Archive for March, 2008
Schizo Market – UK Raises Mortgage Rates – US Drops them
If you thought the mortgage industry was crazy well you are probably right. You need look no further than a comparison between the United States and United Kingdom mortgage industry markets. In the United States mortgage rates dropped slightly on 30 year fixed-rate mortgages last week coming up after several drops in interest rates by the Federal Reserve to the bank that actually make the mortgages happen for consumers. After the feds dropped a total of about two points, borrowers are benefiting with about a half point mortgage rate dropped so far.
In the United Kingdom things are much different. Thanks there do not have the support of the central bank, and the credit crisis there is forcing banks to raise their mortgage interest rates to borrowers in order to deter people from taking mortgages out at all. If you are shopping for a new home in the United Kingdom and you have 10% or less to put down of the home, you will be looking at an interest rate above 7%. The banks don’t want to take any risk at all the United Kingdom right now especially as the number of banks face the potential of bankruptcy.
In the United States the Federal Reserve is loaning money directly to the investment houses that secure mortgages and it helped to bail out and raise caps for Fannie Mae. It remains to be seen which method will stand the test of time. The bail out method of the United States or the free-market method of United Kingdom. In some ways this is kind of like watching a schizophrenic on a diet, one minute eating cheeseburgers and the next minute they’re popping weight loss pills.
Related Stories to UK Rates Rising while US mortgage rates drop
‘Vicious cycle’ for borrowers as more mortgages are withdrawn
Independent, UK – 18 hours ago
But, last week, it finally upped its new mortgage rates. "We had to do this to protect service standards," said Mr Bullock. The mortgage-market is in …
Nationwide and Halifax put up mortgage rate to deter new customers Times Online
Nationwide ups its mortgage rates BBC News
Lowest house-price growth for 12 years Scotsman
ITN – Home Move
all 31 news articles »Mortgage Rate Falls Slightly
Wall Street Journal – Mar 27, 2008
The 30-year fixed-rate mortgage averaged 5.85% for the week ended Thursday, down from last week’s 5.87%. The mortgage averaged 6.16% a year ago. …
Some Hawaii mortgage rates slightly lower Bizjournals.com
all 56 news articles »Mortgage rates go through the roof
Glasgow Sunday Mail, UK – 10 hours ago
NEW housebuyers will pay up to £220 extra a year because of a sharp rise in mortgage rates over the last week. Ten days ago the annual cost of an average …Why Mortgage Rates Aren’t Lower
U.S. News & World Report, DC – Mar 28, 2008
After all, the average interest rate on a 30-year, fixed-rate mortgage has fallen by only about half a percentage point, to 5.85 percent, …
Only some will see benefits of Fed rate cuts Canton Repository (subscription)
Fed rate cuts not reaching mortgage market Providence Business News
Young home buyers should invest cautiously despite unusually low … CBC News
all 12 news articles »US mortgage rate freeze not good idea -OFHEO chief
Reuters – Mar 28, 2008
WASHINGTON (Reuters) – There are signs of improvement in US housing markets but the idea of freezing mortgage rates would be a mistake, the director of the …Mortgage famine hits building societies
This is Money, UK – 10 hours ago
We answer the question on everyone’s lips: The banks made it clear months ago that they would push up mortgage rates and cut lending as the global credit …
Building society assures customers ic Wales
all 2 news articles »International Forecaster March 2008 (#6) – Gold, Silver, Economy + … >
Gold Seek – 1 hour ago
Note how the Fed has cut a whopping 3% off its funds rate, yet mortgage rates have declined a quarter to a half of one percent. That shows you how useless …
Mortgage rates not dropping: Why not, and what does it mean for … Forex Factory
all 2 news articles »Families plead for rate relief
Melbourne Herald Sun, Australia – 2 hours ago
"The banks have been increasing their mortgage rates above the amount set by the Reserve Bank and there are now record numbers of Australians at risk of …
Debt starts to bite bottom line Sydney Morning Herald
Westpac joins NAB in variable hike The Australian
Oz buckles under rates pressure Daily Telegraph
Sydney Morning Herald – The Age
all 143 news articles »WBK – OTC:NABZY
Mortgage rates lifted as lenders feel pain
Financial Times, UK – Mar 27, 2008
Millions of home loan borrowers now face higher interest rates as banks pass on higher wholesale funding costs as conditions worsen in money markets. …Mortgage rates stabilizeINTEREST RATE ACTIVITY
Las Vegas Review – Journal, NV – Mar 29, 2008
By HOLDEN LEWIS Finally, a week without much change in fixed mortgage rates. The benchmark 30-year fixed-rate mortgage fell 3 basis points, to 5.95 percent, …
Great Time to Sell in Charlotte NC
I happen to be moving to the one area in the country that saw rising home prices in January, Charlotte, NC.
