Mortgage Industry News

MORTGAGE REVIEW:RATES,NEWS AND MORE.

***Smart Financial Weekly Mortgage Update May 8, 2009***

Interest Rates

It was another great week for rates even though they moved up slightly. 30 year fixed rates continue to be at historic lows. The reason for this is, as mentioned previously, the Fed is buying Mortgage Backed Securities (MBS) as part of its ongoing commitment to keep mortgage rates low. However, a key point gentle reader’s is that 99% of these purchases have been intended to keep rates at today’s levels not lower! So, do not look for significantly lower rates if the Fed continues its present pattern of buying MBS. Also, the 10 Year Treasury Yield finished the week at 3.29 up from last week.

Date	Rate
5/8/09	4.84
5/1/09	4.78
4/24/09	4.80
4/17/09	4.82
5/8/08	6.05
5/10/07	6.15

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

We all know that the government is stepping up to help the mortgage industry by supporting FHA, Fannie Mae and Freddie Mac. I thought I would share some data with you to help put that support in some kind of perspective.

· FHA is asking Congress for $798 Million to help meet its reserve requirement.

· One in eight FHA loans is delinquent and 7.5% are 90 days or more delinquent according to the Mortgage Bankers Association.

· Fannie Mae lost $23 Billion in first quarter 2009 following $25 Billion loss in fourth quarter 2008.

· Fannie Mae has requested $19 Billion from the government for its capital structure.

· The Treasury has doubled its commitment to Fannie Mae to $200 Billion.

· Fannie Mae took over 21,000 foreclosed homes (single family) in fourth quarter 2008 and 25,000 in first quarter 2009.

No matter how you look at it these are big numbers!

Good News

· Pending home sales up 3.2% in April.

· Construction spending in March was up .3% forecast was for decline of 1-1.5%. This was first increase in 6 months!

· Initial jobless claims were 601,000 which was better than forecast of 635,000. Lowest number in 14 weeks!

· First quarter productivity was up .8% compared to forecast of .6%.

· Jobs report for April was 539,000 jobs lost in April compared to forecast of 610,000.

Statistics of Interest/Concern

· 30 day delinquency on prime loans was up slightly in April.

· Credit card delinquency in April increased 36% over March.

· Commercial delinquency in April was 2.45% compared to 1.00% a year ago.

· April unemployment rate increased to 8.9% in April from 8.5% in March.

· Consumer credit declined in March by $11 Billion more than three times the forecast.

· According to AP 4 million homes have been vacant for more than 90 days.

Commentary:

In testimony before a Congressional committee this week the Chairman of the Federal Reserve Ben Bernake said that he expected recovery later this year and that the economy will grow slowly going forward. He also said that he thought housing may be near a bottom. More and more of the data are pointing toward a recovery sooner rather than later albeit a slow one. Finally, if you believe as I do that it is all about jobs then you will take heart in Challenger, Gray and Christmas Inc. report that layoffs were down for the third consecutive month in April.

If you have any questions or want to get a rate quote please give Burt Carlson a call at (602) 803-9660 or e-mail me at burt@gosfm.com.

Mortgage Industry News

$8,000 First Time Buyer Tax Credit

***Smart Financial Weekly Mortgage Update March 13, 2009***

 

Interest Rates

Rates continue to remain in a narrow range hovering just above the historical low (see Historical Note below). Earlier in the week the Mortgage Bankers Association VP of Economic Forecasting said that 30 year fixed rates should stay in the 5% range for the “foreseeable future”. She also observed that it was likely the Fed would step in and “buy more loans” to keep rates low. There does not seem to be much expectation for lowers rates so waiting may not be prudent whether purchasing or refinancing.

 

Historical Note: On January 15, 2009 the average rate was 4.96 the lowest since 1971 when they started tracking rates.

 

Note that actual market rates vary geographically, lender, credit score and loan to value.

Date	Rate
3/13/09	5.03
3/6/09	5.15
2/27/09	5.07
2/20/09	5.04
3/13/08	6.13
3/15/07	6.14

Source: Federal Reserve Statistical H.15.

 

Mortgage Industry Update

I was asked recently by an Agent about the $8,000 tax credit for first time home buyers. After doing some research on it I thought it a good topic for my weekly newsletter. The credit is part of The American Recovery and Investment Act of 2009 more commonly known as “The Stimulus Act”. The Act authorizes a tax credit of 10% of the purchase price up to a maximum of $8,000 for first time home buyers who purchase homes between January 1, 2009 and December 1, 2009. The credit does NOT have to be repaid. Single tax payers can earn up to $75,000 and married couples up to $150,000. There are some other points worth noting;

·         First time buyer defined as someone who has not owned a principal residence during the 3 years prior to the new purchase.

·         If a buyer owns a vacation home or rental property not used as principal residence they may still qualify for the credit.

·         Reduced credit is available for single buyers with income to $95,000 and married couples to $170,000.

·         The credit can be claimed by completing IRS Form 5405 (as with any tax issue we urge anyone interested in the credit to consult with an appropriate, qualified tax advisor).

·         Any home that qualifies as a principal residence for tax purposes qualifies for the credit (single- family detached, attached homes like townhouses and condos, manufactured homes and even houseboats).

·         The tax credit is refundable which means a buyer can claim the credit even if there is no Federal tax liability. In fact, the buyer would likely get a check from the IRS in this instance!

·         I am not aware of any mechanism where a buyer could access the credit in the form of cash for the down payment today. Buyers can decrease their withholding to accumulate cash over a period of time. Again, consult with a tax professional for advice on this. Note that in some states the state housing finance agency has a program for advancing the funds for a down payment. The person I spoke with at the Arizona State Housing Finance Agency said they did not have such a plan.

 If you have any questions please let me know or go to www.federalhousingtaxcredit.com for additional information.

 

Good News

·         The Omnibus Spending Bill recently passed includes a provision that prohibits banks from getting into the real estate business (except for mortgages).

·         The Term Asset-Backed Securities Loan Facility (TALF) providing for $200 Billion to support auto, credit card and student loan financing was launched this week. The TALF’s goal is to help make more money available for auto loans, credit card financing and student loans. Down the road it is also expected to do the same for commercial real estate.

·         February retail sales were down only .1% versus forecast of down .5% plus the January numbers were revised from up 1.0% to up 1.8%. It is unclear if this is a trend but we will take what we can get.

·         Remember Smart Financial’s FREE appraisal offer for any HomeSmart Agent’s first loan with us!

 

For more information contact Burt Carlson at (602) 803-9660 or by e-mail at burt@gosfm.com.