Utah Cribs » Interest Rates

Economic Review

utahcribs — Mon, 10 Oct 2011 22:43:18 +0000

The dominant theme for the third quarter was flight to safety, with bonds generally rising and stocks falling sharply. In an environment marked by particular concern about the Eurozone, both the US dollar and Japanese yen were sought as safe havens by investors.

as of September 30, 2011

Economic

Review

Most US bond indexes delivered positive numbers, with results ranging from approximately +3 to +6%. Notably, long-term US Treasuries benefited handsomely from the implementation of Operation Twist, the Federal Reserve’s program to sell short-term and buy long-term government debt.

Within US equities, the typically riskier small caps were down more than large caps. As well, international equities, encompassing emerging and developed markets, underperformed the US market. While the MSCI All Country World ex-US Index retreated -19.78% for the quarter, the drop in the US S&P 500 Total Return Index was smaller at -13.87%.

Commodities and real estate also lost ground. The Dow Jones UBS Commodity Total Return Index ended the quarter down -11.33%, while the FTSE NAREIT All Equity REITs Total Return Index fell -15.07%.

Challenges Facing Europe

Much of the risk aversion in the equity market can be traced to continuing economic challenges in Europe. In particular, Greek default remains a possibility; Spain and Italy are both financially strained; the European financial sector is under stress; and European companies in general are warning of “shortfalls.”1

1 Ewen Cameron Watt, et al, “Recalibrating Investment Strategies After a Summer of Volatility,” BlackRock Special Market Update, September 12, 2011.

2 Bob Doll, et al, “What’s Next for the Global Markets?” BlackRock Special Market Update, September 27, 2011.

3 Robert Scherfke, PhD, “Watch the World: Markets Versus Policy,” Wellington Management Viewpoints, September 2011.

These hurdles, however, are not insurmountable. The European Union may successfully expand the available capital needed to stabilize various countries and put plans in place that could support growth. 2 And when assessing potential outcomes in Europe, it is important to keep in mind that “there is more room for monetary stimulus in Europe. The European Central Bank (ECB) actually raised rates [recently]… and it could certainly cut rates by quite a lot.”3

Grounds for Optimism in Asia and the US

There are also bright spots in both Asia and the US to consider. Despite signs of slowing in global growth, which can threaten exports, “Asia still has much more policy flexibility than the developed world.” And

Mortgage Rates Move Higher again…

utahcribs — Mon, 13 Sep 2010 15:21:05 +0000

Mortgage Rates Move Higher Again

Highlights

Average 30 yr fixed rate

Stocks (Weekly)

	Weekly Jobless Claims fell to the lowest level since the week ending July 10
	The July Trade Balance was -$42.8 billion, from -$49.9 billion in June
	The Beige Book reported that the economy is still growing, but with “widespread signs of deceleration”
	The Fed’s Fisher expressed reluctance to ease monetary policy until fiscal policy becomes clearer

This week: +0.05%

Dow: 10,450 +50

Last week: +0.05%

NASDAQ: 2,240 +15

Stronger than expected economic data pushed mortgage rates a little higher again last week. Following a string of weekly drops since the middle of June, mortgage rates have now risen for two straight weeks.

Over the summer, mortgage rates have fallen substantially. Weaker than expected economic reports and the debt crisis in smaller European countries caused investors to reduce their forecasts for economic growth and produced a flight to the relative safety of government guaranteed bonds, resulting in the lowest mortgage rates in decades. Now, however, some investors are asking whether they can fall further. Weaker than average economic growth, low inflation, and an “unusually uncertain” economic outlook still make the current environment supportive of low mortgage rates, but some investors feel that these factors have been fully “priced in.” These investors feel that economic growth must falter significantly for mortgage rates to drop much from here.

Also contributing to the fall in rates was the possibility that the government would take action which would push mortgage rates lower. The political climate has turned less favorable for this, though. Growing opposition to fiscal spending of any type has reduced the chances for additional government support for the housing market and mortgage rates.

The most significant economic data this week will be the monthly inflation reports. The Producer Price Index (PPI) focuses on the increase in prices of “intermediate” goods used by companies to produce finished products and will come out on Thursday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Friday. CPI looks at the price change for those finished goods which are sold to consumers. In addition, Retail Sales, an important indicator of economic growth, will be released on Tuesday. Retail Sales account for about 70% of economic activity. Industrial Production, another important indicator of economic growth, is scheduled for Wednesday. Empire State, Import Prices, Consumer Sentiment and Philly Fed will round out the week.

