Central Bank put 500 billion back into the market to help foreign investors deal with our mortgage crisis.  This helped LIBOR rates ease the gap a little so adjustables will be a little more attractive.  (Did you say adjustables, they still exist? Yes and they can be a good investment if used correctly?  That doesn't mean everybody should get one but they can be a part of any financial plan if used correctly).

All this helped rates drop to 6.125% for today"

You may comment on this blog or contact Chris directly with questions at 314-229-4242 or e-mail him at csimms@pulaskibankstl.com

Update on Today's Mortgage Trends

by Mike and Pat Simms

We recently requested our team member and Certified Mortgage Planner, Chris Simms, to provide an update on what is going on in the market.  This is what he had to say "The last two days have been a wild ride.  The stock market has seen two major 10% corrections this year.  Once in August and now in November.  But yesterday and Tuesday it saw the largest two day gain in five years.  The bond market saw some strength yesterday.  So how is the bond market seeing gains and the stock market seeing gains?  This is because we have had some bad economic indicators showing that the economy is slowing.  Jobless claims came out with above expectations.  This is usually a huge deal but stock traders are attributing a lot of this number to the writer's strike and the short week last week.  But the bond market sees this number as some positive news in regards to the feds likelihood of cutting rates on December 11.  Again the fed will cut the prime lending rate (rate banks charge each other to borrow money on overnight basis) (also what we base our short term loans, i.e. credit cards, car loans, ad Home Equity loans off of) in December but it's a matter of how much.  The jobs report was the first indication.  The next will come in the personal consumer expenditure (PCE) that will be released tomorrow morning.  (PCE is the change in cost for goods and services over a period of time.  Compared to employment, growth, personal income, and jobs this number helps the fed determine where inflation stands.  As an example, if goods go up 3% and income goes up 3% then we are even and there is acceptable inflation.  If goods go down 3% and income goes up then we have deflation.) 

If the PCE for tomorrow comes in at 2% or lower then we will see the fed possibly drop the prime rate 50 basis points or 1/2%. 

Stocks:  Stocks will love this and will truly rally.  The prime rate drop will free up cash flow and businesses will have more money to spend.

Bonds:  Bonds will hate this because of the fear of inflation.  Again more cash in the market means that producers and servicers can raise the price of goods and services because of more money in the market.  Currently we are expecting at least a 1/4% decrease in the prime rate.

Mortgage Rates:  will not like it and we will see mortgage rates rise.  People will pull money from bonds and mortgage backed securities and invest in stocks.

If PCE comes in just a little higher than 2% but still modest we will see a smaller decrease of maybe 25 basis points or 1/4%. 

Stocks:  Stocks won't be thrilled but they will accept the rate drop.  Money will flow in stocks buth with modesty.  There will probably be a large gain in the beginning and then normal up and downs.  Stocks will be modest because there will still be indications that the market is not in safe water.

Bonds:  Have already factored in the fed cut.  There will be a decrease in the beginning as money tries to pick up on the gain in stocks.  But more market news will continue to show problems in the market and security in the market will help money flow to bonds.

Mortgage Rates:  will follow suite with bonds.

Overall I don't expect the current PCE to reflect the state of the economy as it stands today.  These numbers are always looking to the past.  That's why we usually don't know we are in a recession until six months later.  I expect the bond market to continue its trend and rates to continue to go down.  I don't expect them to get outrageous yet, that will depend on future events.  As for now hang in there and enjoy the lower rates today, and don't hesitate to call with any questions."

Chris can be reached at 314-229-4242 or you can e-mail him at csimms@pulaskibankstl.com

Displaying blog entries 51-60 of 60

Contact Information

Photo of The Simms Team - Mike Simms Real Estate
The Simms Team - Mike Simms
Berkshire Hathaway Home Services Select Properties
6149 Midrivers Mall Drive
St. Charles MO 63304
O: 636-720-1100
C: 314-749-0921
Fax: 1-866-723-0639
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