Mortgage Rate Outlook
Sep. 3, 2010 -- The economic news has certainly been nothing to cheer about over the last month or two, but at least some important indicators don't suggest that any double-dip recession is imminent.
HSH's overall mortgage monitor -- our weekly Fixed-Rate Mortgage Indicator (FRMI) -- dipped back by another two basis points, closing our survey at an average 4.76%, a new low. The FRMI includes rates for conforming, jumbo, and most recently the GSE's "high-limit" conforming products and so covers much of the mortgage-borrowing public. For borrowers who don't need a long-term, fixed rate mortgages, a viable choice might be a Hybrid 5/1 ARM, which ended the week at an unchanged average rate of 3.73%.
The Federal Reserve released the minutes of its August 10 meeting, and most clearly identified perhaps the chief reason the economy cannot seem to get out of its own way, economic "stimulus" and low rates or not. Whether you're a consumer or run a business, it all comes down to confidence.
From the minutes: "A number of participants reported that business contacts again indicated that uncertainty about future taxes, regulations, and health-care costs made them reluctant to expand their workforces. Instead, businesses had continued to meet growth in demand for their products largely through productivity gains and by increasing existing employees' hours.
"Consumers and businesses have been reluctant to spend or borrow money, and each are expressions of confidence about future prospects. By most accounts, the Fed has done a good job of getting low interest rates into the marketplace -- but if no one wants to (or is able to) borrow, the economic benefit is minimal.
Personal income growth has been meager, but households are using what little there is of it to buttress
savings and pay off debt. Incomes rose by0.2% in July, a little less than expected, with wages increasing 0.3%. For the first time in a couple of months, personal spending rose more than incomes, rising by 0.4%, so the nation's saving rate eased to 5.9% for the month.
If we haven't been before, we are truly at a crossroads for the recovery. Low rates exist, benefiting the limited number of those who want to (or can) borrow, but hurting those who save, and the stimulative effect even lower rates is uncertain.
The same report shows the median price in Santa Clara County was up 41.6% from the trough. C.A.R also reported the median price decrease from the peak. In the San Francisco Bay Area, the median price was off 28.9% from the peak month of May 2007.
For Santa Clara County, the median price was off 27.5% from the peak month of April 2007.
For Market Reports City by City please click here.
Interested in having property listings in Santa Cruz emailed to you please click here.
To search for Santa Cruz, Monterey Bay properties go to, www.SusanGrant.biz, www.SantaCruzAvoidForeclosure.com or contact Susan Grant directly at (831) 247-9140.
DRE#01331769
Comments(1)