For the ninth straight week, 30-year, fixed-rate mortgages set a new record low.  While there was a bit more pessimistic news about the economy, not everything was sour.  Industrial Production posted a full percentage point gain last month, with manufacturing kicking back upward.  Perhaps part of the drop in rates was due to the expectation that the second estimate for GDP, which is due this week, will reveal an even weaker economy than the previous estimate.  In addition to an increase in refinance activity, there was some welcome news for the mortgage industry.  In an ongoing national survey of senior loan officers, respondents are beginning to see some loosening of underwriting criteria in the private lending market for both residential and commercial borrowers.

Could we see another record low for mortgage rates this week?  Some technical factors at work last week certainly point to a reasonable likelihood.  Of course, more economic news highlighting slowing growth with probably be enough to push rates just a little further downward.

Like Your Home?  Your Neighbors Like Theirs Too!

In a survey from the US Census Bureau and HUD, about 70 percent of US homeowners are satisfied with their homes, with 28 percent being extremely happy with their homes.  84 percent of home owners in newly constructed houses like their homes, with 45 percent giving them a 10 on a scale of 1 to 10.  We also appear to like where we live.  Over 68 percent of homeowners gave their neighborhoods high ratings with 25 percent giving theirs a “best” rating!

Mortgage rates again set record lows last week.  The lower rates were likely driven by a number of factors, such as continued signs that the economic recovery is weak, and due to the Fed’s change in policy.  While the economy is probably the more influential driver of the lower rates, the Fed change in policy is interesting.  After spending the last few months talking about how the Fed will reduce its $2 trillion holding of government-issued debt, the Fed will now change course.  As it collects interest payments and various principle reductions on its debt, it will use those funds to buy mortgage-backed securities and Treasury debt.

This week has a number of important economic reports, including Industrial Production.  With so much of the recovery riding on the strength of manufacturing, a drop in Production would almost certainly drive mortgage rates even lower.  Even if economic news turns a bit more positive next week, mortgage rates will likely stay low as there is so much growing pessimism about the economy.

Will the Mortgage Industry Go Paperless?

According to a survey by the National Mortgage News, about half of mortgage industry professionals believe that the mortgage industry will go paperless in the next three to four years.  Only 28 percent of respondents to a similar survey in 2008 believed that the industry would eliminate paper.  Today, most mortgage professionals report an increase in electronic disclosures.  Do you think the industry would benefit by going paperless?  Give me a ring and let’s chat.

Mortgage rates again set record lows, as the deceleration in economic growth become clearer last week.  The Fed’s Beige Book noted increased economic growth, but characterized it as “modest.” GDP numbers for the first quarter of 2010 were revised upward to 3.7%, which under more normal conditions might have put some upward pressure on mortgage rates.  However, the “advance” second quarter GDP reading came in at 2.4%, highlighting that the recovery is continuing to lose steam.  

This week contains a few very significant pieces of economic data for markets to digest.  The week starts with the release of the ISM Manufacturing Index. While the index is expected to remain above 50, which indicates that manufacturing is expanding, the index continues to fall. Some fear that it will drop below 50 in the coming months.  The week will end with July’s employment data, which is expected to highlight that the labor market is not recovering.  With the economy struggling and inflation remaining tomorrow’s problem, we could see rates at record lows for some time to come.

Want a Little Cut Every Time a House is Sold?

Last week housing advocates launched a campaign to move the Federal government to ban home resale fees.  These fees require that a third party is paid every time a home is sold.  Then the rights to collect these fees are sold on Wall Street.  The practice is already banned in 17 states, and is backed by a broad coalition including the National Association of REALTORS® and the Center for Responsible Lending.  Learn more at www.stophomeresalefees.org.

According to Freddie Mac’s Primary Market Survey, 30-year fixed-rate mortgages hit a new record low last week, dipping down to 4.56%.  While mortgage rates do continue to be one of the economic bright spots this summer, with underwriting criteria tight and home values depressed, there are few that can take advantage of the situation.  Economic data continues to point to a moderating recovery, but a recovery nonetheless.  Fed Chair Bernanke’s testimony before Congress last week did little to reassure markets that this recovery will power forward anytime soon.

With the summer doldrums in full swing, economic data may not brighten market moods much this week.  However, with economic data continuing to show sluggish growth, mortgage rates are very likely to remain low.  The Fed’s Beige Book is due to be released, and if most regions of the country appear to be shifting into neutral, rates could fall just a bit.  However, Friday brings the 1st release of the 2nd quarter GDP.  A better-than-expected reading could brighten moods and push rates upward.

Freddie and Fannie Future – Is There One?

 Last week, a major financial reform package was signed into law.  One of the major elements missing from this package, according to many, was housing finance.  According to Treasury Secretary, Tim Geithner, housing finance is now the new top legislative priority for the President.  When asked, Geithner replied, “we’re not going to preserve Fannie and Freddie in anything like the current form.”  What will the future look like?  Different is the only certainty now.

According to Freddie Mac, 30-year mortgage rates hit a record low of 4.57% last week.  In more normal times, this would launch a flurry of refinance activity, but with current economic conditions, and tight underwriting standards, refinance activity ticked up only slightly.  While some are beginning to worry about a double dip recession, the US economy is growing right now, and the fears are probably unfounded at this point.

This week, we’ll get a bit more insight into the state of the economy with the release of Retail Sales data and Industrial Production numbers.  So far, the recovery has been lead by manufacturing, with hopes that consumers would eventually begin to spend again.  With expectations of another drop in Retail Sales, an unexpected increase would be a surprise, but mortgage rates might be pushed upward.  Rates would go even higher if Industrial Production numbers also showed some signs of growth.  Of course, more poor economic news could push rates to even lower levels next week.

$41 Billion in Residential Property Purchased

Foreign buyers continue to pour money in the US real estate market, with over $41 billion in residential purchases in 12 months ending March 2010.  Adding in recent immigrants and temporary visa holders drives that number up to over $65 billion.  Combined, Canadians and Mexicans purchased over 30% of homes.  Some economists see the continued interest in US homes as very positive, as foreign buyers are helping soak up the excess inventory in the US.

Mortgage rates moved downward again last week as the economic recovery showed further signs of slowing.  The respected ISM Manufacturing Index dropped last week.  While the index does remain above 50, which indicates that manufacturing is growing, the dip is another sign that the manufacturing-led recovery is losing some of its momentum.  Also helping push mortgage rates downward last week was some increased investor appetite for mortgage-related investments.  For many analysts, this a positive sign for the housing market, as this may signal some returning faith in the long-term strength of the US housing sector.  Last week ended with what may have appeared to be good news – a dip in the unemployment rate.  However, the drop was attributed to the number of unemployed who have given up job hunting and are no longer counted.

This holiday-shortened week has very minimal economic data for markets to digest.  With last week’s disappointing news, rates are likely to stay low, and could stay low for some time.

Ten Most Recession-Proof Cities

In a report released by the Brookings Institute’s Metropolitan Policy Program, 21 major US cities were identified as having a robust economy and stable labor and housing markets.  These cities had smaller housing bubbles and did not have strong ties to the auto industry.  Topping the list is Albany, NY, followed by Augusta, GA, Austin, TX, Baton Rouge, LA, Buffalo, NY, Columbia, SC, Dallas, TX, Des Moines, IA, El Paso, TX, and Honolulu, HI.

Last week saw mortgage rates trending slightly further downward.  The Federal Reserve again held interest rates steady, but changed their assessment of the economy.  While its assessment is less positive than in previous meetings, the Fed appears to still have faith the economy will slowly pull itself out of this recession, but noted that “the pace of economic recovery is likely to be moderate for a time.”  GDP was adjusted downward last week, and sadly, we’re seeing evidence that the housing industry continues to struggle, with both existing and new home sales slowing.

This is a very busy week of economic reports and data.  With a manufacturing-led economic recovery underway, the ISM Manufacturing Index will be very influential this week.  If it only drops slightly, as expected, mortgage rates should hold fairly steady.  However, a drop in the ISM could push rates further downward.  We end the week with the Employment Report.  If the unemployment rate does climb, along with a net loss of jobs, we’ll see rates trending downward as the week ends.

