Blog - Insignia Mortgage

Market Commentary 6/7/19

Posted on June 7, 2019 by Damon Germanides

Treasury yields dropped this week to a 21-month low. Multiple Fed officials spoke of the possibility of lowering short-term interest rates as ongoing trade tensions with China begin to wear on the U.S. economy. Further causes of concern include slowing manufacturing data both in the U.S. and abroad, negative interest rates in Europe and Japan, and the European Central Bank opining on the high probability of rate cuts in the Eurozone to combat its sluggish economy.

At the moment, there are several conflicting economic signals: consumer and business confidence is strong, but other key economic data are showing signs of a potential recession on the horizon. Of greatest concern is the 3-month to 10-year Treasury curve, which has inverted. A prolonged inversion supports the notion that the markets believe rates are too high, and more importantly, it is a key recession indicator.

Further pushing bond yields lower Friday was the release of the May Jobs report which came in much cooler than expected (75,000 actual versus 185,000 estimated). Some of the weakness in hires last month could be blamed on worker shortages in certain sectors such as construction. It will be interesting to see how the June jobs report plays out. A tepid June jobs report will all but guarantee a Fed rate cut. Due to the Fed Funds Rate already at a very low level relative to the length of the economic recovery which dates back almost 10 years now, the Fed has very little room to lower short-term rates and it will act sooner than later once it believes economic growth is stalling.

Speaking of rate cuts, corporate and individuals are enjoying lower borrowing costs and lenders are aggressively pricing home and commercial loans in the search for new business. With so many experts expecting lower rates to come, we continue to advise clients to be cautious as any unexpected good news (think trade deal with China) could catch markets off guard. For the moment, we are biased toward floating rates at these levels with the understanding the market is severely overbought.

Market Commentary 5/31/19

Posted on May 31, 2019 by Damon Germanides

The “Sell in May and Go Away” theory is on full display as stocks endure a tough week of trading to the benefit of lower bond yields. The main culprits are ongoing trade tensions with China and strong rhetoric from President Trump concerning Mexico. The U.S. will begin imposing tariffs on Mexican goods coming to the U.S. until Mexico applies stricter measures to help halt the illegal immigration crisis. This surprised the market on Thursday. Adding to the volatility is a slower growing global economy, negative interest rates on German and Japanese government debt, and fears of a potential recession. All of these factors have helped push U.S. Treasury yields to a many months low even against the backdrop of strong consumer confidence, a 3.1% GDP 1st quarter reading, and a fairly decent first-quarter earnings season. For the moment, it certainly is a tale of two stories with the “fear trade” winning.

Mortgage rates are also benefiting from lower rates and low inflation readings, but not as much as U.S. Treasuries. We continue to advise borrowers to take advantage of this very low rate environment as it would not take much to push yields higher should some positive comments come out of Washington or Beijing concerning trade talks.

Market Commentary 5/24/19

Posted on May 24, 2019 by Damon Germanides

Bond yields dropped precipitously and global stocks were volatile as tensions rose over the U.S.-China trade talks, which has dampened investor expectations of a near-term resolution between the world’s two biggest economies. Further pushing yields lower was the ongoing Brexit non-resolution which has forced Theresa May’s resignation. Finally, Europe continues to stall under a huge debt burden and the unintended consequences of negative bond yields which have done little to spur economic growth.

The U.S. economy remains strong, so part of the low-interest rate story has to do with how low bond yields are across the pond and in Japan. Many European bonds trade at or below zero. With unemployment near a 50-year low, tame inflation readings are the other major story that has placed a ceiling on domestic yields. Bonds traded this past week at a near a 17-month low.

Housing has rebounded from a poor 4^th quarter, but high prices continue to weigh on prospective buying decisions. Locally, our own real estate market has seen a strong increase in applications as the busy season is upon us and interest rates on multiple product types are very attractive.

With the 3-month 10-year Treasury curve inverting, we will continue to monitor the bond market closely for recession clues. A prolonged inversion of short-term against long-term yields is a respected indicator of a looming recession. However, for the moment, we believe the U.S. economy is performing well and interest rates this low should be locked-in at these levels; the 10-year Treasury is trading under 2.30% as of Thursday, May 23, 2019.

