MMG WEEKLY – WHAT ARE THEY SAYING THIS WEEK?

Forecast for the Week 

The beginning of the week is quiet, but look for several important reports in the second half of the week.

• On Wednesday, Retail Sales will be released and will gauge how consumer spending habits held up in January.
• Initial Jobless Claims will be reported on Thursday. Last week, claims fell by 5,000 in the latest week to 366,000, just above expectations. The four-week moving average, which evens out any seasonal abnormalities, fell to a five-year low of 350,500.
• New York State Empire Manufacturing and Consumer Sentiment will be released on Friday.

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 attempted to rally last week. I’ll continue to monitor their movement closely.

Chart: Fannie Mae 3.0% Mortgage Bond (Friday February 08, 2013)

The Mortgage Market Guide View… 

IRS Makes Claiming the Home-Office Deduction Easier

A simplified option available for 2013 tax returns requires fewer calculations and will save taxpayers time.
By Cameron Huddleston, Kiplinger.com

If you work from home, deducting costs associated with your home office on your tax return can be a money saver. But claiming this write-off has been somewhat complicated — until now, that is.

The IRS recently announced a simplified option to make it easier for taxpayers to calculate and claim the home-office deduction. Although those who work at home won’t be able to take advantage of the simplified option on their 2012 returns, it will be available for 2013 tax returns, which taxpayers will file in early 2014. The IRS estimates it will reduce the paperwork and record-keeping burden on small businesses by an estimated 1.6 million hours annually.

Currently, to claim the home-office deduction you have to fill out the 43-line Form 8829, which involves substantiating actual expenses. With the new method, you don’t deduct actual expenses. Instead, you determine the amount of deductible expenses by multiplying a prescribed rate ($5) by the square footage of the area of your residence that is used for business purposes, not to exceed 300 square feet. So that means the deduction is capped at $1,500.

With the new option, you don’t depreciate the portion of your home used for business, and you don’t have to allocate deductions for mortgage interest, real estate taxes and casualty losses between personal and business use. You’ll simply claim these expenses as itemized deductions on Schedule A. However, to claim the home-office deduction under the new option, you still must use the space regularly and exclusively for your business.

For more information, see IRS Revenue Procedure 2013-13.

Reprinted with permission. All Contents ©2013 The Kiplinger Washington Editors. Kiplinger.com.

Economic Calendar for the Week of February 11 – February 15

Date	ET	Economic Report	For	Estimate	Actual	Prior	Impact
Wed. February 13	08:30	Retail Sales	Jan	0.1%		0.5%	HIGH
Wed. February 13	08:30	Retail Sales ex-auto	Jan	0.1%		0.3%	HIGH
Thu. February 14	08:30	Jobless Claims (Initial)	2/09	365K		366K	Moderate
Fri. February 15	08:30	Empire State Index	Feb	0.0		-7.8	Moderate
Fri. February 15	10:00	Consumer Sentiment Index (UoM)	Feb	73.5		73.8	Moderate

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