Luxury Home Market Beginning to Recovery

In a sign that another part of the housing market is showing signs of recovery, Walt Disney Corp. announced plans to develop and sell luxury homes near Orlando’s Walt Disney World.  The 450 homes will range in price from $1.5 million to $8 million.  The proposed 950-acre development will also include a 445-room Four Season Hotel, a golf course, and even a nature preserve.  The first homes are expected to be completed in 2011.

Long-term mortgage rates barely moved last week after receiving additional confirmation that inflation is tomorrow’s problem.  Both the Producer and Consumer Price Indices indicated that inflationary pressures remain very low.  While there is some slightly elevated pressure deep in the wholesale side of the economy, very little has been passed through to consumers in recent years.  After last month’s dip, the Leading Economic Indicators did turn positive, but was more reflective of the uneven economic recovery that is expected by most respected economists.

This week will likely be more of the same with the Federal Reserve again holding its rate policy unchanged.  Undoubtedly, the Fed will also mention that the Euro-zone debt crisis is having limited impact here in the States, and that it remains vigilant in its aim of protecting the weak, yet growing economic recovery.  While the weak recovery is frustrating for many, it is allowing the Fed to maintain low interest rates, which hopefully will continue to help the housing market recover.

Homebuyer Tax Credit Deadline Extended

 For some homebuyers, closing by the June 30th tax-credit deadline was unlikely.  Last week, the Senate voted to extend the deadline by 3 months.  According to estimates, there may be as many as 180,000 sales that will fail to close by the June 30th deadline.  The extension is part of a larger tax bill that still is pending in both houses of Congress.  If you are struggling to get a loan closed, please give me a call.  I may be able to provide some timely alternative financing.

Mortgage rates moved slightly downward last week as analysts digested the continued fallout from the Euro-zone debt crisis and the moderating recovery in the US.  While most believe that the risk of a “double-dip” recession is small, there is ample evidence that this recovery will be very slow.  The Fed’s Beige Book probably painted the best picture, with most regions experiencing “moderate” growth.  Retail sales did drop for the first time since September, but still remain much higher than this time last year.  With much of the economy moving toward improvement, the biggest issue for the foreseeable future will likely be jobs.  Once we begin to see significant numbers of jobs being produced on a monthly basis, we’ll know for sure that the economy will not slip backwards.

This week has a number of major economic reports due, including both the Producer and Consumer Price Indices, along with Industrial Production data.  With limited inflation concerns, an unexpected downturn in Industrial Production could help push mortgage rates down even further.  

Mortgage Fraud Still Abounds!

Despite the focus on mortgage fraud since the housing market crash, mortgage fraud continues to be an issue around the country.  According the Financial Times, the FBI is planning on arresting hundreds of people starting this week in its latest crackdown.  If you or anyone you know is considering buying or refinancing a house, and would like to work with an honest mortgage professional, please give me a call.  I take pride in being a truly ethical advisor for you.

Mortgage rates held mostly steady last week as markets continued to be concerned with the debt crisis in Europe.  Economic news was mostly positive, but the labor report certainly disappointed many.  While the unemployment rate did drop to 9.7%, part of that decrease was due to a sizeable number of jobseekers who stopped looking for work and are no longer counted.  Additionally, of the 431,000 new jobs created in May, 411,000 were temporary US Census jobs.  On a positive note, both ISM Indices remain well above 50, meaning that both manufacturing and services are expanding.

With limited concerns about inflationary pressures, combined with fears of a “double-dip” recession floating around, we could see mortgage rates remaining low again this week.  While Retail Sales data may influence rates, Fed Chair Ben Bernanke has three scheduled appearances.  The way he spins the debt crisis in Europe, and its relationship to the US economy, could be the biggest influence in the market.  An important meeting of the European Central Bank could also push rates around.

The US Housing Bubble – Not So Bad?

For the millions of Americans affected, the burst of the real estate bubble was certainly miserable.  However, our problems may be dwarfed by the problems in China.  In 2007, the average sales price of a US home was $316,800, which was 5.4 times the median US household income of $58,480.  In 2009, a typical apartment in Beijing cost $278,160, which was 111 times the city’s median household income of $2,514. Housing prices in China are still climbing.

Mortgage rates again moved downward as European debt concerns continued to mount.  In addition to Greece’s issues, Spain saw its debt downgraded last week.  All of this continues to drive a major international “flight-to-quality” with US treasuries seen as one of the safest places to stash money.  Economically, our recovery does appear to be gaining some traction.  While GDP was adjusted down slightly, we still have significant strength in manufacturing.  Additionally, government stimulus has kicked home sales higher, with hopes that it can continue to hold its own without more intervention. While consumer moods have a long way to go to recovery, we’re seeing better readings.

Mortgage rates could easily move either way this week, or not at all.  Analysts are expecting to see both ISM indices remain strong, and consensus estimates are calling for 500,000 new jobs to have been created last month.  However, even with great domestic economic news, we could have continued concerns over Europe’s debt situation holding mortgage rates low.

Is Renting Better Than Owning?

According to a survey of more than 2,000 US adults released last week by the National Apartment Association, 76% believe that renting is better than owning in this real estate market.  This compares to 57% with similar opinions in 2008.  Experts believe the economy is the primary driver of the increase.  Of course, homeownership provides significant advantages over renting.  If you or anyone you know wants to chat about the value of homeownership, give me a call.

Last week, cash from around the world flowed into the relative security of US Treasuries, as the Euro-zone debt crisis continues to grow.  Both the volume and speed of this global “flight-to-safety” surprised analysts.  The net effect of this major movement of money pushed down Treasury yields, dragging mortgage rates downward.  According to Freddie Mac, both 15-year fixed and the 5-year adjustable mortgages set historic 50-year lows.  While poor economic news is usually what drives mortgage rates downward, we continue to see positive economic signs in the US.  

 This could be another interesting week for mortgage rates.  If concerns continue to grow over Euro-zone debt, and money continues to move into US Treasuries, we could see rates pushed even further downward.  This could occur even if we get more positive US economic news next week.  However, once traders feel the debt crisis is being managed, we could see cash flow out of the US relatively quickly.  Combined with optimism regarding our economy, we would then see rates moving upward.

Time To Buy Real Estate: NOW!

According to Philip Blumberg, CEO of Blumberg Capital Partners, now is the best time to buy real estate from an investment standpoint.  Blumberg Capital Partners focuses on investing in cyclical markets, such as real estate. The company’s analysts are pointing out significant similarities between the end of the current recession and the end of the 1980’s recession.  As unemployment faded, real estate values began increasing, which is likely to happen again.

Mortgage rates again moved downward last week, as financial markets continued to absorb the reality of the challenges in Europe, especially in Greece.  Additionally, concerns over other countries’ debt levels generated some introspection here over our burgeoning debt levels.  On a brighter note, economic news continues to point toward recovery.  Last week, Retail Sales rose 0.4%, which was slightly better than expected.  Industrial Production also climbed by 0.8%, with factory usage again moving closer to pre-recession levels, fueling hopes for a sustained recovery.

Next week, markets will get some insight into inflationary pressures with both the Consumer and Producer Prices Indices.  With most experts expecting very little, if any, inflation, a surprise increase in either index could move mortgage rates upward.  Even with more and more signs of economic strength here in the US, any additional concerns regarding the situation in European will very likely help contain any sizable increase in mortgage rates, at least for the time being.

HVCC Going Away on November 1st?

The Home Valuation Code of Conduct (HVCC), which was agreed to by Fannie Mae, Freddie Mac, and the New York State Attorney General, is set to expire on Nov. 1.  However, there is no requirement for it to be removed.  Fortunately, there are a number of pieces of legislation in the works that could eliminate the HVCC.  The National Association of Realtors is currently working to have an amendment inserted into a House-passed bill that is awaiting vote in the Senate.

Under more normal conditions, mortgage rates would very likely have risen last week given the good economic news.  According to the Labor Department, 290,000 new jobs were added to the economy.  The unemployment rate did tic upward, but this was due to individuals who previously had stopped looking for work and have now returned to job seeking.  Additionally, the ISM Index rose to its highest reading since 2004.  However, last week was far from a normal week.  Concerns over the debt crisis in Greece, and the potential for similar issues in Spain and Portugal, put much of the global financial markets on edge.  Combine that with the Dow Jones dropping some 1,000 points, due to some glitches, and safe havens for money, such as treasury bonds, became very appealing.  This helped drive mortgage rates downward, but they could move back up quickly in the weeks ahead.