That is not exactly a good thing for me is I’m looking to buy a home in the area. Charlotte, North Carolina did not benefit from the rapid escalation in home prices during the housing boom but the prices there have gone up. I do see a number of houses on the market in Charlotte, North Carolina that seem to have inflated prices. And as the correction continues to go around the country, I’m going to wait and see a prices cracked in Charlotte before I buy. The last thing I want to do is buy a home in Charlotte only to see 10 to 20% of the value knocked off of it after the fact.
If you read any of the news reports coming out of Charlotte and you believe the realtors Association (which I do not) then you would believe that people are snapping up houses in Charlotte, North Carolina. That could be, but I’m not exactly sure where they’re doing that because I see a lot of houses on the market there that have been sitting there for months. Normally it would be a benefit to have your house sales price holds steady, but given the uncertainty in the market I suspect that there may be many other buyers looking at the Charlotte area and waiting for the correction to actually hit and so the January numbers could actually hurt Charlotte over the next few months as it possibly experiences a delayed curve in the housing correction.
If I am wrong, then this could be an excellent time to sell your house and Charlotte because you may not see that value for a decade.
These may be crazy times in the real estate market, but that doesn’t mean that you have to make crazy decisions. Take your time, figure out what is going on with your own eyes and information, question what you read in the media and look at the sources for those articles and then act when appropriate.
In the meantime, this weekend I’m working on my own house in the Atlanta area. This was another one of those fabled areas it was not supposed to experience any downturn when the real estate correction came. I didn’t trust that either, and I think I was right to not trust that sentiment as I have seen a number of corrections in the Atlanta area. I’ve been sitting on my house all winter and I’ll probably continue to sit on it through the summer before actually list it. If the market doesn’t correct, in interest rates go through the roof because of inflation, then I’ll just rent the house out. The meantime I’m putting some Baldwin knobs on the cabinets to make them look little fancier in case I do sell it.
Sources and Related Stories about Charlotte, NC home price hold out in Real Estate
Real estate in record freefall
London Free Press, Canada – Mar 26, 2008
Only Charlotte, NC, squeaked by as a gainer in the Case-Shiller index, with a 1.8 per cent rise in January compared to a year earlier. …Pro Step Marketing strategy results in new custom website
TransWorldNews (press release), GA – Mar 28, 2008
Pro Step Marketing, a real estate-focused marketing strategy, design and implementation firm, worked with Paul and Karen McPherson of Charlotte, NC to …Singing honors for 2 students
Charlotte Observer, NC – 11 hours ago
Catawba Valley Community College will offer two classes designed to meet annual continuing education requirements for real estate agents. …Forsite Development, Inc., closes on buildings in Gastonia, NC …
Carolina Newswire (press release), NC – Mar 27, 2008
Forsite Development, Inc. (www.forsiteinc.com), based in Charlotte, develops commercial real estate space, both office and industrial, throughout the …First American CoreLogic Releases January 2008 LoanPerformance …
FOXBusiness – Mar 28, 2008
"Twenty-eight states now show year-over-year real estate declines according to this latest LoanPerformance HPI release," said Damien Weldon, vice president, …FAF – OTC:CMTX
SABEW Announces Additional Winners in its 13th Annual Best in …
FOXBusiness – Mar 28, 2008
News-Press: "Southwest Florida real estate sellers beware" — James L. Martin, Erie (Pa.) Times-News: "Made in Mexico" Weekly Publications — Bryant Ruiz …Business Calendar
Winston-Salem Journal, NC – 12 hours ago
The Piedmont Club Real Estate Council meets the second Friday of each month at 11:30 am for lunch at the Piedmont Club, 19th floor of the BB&T Financial …Real Estate Agent Puts Allen Tate on the Map in South Charlotte …
PR Web (press release), WA – Mar 19, 2008
Charlotte, NC (PRWEB) March 17, 2008 — The #1 real estate company in Charlotte finally has a top agent in Steele Creek. Realtor Brian Wade is establishing …More glum housing data
Minneapolis Star Tribune (subscription), MN – Mar 25, 2008
Foreclosures affected about 0.3 percent of the mortgages in the Twin Cities area, said First American CoreLogic Inc., a real estate information and …Local home-price drop 4th-worst in metro survey
San Diego Union Tribune, United States – Mar 26, 2008
Peter Dennehy, senior vice president of the San Diego-based Sullivan Group Real Estate Advisors, said the prices dropped the most in the lowest-priced …
Seven Tips to Reduce College Borrowing Costs
US News and World Report offers up a good list to help reduce your borrowing cost that we have paraphrased below.
