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Archive for September 2011

26
Sep

Rate Update and Market Watch

[We post a weekly column on local realtor Keith Byrd's Real Estate Blog in which we recap recent news of the economy, real estate, mortgage, and interest rates.  What follows is that column.]

Last week, the Federal Reserve announced an attempt to stimulate growth and lower interest rates.  The plan, dubbed “Operation Twist”, calls for the Fed to swap short-term bonds for long-term ones in its portfolio.  In theory, the “twist” should influence lower interest rates and long-term stability, thus incentivizing investment in riskier securities and boosting investor confidence.  Some analysts thought the action did not do enough to combat economic sluggishness, and others argued the Fed should stay on the sidelines. Few seem satisfied.

The market fell off a cliff last Wednesday after the announcement, which had an impact on mortgage interest rates. The drop was caused by an array of concerns about the global economy. Influences include: European debt concerns, a long term negative outlook by the Fed (recovery is years away), and concern about political deadlock in Washington.  In response to the nearly 400 point drop in the Dow, investors flocked to US treasury bonds as a safe haven. Commodities fell along with everything else (including gold), suggesting the last (and real) safe haven is government bonds.  As a result of demand, bond prices rose and yields fell.  The 10-year bond yield fell to 1.72, a new low.  The average rate on fixed loans has accordingly fallen, and the 30-year fixed hovered around 4.09 percent at the end of last week.

Today the market rallied. The Dow increased 272 points, and other major indexes also fared well (the S&P 500 and the Nasdaq both enjoyed solid gains). Once again, the market moved on news from Europe… this time on optimism that European leadership is putting together a Tarp-like bailout plan in case of emergency. Expect the same volatility (as we keep warning) as we move forward.

Some local news before we sign off: home sales grew 43 percent in San Luis Obispo County year-over-year in August. Over that same time, median overall home sales price fell 10.5 percent to $340,000.

Central Coast Lending offers the following rates: 30 Year Fixed 3.750% (3.758% APR), 15 Year Fixed 3.250% (3.231% APR), 30 Year Jumbo 3.750% (4.597% APR), 30-Year Fixed FHA 3.750% (4.597% APR), 30 Year Fixed VA 3.750%, (3.737% APR). Make sure to check in with our Facebook for daily rate updates in this volatile market, and our Blog for an in-depth discussion about market news.

26
Sep

Mortgage Matters 9/24/11

How close are we to powering our homes with wind? Bob Crizer and Eric Bergman of Crizer Wind Energy join the show to talk wind energy. We talk wind energy basics, renewable energy, and explore wind technology and its future.

 
19
Sep

Rate Update and Market News

[We post a weekly column on local realtor Keith Byrd's Real Estate Blog in which we recap recent news of the economy, real estate, mortgage, and interest rates.  What follows is that column.]

Wall Street logged five positive days last week before dropping over 100 points today on the back of Europe debt concerns (see Greece issues). We have written that sentence enough over the past few months to say with certainty – the stock market will not settle down until Europe can find some lasting resolution to its debt problems.

We have plenty of housing news in recent days, and a few important numbers that will be coming out this week. Mortgage default warnings jumped 33 percent in August, which is the largest monthly gain in 4 years. According to City analyst Josh Levin, there are 3.7 million homes in foreclosure above what is normal for a healthy market. Nearly one in four homes houses in the US are in some stage of foreclosure. The one positive of the increased foreclosures is that it will begin the process of clearing the market of extra supply.

Average home prices in California have fallen 4.2 percent from August 2010, down to $249,000 from $260,000. California is also struggling with unemployment. In August, the jobless rate increased to 12.1 percent, which is second highest in the nation behind Nevada.
This week we will see three important housing reports. We will see the National Association of Home Builders (NAHB) September index that details builder’s confidence of sales conditions. On Tuesday, we will see August housing starts and on Wednesday we will see August existing home sales. We say “important reports” but in all reality, the numbers are expected to be fairly low and simply a further indicator of market struggles. Despite record low interest rates, demand in the housing market just isn’t there.

Rates remain low and refinance activity is up accordingly. Here at Central Coast Lending we offer the 30-Year Fixed at 3.875% (4.028% APR) and the 15-Year Fixed at 3.250% (3.420% APR). Last year, we saw a drop in interest rates at this time before the winter season brought them back up. Keep checking in with our Facebook for daily rate updates and Blog for in depth information about important economic developments.

