Michael Cordle
Mortgage Consultant
The Real Estate ReportNovember 11, 2008
• Economic Commentary
• Weekly Interest Rate Overview• Real Estate News
Still the same quality mortgage services & association with Clarion Mortgage Capital, we are now known as Strategic Equity & Debt Advisors, LLC.
At Strategic Equity & Debt Advisors, we help our clients successfully manage their home financing. In addition to performing the duties of a traditional loan originator, our role is to help integrate the loan that you select into your overall long and short-term financial and investment plan to increase liquidity, safety, rate of return, and tax deductions.
Strategic Equity &
Debt Advisors, LLC
225 Union Blvd., Ste. 150
Lakewood, CO 80228
303.670.3996 Office
303.600.9871 Secure Fax
CLICK FOR WEB SITE
E-MAIL ME
Happy Veteran's Day
This has been a very tough year for many Americans. When we look at our plight and what has happened this year–let us not forget about those who are making more significant sacrifices for our country. Not only those who are serving right now, but also those who have served in the past. Certainly this Veteran’s Day is a time for us to reflect upon their sacrifices and put our difficulties in perspective. We are still the most prosperous country in the world. That does not mean that we don’t have issues right now. We are in the midst of a recession exacerbated by a fiscal crisis that is spreading around the world.
The loss of 240,000 jobs last month is just a reflection of how severe things are right now. As we wrote last week, the government is doing plenty to help us in many ways. And we expect Congress to get together in a special session now that the election is over and consider additional stimulus aimed at the housing industry. The wild card? Interest rates. Our first story in the news section highlights the possible effects of lower rates on the housing market and thus the economy. The Federal Reserve Board is doing its part in lowering rates, but the markets have failed to respond. Every move by the government to back mortgages will help bring rates in line. Even increased borrowing by the government to fund the huge deficit may not cause rates to rise based upon the fact that inflation pressures have decreased significantly. There are some analysts that have even uttered the "deflation" word. What a difference in perspective since the record high oil prices of just a few months ago.
Weekly Interest Rate Overview
The Markets: Rates retracted over one half of their increase from the week before. Freddie Mac announced that for the week ending November 6, 30-year fixed rates averaged 6.20%, down sharply from 6.46% the week before. The average for 15-year fixed fell significantly as well to 5.88%. Adjustables went down with the average for one-year adjustables decreasing to 5.25% and five-year adjustables falling to 6.19%. A year ago 30-year fixed rates were at 6.24%. "Rates fell this week amid new indications of a pullback in consumer spending and a weaker jobs market," said Frank Nothaft, Freddie Mac vice president and chief economist. "The economy shrank by 0.3 percent in the third quarter, led by the first decline in consumer spending since the fourth quarter of 1991. In September alone, consumer spending fell by the most since June 2004. More recently, job layoffs more than doubled in October compared to September on a year-over-year basis."
Current Indices For Adjustable Rate Mortgages
Daily Value
Monthly Value
Nov. 6th
October6-month Treasury Security
0.83%
1.23%1-year Treasury Security
1.17%
1.42%3-year Treasury Security
1.63%
1.86%5-year Treasury Security
2.46%
2.73%10-year Treasury Security
3.75%
3.81%12-month LIBOR–WSJ
3.824% (Oct)12-month MTA
2.256% (Oct)11th District Cost of Funds
2.769% (Sept)Prime Rate
4.00% October
Real Estate News
The National Association of Realtors has stepped up its challenge to lawmakers encouraging them to take new, decisive actions to address the continuing problems in the housing industry, as well as the ongoing economic crisis. The NAR has provided an economic analysis demonstrating that a reduction, or a buydown, of interest rates by just 1 percentage point could result in up to 840,000 additional home sales and reduce the inventory of homes by as much as 20 percent. Inventories currently at 9.9 months’ supply would decrease to approximately a 7.5 month supply. “These changes would help stabilize home values and the housing industry,” Gaylord says. Home price stabilization would bring clarity to the valuations of mortgage-backed securities, removing uncertainty in the financial markets and positively affecting the overall U.S. economy, Gaylord says. A recent consumer survey conducted by NAR member Realogy Corp. reinforces the importance of housing in a broader economic turnaround. The survey found that nine out of 10 home owners believe that owning a home is still the best long-term investment they can make, but nearly one-third of those surveyed said they were putting plans to buy a new or existing home on hold because of the current economic environment. Source: National Association of Realtors
A series of tax credits for wind, solar, geothermal, tidal energy and others was among the tenets of the October congressional financial rescue legislation. The law increased the investment credit for solar from $2,000 to $7,500 for a buyer who spends $25,000 to install solar panels on his roof. In states like California, Connecticut, and New Jersey, where the cost of power is considerable, the pretax compound rate of return on a typical home solar system will be greater than 15 percent per year, says Andy Black, CEO of OnGrid Solar, an industry research firm. Home builders, including some of the biggest, such as Centex, Lennar, Pulte Homes, and Woodside Homes, are seeing advantages to including solar. All are developing successful communities where all of the homes have solar panels capable of making most if not all power. Source: BusinessWeek