Market Commentary 5/17/19

Posted on May 17, 2019 by Damon Germanides

In a volatile week on Wall Street, bonds have traded well with the 10-year Treasury note touching 2.350% for the week. Market strategists have had to react to both tough trade talk on China by the Trump administration, as well as elevated tensions with Iran in the Middle East in directing trades this week. Traders flight to quality investments benefited high-quality bond yields such as government-guaranteed and A-paper mortgage debt with yields moving slightly lower but within a tight band.

Back home, the U.S. economy is humming, job growth is robust, and inflation is tame as evidenced by GDP expanding at a 3.2% annual pace in the first quarter. Unemployment touched a 50-year low and year-over-year CPI is running at 1.9%. This begs the question “why are rates so low?” The answer probably lies in long-term economic growth forecasts as well as fears of a looming recession given the potential for an elongated trade negotiation with China and anemic economic growth out of Europe and Japan. Continue to keep an eye on the 2-10 Treasury spread as signs of looming trouble ahead. For the moment, the spread is around 19 basis points and rebounding from the 9 basis point spread just a short while ago. Treasury inversions are one of the most reliable indicators of a recession and need to be taken seriously when they occur.

Home sales have rebounded due to both the time of year as spring is an important home buying season enhanced by the low-interest rate environment. Our feeling remains that the economy is strong and rates should be higher. However, we have no magic ball and so for the moment, we continue to advise clients to lock-in interest rates at these highly attractive levels.

Market Commentary 5/10/19

Posted on May 10, 2019 by Damon Germanides

U.S. consumer prices rose moderately in April but less than expected. Low inflation readings will keep a lid on bond yields, as well as reinforce the Fed’s position keeping short-term lending rates unchanged for the rest of the year. With inflation in check, some are opining for the Fed to lower interest rates. We tend to disagree and believe a wait-and-see position by the Fed is wiser, as there are some indicators that inflation may pick up and that ultimately these low inflation readings may be transitory.

In other important news, trade talks fell apart this week with China. This resulted in higher tariffs being placed today on Chinese goods imported into the U.S., which will likely lead to retaliation from China sometime in the near future. How these negotiations go is anyone’s guess, but the consensus is that a deal will be struck eventually. However, there is always a chance that negotiations could fall apart and a full-blown trade war will occur, or that these negotiations will drag on much longer than expected. Those fears, while remote, have helped push long-dated treasury bonds lower in what is known as a “flight to quality.” The trade tensions also dented equities this week as analysts reassess the effects of ongoing trade tensions on future economic growth and corporate earnings.

Low rates do benefit our borrowers and have spurred both a good home buying season, as well as our clients who have refinanced into lower rates. With the 10-year Treasury note trading under 2.500%, we remain biased toward locking in interest rates. Should the U.S. strike a trade deal with China, we could easily see rates move up from here.

Insignia Mortgage Featured in Wall Street Journal

Posted on May 6, 2019 by Damon Germanides

Insignia Mortgage is featured in the June 12, 2015, Wall Street Journal in the “Jumbo Jumble” section! The article, “More Options for Mega Mortgages,” discusses the emerging trend of the financing behind ‘super jumbos’ with home loans typically ranging from $4 million to $20 million.

Insignia Mortgage, based in Beverly Hills, CA, specializes in tailored programs for high-net-worth borrowers whose mortgage needs are often not met by traditional lenders. Insignia is also well versed in managing the international components of these deals.

Principals Chris Furie and Damon Germanides are among the top of all mortgage originators in the US. In 2014, Chris was ranked #6 in the country with over $190 million in loans and Damon was #32 with over $129 million.
Find out how Insignia Mortgage can help craft a custom mortgage for you!

Market Commentary 5/3/19

Posted on May 3, 2019 by Damon Germanides

A better than expected April jobs report is further evidence of the “Goldilocks scenario” that our economy continues to flourish in – albeit one that complexes many financial experts. With no near-term threat of inflation as well as improving data on productivity and manufacturing, the U.S. is experiencing the greatest recovery in many of our lifetimes. Today’s job report supported the current administration’s belief that the combination of lowered taxes and less restrictive regulation would stimulate the entrepreneurial spirit of American business owners. It is hard to argue against this position at the moment.

