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Mortgage Industry Update: Rates, News & More

                                           ***Smart Financial Weekly Mortgage Update July 10, 2009***

Interest Rates

Rates were down sharply mid week as the stock market weakened and demand for 10 Year Treasuries was higher than expected with some of our sources offering 30 year fixed rates just below 5.00%! In spite of an upward adjustment Thursday rates were back to just below 5.00% Friday. The head of Interest Rate Strategy for Morgan Stanley said this week that he expects the 10 Year Treasury Yield to “grind” lower by late September then finish the year at about 4.25%. Also this week a Wells Fargo economist predicted that the 10 Year Yield will be about 4.00% by the end of this year. The 10 Year Treasury Yield finished the week at 3.29%. If these predictions are true we can expect mortgage rates to increase about .50% or more by the end of 2009.

 

 

When	Rate
This Week	5.20
1 Month Ago	5.59
1 Year Ago	6.37
2 Years Ago	6.73

 

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

·         Late last week we received word that there had been a significant change in the Your Way Home AZ program. You may recall that this program is designed to help home buyers purchase foreclosures. The original guideline on appraised value required the Seller accept a 5% discount off of the appraised value if selling to a program participant. The new guideline has been reduced to 1%. For information on the program go to ww.yourwayhomeaz.com or contact me.

·         FHA/VA loan applications in June were 36% of total applications the highest level since 1990.

·         Making Home Affordable Update: In a report released by the Boston Federal Reserve this week the Fed said lenders are not modifying loans because they lose money on modifications. The report specifically said that the Making Home Affordable program is “not likely to work”. The report covered over 665,000 loans originated between 2005 and 2007 and followed 150,000 thru the end of 2008. The Treasury responded with a statement that more than 240,000 have had their loans modified under the President’s plan and that the pace of modifications was increasing. One of the co authors of the report who is a Senior Economist for the Boston Fed said that the government would be better off just giving the money directly to homeowners.

·         More Making home Affordable News: Today the government announced it would begin authorizing lenders to modify second mortgages specifically Home Equity Lines of Credit. The process could start as early as the end of this month!

 

Good News

·         Initial weekly jobless claims of 565,000 were below forecast and the lowest level since January this year.

·         ISM Services Index of which gauges the health of the service sector improved in June to 47 up from May’s 44.

 

Statistics of Interest/Concern

·         Continuing jobless claims were up 159,000 to 6.88 million a new record and almost double from a year ago.

·         New hiring level in May was the lowest level in 9 years. Since May 2008 the number of job openings has declined by 1.5 million!

·         $108 Billion in commercial loans as of June are now in default, foreclosure or bankruptcy according to Real Capital Analytics Inc. This represents 5315 properties double the number of properties from the end of 2008!

·         Home Equity Lines of Credit (HELOC) delinquency of 30 or more days past due for Q1 2009 rose to a record 3.52%.

·         Credit card delinquency of 30 days or more past due was 3.23% in Q1 2009 the highest since 1974.

·         Consumer Confidence for June was 64.6 down from May’s 70.8 and below forecast.

 

Commentary

Folks, it is all about jobs. Unless and until the job market gets better and people get back to work, or if they are working and not feeling good about their long term job security, the recovery is going to be slow. If you want to watch one statistic watch the continuing job claims number. When that number starts going down from 6.88 million for more than one month then we will see more good news. Here is an interesting job related stat. Did you know that from March 2008 thru March 2009 Phoenix metro lost as many jobs as Detroit metro? Yes it is true.  According to Arizona Magazine’s July edition each metro area lost 135,000 jobs in that period.

 

Finally, on an international note, late this week the Egyptian’s seized about 1500 pounds of explosives in a mountainous area near the Israeli border. Apparently the plan was to attack the Suez Canal and disrupt shipping through it. 26 people have been arrested so far. For more information on home loans and related I can be reached at (602) 803-9660 or by e-mail at burt@gosfm.com.

Burt Carlson

 

 

 

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MORTGAGE INDUSTRY UPDATE: RATES, NEWS & MORE

***Smart Financial Weekly Mortgage Update June 26, 2009***

Interest Rates

In last week’s Update I said “My guess is we will see rates move up next week”. So much for my forecasting skills! L Rates remained essentially flat for the week with a slight downward pattern at the end of the week. The Federal Reserve made it know after their meeting mid week that they had no plans to buy more Treasuries and they are still committed to buying $1.25 Trillion in Mortgage Backed Securities (MBS) in 2009. They will “continue to evaluate timing and amounts” of any future increases in purchases. This statement helped keep the market calm which will hopefully be the case for the near term. We do NOT need any surprises!

 

 

Date	Rate
6/26/09	5.42
6/19/09	5.38
6/12/09	5.59
6/5/09	5.29
6/26/08	6.45
6/28/07	6.67

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

·         There has been some discussion in D.C. about increasing the Making Home Affordable Refinance limit from 105% LTV to as much as 125% LTV.

·         In March FNMA said they would not guaranty loans in condo communities with fewer than 70% sold up from the previous guideline of 51%. Some Senators including Barney Frank have asked FNMA to “make some adjustments” to their guidelines.

·         The National Association of Home Builders (NAHB) wants the condition of the home to be taken into consideration for home valuation. They argue that distressed homes are typically not as well maintained or damaged compared to others. They have suggested extending the geographical area for comps and/or the time frame for recent sales.

·         The Home Valuation Code of Conduct (HVCC) is getting a lot of attention from the mortgage and housing industry and it is not positive. There are many problems with the process which basically uses a centralized clearinghouse or management company to do appraisals. A big problem is there cannot be ANY communication between the lender, Realtor, Seller, etc and the actual person doing the appraisal. There are many groups actively seeking to lobby for changes in the process. One of these is Think Big Work Small. They have developed a petition which we have signed and recommend interested parties also sign. If you are interested their e-mail address is tbwsdaily@thinkbigworksmall.com

·         Reminder: Smart Financial will pay for the appraisal on your first loan with us!

 

Good News

·         Existing home sales for May were up 2.4% to 4.77 million just below expectations.

·         Existing home inventory for May was at 9.6 months down from 10.2 months in April.

·         Median home price for May was $173,000 down almost 17% from May 2008.

·         Durable goods were up 1.8% compared to forecast of down .9% (even with the increase in May year over year durable goods are down almost 27%).

·         Continuing unemployment claims were up slightly to 6.74 Million.

·         New home inventory was at 10.2 months down slightly from 10.4 months.

 

Statistics of Interest/Concern

·         The Government said this week that it had raised 80% of the funds it needs for FY 2009.

·         The Securities Industry and Financial Markets Association (SIFMA) says Q3 2009 GDP will grow .8%.

·         The Labor Department said that mass layoffs (50 or more employees from single company) increased in May and were the highest since 1995.

·         Quarterly CEO Economic Outlook Index was 18.5 for Q2 2009 compared to -5 for Q1 2009 (above 50 indicates expansion in the economy).

·         Weekly jobless claims were up slightly to 627,000.

·         New home sales market share of 7.45% in May was the lowest since 1968.

 

Commentary

The Harvard University Joint Center for Housing Studies issued a report that said the housing recovery will be slow due to job losses and continued foreclosures. I wonder how much that study cost?

 

 If you have any mortgage related questions please contact Burt Carlson at (602) 803-9660 or at burt@gosfm.com.