General

Mortgage Industry Update: Rates, News & More

***Smart Financial Weekly Mortgage Update October 16, 2009***

Interest Rates

Rates moved up slightly during the week between .125% and .250% but were still at 5.00% when the week ended. I don’t mean to be redundant but if possible take advantage of these rates before they go up.

 

When	Rate
This Week	4.92
1 Month Ago	5.04
1 Year Ago	6.46
2 Years Ago	6.40

 

Note that actual market rates vary geographically and by lender, credit score and Loan to Value.

Source: Federal Reserve Statistical H.15.

 

Mortgage Industry Update

·         The Treasury Department issued its monthly report on the status of loan modifications this week. There are 487,081 Trial Modifications in progress (this is where a homeowner is given a new payment for 3 or 4 months depending on their situation). To date only 1711 homeowners have had their loans formally modified under the President’s plan. Selected lender statistics for percentages of loan modifications in progress thru September are shown below;

1.      Saxon 41%

2.      Citi 33%

3.      Aurora 33%

4.      Nationstar 28%

5.      Chase 27%

6.      GMAC 26%

7.      Wells 20%

8.      Bank of America 11%

9.      National City 9%

·         FHA boss David Stevens said this week he is against increasing the down payment to 5%.

 

Good News

·         NAR says the number of existing homes for sale in August was 3.6 million down from 4.3 million a year ago.

·         The National Association of Business Economists (NABE) survey reported that 80% of its economists said that the recession is over after four consecutive quarters of negative growth. The September survey predicted the economy would grow about 2.6% in 2010 compared to contraction of 2.5% in 2009.

·         Industrial production was up .7% in September which was .1% above forecast.

·         New York Manufacturing Index rose to 34.57 well above forecast of 17.25 and the highest number in five years.

 

Statistics of Interest/Concern

·         Venture capital fund raising dropped to its lowest level in six years during the third quarter according to the National Venture Capital Association.

·         Retail sales for September were down 1.5% compared to forecast of down 2.1% said the Commerce Department.

·         Moody’s Delinquency Ticker (DT) for September shows U.S. Commercial Mortgage Backed Securities (CMBS) delinquency at 3.64% a 310 basis point increase from a year ago. This means that the delinquency a year ago was .24%.

·         Major credit card companies reported defaults fell in September but delinquency climbed at all the major card issuers. Bank of America is the worst performer with a default rate of 14.25% and delinquency of 7.53%.

·         Consumer Price Index (CPI) rose .2% in September said the Labor Department. Consumer prices have been falling on an annual basis since March of this year.

·         Consumer sentiment for September came in at 69.4 below forecast of 73.5.

 

Foreclosure Headlines

·         According to Zillo 30% of the foreclosures in June involved the top one third in home values (price) this is a 16% increase from three years ago. At the lower end of value (price) one third of the homes had 36% of the foreclosures down 55% from three years ago. In other words, the more expensive homes are foreclosing at a faster rate and the lower priced homes the foreclosure rate appears to be slowing down.

·         RealtyTrac reported that in August there were 358,471 foreclosure filings. This number includes default notices, auction sales notices and bank repo’s). They also reported the  third quarter was the WORST ever for foreclosures with 937,840 filings!

·         A report from W.O. Carey School of business at ASU said that two thirds of the homes sold in Arizona thru September were either foreclosures or the resale of home recently foreclosed.

 

Job Market Headlines

·         Initial weekly jobless claims were 514,000 below forecast of 520,000.

·         Continuing jobless claims were 5.99 million the lowest level since March.

·         The last time the unemployment rate reached 9.8% was the period from July 1982 thru June 1983.

 

 

 

 

Commentary/Observations

The Federal government finished fiscal year 2009 with a $1.42 TRILLION deficit the largest since WWII. The OMB estimates that the deficit will hit $9 TRILLION in the next ten years which would mean that the debt held by the public would be 82% of GDP up from a previous record set in 2008 of 43%. For you non economists out there GDP (Gross Domestic Product) is the total output of our ENTIRE economy. This is not good news.

 

The Dow index reached 10,000 during the week which was the same level it was at in 1999.

 

The Administration announced Thursday that $16 Billion in Stimulus money had been contracted out to firms and $2.2 Billion of that had actually been paid out creating 30,383 new jobs. Friday it was disclosed that there appears to be some reporting errors in the data.

If you have any mortgage or related questions I can be reached at (602) 803-9660 or by e-mail at burt@gosfm.com.