This week has many important economic data points to watch, including Retail Sales and Industrial Production.  Of course, rates could go either way as events unfold in European markets.

Mortgage Insurer PMI: Housing Market Recovering

According to the mortgage insurance company, PMI, the housing market is showing more signs of improvement.  In its latest U.S. Market Risk Index, PMI states that of the nation’s 384 Metropolitan Statistical Areas, 356 had a declining Risk Score.  During the fourth quarter of 2009, the highest risk category shrunk by 26.4%. The survey takes into account many factors include affordability, mortgage credit quality, foreclosure rates, housing supply, and other factors.

Mortgage rates continued to remain fairly flat last week, even as the recovery seemed to solidify its footing.  The Federal Reserve left interest rates unchanged, as expected.  The accompanying policy statement did note that “economic activity has continued to strengthen and that the labor market is beginning to improve.”  While the Fed believes that it will keep interest rates low for an “extended period” of time, it is worth noting that interest rates below 1.0% can be considered low.  With the Fed Funds rate at 0.25%, the Fed could begin lifting rates at any time.  GDP came in at 3.2%, the third quarter in a row in positive territory. 

Two reports will probably dominate this week’s economic news: the ISM Manufacturing Index, and the Employment Report.  If the ISM Index climbs above 60 and unemployment shrinks with more than 200, 000 jobs created last month, we could see mortgage rates moving upward.  However, even very positive reports will continued to be tempered by international concerns over Greece’s bailout.

Low Rates Generate Refi Savings

According to a Freddie Mac analysis released last week, one-half of borrowers who refinanced their conventional mortgage during the first quarter of this year saw a median decrease in their interest rate of 0.9%.  Believe it or not, refinance activity accounted for about three-fourths of originations during the first quarter.  With rates remaining so low, now is a great time to refinance.  If you or anyone you know is considering refinancing, please give me a call.

Mortgage rates moved little last week, even as economic data released during the week was slightly better than expected.  Optimism that the economy may be getting some solid footing and moving from a technical recovery to a more broad-based recovery seems to be growing.  The two largest areas that continue to hold out are the housing and employment markets.  Last week, both new and existing home sales moved higher than expected.  However, the expiring tax credit may be the reason for the underlying improvement.  It will be a few months before we know for sure whether housing is really starting to improve, or is still struggling mightily.

This week is packed with important items for financial markets.  We’ll get our first look at first quarter GDP numbers, two important consumer attitude surveys, and the Fed meets again.  While rates are unlikely to be changed, analysts will scour the announcement looking for clues as to when rates could be lifted.  The closer that event appears, the more likely that mortgage rates will go up.

 The Best Places to Relocate

After receiving and reviewing over 8,000 nominations, RelocateAmerica.com declared Huntsville, AL as the best place to relocate in 2010. Contributing to the ranking were many factors including economic, environmental, education, crime, employment, housing data, and interviews.  Rounding out the top ten places were Washington, DC, Austin, TX, San Diego, CA, San Antonio, TX, Tulsa, OK, Charlotte, NC, Raleigh, NC, Boulder, CO, and  Minneapolis, MN.

Last week’s economic data continued to be mostly positive, but mortgage rates slid downwards.  This manufacturing-lead recovery continues to maintain its pace, with Industrial Production numbers revealing solid gains for manufacturing and mining issues.  While the housing and labor market will likely be a major drag on the recovery for some time, retail sales did tick upward more than expected.  As economically positive as most of last week’s news was, inflation at the consumer level of the economy is all but absent.  This should enable the Fed to maintain its stance regarding low interest rates for the foreseeable future.

With the Dow moving over 11,000 last week, and Treasury Secretary Timothy Geithner’s remarks this weekend about the economy growing faster than expected, we could see some additional volatility in the bond market.  If we get encouraging news, especially if it includes positive news on new and existing home sales, we could see mortgage rates begin moving back upward.

Will The Homebuyer’s Tax Credit Expire?

Last November, the $8,000 first-time homebuyer tax credit was expanded and extended into 2010.  At the beginning of this year, many experts were predicting that the tax credit would be extended again.  However, the tax credit likely will be allowed to expire.  The two powerful lobbying groups which helped shape the credits, the National Association of Realtors and the National Association of Home Builders, have no plans to push for an extension.

Mortgage rates began heading upward last week as markets continued to digest the positive economic news from the previous week, and reacted to more positive news last week.  The ISM Services Index rose sharply last week on the heels of a larger than expected increase in the ISM Manufacturing Index.  While manufacturing has lead much of this current recovery, the increase in the Services Index reveals that we may be on the verge of seeing an even larger portion of the economy, services, moving into a sustainable growth situation.  

Without the support of the Fed’s program for buying mortgage-backed securities, next week could be one of the more volatile weeks we’ve seen in a while for mortgage rates.  Many very important economic reports are due including Retail Sales and Industrial Production.  If these two reports come in near expectations, it is very likely that mortgage rates will continue moving upward next week.  However, a 0.0% or 0.1% change in the CPI could help temper that upward movement.

Canadians Swooping In To Purchase Real Estate

According to the National Association of Realtors, Canadians buyers led all foreign clients in 2009, with 27,000 Canadians purchasing vacation homes in the US.  With the continued strength of the Canadian dollar, experts predict that Canadian buyers will continue to purchase even more US residential property in 2010.  The top destinations for Canadian buyers are Florida, California, and Arizona, and many are interested in foreclosures and short sales.

Last week saw mortgage rates move slightly upward as some more signs of economic recovery appeared.  The esteemed ISM Manufacturing Index surged to 59.6, the best reading since 2004, suggesting that manufacturing will not be tapering off as some analysts had feared.  Consumer Confidence also moved upward, but still remains low compared to better economic times.  The latest employment data also suggested better times ahead with 162,000 jobs created last month, and no change to the unemployment rate.  Last week also marked the end of the Fed’s program of buying mortgage-backed securities.  While there was certainly no major impact to mortgage rates, it will take a few months to sort out whether the timing was good.  Without the Fed’s support, rates will be influenced more now by economic factors.  If the economy improves, rates will move upward.

This week is a fairly light week in terms of economic news and data.  We’re likely to see some upward movement in rates as the market digests all the data from last week.

Sales of Vacation Homes on the Rise

According to research released last week from the National Association of Realtors, sales of vacation homes increased 7.9% in 2009.  Nine out of ten new owners surveyed planned to use the property for vacations or family retreats.  The median price also rose from $150,000 in 2008 to $169,000 in 2009.  Seventy percent of vacation home buyers financed their purchase.  If you or anyone you know is interested in financing a vacation home, please give me a call.

Last week saw mortgage rates again staying mostly flat with some mixed economic news.  GDP for the last quarter of 2009 was revised downward to 5.6%, which was still a good improvement over previous quarters.  Housing numbers were down again, giving some analysts concern about how housing will fair over the next few months, especially if rates start moving upward.

This week has some very important economic news for the markets to digest, including employment data, the ISM Manufacturing Index, and Consumer Confidence.  With more signs that the recovery is slowing, every bit of data that reinforces that will help to hold mortgage rates from moving upward.  However, the end of March is the end of the Fed’s program of buying mortgage backed securities.  While this may pass as a non-event, it could also set mortgage rates on an upward trend that may last for some time.  If equities continue to rally with good economic news this week, especially a drop in unemployment and a positive increase in jobs, we may see rates climbing in the near future.

The Best Cities For Borrowers

As the recession begins to show signs of easing, some cities are seeing home prices appreciate.  Couple that with the lowest percentage of foreclosures, delinquencies, and bank-owned homes, and you get Forbes Magazine’s Best Cities for Borrowers.  Topping the list is Kansas City, MO.  The rest of the top ten cities are Houston, TX, Dallas, TX, Virginia Beach, VA, San Antonio, TX, Boston, MA, Pittsburgh, PA, Denver, CO, Seattle, WA, and Portland, OR.

According to some analysts, mortgage rates again “wandered about aimlessly” last week.  It is becoming more apparent that the current economic recovery will be a very slow and muted affair, at least for the time being.  With manufacturing issues appearing to cool, consumers remaining on the sidelines, and, in last week’s PPI and CPI, inflationary pressures seeming to be nearly nonexistent, the Fed will likely be able to maintain its low rates for some time.  The Fed’s policy statement last week said as much, with the Fed leaving rates unchanged again.

