Half of all U.S. households can now afford today's median home value of $200,000 according to figures released by the National Association of Homebuilders. This is great news for the economy and for a hopeful recovery one of the worst housing slumps on record.
Signs of a housing recovery are everywhere, from mortgage rates at their lowest point ever to the upswing in existing home sales and even an 11 percent increase in housing permits for the month of February. This translates into a 2009 spring market that is poised to produce positive sales numbers and may even mark an end to slipping home values.
"With affordability up dramatically, reports from our builders in the field indicate that foot traffic in new homes is on the rise and consumer interest is increasing with each passing day. These are encouraging signs that the housing market may be finally reaching a bottom," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla.
Data from the Census Bureau comparing February 2007 to February 2009 shows that home buyers today can typically purchase a home for $20,000 less and save nearly $500 a month on a mortgage. The data also shows that 55.4 million Americans can now afford to own a home, that is a huge increase from 38.4 million just two years ago.
"That's an increase of 17 million households from conditions just two years ago and the best housing affordability number we have seen in years," said Robson. "We are now seeing the first signs that buyers are returning to the marketplace."
The $8,000 homebuyer tax credit has done its job by sparking an interest in home buying. During February and March nearly 1.5 million people looked deeper into the homebuyer tax credit by visiting the National Association of Realtors consumer website at www.federalhousingtaxcredit.com.
"With home values in many markets at the lowest level since 2003, an $8,000 tax credit available to first-time home buyers, fixed-rate mortgages under 5 percent, and an outstanding selection of homes to choose from, buyers are starting to recognize that this has the makings for a one-time opportunity to break into the market," said Robson.
Is now the right time for you to purchase a home? The first thing you should do before finding your dream home is to talk to a finance and mortgage professional first. This will allow you to determine how much you can afford and more importantly save you time when looking for a home.
For more on mortgage rates visit Future Planning Financial at www.fpf-direct.com.
Fixed mortgage rates ticked up slightly from last weeks averages according to the latest survey released by Zillow Mortgage Marketplace. However, folks in Georgia are still able to receive a 30 year fixed mortgage rate below 5 percent.
On a national basis, the 30 year fixed mortgage rate increased slightly from 5.06 percent to a current average of 5.09 percent. The 15 year fixed mortgage rate also saw a slight increase week over week from an average of 4.73 percent to a current average of 4.80 percent.
The 5 year adjustable mortgage rate, the only ARM that Zillow Mortgage Marketplace tracks, declined by 0.03 percent to a current average of 4.66 percent.
On a state by state basis, Georgia recorded the lowest 30 year fixed mortgage rate at 4.99 percent followed by Texas at 5.05 percent and California and Florida at 5.06 percent. Ohio recorded the highest average for a 30 year fixed mortgage rate at 5.24 percent followed by Illinois at 5.16 percent and New York at 5.15 percent.
Be sure to visit Future Planning Financial at www.fpf-direct.com for more mortgage news and local mortgage rates.
President Barack Obama sat down with CEO's from Bank of America, Bank of New York Mellon, JPMorgan Chase, Goldman Sachs and U.S. Bancorp today to discuss the current economic crisis.
In a press release, Secretary Robert Gibbs noted that Obama was pleased with the meeting stating Obama as saying "they had a good, productive and frank conversation." The main goal of the meeting was to let the bankers know that the doors to the White House are always open to them for discussions and critique on ways the White House should go forth on handling the economic crisis.
Reactions from CEO's as they left the White House Friday afternoon was that they felt more confidence in where the markets are heading today and that President Obama is working diligently on behalf of American citizens, as the President made it well known to the bankers that Americans are mad. Obama also emphasized that Wall Street needs Main Street and Main Street needs Wall Street, all of the bankers agreed and recognized that we are all in this together.
You can watch the videos from Bloomberg by visiting Future Planning Financial at www.fpf-direct.com.
The 30 year fixed mortgage rate fell, week over week, from 4.89 percent to an average contract rate of 4.63 percent. The 4.63 percent 30 year fixed rate is the lowest recorded by the Mortgage Bankers Association since it began its weekly survey in 1990.
The 15 year fixed mortgage rate also fell, week over week, from 4.52 percent to an average contract rate of 4.52 percent.
Finally the one year adjustable mortgage rates, the only rate to increase, jumped up from 6.20 percent to an average contract rate of 6.22 percent.
Mortgage applications surged 32.2 percent as mortgage rates have become very beneficial for homeowners and homebuyers. The refinance index alone increased an amazing 41.5 percent while the purchase index increased a slight 3.9 percent.
Of all the mortgage applications submitted over the past week, 78.5 percent of those applications were from homeowners looking to refinance their homes and take advantage of saving hundreds if not thousands of dollars on their home loans.
The Troubled Asset Relief Program (TARP) has surpassed the 100 bank and institution bailout point totaling $167,756,852,000 in taxpayer money under the Capital Purchase Program according to the December 16th, 2008 Transaction Report by the Treasury.
The first bailout recorded on the Capital Purchase Program was on October 28, 2008 for a total of $15,000,000,000 awarded to Bank of America. On that same day Citigroup, JP Morgan Chase and Wells Fargo have recorded the largest single transaction of $25,000,000,000. Since then the Treasury has eased its spending somewhat with the largest single transaction for the month of December in the amount of $935,000,000 to Popular, Inc. of San Juan Puerto Rico.