Mortgage rates drop to new low of 4.57 pct. – Yahoo! News

utahcribs — Thu, 08 Jul 2010 15:33:46 +0000

NEW YORK – Mortgage rates fell for the second straight week to the lowest point in five decades. But many people either dont qualify for new mortgages or have already taken advantage of the low rates this year.As a result, the housing market and the broader economy may not benefit much from the lower rates.The average rate on a 30-year fixed mortgage dropped to 4.57 percent this week, mortgage company Freddie Mac reported Thursday. Thats down from the previous record low of 4.58 percent set last week.Its the lowest since Freddie Mac began tracking rates in 1971. The last time rates were lower was in the 1950s, when most long-term home loans lasted just 20 or 25 years.Rates have fallen over the past two months. Investors, concerned with the European debt crisis, have poured money into the safety of Treasury bonds. Treasury yields have fallen and so have mortgage rates, which tend to track yields on long-term Treasurys.However, low rates have yet to fuel home sales. The housing market has slowed since federal tax credits for homebuyers expired at the end of April. And the latest decline in mortgage rates is unlikely to boost the market.

via Mortgage rates drop to new low of 4.57 pct. – Yahoo! News.

Crazy, I can’t believe interest rates are this low! I am eating my own words, yes I was wrong. I thought for sure they couldn’t last this long. Now I am still under the impression, that it is not good as a whole for our economy to keep them to low, however for the average consumer this is great. Now obviously this doesn’t mean go out and by any old house. But, it does mean if you find a deal take advantage of it. Interest rates are at a all time low. What will Interest Rates do from here on into the future? Well apparently your guess is as good as mine. But. rest assured I will have my money on them going up soon.

Real Estate market update for Salt Lake City Real Estate..

utahcribs — Tue, 06 Jul 2010 17:01:11 +0000

It’s official — on July 2, a law was passed extending the closing date deadline for the Homebuyer Tax Credit Program. As a result, any buyer that signed a Purchase & Sale Agreement by April 30 has until September 30 to close.

The real estate market continues to rally — and interest rates on mortgages are extraordinarily low. As always, my goal is to provide updates and information that will add value to your business. It’s always a pleasure to help.

Sincerely,

Aaron Butler
aaron.butler@academy.cc

Weak Economic Growth Helps Mortgage Rates

Highlights

Average 30 yr fixed rate

Stocks (Weekly)

	The Unemployment Rate fell to the lowest level since July 2009
	The Core PCE inflation index rose at a tame 1.3% annual rate
	Consumer Confidence dropped to 53 from 63 last month
	The Fed’s Duke suggested that Fed MBS sales are a long way off

This week: -0.05%

Dow: 9,700 -400

Last week: -0.05%

NASDAQ: 2,100 -100

After dropping to the lowest level in decades last week, mortgage rates fallen even further. Weak economic data from the US, Europe, and China caused investors to question the pace of the global economic recovery. Slower economic growth was positive for mortgage rates and negative for the stock market.

Friday’s important Employment report reflected a slowly improving labor market. The economy lost -125K jobs in June, which was very close to expectations. The figures include a loss of -225K census workers who completed their temporary assignments. The private sector added 83K jobs. The Unemployment Rate fell to 9.5% from 9.7% in May, but this was due to 650K people leaving the labor force. The labor force consists of everyone in the US who either has a job or is looking for one, and the Unemployment Rate measures the percentage of the labor force without jobs.

There was mixed news in the housing sector last week. May Pending Home Sales declined 30% from April, as many buyers rushed to sign contracts ahead of the April 30 deadline to qualify for the home buyer tax credit. On a more positive note, the “close-by” deadline for the home buyer tax credit has been extended to September 30. Although the tax credit is not available for new contracts signed after April 30, extremely low mortgage rates and high home affordability levels make conditions very favorable for home purchases.

21 Things You Should Never Buy New – Yahoo! Finance

utahcribs — Tue, 29 Jun 2010 23:30:51 +0000

13. Houses: You’re typically able to get better and more features for your dollar when you purchase an older home rather than building new. Older houses were often constructed on bigger corner lots, and you also get architectural variety in your neighborhood if the houses were built or remodeled in different eras.

via 21 Things You Should Never Buy New – Yahoo! Finance.

I am always looking for interesting things in the news. This was a great article I think a lot of people need to read. Because I work with consumers directly I am constantly being bombarded with financial questions. And it really comes down to simple management. If you want me to dumb down our current economic situation it is actually quite simple. Money mangement! How hard is it to not buy something you can’t afford? Is that hard to understand? When you buy a home, you buy a home that you are qualified to purchase. Based on your income, your income to debt ratio. Now what is your income to debt ratio. For example, if you make $2000 a month, and you have a car payment and a credit card payment that equal $1000 a month. That would put you at 50%. That is what lenders are looking for.

Our Govt. hasn’t quite learned this principle yet either. So I guess I can’t be to surprised that the majority of the country doesn’t either..

UPDATE 1-Senate votes to extend US home tax credit deadline | Reuters

utahcribs — Thu, 17 Jun 2010 17:26:34 +0000

UPDATE 1-Senate votes to extend US home tax credit deadline | Reuters.