This week could be another week of the same for rates, but there are some unknowns coming.  While many have pointed out that the Fed continues to have many tools available to influence rates, its campaign of buying mortgage-backed securities will come to an end on March 31st.  While there appears to be some significant stability to rates right now, markets can turn quickly.  Hopefully it will not happen, but even a false rumor could lead to a spike in mortgage rates in the coming weeks.

Will Fannie and Freddie Survive?

Set up to provide liquidity to the secondary mortgage market, the two housing giants, Fannie Mae and Freddie Mac, are now under government control.  More proposals came out last week on how to deal with the two companies, including a GOP plan to phase the companies out.  Over the coming months, we’ll see lots of debate on the future of housing finance in this country.  If you’d like to chat about what may happen with mortgages, please give me a call.

Last week saw mortgage rates again holding steady, as investors balanced economic news and the pending end to the Federal Reserve’s campaign of buying mortgage debt.  Economic news was a bit light last week, and many appeared to be waiting for this week for insight into the economy and rates.

Markets will have plenty to digest this week, with many important economic reports and a quick, but critical, one-day meeting of the Fed.  With such a muted reaction after the Fed raised its discount rate at its last meeting, some analysts are expecting the discount rate to go up again.  However, expectations are for the Fed to hold its Fed Funds rate steady.  As has been the case for some time now, the accompanying policy announcement will likely have greater influence.  Every indication that the Fed believes we are returning to “normal,” will be that much more upward pressure on rates.  This week also holds both the CPI and PPI.  While inflation seems to be very muted with this slow economic recovery, the minute it starts picking up, mortgage rates should also start moving up.

Foreclosure Index Drops to 2005 Levels

The University Financial Associates (UFA), a risk-management firm that forecasts mortgage and consumer loan performance, released its UFA Default Risk Indexlast week.  This index measures the risk of default on newly originated prime and nonprime mortgages.  The index peaked in 2007 at 330.  While the risk remains high for lenders given current economic conditions and the overall state of the housing market, the index has now dropped to 158!

Last week saw mortgage rates holding relatively steady even though the first-of-the month cascade of data revealed a bit more hope for the budding economic recovery.  While the ISM Manufacturing Index did tick downward to 56.6, it remains firmly above 50, which indicates that manufacturing is continuing to expand.  The ISM Services Index climbed to 53.0, indicating growth in services.  The unemployment rate remained steady at 9.7% and only 36,000 jobs were lost last month.  Both of the ISM surveys and a few other indices are starting to show some signs that we may see increases in employment in the next few months.  This will be great for the economy and those seeking work, however, it will likely coincide with the Fed beginning to raise interest rates.

This week is lighter in terms of economic news, but retail sales data is due.  With consumer moods darkening some, a drop in sales could help hold rates down.  However, some comments last week from Congressman Barney Frank regarding Freddie and Fannie debt could help push rates upward.

Jumbo Mortgages Beginning to Return

When the housing market melted down, obtaining a jumbo mortgage became very expensive.  That was, if you could find a lender willing to do one.  With signs that the housing market may have finally reached, or is near bottom, jumbo mortgages have begun to be more and more available.  According to Informa Research Services, some jumbos are now at 5-year lows.  If you or anyone you know has a need for a jumbo mortgage, please give me a call.

Much of the optimism about the pace of economic recovery evaporated last week, as economic news turned mostly sour.  Consumer confidence plunged, and both new, and existing, home sales slowed considerably.  While mortgage rates moved upward in last week’s Freddie Mac survey, they may begin trending downward if economic news this week continues to point to a stuttering recovery.

This week brings us the usual cascade of first-of-the-month data, with very important insight into manufacturing and employment.  While GDP was adjusted upward last week, most of the increase was due to inventory-related adjustments.  If the ISM Manufacturing Survey comes in below 55.0, we could see mortgage rates begin the week on a decidedly downward bent as traders begin worry about a manufacturing slowdown.  However, if the ISM shows any improvement, rates will flatten, or perhaps even move slightly upward.  Friday’s employment report will be hugely influential as usual.  If we get an unexpected month of job creation, we could see rates moving back upward next week.

Multigenerational Households on the Rise

According to a recently released survey by Coldwell Banker Real Estate LLC, 37% of participating agents are seeing an increase in the number of buyers who are seeking homes to accommodate multigenerational households.  Over 70% of surveyed agents expect economic conditions to increase the demand for homes to accommodate multiple generations.  If you or anyone you know is considering buying a home for a multigenerational household, please give me a call.

Mortgage rates continue to remain at their current low levels, which is a huge benefit to consumers, as the economy continues to show more and more signs of recovery strength.  Retail Sales posted a 0.5% increase last month. Removing volatile auto and energy elements revealed a core increase of 0.6% for the month.  Freddie and Fannie announced last week that they would be speeding up their purchases of poorly- or non-performing loans from investors.  Purchasing these securities will cost the government less than advancing payments on the non-performing loans to investors.  The move has sparked a debate on how this will ultimately impact mortgage rates.  With so many unknowns in the market right now, mortgage rates could stay put, or could shoot upward.

This week has some very important economic data for markets to digest, with Industrial Production and both Consumer and Producer Price Indices due.  With some occasional signs of inflation, an unexpected increase in the CPI could break rates out of their recent holding pattern.

Remodeling Requests Increasing

ServiceMagic.com, a website that connects homeowners with home-service professionals, stated that requests for remodeling services jumped 37% in the fourth quarter of last year compared to the previous year.  Interestingly, some of the markets hardest hit by the housing downturn are seeing the largest spikes in requests.  For example, in Phoenix, requests for kitchen projects spiked 166%.  Some experts see the trend as another sign of strength returning to the market.

Last week, the Federal Reserve took center stage by raising its discount rate; the rate at which banks can borrow money directly from the Federal Reserve.  While this move has very little immediate impact, the increase was widely viewed as a symbolic first step in beginning to remove the emergency measures put into place during this deep recession.  The Fed’s meeting minutes also provided some more insight into future Fed moves.  In addition to letting certain programs expire as planned, the Fed will create some new tools that will enable it to “mop up” excess cash in the market.  These new tools, in conjunction with its primary method of adjusting the Fed Funds rate, will be targeted at keeping inflationary pressure under control.

This week, and coming weeks, could begin to see mortgage rates become more volatile as the market digests everything coming out of the Fed.  We’ll also get new and existing home sales data this week.  With housing and employment as the weakest link, any positive news could push rates upward.

Positive Signs on the Foreclosure Front

On Friday, the Mortgage Bankers Association announced that the delinquency rate for loans on one- to four-unit properties in the U.S. fell to 9.47% in the fourth quarter from 9.64% in the third quarter. Also, the percentage of homeowners entering the foreclosure process also fell.  While there can be no doubt that the foreclosure crisis is far from over, many experts believe that if the economy continues to improve, this may mark the foreclosure bottom.

According to comments this last weekend by Treasury Secretary Timothy Geithner, the risk that the economy will slip back into recession is lower now than at any time in the past year.  While the probability of a “double-dip recession” may be unlikely, Geithner believes the current recovery is likely to be very uneven.  Some evidence of this was certainly present in last week’s ISM Indices.  The services index managed to stay above 50, indicating a slight amount of growth in service industries, while the manufacturing index bolted to its highest level since 2004.  While the Labor Department employment data did show signs of an improving labor market, other measures released last week were not as positive.  Overall, we are at a point where mortgage rates might slip slightly, but the risk of a quick upward movement continues to grow.

This week has a bit less economic data than last week, but with Retail Sales data due, we could see rates moving upward, especially if sales come in stronger than most analysts are predicting.

Mortgage Investors Pitch A New Modification Plan

With criticism mounting over the general lack and quality of mortgage modifications, a group of investors who hold some $100 billon in mortgage bonds has proposed to Congress a new plan to modify mortgages.  Contractually, 2nd mortgages are wiped out before a first mortgage is modified.  This group’s plan would agree to principal reductions to 96.5 percent of a homes’ value. However, the reductions would be split across both first and second mortgages.

While last week had some economic data released, non-market events seemed to dominate.  Fed Chair Bernanke was reconfirmed by the Senate, but with the smallest number of votes in the Fed’s history.  This may foreshadow some interesting battles ahead for monetary management in the US in coming months.  The Fed also met, leaving interest rates unchanged again.  However, its policy announcement confirmed the end dates for a number of market support programs, including a March 31st termination of the Fed’s program of buying mortgage-backed securities. In addition to all this, GDP came in at a brisk 5.7%, Consumer Confidence and Sentiment increased, and existing home sales cratered.  Everything seemed to come out in balance, and mortgage rates barely budged. 

