Arizona Mortgage Rates & News - November 20,2009

***Smart Financial Weekly Mortgage Update November 20, 2009***

Interest Rates
On December 18, 2008 the average 30 year fixed rate for the week was 5.19%. Since then the average rate has been below 5.25% except for the period between June 4 thru July 2 and the week of June 11 when it was 5.59%. This trend is likely to switch to an upward movement in rates as the Fed ends its support of long term rates. Also, the Fed heavily hinted this week that it would keep short term rates low for “an extended period”. Did you know that at the end of the eight month long recession in November 2001 it took the Fed two and one half years to raise short term rates?

When Rate
This Week 4.83
1 Month Ago 5.00
1 Year Ago 6.04
2 Years Ago 6.20

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 Your Way Home Az program for the purchase of foreclosures is almost out of funds and I am told they are not taking any more applications.
• Mortgage delinquency (60 days late or more) for the third quarter was 6.25% up from 3.96% a year ago. Nevada had the highest rate of 14.5% and Arizona was at 10.4%.
• FHA delinquency for the third quarter was 8.2% plus another 3.32% in foreclosure. In other words one in six FHA loans is delinquent or worse.

Good News
• Producer Price Index (PPI) for October came in at .3% compared to forecast of .5%.
• Consumer Price Index (CPI) was up .3% in October slightly higher than expected.
• Housing starts declined 10.6% in October to a seasonally adjusted rate of 592,000 lowest since April of this year. Building permits were also down by 4% in October.
• Conference Board said its index of leading economic indicators rose by .3% in October just below forecast of .5%. In the last six months the indicators have grown 5.0%.

Statistics of Interest/Concern
• In fiscal year 2009 (ended 9/30/09) the U.S. Postal Service lost $3.8 Billion. This AFTER reducing expenses by $6 Billion including eliminating 40,000 jobs. The Service is asking for authority to drop Saturday service thus saving an estimated $3.5 Billion in fiscal 2010.
• Retail sales were up 1.4% in November compared to forecast of +.9%.
• The Empire State Manufacturing Index was 23.5 in November forecast was for 30.
• Defaults on credit cards fell in October but delinquencies rose across the board according to the credit card companies.
• Industrial output in October was up .1% expectation was for increase of .4%.

Foreclosure Headlines
• The Urban Institute said in a report that borrowers facing foreclosure were 60% more likely to keep their homes if they sought counseling and were saving an average of $454 per month if the got counseling for loan modification compared to those who did not seek counseling. Note that this counseling is free and provided thru NeighborWorks America.
• Las Vegas again led the nation in percentage of homes underwater at 81.1%. Phoenix came in fifth at 63.5%.

Job Market Headlines
• The Labor Department reported that 13 states have unemployment rates above 10.2% and jobless rates in 29 states increased in October. The states with the highest unemployment rates are Michigan 15.1%, Nevada 13%, Rhode Island 12.9%, California 12.5% and South Carolina at 12.1%. Arizona was not in the top ten.
• Initial weekly jobless claims were 505,000 and in line with expectations.
• The four week moving average for weekly claims fell to 514,000 also in line with expectations and the eleventh consecutive weekly decline.
• Continuing claims were 5.61 million and in line with forecast.

Commentary/Observations
According to the government the “real” unemployment rate is 17.5%. This is referred to as the U-6 number which includes the U-3 number (commonly referred to as the unemployment rate which for October was 10.2%) plus those workers who have given up looking for work and those working part time who want to work full time.

It took nearly two years to consistently add jobs after the eight month long 2001 recession which ended in November 2001. It took another two years to recoup all of the jobs lost according to Moody’s Adversity Index report. The current recession is already much longer and more destructive than the 2001 recession.

The key to the economic recovery is job’s folks! When people work they can pay their mortgages and buy stuff. They feel good about themselves and their futures. The concept of a “jobless recovery” to me is non-sense. How does our economy recover without people working?

The following was borrowed from Rick Roper at GEM Corp. but I thought it makes a worthwhile point….

From time to time, news reporters have called the office and wanted comments about various mortgage news. And invariably, they usually get the quotes wrong. Nothing like being misquoted and wanting the news organization to publish a retraction. Or the news organization has a particular slant for how they want to present the news. Recently a Harley Bike Club member told of the story of a Harley biker riding by a zoo in Washington, DC when he sees a little girl leaning into the lion’s cage. Suddenly, the lion grabs her by the cuff of her jacket and tries to pull her inside to slaughter her, under the eyes of her screaming parents. The biker jumps off his Harley, runs to the cage and hits the lion square on the nose with a powerful punch. Whimpering from the pain the lion jumps back letting go of the girl, and the biker brings her to her terrified parents, who thank him endlessly. A reporter has watched the whole event. The reporter addressing the Harley rider says, “Sir, this was the most gallant and brave thing I’ve seen a man do in my whole life.” The Harley rider replies, “Why, it was nothing, really, the lion was behind bars. I just saw this little kid in danger and acted as I felt right.” The reporter says, “Well, I’ll make sure this won’t go unnoticed. I’m a journalist, you know, and tomorrow’s paper will have this story on the front page… So, what do you do for a living and what political affiliation do you have?” The biker replies, “I’m a U.S. Marine and a Republican.” The journalist leaves. The following morning the biker buys the paper to see if it indeed brings news of his actions, and reads, on the front page:
“U.S. MARINE ASSAULTS AFRICAN IMMIGRANT AND STEALS HIS LUNCH”

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

Tagged as: Arizona mortgage rates, Foreclosure information, Your Way Home AZ update