Federal budget deficit

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.

 

 

 

 

 

 

 

 

 

 

 

 

Federal budget deficit

Mortgage Industry Update: Rates, News & More

***Smart Financial Weekly Mortgage Update August 28, 2009***

Reminder: The first time home buyer tax credit is currently scheduled to end December 1, 2009. Buyers wanting to take advantage of the credit must close by then.

 

Interest Rates

Rates moved down slightly from the start of the week to finish at just above 5.00% for both FHA and conventional. These are SMOKIN rates and along with the first time buyer credit says to me buyers need to get in the game before it’s too late. While there has been some discussion about extending or re working the tax credit it is almost certain rates will be higher at the end of the year. This is a wonderful window of opportunity for home buyers so let’s get the word out!

 

When	Rate
This Week	5.14
1 Month Ago	5.25
1 Year Ago	6.40
2 Years Ago	6.45

 

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 below chart shows the volume of Option Arms/Pick a Pay plan and Alt A loans that are scheduled to adjust in 2010-2011. With housing values being low, unemployment high and the possibility of the Fed raising rates as the economy starts to recover there could be many more foreclosures.

 

·         FHA has said NO to HVCC implementation according to an FHA commissioner. Now if we could only get the HVCC moratorium (HR 3044) for 18 months approved.

·         Jumbo loans are still available but require at least 20% down (sometimes 25%), very good credit scores and good debt to income ratios. 30 year fixed rate and Arm financing is available but the rates are much higher than conventional loans. Fixed rates were mid to high 6%’s and Arm’s in low to mid 6%’s for primary residences.

 

Good News

·         New home sales surged 9.6% in July and exceeded forecast according to HUD and the Census Bureau.

 

 

·         Median home price in July was $211,000 and continued to decline although at a slower rate than in the past.

·         New home inventory was 7.5 months in July down from 8.8 months in June. Also, new homes available for sale were at the lowest level in 16 years.

·         Case-Shiller Home Price Index rose 1.2% in July. Also, second quarter prices were up 2.9% which was the first quarterly increase in three years. However, prices are still down 15% from last July.

·         University of Michigan Index of consumer confidence was 65.7 in August slightly lower than July’s 66.0. While not really good news it’s not bad either as confidence seems to have stabilized for now.

·         Second quarter GDP was revised to -1.0% from -1.5%.

 

Statistics of Interest/Concern

·         Housing Market Index (measures home builder’s confidence) was 18 in July. Anything below 50 indicates business conditions are poor.

·         In 1989 589 banks failed so far this year 81 have failed and 150 or so are expected to fail in the next 12 months. Three of the six biggest bank failures EVER have taken place in the last 14 months says the FDIC (see Commentary below for more).

·         CMBS (Commercial Mortgage Backed Securities) 30 day or more delinquency was at $30 Billion in July and still increasing according to RealPoint. Also, 90 day+, foreclosure and REO’s were up for the 20^th straight month to $2.15 Billion from June.

·         The LA Times says California tax officials are reporting that the state’s property values fell 2.4% in the last fiscal year which is the largest drop in 76 years.

·         In a Monster.com poll of 16,000 taken in mid July 34% of the respondents said they had only one week’s worth of savings. Another 16% said they had 2-4 weeks savings.

 

Foreclosure Headlines

·         Wednesday HUD launched a $50 million effort to help state and local government address the foreclosure issue. HUD will grant money to national and local organizations to buy, rehab and then sell foreclosed property.

·         Not exactly a foreclosure story but the Treasury Department is providing $309 Million to fund affordable housing projects that have been halted by the lack of capital in today’s marketplace. The money will be used to fund projects of a variety of sizes in seven states including Arizona.

 

Job Market Headlines

·         Initial weekly jobless claims for the week ending August 22 came in at 570,000.

·         Continuing jobless claims fell to 6.133 million from 6.252 million.

·         A top Federal Reserve official Dennis Lockhart has said that his forecast calls for a slow recovery and protracted unemployment.

·         By the end of the year 1.5 million people will have exhausted their unemployment benefits. Earlier this month a bill was introduced to extend the Federal benefits 13 weeks in states with 3 months unemployment rate of 9.5% or greater. This would include about 20 states. Congress is expected to revisit the issue after its summer recess.

·         Cash for Clunkers saved or created 21,000 jobs says the White House (see more below).

 

 

Commentary/Observations

The White House and CBO project this year’s Federal budget deficit will be $1.6 TRILLION compared to 2008 deficit of $455 Billion. The five biggest monthly Federal budget deficits ever have occurred this year says the Treasury Department. The projected deficit for the next few years is anywhere from $7 to $10+ TRILLION and we still have no health care legislation. Is it just me but are we trying to swallow a bit too much?

 

In a report released by the FDIC on the status of the nation’s banks it was noted that in the second quarter of 2009 they lost $3.9 Billion, bad loans were growing faster than they could set aside reserves, total lending had declined and the list of troubled banks rose to 416. Analysts say that the coming consolidation will impact primarily small banks.

 

A Manhattan Chief District Court judge has ordered the Federal Reserve to identify banks and other firms that have been loaned money by the Fed under a variety of programs. The Fed has fought this on the grounds the disclosure of this information might cause a “run” on some of the banks named.

 

According to the government the Cash for Clunkers program resulted in 690,114 sales. Toyota had the most sales with 19% and GM was second with 17.6%. Also, 84% of the clunkers were trucks, vans & SUV’s. The White House says 21,000 jobs were saved or created by the program.

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