Mortgage Rates

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.

 

Mortgage Rates

MORTGAGE INDUSTRY UPDATE: RATES, NEWS AND MORE

***Smart Financial Weekly Mortgage Update June 19, 2009***

Mortgage rates remained in a narrow range as the week ended. I think it is a safe bet that we will not see 5.00% rates going forward. The culprit is excessive government spending and borrowing along with the budget deficit as we have discussed before. Thursday the Fed announced the sale of a RECORD $104 Billion of bonds next week. My guess is we will see rates move up next week.

 

Date	Rate
6/19/09	5.38
6/12/09	5.59
6/5/09	5.29
5/29/09	4.91
6/19/08	6.42
6/21/07	6.69

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

·         Recently I have been asked about lenders property flipping guidelines. So what follows is a summary of what I learned;

FHA: Any purchase contract must be dated at least 91 days from the date the property changed hands.

VA: There are no seasoning limitations so they vary from lender to lender.

Conventional: Varies by lender with some having no season requirements and others having limitations for example.

·         Hope for Homeowners update! Back in late May the President signed into law legislation that among other things revised the Hope for Homeowners program. Some of the revisions are the loan balance can only be reduced to 93% of property value instead of 90%, servicers will be paid $1,000 per modification, there will be equity sharing with the investor up to the original appraised value and any servicer participating in the Making home Affordable program must offer Hope for Homeowners. For more information on this program the first place to call is your current lender.

 

Good News

·         May housing starts were up 17% to 532,000 annual rate.

·         Building permits in May were also up.

·         PPI (Producer Price Index) was up .2% in May compared to forecast of +.6% (in the past year the PPI is down 5% the sharpest decline since 1949).

·         CPI (Consumer Price Index) for May was up .1% compared to forecast of up .3%. The year over year CPI is down 1.3% the lowest since 1950.

·         Weekly initial jobless claims of 608,000 were right at expectation.

·         Continuing jobless claims were down 148,000 to 6.69 million.

·         The Conference Board report on leading economic indicators for May showed 7 of 10 positive resulting in a 1.2% gain. This follow April’s revised number of +1.1%.

 

Statistics of Interest/Concern

·         According to the Treasury Dept. the budget deficit for FY 2009 will be $1.84 TRILLION compared to the $455 Billion deficit for FY 2008.

·         New York Mfg Index of -9.41 was worse than expected (anything below zero indicates contraction).

·         The National Association for Credit Counseling said in 2006 it counseled 1.5 million people. The number increased in 2008 to 3.2 million and so far in 2009 that number has increased by 34%. They found that their average client has 6 credit cards that total 62% of family income EXCLUDING mortgages, autos, etc.

·         According to the Mortgage Bankers Association (MBA) 9% of the country’s 45 million mortgages were delinquent in May. This is the highest number since the MBA started tracking this statistic since 1972.

·         13 states now have unemployment rates of 10% or more.

 

Commentary

I was thinking of how to put the rate increases into perspective. So being a numbers person I decided to compare this year with last year at this time. Last May the average home price was about $271,000 compared to $163,400 in 2008. Last year’s average mortgage rate was 6.42% compared to this year’s rate of 5.38%. OK, so you already know where I am going. Clearly as far as affordability is concerned the decline in home prices far exceeds the impact of “higher rates”. Even with rates moving up a Buyer can still purchase more home for far less than a year ago AND the basic loan qualifying standards have not changed that much. Folks, it is a GREAT time to buy a home!

 

Finally, while there always seems to be bad news or data the amount of good news and positive data suggests that the recession is weakening. While the recovery may be slow and it may take some time for “full recovery” we are doing much better than the end of last year. So, if by the end of 2009 we see the same amount of progress in the last half of the year that will be fine with me.

For more information on mortgages and mortgage related questions please contact Burt Carlson at (602) 803-9660 or burt@gosfm.com.