This week, we may have a bit more focus on economic data with the ISM reports and employment data.  With signs pointing toward economic recovery, even a tepid one, a decrease in unemployment and net gain of jobs in January could push mortgage rates upward into next week.

No Surprise: Foreclosures High Where It Was Hot

Unsurprisingly, states that got extremely hot during the real-estate boom are the same states that are having cities with significant foreclosure issues.  According to RealtyTrac, the twenty cities with the highest rates of foreclosure notices were all in California, Florida, Nevada and Arizona – the biggest boom states.  Some experts are warning that the crisis has not past, and that we may be in for another wave of foreclosures across the country due to unemployment.

Last week saw mortgage rates sliding downward, as a few big concerns began weighing heavily on the market.  Economic news continues to highlight a very muted recovery, but fears of a double-dip recession were fanned by events in Washington.  While bank-bashing has become a popular pastime, the Obama administration took it one step further with the proposal of a tax structure that would hit all large banks.  Regardless of one’s opinion of banks or the tax, it is very likely that business and consumers will ultimately bear this new tax.  To compound the market’s concerns, uncertainty surrounding the reappointment of Fed Chair Bernanke stoked anxiety.  A failed confirmation could easily lead to months of political bickering, dragging the search for a successor on for many months.

This week is a huge week for markets.  In addition to the political concerns, the Fed meets again with analysts ready to dissect its policy announcement looking for clues of future Fed moves.  With GDP data, Consumer Confidence, and slew of housing data on tap, rates could move either way.

Homebuyer Tax Credits – Straightforward?

As with almost everything else from Washington, there are a number of nuances with the homebuyer tax credit to which buyers should be aware.  For example, to qualify for the move-up tax credit, a home owner must have occupied the same principal residence consecutively for five of the last eight years.  If you or anyone you know is considering buying a home and wants to know more about the tax credits, please give me a call, and I’ll be happy to help.

Long-term mortgage rates moved down slightly last week as some of the recent optimism regarding the economy waned.  While industrial output increased a solid 0.6%, the increase was due to utility output related to the frigid weather gripping much of the nation.  Retail sales dropped by 0.3%, which was quite shy of the 0.5% increase that analysts had forecast.  Fortunately, both the Consumer Price Index’s headline and core numbers increased only a scant 0.1%.  

While the market is being reminded that this recovery is at its early stages, and is a rather muted recovery, the debate over what the Fed will do regarding its purchases of mortgage-backed securities is heating up.  Some analysts are predicting a full 1.0% or more increase in rates by March, while others see only about a 0.5% increase in the first half of the year.  In any event, rates are very, very likely to increase over the next few months.  However, we could see rates slip just a little more next week if economic news continues to point to a slow path for economic recovery.

ARM Indices Don’t Always Move As Expected

Borrowers with adjustable rate mortgages tied to the COFI index got a bit of a surprise in their last bill – their payment was going up.  On December 31st, in a month where most indices went down, the COFI index jumped 0.835% to 2.094% from 1.259%.   This index is calculated using data from a number of Western US institutions.  One of the member institutions was Wachovia, and now as part of Wells Fargo, its data is no longer used in calculating the COFI.

Mortgage rates halted their four-week upward climb last week as the New Year began.  The jobs lost number last week did disappoint some, with 85,000 jobs lost.  However, November’s numbers were revised to show a net gain of 4,000 jobs.  This is the first month of job growth in two years.  Other economic indicators also pointed to an economy that is beginning to gain some footing.  Both ISM surveys showed greater that expected growth.

This week contains plenty of data that could push rates either way.  However, given recent news, it is very unlikely that rates will fall back much.  The government’s current program of buying mortgage-backed securities is set to expire in March.  There is a growing call for the program to be scaled back or even terminated.  With private markets still on shaky ground, this could mean rates would need to increase to find investors for mortgage-backed products.  Other news, such as Industrial Production data and the Consumer Price Index, could push rates either way this week too.

Pressure On Mortgage Principal

According to news reports, Federal Deposit Insurance Corp. Chair Sheila Bair is considering creating an incentive for lenders who reduce the principal on $45 billion in mortgages held by the Treasury from seized banks. She is considering the incentives after congressional testimony indicated another 7 million homeowners may lose their homes this year unless there is a big increase in property values or lenders become much more willing to cut principal amounts.

According to the Freddie Mac Primary Mortgage Market Survey, both 30-year and 15-year fixed-rate mortgages fell to record lows.  However, that news was quickly forgotten as we got what is probably the first surprising piece of economic news in some time.  According to the Labor Department, only 11,000 jobs were lost in November, and the numbers for October and September were revised lower.  Additionally, the unemployment rate shrank to 10.0%.  Mortgage rates immediately began climbing on this good economic news.  Of the two data points, the jobs lost number is the more important.  One of the critical factors to reach true economic recovery will be to stem job losses.  Because of the way the unemployment rate is calculated, excluding workers who have given up on trying to find a job, we could see the rate climb as those not looking begin looking the job hunt.

Mortgage rates will likely start the week slowly moving upward, but if Friday’s Retail Sales report holds another positive surprise, rates could very likely take another step upward as the week ends.

Mortgage rates nudged slightly higher last week as more data and news pointed toward economic recovery.  The housing market continued to show signs of uneven improvement – but improvement nonetheless.  Housing Starts and Existing Home Sales moved higher, but the latter’s increase may be attributable to the soon-to-expire, first-time homebuyer tax credit and high levels of short sales.  The Leading Economic Indicators also posted an improvement for the sixth month in a row. This week should contain the first “official” end-of-recession data point, with the first, or advance, reading of the third quarter’s GDP.  Experts expect the reading to be near 3.0%.  While this number does represent a growing economy, there is no question that this simply signals the technical end of the recession.  True economic recovery is still to come.  Fortunately, inflationary pressures also continue to be a future issue, leaving the Fed with options for managing interest rates.  More positive economic new may pressure rates upward again this week, but the movement may not be too severe.

Glimmer of Hope on the Appraisal Front 

Implemented in response to some of the abuses during the housing boom, the Home Valuation Code of Conduct has become a major challenge for many in the housing industry.  While still in a very, very early stage, the House Financial Services Committee passed an amendment to a bill last week that could “sunset” the HVCC.  While the news is being met with positive response by many in the industry, any action to improve this difficult situation is still months away at best.

Last week, money moved out of bond markets and into stock and commodity markets as economic data continued to paint a picture of economic recovery.  While the headline Retail Sales number dipped by 1.5%, much of the decline was attributed to the end of the government’s “Cash for Clunkers” program.  Excluding auto issues, retail sales actually increased 0.4% last month.  Industrial Production, the measure of output for all of the nation’s factories, mines, and utilities, also moved upward.  Recently, this type of news and movement of money would not have effect mortgage rates much at all, as government programs helped hold rates in check.  With many of these programs expiring soon, it appears rates may be becoming more sensitive to economic and technical factors. After last week’s run up in rates, we may see some downward movement as many housing numbers are due this week. This data might remind the market of the continued weakness in the housing industry, and with consumers overall.  However, other positive news could nudge rates upward a bit.

Recession-Proof Places for Working Retirees

Forbes.com released another interesting list last week, in which it reveals the US’ best “Recession-Proof Cities To Retire In.”  The analysis looked at a number of economic factors, including cost of living and ease of finding employment, and also factored in the number of sunny days.  The top cities are Atlanta, GA, Dallas, TX, Tampa, FL, Houston, TX, St. Louis, MO, Austin, TX, Las Vegas, NV, Phoenix, AZ, Kansas City, MO, and San Antonio, TX.

Mortgage rates found some downward space last week as economic data again reminded us that we still have a very long way to go to return to a healthy economy.  The one bright spot last week was the GDP report.  The nation’s GDP was adjusted to a -0.7%.  Nearly every estimate now has growth technically returning in this quarter.  We get our first glimpse into whether the estimates are true at the end of this month.  The rest of last week’s data was not terrible, but it simply reinforced the fact that we are bouncing along the bottom of this recession.  The ISM Manufacturing Index notched down slightly, Consumer Confidence dipped, and the employment situation is not improving.

