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Four Simple Questions

Here are Four Simple Questions that your lender absolutely must be able to answer correctly. If they do not know the answers...Run...Don't Walk...Run to a Lender that Does!

1) What are mortgage interest rates based on?

2) What is the next Economic Report or event that could cause interest rate movement?

3) When Bernanke and the Fed “change rates”, what does this mean… and what impact does this have on mortgage interest rates?

4) Do you have access to live, real time, mortgage bond quotes?

Week Ahead

Economic Indicator	Release Date and Time	Consensus Estimate	Analysis
Consumer Credit	Monday, Jan. 9, 3:00 pm, et	$7.5b	Low importance. A significantly large increase may lead to lower mortgage interest rates.
3-year Treasury Note Auction	Tuesday, Jan. 10, 1:15 pm, et	None	Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
10-year Treasury Note Auction	Wednesday, Jan. 11, 1:15 pm, et	None	Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Fed "Beige Book"	Wednesday, Jan. 11, 2:00 pm, et	None	Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates.
Weekly Jobless Claims	Thursday, Jan. 12, 8:30 am, et	365k	Important. An indication of employment. Higher claims may result in lower rates.
Retail Sales	Thursday, Jan. 12, 8:30 am, et	Up 0.2%	Important. A measure of consumer demand. Weakness may lead to lower mortgage rates.
30-year Treasury Bond Auction	Thursday, Jan. 12, 1:15 pm, et	None	Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Trade Data	Friday, Jan. 13, 8:30 am, et	$43b deficit	Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
U of Michigan Consumer Sentiment	Friday, Jan. 13, 10:00 am, et	65.5	Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates.

For the Week of January 9th–13th, 2012
The most significant economic data next week will be the monthly inflation reports. The Producer Price Index (PPI) focuses on the increase in prices of "intermediate" goods used by companies to produce finished products and will come out on Thursday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Friday. CPI looks at the price change for those finished goods which are sold to consumers. In addition, Retail Sales will be released on Wednesday. Industrial Production, another important indicator of economic growth, is scheduled for Friday. Import Prices, the Trade Balance, Empire State, Consumer Sentiment, and the Fed's Beige Book will round out a busy week. There will be Treasury auctions on Tuesday, Wednesday, and Thursday. Investors also will be watching to see if Congress reaches an agreement on the debt ceiling to avoid a shutdown. .

Interest rates remain historically favorable. The demand for bonds remains high pushing rates lower. Anytime prices rise substantially there is always a danger of a correction. The big unknown is if or when that correction may come. For now it remains wise to take advantage of mortgage interest rates at their current levels.