 

 

 

Mortgage Rates

MORTGAGE REVIEW:RATES, NEWS & MORE

***Smart Financial Weekly Mortgage Update June 12, 2009***

Interest Rates

Holy cow! Mortgage rates have moved up sharply again in recent days (albeit moderating as I write this) as indicated by the chart below. The reasons for this have been discussed in my past two Newsletters but the same issues are at play: huge budget deficits and government spending requiring the government to raise record sums of money to finance the spending. The Wall Street Journal observes that the Fed is not likely to increase its buying of Bonds and Mortgage Backed Securities (MBS) but may discuss possible adjustments at its meeting June 23 and 24. The Fed’s actions have kept long term rates artificially low. The Fed continues to be threading a very fine needle with whatever they decide being potentially harmful to the recovery. You may want to check out media reports on the results of the Fed meeting but if you cannot not to worry as we will update you.

Date	Rate
6/12/09	5.59
6/5/09	5.29
5/29/09	4.91
5/22/09	4.82
6/12/08	6.32
6/14/07	6.74

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

· Today legislation was introduced in the Senate to expand the first time buyer’s tax credit. Among the proposed changes are 1) increase the credit from $8,000 to $15,000, 2) have the credit apply to any home buyer, 3) eliminate income caps, 4) allow tax deductibility in 2009 for homes purchased in 2010 and 5) extend the credit one year from the date of enactment. Now THIS is what we need from our elected leaders! A number of Senators and the NAR are supporting the legislation.

· FHA Update: More concern about the financial viability of FHA were expressed this week as some Senators think it is going to “explode” and harm communities, tax payers and homeowners if not managed correctly. The Congressional Budget Office (CBO) says FHA may break even this year while the head of HUD thinks they will make money. My money is on the CBO forecast.

Good News

· Consumer confidence hit 9 month high for June up slightly from May.

· IAS 360 says that in April home prices were down 13% from a year ago but that the decline may have leveled off.

· Wholesale inventories for April were down 1.4% from forecast of down 1.15. April was the eighth consecutive month inventories declined.

· The Federal Reserve Beige Book suggests that the worst of the recession may have passed.

Statistics of Interest/Concern

· Credit card delinquency increased 11% in 1Q 2009 to 1.32% accounts over 90 days delinquent.

· About 750,000 Option Arms are scheduled to re-set in 2010 and 2011 with 54,000 in August 2011 alone according to Bloomberg. California will likely suffer the most from the fallout of these re-sets.

Commentary

Since I believe strongly in all homeowners exploring loan modification I just wanted to remind you that if your loan is held or guaranteed by Fannie Mae or Freddie Mac OR your lender has received money from the government under the TARP they are REQUIRED by law to consider your loan for a modification.

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

Mortgage Rates

MORTGAGE INDUSTRY UPDATE: RATES, NEWS & MORE

***Smart Financial Weekly Mortgage Update June 5, 2009***

Interest Rates

Since last Wednesday rates have moved up sharply as indicated by the table below. The average 30 year fixed rate mortgage is 5.29% our sources had rates at end of day today above that level. While the increase is substantial compared to the last two years rates are still very attractive. Last week we offered some thoughts on the reasons for the increasing rate environment. Today we share some thoughts from a Wells Fargo Senior Economist.

He says that if he had one variable to watch on the direction of the economy it would be the Ten Year Treasury Yield. Personally I think the job numbers are more important but as Dennis Miller used to say that’s my opinion and I am sticking with it! The Wells Economist goes on to say the rise in long term bond yields can signal renewed economic growth and recovery. However, he believes that the recent run up in yields is more about inflation, the dollar, federal borrowing and Fed purchase programs. Does any of this sound familiar gentle reader? The bottom line for him is downside risks are on the rise. See the chart below comparing the 10 year Treasury yield with 30 year mortgage rates. With the ten year closing today at 3.83% and based on the chart which way do you think rates are headed?

Massive U.S. borrowing binge poses challenge to Fed, Treasury

Due to technical issues beyond our control the chart that was supposed to be above does not appear. We apologize for any inconvenience to the reader.

Date	Rate
6/5/09	5.29
5/29/09	4.91
5/22/09	4.82
5/15/09	4.86
6/5/08	6.09
6/7/07	6.53

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

· It looks like the program to loan home buyers money against the $8,000 first time buyers tax credit is moving forward but there are still no details available as yet.

· The Consumer Mortgage Coalition has urged FHFA (Federal Housing Finance Agency) to increase the conforming loan limit to $1,000,000.