19
Sep

Mortgage Matters 9/17/11

 
12
Sep

Obama Announces Job Creation Plan, 10-Year Yield Hits 60-Year Low

[We post a weekly column on local realtor Keith Byrd's Real Estate Blog in which we recap recent news of the economy, real estate, mortgage, and interest rates.  What follows is that column.]

President Obama announced his job creation plan on Thursday, September 8. We have a rundown of the nuts and bolts of the plan on our blog, but generally the $447 billion plan touts $240 billion in employment-related tax relief. The plan will offer tax breaks to companies that hire new workers and cut payroll taxes in general for employers and employees alike. The plan would add additional spending for extending unemployment ($49 billion), modernizing schools ($30 billion), and investing in infrastructure ($50 billion). The President vowed to push the plan forward in the proceeding weeks and asked Congress to act swiftly. He also allowed that he would find cuts to offset the loss of revenue to keep from increasing the deficit even more.

Wall Street didn’t respond with enthusiasm. Instead, investors were preoccupied with European debt concerns. Another terrible Friday brought the Dow down just below 11,000. This comes a week after we ended the week with a 253 point drop in the Dow after an awful jobs report. This week?… a 300 point drop in the Dow, but this time over concern about European debt. This should show that poor domestic economic news is certainly not the sole driving force behind stock volatility. On a related note, the Euro fell against the dollar to a 6.5 month low (1.3656 EUR/USD).

As a result of the sell-off, the 10-Year Treasury yield fell to a 60-Year low as investors remain cautious. This sharp drop could yield even lower interest rates, which have already been bordering on 50-year lows, but banks don’t seem to be in a rush to lower anything. Rates are low as is, banks are inundated with business, and as such have little incentive to strip away the extra profits to keep in line with the dropping 10-Year yield.

Here at Central Coast Lending we offer the 30-Year Fixed at 3.875% (4.028% APR) and the 15-Year Fixed at 3.250% (3.420% APR). These have been steady for over 3 weeks now and should only drop more given the opportunity. Keep checking in with our Facebook for daily rate updates and Blog for more information.

5
Sep

Rate Update and Market Watch

[We post a weekly column on local realtor Keith Byrd's Real Estate Blog in which we recap recent news of the economy, real estate, mortgage, and interest rates.  What follows is that column.]

Well, that was an eventful Friday. After a better than expected manufacturing report and stock gains throughout the week, the market tanked after an absolutely disastrous jobs report. Economists had already expected the August jobs report to be weak, forecasting around 75,000 jobs added, down from July numbers. The real numbers were worse.

The United States had a net of zero non-farm jobs added in August, and unemployment remained at 9.1%.

The major US stock indexes dropped to erase gains from earlier sessions, and turn negative for the week. The Dow fell 253.31 points to settle at 11,240.26 and the Nasdaq (-65.71) and S&P 500 (-30.45) also saw 2 percent dips. Poor news out of Europe certainly did not help the session, but the jobs report took center stage.

As a result of this movement, we have seen two developments that should keep interests rates low for the foreseeable future.  As money left stocks, investors flooded to US Treasury bonds. The 10-Year rose to 101.28 (+1.32) and the 30-Year jumped to 108.46 after a hefty 3.73 rise in price. As price increases, yields have dropped. The 10-Year yield, which tracks for mortgage interest rates, is below 2 percent (1.98). We have already seen interest rates drop recently, even hitting 40-year lows last week, and this flight to the bond market could bring rates even lower.  At Central Coast Lending, we were able to hold our 30-Year at 3.875% (4.028% APR) for the week and our 15-Year at 3.250% (3.430% APR).

The Fed is expected to respond to recession fears with a move that has been called an “Operation Twist.”  In this plan, the Fed would purchase longer-dated Treasury Bills and sell short-dated Treasury Bills in an attempt to keep interest rates low long term to give investors and corporations confidence. The move does not affect the money supply and does not amount to QE3.

In a final piece of big news before the weekend, the US has sued 17 major banks over selling bonds backed by subprime mortgages that should not have been put into securities. The move was unexpected on the market and caused an immediate drop in financials.

For updates on these developments next week, monitor our Facebook for the day-to-day news and our Blog for in-depth analysis.

5
Sep

Mortgage Matters 9/3/11