Well, lucky for all those that waited. Check out this interesting article about extending the Housing Tax Credit..

BONDS | GLOBAL MARKETS

June 16 (Reuters) – The U.S. Senate voted on Wednesday to give homebuyers another three months to settle on their contracts and take advantage of a popular tax credit that sparked a rush of activity in the housing market.

The Senate, with a vote of 60-37, accepted an amendment by Democratic Leader Harry Reid that extends the closing deadline to Sept. 30 for buyers who met the April 30 deadline to have a signed contract.

The current deadline requires buyers to close by June 30 to get the $8,000 tax credit for first-time homebuyers. Existing homeowners buying a new primary residence are eligible for a $6,500 credit.

Reid offered the measure as an amendment to a bill that would extend some popular business tax breaks and extend unemployment insurance benefits for jobless workers.

The proposal would not have a significant impact on future home sales as the extension would be only for home buyers who already had a contract in hand by April 30.

The popularity of the tax credit has caused some anxiety because settlement offices are inundated with buyers trying to close on transactions by the end of this month to get the tax break. (Reporting by Donna Smith; Editing by John O’Callaghan)

Stocks rise after pending home sales top forecasts

utahcribs — Wed, 02 Jun 2010 15:36:13 +0000

ksl.com – Stocks rise after pending home sales top forecasts.

So some good news, the stock market is reacting to the good news in the Real Estate market. I hve a hard time keeping the good/bad real estate news straight. It really doesn’t make sense to me sometimes.. And I am a local Real Estate Broker in Salt Lake City UTAH.. Real Estate is so volatile, just like every other aspect of the financial world we find ourselves in. Who’s to say its good or bad. The fact of the matter is, I am busier right now then I ever have been. Now, what do I think is going to happen in the coming months. Well bottom line, interest rates are at an all time low. Which I am amazed at, affordable housing I think has hit its bottom in Utah anyway.. However, the upper end homes along the wasatch front? That is a completely different beast. I think current owners of those types of properties are chasing the market down. They will see another 10% drop in home prices.. People just can’t afford those types of homes. So get ready for anoher roller coaster, becasue it is coming fast..

10 year T-bill yield rises to 4%…

brad — Mon, 05 Apr 2010 18:18:32 +0000

The big news today across the financial world is that the yield on 10 year Treasury bonds (also known as government debt) has risen to 4%. One of the reasons the yield rose is because there isn’t as much demand for goverment bonds right now. The lessened demand for this goverment debt was spurred on by the jobs that were created this past month, ‘stronger economic data’ according to the Wall street Journal, and the amount of debt the government has already issued to finance itself.

So what does all that hoopla and finance stuff mean to the everyday consumer??? It simply means you can expect interest rates on homes to be on the rise as well. Many economists and other experts have been predicting this for a long time, and now it appears it is happening. Mortgage rates are tied to the bond market, so expect mortgage rates to follow. So if you’re expecting rates to get even lower than they have been for the past year and a half, I believe you have waited too long.

Comments? Opinions? Let’s hear ‘em. Here’s the article:

http://www.reuters.com/article/idUSN0543127020100405

Fed weighs how and when to signal higher rates – Interest Rates on the Rise..

utahcribs — Tue, 16 Mar 2010 14:23:16 +0000

Fed weighs how and when to signal higher rates – Yahoo! News.

So maybe just the title of this article should scare the willies out of consumers? I really am so confused. I have received several emails over the last couple of days from potential buyers telling me they are going to wait unti the end of the year? Now all of them have different theories, but if they would just simply understand the subject of “interest Rates” maybe they would be singing a different tune?

Interest Rates are at an all time low! Yes, and housing prices have adjusted to be reasonable again! Yes! Now the affordability of money with the low interest rates is phenominal. And will not get any better. Take advantage of the cheap money while you can, they won’t last too much longer..

And why you are at it.. Go buy a deal.

Utah bank Foreclosure lists..

First Time Home Buyer Tax Credit.. Will they extend the tax credit?

Spencer Janke — Mon, 01 Mar 2010 17:21:04 +0000

So the ultimate question in the conomy right now is. Will they extend the tax credit? It is that time of year where law makers are making the round to determine if they will extend the tax credit? Now why would it be wise to do so? Well, first example would be what will happen if they don’t? Now, before I go any further I am actually of the opinion that they don’t extend the credit! Now many of you say, what the heck.. If you are in the Real Estate industry in Salt Lake City, why wouldn’t you want it? Well first of all I think people need to feel the urgency of the situation. People keep thinking oh we have the tax credit, interest rates are low, its just going to get better. I will wait and buy at the low.. I hear that every day.. So I think they should let the tax credit expire and see the people throughout the country freak out when they realize they missed out…

Now, that is just my opinion.. Love to hear your thoughts.

Will they extend the first time home buyer tax credit?