· The Fannie Mae and Freddie Mac loan modification programs under the President’s housing bill will not show significant results until late summer the head of FHFA said Thursday. If you or someone you know is having a problem with their mortgage or modifying their loan please have them contact me!

Good News

· First quarter 2009 home prices were down 2.2% on annual basis versus down 12.5% for fourth quarter 2008 according to IHS Global.

· May job lose at 345,000 compared to expectations of 520,000 PLUS adjustments from previous two months revealed 82,000 fewer jobs lost!

· ISM Mfg Factory Index for May 42.8 the highest since September 2008. Anything above 50 means the economy is in expansion mode.

· Pending home sales up 6.7% in April the largest increase in 7 years!

· First quarter productivity was up 1.6% higher than the forecast.

Statistics of Interest/Concern

· The Center for Responsible Lending says that so far this year there have been one million foreclosure starts.

· May unemployment rate 9.4 versus forecast of 9.2.

· Continuing jobless claims for the week were 621,000 met expectations.

· Total continuing jobless claims were at 6.74 million but for the first time since January actually declined slightly.

· Dice Holdings semi-annual survey of employers and recruiting firms showed most of those surveyed do not expect an increase in hiring this year.

· For April the Federal Reserve reported that consumer borrowing was down by $15.7 Billion following March’s $16.6 Billion decline which was the largest decline since 1943 when such records started being kept.

· Crude oil finished the week at $68 barrel.

Commentary:

Many states are having big budget problems. It is estimated that nationwide all states will require a $24 Billion increase in taxes to meet fiscal year 2009 budget requirements. The states with the biggest shortfall are California $11.3 Billion, Illinois $4.4 Billion and New York with $4.0 Billion.

If you have any questions or want to discuss your financing needs please give me a call at (602) 803-9660 or e-mail me at burt@gosfm.com.

Mortgage Rates

MORTGAGE REVIEW:RATES, NEWS AND MORE!

***Smart Financial Weekly Mortgage Update May 29, 2009!***

Interest Rates

It was bound to happen. Wednesday the market went, well, nuts! We suffered through 3 rate increases that day and some investors even stopped taking rate locks. Why? On Wednesday the 10 year Treasury Yield closed at 3.73% driving mortgage rates up .375% to .500%. The difference between the 2 year Yield and the 10 year Yield hit an all time high (typically means economy headed for recovery BUT massive spending could mean higher rates, inflation, etc)! Rates have moderated some as the week ended with the 10 Year Treasury Yield at about 3.46%.

So what is going on? Well, gentle reader, read on as we try to simplify the complex;

· Our government is trying to raise money to pay for all of the bailouts and spending it has committed to in an effort to get the economy out of the recession. Some say it could be as much as two TRILLION dollars. L

· Washington gets money from the sale of various instruments and tax receipts (more on tax receipts later). J

· The current SUPPLY or what the government wants to sell is more than the MARKET can ABSORB so, are you still with me N, prices go down (yields go up).

· As Yields on the 10 Year Treasury increase mortgage rates typically move up as well. D The Fed has pledged to buy up to $300 BILLION in Treasuries and $1.25 TRILLION in bonds backed by home loans to……………………………….keep mortgage rates low to help the housing market recover C.

· As the economy starts to recover investors holding these government instruments see better returns elsewhere (stock market, oil and other commodities) so they sell them. This puts more SUPPLY back in the system pushing Yields up even more. D

· Remember those tax receipts mentioned above? Well, the month of April is typically the biggest revenue month for the government because of the infamous April 15^th deadline. This year tax receipts for April were very weak. Impact is more money has to be raised by, you guessed it, selling government treasuries and bonds.

· The RISK here is that as rates move up consumer and business credit gets more expensive and complicates and/or delays recovery from the recession.

What to look for $: If foreign owners of our government instruments lose confidence in our recovery and sell (remember more than 50% of these instruments are foreign owned) creating more SUPPLY then rates likely move up thus hurting housing which was the initial cause of our recession.

Date	Rate
5/29/09	4.91
5/22/09	4.82
5/15/09	4.86
5/8/09	4.84
5/29/08	6.06
5/31/07	6.42

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

· First time home buyer tax credit update: Today it was announced that FHA would allow an advance of the first time buyer tax credit to help buyers cover closing costs, etc. The advance can NOT be used for the down payment. Additional details will be forthcoming.