This week likely will start with some downward pressure on mortgage rates holding over from last week.  Hopefully, the ongoing low mortgage rates will continue to help the housing market find its footing, which ultimately could help the economy return to health.  The situation remains the same as it has for some time.  Rates may continue to drift downward, but could spring upward at any time.

Interesting Ongoing Real Estate Study

The second annual “Soul of the Community” survey was released last week by the Gallup and the Knight Foundation.  The study is an offshoot of a study from Gallup that has linked employee’s emotional connection to their companies with better company financial performance.  This new study is attempting to understand whether there is a similar link between emotional connection to a community and local economic growth.  For more, visit soulofthecommunity.org.

The “recession is very likely over,” announced Fed Chair Ben Bernanke last week.  While this may be technically true, markets did not react with the usual leap upward in interest rates.  Instead, mortgage rates continued their very slow downward decent.  While we may finally be in a period of economic growth, we may be far from a reasonable economic recovery.  As long as unemployment remains elevated, we may see inflationary pressures held in check.  This combined with a slow unwinding of federal intervention in financial markets may lead to a lengthy period of low rates.  However, markets may react with rapidly increasing rates if significantly better-than-expected data is released, or if rumors of termination of certain government programs circulate.

The direction that mortgage rates move this week is very likely to be dependent on the Fed’s policy announcement on Wednesday.  If the Fed issues any surprises for the market, such as the termination of any support programs, we could see rates rise.  Otherwise, they should stay fairly level.

At Risk of Foreclosure – Don’t Get Scammed!

Last week, attorney generals from twelve states meet with Treasury Secretary Tim Geithner, U.S. Attorney General Eric Holder, and other federal officials.  The meeting was aimed at the growing level of mortgage rescue fraud, which is “becoming an epidemic,” according to the meeting participants.  If you or any one you know is facing foreclosure, please do not fall prey to these scams.  Please give me a call immediately, and I will help find ethical help.

Mortgage rates held mostly steady last week with little influential economic news or data released.  The Federal Reserve’s Beige Book reiterated the prevailing sentiment that economic activity is beginning to firm during the last two months of the summer.

This week has some significant data points due, including both the Producer and Consumer Price Indices, along with retail sales data and industrial production numbers.  The market appears to have priced in inflation as a future concern, as increasing price pressures have not flared in many months.  If both indices come in anywhere near expectations, we’ll see inflationary concerns continue to be pushed off into the future.  Industrial Production is expected to tic upward again as we have ample evidence that manufacturing and other industrial issues are moving toward some level of recovery.  Retail sales may have the biggest influence this week as consumer spending is expected to remain in check for some time.  If sales leap unexpectedly, we could see mortgage rates pushing upward.

Healthcare or Home Sales?

On November 30th, the federal tax credit for first-time buyers is set to expire.  According to many experts, activity is hitting a frenzied pace as qualified buyers work to start the process of closing on a home.  Right now, at least 20 bills have been drafted that would extend or expand the tax credit, including some that would remove the first-time requirement or increase the credit.  However, many fear that Congress will focus on healthcare legislation and not act on these bills.

Mortgage rates slipped slightly last week, even as more signs of economic recovery appeared.  The highly-regarded ISM Manufacturing Index moved upward to 52.9, on expectations that it would only reach 50.2.  Any reading that is above 50 indicates that manufacturing is expanding in the US.  Its sister index, the ISM Non-Manufacturing, or Services Index, also climbed, but only to 48.4.  Not all of the data was good news last week, as the unemployment rate climbed unexpectedly to 9.7%.  However, financial markets did not react all that strongly to the news, as most analysts are anticipating that the unemployment rate will top 10% before this recession has run its course.  News also came out this week that more top economic forecasters are predicting that the US economy will begin growing in the current quarter, with some estimates for 3rd quarter GDP as high as 3.5%.

This week has only a few economic data releases to influence rates.  The current slightly downward trend in mortgage rates is likely to last through the week, and may even last for a few more weeks.

As the news continues to proclaim that we are breaking free of this painful recession, mortgage rates continue to stay in a very tight range, remaining at extremely low levels.  There is little doubt that this is contributing to some positive news in the housing marketing.  According to the S&P/Case-Shiller 20-city home price index, we’ve now gone two months with prices actually increasing.  While there are many elements necessary to moving out of this recession, stabilization in the housing market will significantly contribute to overall economic recovery.

This week is a jam-packed week of important economic news.  The ISM Manufacturing Index is expected to tic over the 50-mark, indicating that manufacturing is finally expanding.  Employment data is also due on Friday, with expectations of minimal change to our present situation.  Even if we have good economic news, we could see rates not climbing too severely as lenders are beginning to see lessening risks of foreclosures as the housing market shows signs of recovery.

FICO 08 Scoring Model Still in the Wings

It is frustrating for some borrowers hearing from a mortgage lender that their FICO score is lower than what a bank, auto-lender, or credit card company has told them.  For most, the issue is that many non-mortgage lenders have adopted FICO 08 which ignores very small blemishes on credit reports unlike the older FICO model.  Because Freddie and Fannie have not approved the use of FICO 08, most lenders are not using the newer credit scoring model in their underwriting.

With the Fed’s recent policy announcement, and the comments of various Fed officials over the last two weeks, many believe that the Fed will support low mortgage rates at least until we see economic growth return in earnest.  This, combined with more news last week that inflation is not a near-term issue, helped mortgage rates ease back downward.  Even with additional signs that the economy is coming back to life, including another increase the Leading Indicators, rates still moved downward.

Short of very unexpected economic news, mortgage rates do not have far to move downward.  As has been the case for some time, the potential for a spike upward is significantly higher than the potential for a large drop.  This week holds two pieces of economic data that could move rates.  Consumer Confidence is expected to recover some, but 2nd quarter GDP is expected to be revised to -1.5%.  If we see Confidence rise significantly and GDP is revised upward, we could be watching mortgage rates climb as we move through the week.  Otherwise, rates are likely to stay relatively flat.

AHighWalkScore™ May Mean More Value Dow

In a recently released report analyzing 94,000 real-estate transactions in 15 markets, neighborhoods with more amenities within walking distance, tended to have higher sales prices than those homes without close-by shopping, schools, entertainment, and employers.  The study used Walk Scores calculated by WalkScore.com and data from ZipRealty, and found that the premium for a home in a walking-friendly neighborhood can range from $4K to $34K.

Mortgage rates continue to remain fairly level as we head toward the end of the month.  This summer started with fears of a depression and is ending with hopes that a recovery will begin before the end of the year.  Last week, the Fed indicated it planned to keep its rates at this historically low level, even as it noted signs of the economy leveling out.  More importantly, the Fed did state that it will begin slowing purchases of treasuries, however, it left itself time to slow the purchases and then ramp purchases back up should interest rates climb too quickly.  The Fed did not provide any additional insight into how it would slow down its purchases of mortgage-backed securities, so it is likely that the Fed will continue to provide support for low mortgage rates for the foreseeable future.

This week has a few items of note, but it is likely that rates will wrap up the last few weeks of summer without any dramatic moves either way.  We are likely to hear news that the economy is continuing to improve, but that consumers will likely struggle until the labor market improves.

Housing Recovery Hopes Grow

While there is no doubt that the US housing market is far from a recovery, there are more and more signs that we may be getting closer.  In a recent article on Forbes.com, the authors analyzed data from Zillow.com, and identified local best markets posed to turn around based on sales activity and percentage of foreclosures.  The list included metro areas from both California and Florida, as well as other markets.  We still have a way to go, but here’s to a speedy recovery!

 Additional evidence appeared last week that we may be very close to the bottom of this recession.  While it is the nineteenth straight month of job losses, July saw only 247,000 jobs lost with a tiny improvement in the unemployment rate.  The ISM Manufacturing Index also revealed greater signs of life than expected.  Mortgage rates did end the week with some upward pressure that may continue into this week, especially if the positive economic news continues.

While this week is packed with important economic data, the most influential news of the week could be the policy announcement that accompanies the Fed’s rate decision.  The Fed is expected to leave rates unchanged, but analysts are seeking hints on how the Fed will unwind itself from financial markets.  This year, the Fed has purchased nearly every mortgage-backed security on the market.  If the Fed hints it will begin slowing those purchases, we could see rates rise.   However, if the Fed offers no hints, we may see some flattening pressure on rates, even with good economic news.

