Interest Rates
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.
I want to be your mortgage guy! Call me to get your Arizona mortgage started.
Burt Carlson
Smart Financial Mortgage
(602) 803-9660
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