· There has been a lot of publicity about loan modifications recently. According to the Treasury Department somewhere between 10,000 and 55,000 loans have been modified under the President’s plan. The goal is to help 4 million homeowners. Also, in January and February 313,000 homes became 90 days delinquent or went into foreclosure.

· According to a NY Times analysis the number of prime mortgages with serious delinquency (90 days late or more, property in foreclosure or in lender possession) increased from 473,000 in November 2008 to 1.5 Million at the end of February or a total of $224 billion dollars in loans!

Good News

· Consumer confidence was 54.9 for April compared to the forecast of 43 (the biggest gain since April 2003).

· Existing home inventory was about 10 months for April.

· Existing home sales were flat in April at 4.68 million units on annualized basis compared to the forecast of 4.63 million.

· Durable goods up 1.9% in April compared to expectations of .5%. March was revised downward to -2.1%.

· Initial jobless claims were at 623,000 in April compared to 628,000 forecast.

Statistics of Interest/Concern

· Home values thru first quarter 2009 declined 19% the sharpest decline in 21 years according to Case-Shiller (Phoenix metro was down 36% and led the nation).

· Absentee buyers (investors and second homes) accounted for about 40% of sales in the Phoenix area in April.

· Delinquency on prime loans was at 8% for April and if you add in foreclosures, etc was 11%.

· New home construction was flat versus expectations at 10 months inventory.

Commentary:

More news from Texas as the state created more jobs in 2008 that the remaining 49 COMBINED! Wow, how about them cowboys!

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

Mortgage Rates

MORTGAGE REVIEW: RATES, NEWS AND MORE

***Smart Financial Weekly Mortgage Update May 22, 2009***

Interest Rates

On March 18, 2009 the 10 Year Treasury Yield was 2.50%. Today it closed at 3.45%. This is a significant increase in a very short period of time. At the last meeting of the Federal Reserve it was revealed in notes released Wednesday that several members are open to the Fed purchasing more Treasuries than previously announced to keep long term rates at current levels. On Thursday mortgage rates moved up as the Treasury announced the issuance of about $100 Billion in new debt. To offset this move the Fed will buy back some Treasuries.

Concept: The Treasury Department issues new debt to fund government spending and the Fed buys Treasuries to keep rates low.

Concern: How long will this strategy work before rates move upward?

Date	Rate
5/22/09	4.82
5/15/09	4.86
5/8/09	4.84
5/1/09	4.78
5/22/08	5.98
5/24/07	6.37

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

· In yet another piece of legislation aimed at helping the housing market the President has signed the Helping Families Save their Homes Act of 2009. This legislation provides a “Safe Harbor” for loan servicing firms. The Safe Harbor protects the firms from investor lawsuits when they modify a loan as long as the modification is consistent with the revised (in this Act) Hope for Homeowners program.

· In recent weeks I have noticed that many FHA lenders have added risk adjustments for credit score and/or loan amount. If the purchase price is below $100,000 and the Buyers score is below 660 or so there will likely be adjustments which will increase the rate.

Good News

· First quarter 2009 homes were the most affordable in 18 years.

· Housing starts were down 12.8% to the lowest level since 1959.

· The number of housing starts in April was 458,000 down from forecast of 520,000.

· New building permits in April were 494,000 the lowest since 1960.

· Home builder sentiment improved for the second month in a row and was at the highest level since September 2008.

· The Leading Economic Indicators rose 1% (group of the 10 leading indicators) in April the first increase since June 2008. It was also the biggest monthly increase since November 2005.

· In April the unemployment rate declined in 21 states according to the government.

Statistics of Interest/Concern

· In 2007 the Social Security Trust fund was projected to have zero balance in 2041 but on May 12, 2009 the forecast was for zero balance in 2037.

· The Medi-Care Trust fund is forecast to have a zero balance in 2017.

· According to Real Capital Analytics $73 Billion in commercial real estate loans are in some level of distress and there are $271 Billion in commercial real estate loans due this year.

· Initial jobless claims for the week were 631,000 which was right on forecast.

· Continuing jobless claims increased to a record 6.662 million in April.

· The Congressional Budget Office (CBO) projects that the jobless rate could exceed 10%.