Rules, Rules, And More Rules

As the housing industry melted down, talk of new rules for the mortgage industry heated up.  From local regulations to national guidelines, many of these new rules are changing the way the mortgage process works.  One of the changes is causing quite a bit of confusion and will likely cause delays in closings.  It is known as the 3/7/3 Rule, and pertains to the required amount of time between disclosures and closing.  Please give me a call and I will help clarify these new rules.

 Last month saw rates spiking higher as optimism about the economy began to grow.  June started with news that the economy had only lost 345,000 jobs in May.  Other data, including some housing data and the ISM indices, began to show that the rate of economic hemorrhaging was finally slowing.  A few inflation indicators also pointed to a slightly higher level of inflationary pressure, effectively eliminating fears regarding the risk of a deflationary market.  After many weeks with no major announcements or new programs regarding the housing industry, the mortgage market began to be more influenced by economic data and market factors than government intervention.  The result was a quick jump in mortgage rates, which is now beginning to moderate.

After climbing for a few weeks, and unnerving many in the housing and mortgage industry, mortgage rates began to slowly drift downward.  The market’s exuberant optimism about a quick economic recovery faded as more economic data came in that served as a reminder that we are in a very deep recession that will not be existed easily or quickly.  Consumer Confidence ticked back downward, and other indicators continued to show a reduction in the rate of economic decline, but not as much as hoped.  Then the Labor Department released June’s employment data.  While the unemployment rate only ticked upward to 9.5%, 467,000 jobs were shed from the US economy, sparking concerns over how far we really are from economic recovery.   

So what happens with rates now?  It is very likely that rates will continue to drift downward in a very slow and likely uneven pattern for the next few weeks.  The recent spike in mortgage rates should serve as a reminder that the risk of mortgage rates jumping quickly is very high in our economic current situation.  It would not be surprising to see a few more spikes in rates whenever we see a run of good economic data.  However, considering the depth of this recession, we’ll probably be reminded again by poor economic data, and rates will once again drift down slowly.  However, few experts expect rates to hit a new record low during this recession.

Mortgage rates continue to hit record lows as the economic activity slows and the federal government continues to seek ways to stimulate housing market activity. 2.6 million jobs were shed in 2008. This represents the worst year for job losses since the US worked through demobilizing after World War II. Nearly every other economic indicator also fell in December. Retail sales dropped another 1.8%. Consumer Confidence hit an all-time low. Almost every manufacturing gauge also showed signs of strain.

While the economic news seems bleak, and is certainly making great media headlines, there is some positive news afoot. Most inflation indicators are showing little to no price pressures, and programs implemented to help the housing market may have begun to slow housing price depreciation.While the economy seeks sure footing, the Fed did made a historic move, changing its Fed Fund target rate from a specific rate to a target range of zero to 0.25%. However, this move was overshadowed by news that the Fed’s plan to buy over $600 billion in agency-backed mortgage debt is firmly underway. While most government plans take significant time to implement, the Fed has already purchased tens of billions in debt.

This month could very well see more record lows for mortgage rates as economic news continues to highlight our recessionary challenges. Additionally, more programs may be on the way to help the housing market. Generally, programs that create economic stimulus drive rates upward. However, some of these programs may function to drive rates even further downward. If Congress is able to force the billions in foreclosure-assistance in the next round of TARP funding, we could see some returning demand for housing-related securities as these securities’ relative risk may be perceived as less. All of this downward pressure on rates could be reversed in coming weeks if the market perceives the next economic stimulus package as the solution to our current economic challenges. The sooner the market believes we’ll see a recovery, the sooner rates go up.

In December, major credit card reform was finally announced by federal regulators. Consumer advocates have been working for years to get many of the changes in place. One of the biggest new regulations applies to interest rates on existing balances. Previous rules allowed companies to change borrowers’ interest rates on existing balances with very few regulations. For example, some borrowers found their rates increasing when their credit score dropped, even if they had never missed a payment. The new rules prohibit companies from upping rates on existing balances as long as the borrower stays current on their payments.

Experts are emphasizing that the changes are not mandatory until mid-2010, and regardless of credit card rules, being credit-card savvy is always a wise move. Whether you are using a personal financial software package, a spreadsheet, or even pen and paper, make sure you know your balances and interest rates. Focus on paying off the higher-interest rate cards first, while never missing a payment. As your credit score improves, you’ll be eligible for cards with better rates.

May began with mortgage rates hovering in record low territory. Rates for conforming 30-year, fixed-rate mortgages appeared to be firmly entrenched below five percent. With massive government intervention and a global recession, it appeared to many that rates would remain below 5% for at least a few months. However, as talk of a potential depression waned, hints of economic recovery reminded us that mortgage rates cannot stay low forever. For many on-the-fence buyers and those waiting for rates to dip even lower to refinance their homes, there is a reasonable chance that they have missed the opportunity of a sub-5%, 30-year, fixed-rate mortgage. Of course, compared to historical standards, rates are still amazing low and may be for some time.

There is certainly no question that we are in one of the longest and deepest recessions since WWII. The economy continues to shrink, with all sectors of the economy struggling. Many experts had assumed that the economy would continue to get worse for the remainder of this year. However, economic news this month began to show signs that the rate of contraction may be slowing. Many analysts and government officials began predicting that economic recovery might begin before the end of the year. While it is certainly good news that we may be near the end of this economic tailspin, those historically low mortgage rates may be behind us now. However, as the economy improves, there is significant potential for very positive news from the mortgage industry. Assuming that the economy does turn around, we should see the rate of foreclosures also scaling back. An improved economy and a reduced risk of foreclosure should begin to help the industry loosen underwriting standards that have become extremely restrictive for even high-quality mortgage shoppers.

So have we entered a period of ever climbing mortgage rates? The answer is probably not. The path to economic recover will have bumps along the way. Signs that reveal continued economic weakness will help push mortgage rates down slightly, but it is unlikely that rates will return to historically low levels. Please be advised that every data point that hints at economic recovery will provide significant upward pressure on rates.

Signs of economic stress seem to be everywhere – high unemployment, entire industries under fire, and governments attempting to stem the carnage. While most media coverage sensationalizes the failures of major corporations, the truth is that in every corner of America, independent, local businesses are struggling to survive like never before. You may not ever think about it, but most of what keeps local communities and local governments functioning is local business. In fact, for every $100 you spend in a local business, $68 returns to your community through taxes, payroll, and other expenditures. That same $100 spent at a national chain, only generates $43 for your community.

So what can you do? Entrepreneur and blogger Cinda Baxter recently launched “The 3/50 Project,” and support for the program has exploded across the Internet and is beginning to make an impact in some areas. The idea is simple. Think about three local businesses, such as coffee shops, bookstores, or any other independent, locally-owned businesses that you would miss if they went out of business. Then commit to spending a total of $50 per month at those businesses. Learn more at www.the350project.net.

In today’s housing market, if you ask most people what are the most important steps for selling a home, most will respond with a list of items regarding the house itself. The list may include fresh coats of paint, repairing any broken or damaged features of the home, and removing clutter from rooms and closets. You might even be referred to a “home staging professional,” which is a person versed in preparing a home for sale. While getting the house you are selling ready is certainly important, only a few people think as far in advance as they should about getting their financial house in order for the purchase of their next home.

There is no secret in the lending industry that if you have better credit, larger financial reserves, a larger down payment, and great documentation, you’ll likely get better terms on your next mortgage. Unfortunately, many people wait until they have found their next home before considering all the financial details. Meeting with your mortgage professional months, or sometimes even years in advance, can put you in a position to get the best mortgage possible. A simple review of your credit may reveal steps you can take to improve your score. Some actions can positively impact credit quickly, such as closing specific accounts and correcting errors. Others, such as keeping all payments current, may take some time.

Even with lending standards tightening, products exist for individuals with limited cash on hand. However, take time now to consider the cash you may have after your home sells, as well as your current financial situation. We may be able to devise a plan to increase your financial reserves, make the most appropriate down payment, and get the best mortgage available for you. If you, or anyone you know, is considering putting their house on the market, please give me a call. I’ll take the time to explain the specific steps necessary to get the best mortgage possible.