1) Borrow as little as possible.
2) Check your future salary
to see what you can afford in the future.3) Shop around for the lowest rates.
4) Fill out the FAFSA to qualify for low-cost federal student loans.
5) Don’t charge tuition or other school expenses to your credit card.
6) Consider nonprofits offering access to loans such as MOHELA and NHHEAF have offered lower-cost loans. Graduate Leverage, a cooperative, is also offering competitive terms.
7) See if you can qualify for one of the many loan repayment or loan forgiveness programs, so your employer—not you—pays off your student debts.
How to Reduce Your Borrowing Costs – US News and World Report
In addition to these tips, its also very wise to do some paid work while you are in school. It generates income to help keep your debt and borrowing down while building up your experience. Many companies are having a very difficult time finding students to work for paid coops these days. The work may not always be glamorous (that’s why its called work) but it can save you a fortune in interest and give you some great work and life experience rather than wasting money on funny t-shirts and concerts.
Student Loan Industry Shrinks by 3 Banks
Three banks pulled out of the Student Loan industry this week citing higher risks and more difficulty in making profits from dropping interest rates. M&T, HSBC and TCF Financial group, which represented about half a percent of the 2006 100 billion dollar plus student loan market are packing it in.
M&T spokesman Phil Hosmer said two factors drove the Buffalo-based bank’s decision: difficulty in reselling the loans on the securities market, and reduction from $28 billion to $4 billion in the federal subsidy for the loans. Interest rates, set by the federal government, also are set to fall from 6.8 percent to 3.4 percent in 2011.
“It makes it more difficult to make a profit and reduce your risk,” Hosmer said.
3 banks give up on student loans — Page 1 — Times Union – Albany NY
The inability to securitize student loans definitely spells a problem for potential borrowers and students as well as people looking to refinance their existing student loans. Mix into this the problems with the mortgage industry and if people start defaulting on mortgages, their student loans may not be far behind. Many people will definitely watching this market for signs of another crisis the early exit of some banks may just be a mattress topper hiding a problems underneath.
Gold's Impact on your Ability to buy a Home
Gold hit $1009 an ounce this week. Right now the dollar is dropping in value around the world and the dollar value of gold is going up. If you are trying to buy a house right now, inflation could begin to be an issue on two levels.
The first level is that a house is a real physical thing. It is ‘real’ estate or ‘real’ property. Money, cash is just an item with a perceived value. When you try to buy real stuff with something of diminishing perceived value, you have to spend more and more of the money to actually buy something.
That takes a toll on banks as well. Interest rates are set according to a banks need to make a profit on loans, to cover risk on loans and to fight inflation. If inflation increases (as the value of the dollar decreases) then banks will have no choice but to increase mortgage interest rates. Otherwise when you repay a loan to a bank, you are essentially paying them less in real money than what you borrowed because the money they gave you at the origination was worth something and that same amount of money when repaid is worth less.
There is however something that you might have that may be worth more in cash now than when you originally bought it. That something is gold. If you bought a gold ring a few years ago when gold was selling for $380 an ounce, that ring could be worth three times as much now. If you bought it a couple years ago when gold was worth about $600 an ounce it could be worth twice as much very soon.