Commentary:

A sign of the times is that in Texas cattle rustling is on the rise and in fact has tripled from 2007 to 2008. Missouri has also had a sharp rise in cow thefts! Just thought you would like to know.

If you have any mortgage or related questions please feel free to contact me at (602) 803-9660 or by e-mail at burt@gosfm.com.

Mortgage Rates

MORTGAGE REVIEW: RATES, NEWS & MORE

***Smart Financial Weekly Mortgage Update May 15, 2009***

Interest Rates

Can the recovery of the U.S. economy lead to higher interest rates? At least one economist thinks so (maybe more). According to a Wells Fargo Senior Economist it goes something like this. As the recovery moves forward the Federal Reserve will start “mopping away” all the excess liquidity it has injected into the economy. Early signs of this have been seen in the increase in the 10 Year Treasury Yields (although the 10 Year Treasury Yield finished the week at 3.13 down from last week). Fed Chairman Bernake has stated publicly that he sees an orderly process to the mopping away where the Wells Fargo economist is not so sure.

The problem for the Fed is as credit markets thaw and more money is available investors will look for investments with higher returns than U.S. Treasuries. This in turn will cause Treasury yields to increase to attract buyers so that we can fund Federal spending. So the Fed will have to decide between buying Mortgage Backed Securities (MBS) (to keep mortgage rates lower) and/or buying Treasuries to keep funds flowing into the Treasury. This is where the fun really starts! Because most of the President’s “fiscal package” spending is in the next few years the Fed will have to raise rates to prevent inflation from creeping into the economy or so the thinking goes.

Bottom Line: In the next few years some argue we will pay for low mortgage rates today and more government spending to jump start the economy with higher rates in the future. The only question is how long will it take this future to arrive and what will the rates look like?

Date	Rate
5/15/09	4.82
5/8/09	4.84
5/1/09	4.78
4/24/09	4.80
5/15/08	6.01
5/17/07	6.21

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

· $8,000 First Time buyer Tax Credit Update: HUD Secretary Donovan said earlier this week that the FHA would allow approved lenders, non profits and state and local agencies to issue bridge loans to first time buyers using the tax credit. However, the Mortgagee Letter addressing this idea has been pulled from HUD’s website. I guess they are re-thinking the issue.

· Freddie Mac lost $9 Billion in Q1 2009 compared to $23.9 Billion loss in Q4 2008. This reduced the equity to minus $.6 Billion so they requested $6 Billion in equity from the government (remember we the tax payers own Freddie Mac and Fannie Mae).

· Wells Fargo in its quarterly report for March 31, 2009 noted that it has $115 Billion in Option Arms/Pick a Pay loans in its portfolio and that number is 107% of the estimated value of the properties! In addition, Wells said that 50% of the borrowers were paying the minimum payment or less than the interest. Finally, they said 70% of these loans are in California, Arizona and Florida and Wells estimated that 61% of these loans will not be paid. Can you say foreclosure crisis continues?

Good News

· As of March 31, 2009 there were 3.7 million homes existing for sale compared to 4.7 million in July 2008 according to the National Association of Realtors (NAR).

· Consumer sentiment for April was 67.9 the highest level since September 2008.

· New York State Empire Mfg Index was -4.55 for April beating forecast of -14 and up from March’s -14.

Statistics of Interest/Concern

· Initial jobless claims were 637,000 versus forecast of 610,000.

· Producer Price Index (PPI) was up .3% versus forecast of .2%.

· Consumer Price Index (CPI) was flat in April and down .7% for the last 12 months the sharpest decline in 54 years.

· Household debt grew from 69% of Gross Domestic Product (GDP) in 1998 to 100% of GDP in 2008.

· Median home price for single family residences was down 14% to 169,000 the biggest drop on record.

· Foreclosure filings were up 32% in April.

· Retail sales were down .4% compared to forecast of ZERO (eighth decline in last 10 months).

· Credit card defaults rose to an all time high in April.

Commentary:

As you can see there was somewhat more bad news than good for the week. However, most analysts do think the economy is headed in the right direction and that we are in the early stages of recovery.

For more information about the mortgage industry or loan programs please contact Burt Carlson at (602) 803-9660 or by e-mail at burt@gosfm.com.

Mortgage Rates

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.