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 the best qualified customers. Your individual rate may vary.

Rate information above is courtesy of Melissa Breeland of Residential Mortgage of SC

Perhaps there is some truth in Charles Dickens' prologue from A Tale of Two Cities, which begins “It was the best of times, it was the worst of times. . .” Perhaps we will look back and see that this was the best of times to be a home buyer. In some parts of the country, prices are off 35% to 50% from highs set three years ago. On the other hand, perhaps we will look back and see that this was the worst of times. At least it could be the worst of times for Freddie Mac and Fannie Mae: Both firms lost 60% of their value this past week on solvency concerns.

Why should those of us who are not Freddie or Fannie shareholders care? Because they provide stability and liquidity to the mortgage market by guaranteeing that investors who purchase mortgage securities will receive timely payments of principal and interest. The two companies currently own or guarantee about $5 trillion in mortgages, or nearly half of all outstanding U.S. home-mortgage debt. They are pretty much the only game in town for conforming mortgages.

Fannie and Freddie aren't going anywhere, but a disruption in their operations could impact mortgage rates. Some pundits have stated that if their troubles persist, rates on mortgages could move higher – as much as 0.25% to 0.50%.

So far, mortgage markets remain sanguine over Fannie's and Freddie's fate. The prime 30-year fixed-rate mortgage fell five basis points to 6.48% last week, while the prime 15-year fixed-rate mortgage fell eight basis points to 6.01 and the prime 5/1 adjustable-rate mortgage fell four basis points to 6.05%, according to Bankrate.com's latest survey.

Mortgage Applications	Wed. July 16, 7:00 am, et	None	Important. Lower rates and lower home prices are stimulating additional activity.
Consumer Price Index (June)	Wed. July 16, 8:30 am, et	All Goods: 0.7% (increase) Core: 0.3% (Increase)	Very Important. An unexpected increase in consumer prices could push credit rates higher.
Industrial Production (June)	Wed. July 16, 9:15 am, et	0.1% (Decrease)	Moderately Important. Production is expected to fall on slowing business sales.
Housing Market Index (July)	Wed. July 16, 1:00 pm, et	18 Index	Important. The index confirms that the housing recovery remains elusive.
Federal Reserve FOMC Minutes	Wed. July 16, 2:00 pm, et	None	Important. The minutes are expected to reveal clues to the Fed's bias on interest rates.
Housing Starts (June)	Thurs. July 16, 8:30 am, et	960,000 (Annualized)	Important. Markets are looking for signs of stabilization.

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 the best qualified customers. Your ndividual rate may vary.

This information is courtesy of Melissa Breeland of Residential Mortage of SC

Last week was holiday shortened, and it felt like it. Everyone was feeling languid, and that feeling was reflected in the market's mood: Not much was ventured, so not much was gained, nor lost.

The news released last week was mostly a non-event. The jobless rate held steady last month at 5.5%, and the nation’s unemployment rolls were “essentially unchanged” at 8.5 million job seekers, the U.S. Department of Labor reported. Average hourly earnings rose $0.06, or 0.3%, compared with May – to a seasonally adjusted $18.01. We lost 62,000 jobs in June, but juxtaposed against the 7.8 million jobs created since August 2003, that isn't so bad (unless, of course, it's your job that was lost).

Separately, the Commerce Department's construction spending figure dropped 0.4% in May, and 6% from a year ago, reflecting the continuing woes of the housing industry. It was the 11th such monthly decline in the past year, dropping construction spending to $1.085 trillion at a seasonally adjusted yearly rate. If not for residential construction, the numbers would have posted in the black.

The good news was that mortgage rates fell again, a sign that inflation might be less onerous than some pundits believe. On that front, the prime 30-year fixed-rate mortgage fell nine basis points to 6.53%, the prime 15-year fixed-rate mortgage fell 10 basis points to 6.09%, while the prime 5/1 adjustable-rate mortgage fell 19 basis points to 6.09%. It was a prime week all around for mortgage rates.

Many of the economic numbers that government agencies and economists cite are averages, complied by sampling data from across the nation. But we know that averages mean little in our regional markets. Many of you are aware that home prices in one neighborhood can be off a fraction, while in a neighborhood a few miles away they can be off 50%. No one average fits all. In fact, no one average fits anybody.

Housing is widely regarded as a national disaster, but when the numbers are parsed, perhaps things aren't that bad. The Wall Street Journal reports that in Stockton, Calif., one in 75 households is in foreclosure; in Nebraska, the figure is one in every 1,459. Home prices have plunged in regions like Miami-Dade County, but have actually appreciated in regions like San Francisco and Silicon Valley. The notion that these disparate areas share a common housing market is a fiction.

But these big-picture statistics can form an overall malaise where none is warranted. Macro data and big-picture statistics like GDP growth, the unemployment rate and consumer sentiment are all large averages that are interpreted to impact everyone equally, but they don't, as the aforementioned housing data attest.