There were 263,000 jobs created in April, well above estimates of 180,000 to 200,000. The unemployment rate fell to an almost 50-year low at 3.60% (WOW!). With wage inflation coming in lower than expected, bonds reacted favorably to this report and stocks surged.

Setting aside the myriad of potential issues impacting the market, which include Brexit, the 2020 election, and China-US trade tension, the talk for the moment is the near-perfect market conditions of the U.S. is economy right now. As a rising stock market is a strong vote of confidence for U.S. consumption, we are seeing an increase in home buying activity as well as other financing activity. With rates still not too far off historical lows, it should be a good home buying season.

With the 10-year Treasury range-bound, we are biased toward locking in rates given the positive economic reporting and comments from the Fed this week about their concerns that inflation may be transitory.

Market Commentary 4/26/19

Posted on April 26, 2019 by Damon Germanides

A strong GDP reading of 3.2% for the first quarter of 2019 has allayed concerns about a slowing U.S. economy. This result was well above the expected reading of 2.8%. Report highlights include a decline in inflation, which pushed bond yields lower, as well as strong economic data and retail sales. One point of caution within the report regarded built-up inventories. This first quarter build-up may be followed by a decrease later in the year, possibly creating a drag on later GDP readings.

In further good news this week, housing has picked up. This was expected given the time of year and the nice drop in interest rates.

With continued good news on the U.S. economy, important inflations readings next week, and the 10-year Treasury note trading at around 2.500%, we remain biased toward locking-in rates at these levels. However, we do acknowledge that there are many geopolitical and economic issues around the world that could push yields lower in the coming months.

Market Commentary 4/19/19

Posted on April 19, 2019 by Damon Germanides

The U.S. economy continues to chug along, at least that’s the consensus for the moment. With consumer and business sentiment still going strong, along with a recent surge in retail sales, low inflation and near full employment, the overall picture of the economy is good.

The Fed hitting the pause button earlier this year on raising rates and running off the balance sheet has certainly helped investor confidence as evidenced by the rise in equities. In addition, mortgage applications amongst other finance activities have improved due to the pause in short term rate increases by the Fed. Finally, the steeping of the yield curve has put to rest rumors of recession talk as several top bank economists see no signs of a recession, near-term.

For the moment, we are in a “Goldilocks Environment” with an economy that is neither running too hot nor too cold. As a result, the spring home buying season should be a good one.

Even as other parts of the world are experiencing a slow-down, it is hard to bet against the U.S. and all of the opportunity that this country has to offer its citizens. However, risks remain in Europe, and in our negotiations with China and North Korea, as well as the massive government debt burdens. These economic and geopolitical risks are capping our rates back home as the German 10-year Bund is trading in negative territory juxtaposed to US Treasuries which are trading above 2.50%.

Given the drift up in the 10-year U.S. Treasury from around 2.39% to 2.54%, we believe rates are range-bound. We can see rates continue to drift higher if the U.S. economy continues to stay strong and stocks continue to rise.

Insignia Mortgage Nationally Ranked Top Producers For the 4th Year In A Row

Posted on April 9, 2019 by Damon Germanides

For the fourth year in a row, Insignia Mortgage has achieved top status as among the nation’s top mortgage producers for 2018, as ranked by The Scotsman Guide, National Mortgage News, and they’ve again cracked the $150 Million Club, as ranked by Mortgage Professional America. Insignia Mortgage consistently has the highest average loan size per borrower in the country at over $1,950,000.

Chris Furie and Damon Germanides were ranked as #3 and #4 in the Top Mortgage category nationally respectively for this year by The Scotsman Guide, and #11 and #14 for “Top Dollar”, with a total collective volume of nearly $400 million, a total of 223 closed loans between them and an average loan of nearly $2 million.

Chris and Damon ranked #8 and #10 respectively as top national producers by National Mortgage News.

Chris has been in the mortgage business for 30 years and Damon has been in the business for 15 years.