Forecast for the Week
After last week’s quiet economic release calendar, this week’s calendar heats up.
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. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on.
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.
To go one step further – a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. 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.
As you can see in the chart below, Bonds have been on a “Down Escalator” trend of late…and this trend is not friendly to home loan rates. I’ll be watching closely to see if Bonds can “step off” this escalator and change course.
Chart: Fannie Mae 3.5% Mortgage Bond (Friday Mar 23, 2012)
Mortgage Market Guide View…
IRS Warns of New Tax Scam
The IRS is warning taxpayers to watch out for people promoting a tax refund or nonexistent stimulus payment based on the American Opportunity Tax Credit. This credit is available to taxpayers who have qualified college expenses, but promoters of the new scheme claim they can get a refund based on the credit even for people who aren’t enrolled in or paying for college.
Scam artists are targeting senior citizens, members of church congregations and people who have little or no income and normally aren’t required to file a return, according to the IRS. Promoters of the scam often charge exorbitant upfront fees to file claims for nonexistent refunds.
The IRS already has stopped thousands of these fraudulent claims and is investigating the source of them. However, the IRS warns taxpayers to be aware of the following to avoid becoming a victim:
-Homemade flyers and brochures implying tax credits are available without proof of eligibility.
For more advice on how to avoid becoming a victim, see 5 Ways to Guard Against Tax Fraud.
Reprinted with permission. All Contents ©2012 The Kiplinger Washington Editors. Kiplinger.com.
Economic Calendar for the Week of March 26 – March 30
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