***Smart Financial Weekly Mortgage Update October 30, 2009***
First time homebuyer tax credit update: The tax credit has been included as an amendment to a bill extending unemployment benefits. The proposed amendment will extend the credit thru April 30, 2010, reduce it to max of $6500 but expand it to more buyers and increase income limits. The Senate is expected to consider it early next week.
Interest Rates
This week the Fed made its last purchase of $300 Billion in Treasuries as part of its effort to keep mortgage rates down. Rates were again fairly stable for the week but the impact of lack of Fed purchases is expected to be felt soon and reflected in higher rates.
When Rate
This Week 5.03
1 Month Ago 4.94
1 Year Ago 6.46
2 Years Ago 6.26
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 recent speeches the Commissioner of the FHA has said that he expects ongoing changes to FHA underwriting policy. FHA has also indicated that it will revisit the two appraisal requirement.
• Foresight Analytics estimates that the total delinquency for first mortgages increased to 11% in the third quarter final data will be released in late November.
• On October 10th in a Federal Bankruptcy court in the Southern District of New York a judge ruled that PHH Mortgage had not proved its claim of delinquency by the borrower and ordered the debt discharged……….wiped out.
Good News
• Third quarter GDP grew 3.5% versus forecast of 3.2%. Housing contributed to growth for the first time in four years with +.53% growth. However, if you exclude autos driven by the Cash for Clunkers program GDP growth was actually 1.9%.
• September durable goods up 1.0% which was in line with forecast.
• Case-Shiller home price index declined in August 11.3% from a year ago but improved 1.2% from July.
• Median home prices rose in September to $204,800 from $199,900 in August.
Statistics of Interest/Concern
• Moody’s Investment Services said Monday that the bank charge off rate has exceeded the rate in the early years of the Great Depression. About $116 Billion has been written off so far.
• Consumer confidence for September was 47.7 well below forecast of 53.5.
• Oxford Analytics study suggests that home prices will fall another 10% nationally in 2010.
• Consumer spending was down .5% in September.
• New home sales fell 3.6% in September after five consecutive months of increases while months of inventory shrank to 7.5 months compared to 12.4 in January.
• S&P has downgraded seven mortgage insurance companies including Radian and MGIC.
Foreclosure Headlines
• The Census Department reported that in the third quarter 18.8 million homes were vacant up slightly from the second quarter.
Job Market Headlines
• Initial weekly jobless claims came in at 350,000 flat from previous week.
• The National Association of Business Economists forecast only 12,000 additional jobs per month in the first quarter of 2010.The economy needs at least 150,000 new jobs per month to keep up with population growth. The group estimates it will be 2012 before the economy reaches the 150,000 level. The consensus on unemployment was that it would peak in the summer of 2010.
Commentary/Observations
In Florida hundreds of complaints have been filed against Bank of America for loan modification related problems including lack of communication and other issues.
Auto analyst Edmunds.com has calculated that Cash for Clunkers cost to the tax payer per car sold was $24,000. They also added that there were few marginal sales. The government disputes the claim.
The Iranian regime has said it is unwilling to accept a deal that would have the country ship 70% of its enriched Uranium out of the country according to the International Atomic Energy Agency.
If you have any mortgage or related questions I can be reached at (602) 803-9660 or by e-mail at burt@gofsm.com.
{ 2 comments… read them below or add one }
John 11.01.09 at 1:43 pm
The first time homebuyer credit will continue to be $8000 through 4/10 and current homeowners will receive $6500 if they buy another house with a higher principle (with income limitations). They increased the income limits from $75,000 to $125,000 for individuals and from $150,000 to $225,000 for married couples. This is great news if you’re in the market!
Kevin Simpson 11.03.09 at 9:11 am
I like this part of the blog… It’s good to check all the information gathered together