While pundits and talking heads debate the state of the real estate market and try to affix blame for the struggles the industry has experienced, savvy real estate investors and wise vacation-home buyers are snatching up bargains around the country. The real estate market may not have hit bottom yet, but timing the absolute bottom is practically impossible. With more and more signs that the economy is near the bottom of this recession, with many experts predicting recovery starting this year, the time to buy a second home is now.

If you are looking to buy a second home, much of the historical advice continues to hold true. For vacation homes, it is always wise to consider how often you’ll be able to use the home, the amenities of the area you are considering, and the potential for renting the property when you are not using it. For investment properties, cash flow is king, along with the overall rent-ability of the property and potential for future resale. With the current real estate market, a few additional factors are worth considering. First, with the national real estate market in a decline, your time horizon should be long. We’ll know in four or five years whether or not 2009 was the year the market turned back around. You may also want to consider foreclosures and short-sales, especially if you are looking for a great bargain. Not only are banks needing to move distressed properties off their books, but in some areas local governments are now requiring banks to maintain the properties as if they were occupied. This is driving banks to cut better deals and move distressed property quickly.

If you are interested in purchasing a second home, please give me a call. I’ll help you secure the best financing available for your situation. If you are thinking about pursuing distressed properties, call me today as experts are strongly advising getting prequalified up front, so you can move quickly on a great deal.

Have you noticed anything different about your credit card lately? Twenty-one percent of consumers have realized that their interest rate has increased, according to a recent survey by Synergistics Research Corp. Another seventeen percent saw an increase in their minimum monthly balance, while almost ten percent noticed that their credit limit had decreased. Unfortunately, many who notice that their credit limit dropped did so because their new limit was less than their balance, and their account was now subject to additional fees!

In July, many new rules go into effect that will require credit card companies provide 45 days notice if they plan to change your credit limit. However, the rule only applies if the change in your limit will result in fees. Companies can still drop your limit without notice if you will not be impacted. Experts are cautioning card users to confirm that their limits have not been lowered whenever they are planning on spending outside of their normal spending range. Additionally, it is a good idea to know if your limit dropped, as your credit score may be impacted by a higher credit-to-available-credit ratio.

Two major announcements over the last few weeks have helped push mortgage rates to new record lows. The Federal Reserve announced that it would continue to purchase mortgage-backed debt and securities. At the current rate of purchases, the Fed may buy nearly every conforming mortgage originated this year. Additionally, the government has begun to provide details on how it intends to help banks clear “toxic assets” off their books. These moves, combined with the ongoing recession, have created an ideal time to refinance your home. However, over the last few weeks, a few signs of hope have emerged that this recession may not be as deep or as dark as many feared. Once the recession bottoms and economist begin to believe a recovery is coming, it is extremely likely that rates will begin to move upward.

While many people may have refinanced just because they could, most of us have become more prudent with our mortgages. While there are a multitude of good reasons to refinance, two of the most popular and recommended reasons to refinance are for financial advantage and home improvement. Most rate and term refinances either reduce a borrower’s monthly payment, or put them in a position to eliminate their mortgage in a shorter period of time. With 15-year mortgages also at record lows, this option is very appealing to certain borrowers. If you are one of the fortunate homeowners with equity, cash-out refinances continue to be seen as a positive financial move to eliminate other high-interest debt. Additionally, with the recession bearing down on the construction industry, many homeowners are finding they can get great deals on major home improvement projects.

If you are interested in any type of refinancing, please give me a call today, and we’ll get you into the lowest rate available!

While the media heaped scorn on Bernard Madoff after his arrest for what may turn out to be the biggest Ponzi scheme in history, thousands of people fall victim to financial fraud every year. In many cases, victims are unwittingly misled by the same people – their friends. Peer-driven financial scams have been around for centuries and continue to flourish.

While most people can tell you that a pyramid scheme is another term for a Ponzi, many people find themselves sucked into one, even after it is described to them. From presentations on the Internet to dinner parties, and even in church meeting rooms, clubs or investment opportunities are presented as a “charitable gifting concept.” Whether it is called Women Empowering Women or The Dinner Party, the idea is the same. You simply “gift” the organization a sum of money. The money is then “gifted” to one of the club’s members. By simply giving your “gift,” you get in line to be a future recipient of new members’ “gifts.” Because of the enthusiasm of the club’s members, many people fail to recognize that these clubs are Ponzi schemes, even when the structure is shown on a diagram. With anything that has to do with your money, always remember, “If it sounds to good to be true, it probably is.”

From challenges in the labor market to the shrinking of our portfolios, signs of economic stress are all around us. For many people the stress is all too real, stemming from a job loss or other financial hardship. However, for the majority of Americans who are not in financial straits, the psychological stress from these challenging times has already begun to modify behaviors. Many of us are taking a hard look at our finances, in fear of impending financial hardships, and making changes that we believe will better prepare us for the future.Many of the steps that people undertake are very prudent, such as confirming that one’s bank is FDIC insured or eliminating unnecessary expenses. Unfortunately, some seemingly logical actions may have unexpected financial consequences, especially in regards to your credit score. Because our credit scores have become such an integral part of our financial health, from influencing auto insurance to employment decisions, it is paramount to keep your credit score in mind, especially when you make changes with your credit cards. There are three common missteps that financially savvy people with credit cards take in times like these. While it may seem prudent to add credit cards, a flurry of applications, along with a slew of new credit, usually pushes credit scores downward. Credit scores can also be dinged by not using credit cards. Some companies will stop reporting unused cards, which can adversely move your credit scores, while some companies will just close your account. Finally, if you have some old, rarely-used cards, it might seem wise to close the account. However, your score will drop quickly if you cancel cards with long histories, especially if it increases your debt to available credit ratio.

If you would like to discuss your credit score, or the ever-changing mortgage industry, please give me a call today.

As the economy began to slide last year, many people focused on making New Year’s resolutions regarding their personal finances. Sadly, according to a number of studies, a whooping eighty-five percent or more of us fail to keep any of our New Year’s resolutions. Even more unsettling is that by the time February begins, fifty percent of resolutions are already blown! For many, the resolutions are just to big to achieve. Rather than focus on unattainable monetary goals, experts advise four straight-forward steps to financial success.First and foremost, make a budget. From fancy software packages to simple pencil and paper versions, a budget is even more important during financially difficult times than during good times. The goal of your budget is simple – do not spend more money, on a periodic basis, than you make during that same period. For many, the second step is to focus on paying down debt aggressively. With the risk of unemployment growing, servicing a large debt if you become unemployed is an unnecessary burden. For the majority of people whose income does exceed their needs, experts are calling for a “save some, spend some” approach to one’s finances. Most experts advise building a cash reserve of six months or more of living expenses. However, experts are also cautioning us not to become Scrooges, as two-thirds of the US economy is dependent on consumer spending.

With mortgage interest rates at historic lows, and with the potential of even lower rates to come, the fourth item experts are loudly recommending is a mortgage review. Many households can save hundreds of dollars every month with a simple refinance. Please give me a call and I will be happy to help you review your financial situation to understand whether refinancing your mortgage makes good economic sense.

It seems that every other week, mortgage rates hit a new historic low. Events of the last few months have driven mortgage rates to levels that many experts thought were lower than mortgages would ever go. While the struggling economy has certainly contributed to lower rates, recent government programs and rumors of more programs to come have pushed rates lower and lower. The Federal Reserve has already begun buying up mortgage securities and has firm plans to continue buying hundreds of millions in mortgage debt. This is serving to draw mortgage rates downward. Rumors continue to surface regarding a plan at the Treasury Department that would push good-quality, thirty-year, fixed-rate mortgages to 4.5%.Unsurprisingly, refinancing applications are flowing into mortgage lenders. Is now a good time for you to consider refinancing your mortgage, or should you hold out for those potentially lower rates? This question is being asked by millions of homeowners across the country. The answer is relatively simple – it totally depends on your situation. If you are in a position where refinancing today will save you money, then trying to time the lowest rate available is a risky proposition. There is no guarantee that they will not start climbing tomorrow. If you are in a position where today’s rates will not save you any money, or give you some additional piece of mind with a 30-year fixed, then it is worth waiting to see if rates drop to even lower levels.

Whether you are ready to refinance today, or if you think a future historic low might save you money, please give me a call. We’ll run through all the numbers and all of your available options to help you decide. If you’d like, we’ll even set a target rate, and I’ll contact you if the rate becomes available.