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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (54140)	2/17/2006 8:27:55 PM
From: shades	Respond to of 110194

Falling Volatility Boosts Mortgage Bond Performance . By Danielle Reed Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Despite worries among some mortgage bond investors that volatility would rise in 2006, it's continued to fall - and that's helped mortgage bond performance. Volatility, a measure of risk that can affect the price of an asset and is typically expressed in the pricing of hedging instruments such as options and swaptions, is down 12% in 2006 for shorter-dated options, and 5% for longer-dated options. When volatility rises, this means the cost of hedging goes up, and when it falls, hedging costs decline. Lower hedging costs explain in part why lower volatility helps mortgage bond performance, said Alec Crawford, managing director of mortgage strategy for RBS Greenwich Capital. Additionally, as volatility falls, risk premiums for mortgage bonds - adjusted for option prices - tend to remain stable, and that makes mortgage bonds attractive to investors. So far this year, as volatility has dropped, risk premiums for fixed-rate 30-year current coupon mortgage bonds - a blend of 5.5% and 6% coupons - have narrowed to 125 basis points from 138 basis points over Treasurys. "Typically when vol drops, you will see mortgages outperform Treasurys and swaps," Crawford said. "So far this year, mortgages have tracked vol very closely." The falling volatility so far this year - and especially during the past week - has been a reflection of a stable rates market. The yield on the 10-year Treasury, the baseline from which mortgage rates are priced, has remained within a band of 4.33% to 4.62%. Shorter-dated volatility in particular "has declined a lot" since new Federal Reserve Chairman Ben Bernanke gave his semi-annual testimony on the economy before Congress, said Amin Majidi, director of mortgage-backed securities research for Deutsche Bank in New York. That's because "people are comfortable that Bernanke is not going to change Fed policy with each and every piece of signficant economic data," Majidi said. -By Danielle Reed, Dow Jones Newswires; 201-938-2039; danielle.reed@dowjones.com (END) Dow Jones Newswires February 17, 2006 13:53 ET (18:53 GMT) Copyright (c) 2006 Dow Jones & Company, Inc.- - 01 53 PM EST 02-17-06

To: russwinter who wrote (54140)	2/17/2006 8:32:18 PM
From: shades	Respond to of 110194

Of course, like all longer-term loans, the 40-year mortgage carries a rate that's higher than shorter-term loans, as lenders charge more for taking on the risk of a longer term loan. So although the payments are lower, a borrower ends up paying much more in interest. We have talked already about multi generational 100 year loans in japan. What is more important - the citizens or the real estate agents and brokers and thier industry? I say lets burn the real estate agents at the stake or at the very least make them get off thier butts and go to ITT TECH and learn something USEFUL besides showing a house to a dumb sucker citizen. Some black representative was coming down hard on Bernanke along with bernie sanders about the american worker competing with a foreign one. I wish Bernanke had said the public tit is going away - just like you don't get to suck your mommas tit anymore for milk Mr. Bernie Sanders - your constituents are gonna have to turn off Fear Factor and go back to school and have some USE to this society they suck from - hehe.

To: russwinter who wrote (54140)	2/17/2006 8:33:36 PM
From: shades	Respond to of 110194

Prices Rise, But Pace of Home Sales Slowing In California . By Danielle Reed Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--The volume of home sales is declining in California, even as prices have continued to climb, recent reports from a data provider show. Sales of Bay Area homes fell in January to the lowest level in five years, according to real estate information service DataQuick Information Systems. A total 6,004 new and resale houses and condos were sold, down 35.8% from 9,347 in December, and 20% below the 7,509 sold in January 2005. While a decline in sales volume from December to January is a normal seasonal pattern, January was the 10th consecutive month in which the volume of sales declined from the prior year. Also, the January sales count was the lowest since January 2001, when 5,977 homes sold. "We won't know for another couple of months if this is a lull in the market or part of a longer-term downturn," said Marshall Prentice, DataQuick president, in a press release. "It's always difficult to project from trends we see in January and February. The March numbers will tell us more about what's going on." Still, prices are continuing to rise at a healthy - albeit slower - pace. The median price paid for a Bay Area home in January was $607,000, up 13.7% from $534,000 a year earlier. The annual price increase was the lowest since the median sales price rose 13.1% to $474,000 in March 2004. "It's probable that appreciation will dip into the single digits in the next month or two," DataQuick said in the report. Meanwhile, in Southern California the number of homes sold in January also declined to its lowest level in five years. A total of 20,085 new and resale homes were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties, DataQuick said, down 30.6% from 28,952 in December and down 7.4% from 21,680 a year earlier. The median price paid for a home in Southern California rose 13% to $469,000 from $415,000 in January 2005. "There's nothing really ominous in the numbers," Prentice said in the report. But here, as in the Bay Area, "we won't know for another couple of months" whether or not the drop in sales volume heralds a more pronounced decline in the real estate market. -By Danielle Reed, Dow Jones Newswires; 201-938-2039; danielle.reed@dowjones.com (END) Dow Jones Newswires February 17, 2006 09:38 ET (14:38 GMT) Copyright (c) 2006 Dow Jones & Company, Inc.- - 09 38 AM EST 02-17-06