If you are looking to buy a home, (something real and useful) you might be able to come up with the down payment by selling some gold, possibly jewelry or other items. Similarly, you could use your jewelry to pay off your existing debt, or buy anything that is something real whether you are upgrading your home with a small business phone system or something else that you might be able to use earn more money, to earn a living or to survive a recession while inflation attacks your cash.
The Federal Reserves $200 Billion Non-Bailout
The Federal Reserve this week unleashed a $200 billion non bailout initiative. They are essentially allowing investors to take mortgage backed securities and swap them for US treasuries.
The Fed said in a statement in Washington it plans to make up to $200 billion available through weekly auctions. Officials told reporters on condition of anonymity that the program may be increased as needed. The Fed coordinated the effort with central banks in Europe and Canada, which plan to inject up to $45 billion into their banking systems.
You might think of it like a collateral swap. Say your teenager has an old beater of a car. Maybe they bought it from a junk yard for $800 and fixed it up with $200 in labor and 2 months of elbow grease and amazingly the car runs and even passed inspection so that it can be licensed and insured.
Your teenager then comes to you and tells you that they need $4000 in cash for some un-related purpose. You agree to loan them the money and accept the title to their junker car as collateral. Now, unfortunately for you, you have 10 other teenagers in need of money too (maybe you adopted or something). You can’t keep making collateral loans on junker cars. So you take your loan document and you swap it out with the Feds for a loan document from the US government on US treasuries.
Your teenager now has to repay the government and the government has to repay you. Odds are (theoretically) that the government will be able to pay you back in dollars with less risk than your teenager.
Sound too good to be true?
Well, it is kind of. The risk here is that the when the US government pays you back, they pay you in dollars. If you are watching the currency market lately, the dollar is rapidly approaching the point where it will be worthless. Don’t believe me, then let me know how many gallons of gas you can buy with a dollar today and how many gallons you will be able to buy with a dollar paid back to you by the treasury when ever they actually pay you. I’m guessing that unless the government doesn’t fix its finances with something akin to a massive financial colon cleanseing process, you will be better off burning those dollars than trying to exchange them for gasoline to burn in your own car.
Buyers Need to Focus on Foreclosures
Let’s get real about our home investments for a second. There are several trends that you need to not only know but appreciate as you make your home purchasing decisions this years:
- The Real Estate Market has been inflated
- Mortgage Lenders have engaged in fraud that increased the real estate market inflation
- Builders have also served to inflate the market
- Both the mortgage market and real estate market are in correction now
Here’s what these trends mean for you. The prices have been high, even too high and that put money in the pockets of builders and mortgage bankers and brokers. That money came from people just like you. Now, if you want to give your money away for nothing, then you are wasting your time reading this column. Feel free to click away now.
The correction is taking place today and on the home shopping front the best place to find homes that have had their prices corrected the most is in the foreclosure market. These homes have corrected significantly and some may even be value buys. Why would you pay say 40% more for the same house through normal channels when you can possibly save $80,000 on a home that is in foreclosure.
Here are just a few examples in one of those counties that used to be one of the most inflated markets in the country, southern California.
You can find recent san diego foreclosure listings to review or la jolla foreclosure listings to review. and information from any realtor, but in doing so you essentially have to set up a relationship with that realtor. That’s fine, but in the world of the internet, if you can do the research before connecting to a realtor so much the better.
Foreclosure listings work differently than normal real estate listings and the rules are different across the country. Typically, you do not get the same time period to review a home or even have it inspected. These properties are typically sold ‘as is’. That means you could end up with a lemon. You should approach these homes a potential money pits or homes that are only partially constructed. You may even need to take out a construction loan and fix the place up before you can get real financing. The point is, do not expect to go in and make a bunch of demands on the seller (the bank). You are buying the house at what should be bottom basement prices. This purchase should be all about the price. If the price isn’t a sweet heart of a deal, then go somewhere else. DO NOT fall in love with a foreclosure home when you are buying it.
If you can not approach a foreclosure property with this type of discipline, then you will be better off paying the 40% premium and looking for normal real estate listings in San Diego to buy.
