Doing the Charleston!

*** Due to market fluctuations, interest rates are subject to change at any time and without notice. Interest rates are also subject to credit and property approval based on secondary market guidelines. The rates shown are based on average rates for  best qualified customers. Your individual rate may vary. Lenders have access to hundreds of loan programs. The programs and rates listed here are just the most popular.

Happy New Year!  As has been a tradition in our household for decades, I hope on Jan. 1 you will be enjoying the Rose Parade as one of the ways you usher in the New Year. As fun as it always is, I am particularly looking forward to this year’s parade.  I am very pleased and excited that the National Association of REALTORS® will be participating in the parade for the first time; with a gorgeous float to celebrate home ownership and to commemorate NAR's 100^th anniversary.

I seldom wax poetic in this blog, or as some may call it being sappy, but today I have the desire to simply say how proud I am to be a REALTOR®. The dream of home ownership has always been one of the integral parts of the ”American Dream” , and I am grateful to those of you who have entrusted me to help you achieve that dream. If I can help any of you out there to also work toward this most gratifying of personal goals, it would be my honor to do so.

Back to the Rose Parade…In a time when we are all feeling a little scared about what is happening in the economy, the simple enjoyment of watching a parade is a welcome respite, and the Rose Parade is just the best of the best!!  I am including a link below to the NAR website showing the process of creating our entry into the parade. I found it very interesting and heartwarming. If you decide to take a few minutes to view it, I hope you will too.  Here is the link http://www.realtor.org/about_nar/nar_centennial/parade_webisodes

The parade is scheduled to start New Years Day at 11:00 AM, EST.  If you do watch the parade, please look for our NAR float.  Also, for the first time ever, viewers have a chance to give out a trophy for their favorite Rose Parade float. If our float is your favorite, after watching the parade go to this link http://www.ktla.com/roseparade_poll, and vote for it. I will be a little biased in my vote I admit, but it’s so beautiful, and represents so much to so many.  It would just be soooooo cool if the NAR float won the first viewer’s choice trophy, in our first participation in the parade!!

Viewer voting will be open on Jan.1 only, from 1:00 PM to 8:00 PM, EST. The winner will be announced and the trophy awarded on January 2.  If you miss the results, I will post it here, if we win.

In closing today, I want to send my best wishes to all of you, my loyal blog readers, for a 2009 filled with health, prosperity, and happiness!

Warmest regards – Barbara Newton, REALTOR®

Interest rates were the story of the week, thanks to moves by the Federal Reserve to keep them trending lower. On Tuesday, our central bank sliced the fed funds rate – a key short-term lending rate – 75 basis points (a basis point is 1/100 of a percentage point) to 0.25%. The new, lower fed funds rate, in conjunction with plans to buy securities backed by mortgages, should keep mortgage rates low into the near future.

Lower mortgage rates, in turn, will help revive a moribund housing market. How moribund is it?  The news isn't as bad as some pundits suggest. When prices are falling, the smart move is to reduce supply – which is what homebuilders are doing these days. The cutback will limit the supply of new homes hitting the market, reducing the glut of unsold homes pressuring prices.

The glut won't last forever. In fact, in some areas of the country borrowers (those with strong credit histories and hefty down payments) were reducing the glut by picking up 30-year loans in the 4% range. The national average isn't quite that good, but it's good nonetheless. According to Bankrate's latest survey, the prime 30-year fixed-rate mortgage fell 38 basis points to average 5.42%, the prime 15-year fixed-rate mortgage fell 21 basis points to average 5.3%, and the prime 5/1 adjustable-rate mortgage fell 33 basis points to average 5.84%. Best of all, the money is readily available; lending standards aren't nearly as onerous as some media outlets suggest.

Given the recent plunge in mortgage rates, it's no surprise that mortgage application volume continues to rise. Mortgage activity continues to reflect an iron-clad law of economics – lower prices produce higher demand.

Lower prices stimulate greater demand. Nowhere was that economic maxim seen more clearly than in the mortgage markets, where the number of homeowners and potential home buyers surged in response to aggressive federal efforts to lower mortgage rates. The Mortgage Bankers Association reported that the application activity index shot up 112% the week before last. Refinance activity led the charge, with a 203% increase, but purchase activity held its own, increasing a stout 23%..

Further mortgage-rate reductions could be in the works, if the Treasury Department's new plan to revitalize the U.S. home market is given the thumbs up. The plan, which is in the development stage, would temporarily use the clout of mortgage giants Fannie Mae and Freddie Mac to encourage banks to lend at rates as low as 4.5%, more than a full point lower than prevailing rates for standard 30-year fixed-rate mortgages.

Additional money for mortgage lending could be moving in from other financing segments of the market as well, at least if recent trends in the commercial paper market (financing used to fund operations and short-term lending) is any indication. After investor demand for commercial paper plummeted in the wake of Lehman Brothers' collapse and other troubles in the financial sector, the Federal Reserve started purchasing three-month commercial paper to alleviate the pressures by companies to get short-term cash. Since then, the overall commercial-paper market has not only stabilized but grown, while the rates that companies have to pay investors to buy the paper have dipped.

One down side has to be mentioned though, recoveries in all markets – financial or otherwise – could be strained more if the current unemployment trend continues unabated. The jobless rate is now 6.7%, but it wasn't a surprise; most economists expected the jobless rate to post at 6.7%. Help to reduce unemployment will hopefully be factored into the overall recovery plans, that as yet are still being detemined by the powers that be.

Here are the economic reports to watch this week:

There is a silver lining for all Americans -- both employed and unemployed.  With each piece of negative news about the economy, Washington is more likely to pass new stimulus packages to the benefit of household budgets.

On one front, Federal Reserve Chairman Ben Bernanke has already alluded to further Fed Funds Rate cuts at the Fed's two-day meeting starting December 15.  Because the Fed Funds Rate is directly tied to Prime Rate, any cut in the benchmark lending rate would lead "floating" interest rates lower on home equity credit lines and other revolving debt .

And this talk from the Fed comes on the heels of its $500 billion pledge to buy mortgage-backed bonds.  That demand-shifting move was announced last week and drove mortgage rates lower.  It also marked the official start of the refinancing boom.

And, lastly, Capitol Hill is already responding to the November lost jobs data with calls for "urgent" action.  It's a vague term, to be sure, but history has shown that Congress could pass any number of measures, each meant to put more money into household budgets nationwide. 

The U.S. is in a verified recession and Washington is throwing the kitchen sink at it.

The end result is that Friday's lost jobs data is a non-event of sorts for active home buyers.  Mortgage markets expected a poor reading and they got it.  Normally, data like this would cause mortgage rates to spike but this is not a normal market.

Now, with markets expecting additional stimulus, mortgage rates are edging lower today with hopes of an economic rebound.

Source
Employers cut 533,000 jobs in Nov., most since 1974
Barbara Hagenbaugh
December 5, 2008, USA Today