The Capital Purchase Program is equivalent to investing in the stock market. What happens is the Treasury purchases stock in these companies, in return this frees up cash for these institutions to lend to the general public on mortgage loans, car loan etc. If the Treasury places money into the right institutions there is a very good chance your money would turn a profit for the government. Money placed in the wrong institutions is basically chalked up as a loss.
However, there seems to be consensuses out there that these institutions are hoarding the cash for the Capital Purchase Program as the market continue to deteriorate. In the meantime the Treasury continues to put pressure on these institutions to make new loans that would in return revive the housing market.
The only problem right now is home values continue to deteriorate at a rapid pace; you can almost compare it to the drop in value of a new car after you drive it off the lot. This has led to The National Association of Realtors and National Association of Home Builders to push Congress into approving another stimulus package, dubbed "Fix Housing First", that would give homebuyers tax incentives and subsidized mortgage rates, as low as 2.99 percent 30 year fixed, to help stabilize home values.
It could be speculation but the next round of foreclosures may be on the horizon, and it has already been dubbed the Option Arm round. 60 minutes did a piece on how Option Arms are about to reset and many homeowners with these loans are having troubles paying their 1 percent teaser rate which will reset at a much higher rate.
It may not be as much as banks hoarding cash as they are preparing to hold the cards for the next round of bailouts that will be facing the U.S. housing market. Only time will be able to tell if the banks receiving and hoarding funds from the Capital Purchase Program are doing so wisely or selfishly.
The 30 year fixed mortgage rate is pushing closer to the Treasury's 4.5 percent mark in the latest reading. With the Federal Reserve expected to cut rates will it have a negative impact on mortgage rates?
According to Zillow Mortgage Marketplace 30 fixed mortgage rates fell 0.19 percent from last week to an average of 5.15 percent. The 15 year fixed mortgage rate also fell week over week and now averages an even 5 percent.
The 5 year adjustable mortgage rate showed a slight increase week over week of 0.01 percent to average 5.94 percent. With expectations of a Fed rate cut of short term rates however, the 5 year arm may show improvement over the coming days and weeks.
Speculation is that the Federal Reserve is going to be cutting interest rates by at least 0.50 percent. If that happens, the key interest rate will be sitting at 0.50 percent, the lowest since the 60s.
The downside to an interest rate cut is that investors will begin to pull their money out of bonds and place it into other investments. What this does is drive long term mortgage rates up as mortgage rates are tied into the bond market. When bonds go down, mortgage rates go up and vice versa.
Keep an eye on mortgage rates and the Fed rate cut by visiting Future Planning Financial at www.fpf-direct.com.
A “heightened risk that the interest of the government and taxpayers may not be adequately protected,” is what the Government Accountability Office stated about the TARP program.
The TARP program which was designed by the Treasury to purchase toxic mortgage loans quickly switched over into a program called the Capital Purchase Program (CPP) which is now used to inject capital into banks and other financial institutions.
Since the $700 billion TARP program began, $195 billion has been disbursed to 87 institutions through the CPP program. Oversight of this money once it leaves the Treasury is virtually nonexistent according to the report by the GAO.
Currently there are no requirements that institutions receiving funds from the government track or report how the funds are being used. The requirement of the Treasury is for the institutions receiving the funds are to increase the flow of credit.
Since the Treasury has not yet determined how it will monitor compliance with executive compensation or any other compliances or requirements, the Treasury’s ability to ensure accountability of the institutions receiving your money is very limited.
In response to the GAO report released today, Interim Assistant Secretary for Financial Stability Neel Kashkari said “The GAO report is just one example of our compliance with the tough oversight Congress has appropriately established over the TARP.” It may be that Congress’s oversight of the TARP program is tough but the Treasury’s oversight of your money to these institutions is rather pathetic.
Also disturbing is that the Treasury has not turned down one institution that has applied for the TARP program. Instead banks and institutions who appear unlikely to win approval are encouraged to withdraw from the process. Without knowing which financial institutions, if any, have been turned away from the capital purchase program -- and why -- taxpayers have no way to assess whether their money is being directed in the most effective manner.
The latest data from the OCC's Mortgage Metrics shows a disturbing trend of homeowners re-defaulting on their mortgages after a modification loan has been set up.
After 90 days the number of re-defaults is at 36 percent, 53 percent after 6 months and 58 percent after eight months. This is a disturbing report that may have the loan modification programs undergoing major changes, which may make it very difficult to get a modification loan.
So why haven't loan modifications been working? I believe the truth to be that many Americans are already way over extended and a simple modification that saves $250 a month just is not going to cut it. Granted $250 in monthly savings is great but that savings is being offset with rising energy and food cost, thank God gas prices came down.
So if you are looking for a loan modification program to help save your home there are other important steps you need to take to ensure your financial stability. First of all, get rid of your credit card debt and once you do get rid of it, dont go on a spending spree. Save your credit cards for emergency use only, and christmas presents are not an emergency.
Second, cut back on daily spending such as that morning cup of coffee at your favorite coffee shop. It may sound like pennies a day but you never know what that money could do for you after a month or year of savings.
Finally, start saving even if it is putting money away in the mattress as many Americans have lost faith in the banking system. It's time to simplify your life and your daily spending in order to come out ahead in this economy when it finally does turn around.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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