Posted in financing, foreclosure, Home Improvements, real estate, Real Estate Agents | 
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Home Loan Focus adds Finance Calculation Tools
We previously tried adding some credit and finance calculation tools a couple weeks back. The tools were sponsored by credit companies, and they did not deliver what we were looking for. You’ve probably seen teaser calculation tools in the past. They ask you for some information to calculate a new payment or what if scenario on your finances and before you know it, you have no answer and they are sending your personal information off like a loan application. Well, we think that is bogus.
If you want to check out our sponsors, more power to you, but we want you to do that with your eyes wide open and preferably when you have all the facts in front of you and all your ducks in a row. When you negotiate a new mortgage or even a refinance, you need to have everything in your finances straight and tight if you are going to actually get the highest rate possible.
With that in mind we have established several tools to help you with this without having to send any information at all to a sponsor. If you have ideas about additional tools that we should add, please let us know and we will try and develop it. The bottom line is that we want you prepared to get the best deal no matter if you are financing a jumbo mortgage in San Francisco, looking into the real estate Branson market for a possible relocation, or refinancing credit cards into a home equity loan (not a good time to do that in general.)
Posted in Credit Improvement, financing, refinancing, Renting v Buying, Saving Money, Solutions for Mortgage Crisis |
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Inflation Could Turn Us into a Rent-That-House Society
As the real estate market starts to settle out, and as inflation starts to enter into the picture, it is very likely that America will see a period in real estate very similar to what we experienced in the 70s and early 80s. Fewer people will own their own home and more people will write.
The equation has not changed in that there are still many many people looking for places to live. The population across United States is expected to increase by 100 million people over the next 15 to 20 years. Those people have to live somewhere in those places do not exist today.
Some people would point to the Federal Reserve and state that the Federal Reserve is lowering interest rates and that mortgage rates should follow soon. The problem is that inflation has entered into the equation. The Federal Reserve cannot control inflation especially when the United States has a massive debt that is building on a regular basis. That inflation essentially adds percentage points to the real mortgage rates banks can offer. Let’s say that the Federal Reserve sets rates at 3%, and inflation is running at 3%, and banks need to make a profit of 1 1/2 percent to keep operations going in to lure in investors to buy securitized mortgages. That would mean that the real interest rate for a person with excellent credit would start off at 7 1/2 percent. If that person has less than stellar credit the interest rate is going to be even higher.
If inflation increases, then interest rates in total will also go up no matter what the Federal Reserve does. Now as those interest rates go up that points towards the need for many people looking for a home to live in to consider renting. It also means that people that are sitting on homes today with low interest rates are likely to become landlords very soon. If they are locked into an interest rate is lower than what can be had on the market, they may not make their money back in equity in the house but they could make it back in rent. In doing that we are going to see a nation change from being a flip that house nation into a rent that house, sublet the apartment, where sublet that room.
For a similar example, you can look at what is going on in city centers around the US or even in the United Kingdom or Europe. We all face the same inflation and the same rising population centers. All those baby Emily crib sets have to go somewhere.
Posted in Home Sales Market News, mortgage system pitfalls, mortgages, Renting v Buying |
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3 Million New College Grads Facing Job Search During Recession
Below we’ve pulled together a series of video news articles. These are stories about potential of a coming recession and the impact of the recession could have on people just like you. As these things go, recessions cannot be determined until after they’ve happened. Many people did not start to feel the impact of a recession until it’s well under way. This particular recession that we may be facing a have been in part triggered by the subprime mortgage scandals. That combined with the bursting of the real estate bubble, the war in Iraq in general instability around the world are all fueling the fire.
It is been almost 20 years since the US went through the last recession, and many people are not experienced with dealing with times are troubled in this way. If we are headed into a recession, now is the time to make adjustments in your lifestyle, your finances and your priorities.
Many different people find different ways to handle the recession. This might come in the form of cost cutting or efforts to increase their income. Some people will lose their jobs, and some of those people have to find entirely new careers and skill sets to win those careers. When the Internet bubble broke a few years back, many salaried employees took their savings and went to school to get MBA’s and advanced degrees hoping to weather the storm and school. There’s no perfect solution are fit for everyone, and hopefully if this recession is mild we will have to resort to grilling up squirrels on billet grilles in a college dorm room somewhere like former presidential hopeful Mike Huckabee.
The important thing to consider is what you will do, how you will manage times when the dollar does not buy as much as it did whether that’s milk or gas or clothing or even your house payment.