Is A Big Mortgage Rate Increase Coming in 2010?
Housing market
Wall Street insiders estimate the Fed’s $300 billion in Treasury purchases helped push down rates on those securities by half a percentage point and its purchasing of mortgage-backed securities (it will eventually buy $1.25 trillion) is pushing down rates on those securities by a full percentage point.
US government bought over 90% of all mortgages last 3-4 months
Are Home Mortgage Rates About to Rise?
Home mortgage rate cut
Last week about the Federal Reserve continuing its policy of keeping interest rates low to stimulate the economy. Also, thirty-year fixed mortgage rates slipped below the five percent mark for the first time in nearly half a year, dipping to 4.9 percent and fifteen year fixed rates are just 4.4 percent. It looks like the low rates caused applications for new mortgages to jump by nearly 6 percent last week, according to the Mortgage Bankers Association.
According to the statement released by the Fed, in an effort to “provide support to mortgage lending and housing markets” they will “purchase a total of $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt.” Additionally, “they expect to gradually slow the pace of these purchases in order to promote a smooth transition.” Read more 
Real Estate Market News … Positive & Negative
CNBC's Jim Cramer recently interviewed Toll Brothers CEO Robert Toll and his take on the national housing market got a lot of play. The homebuilder said he see signs of a rebound in "80% of the country." He backs this up by reporting that "expressions of interest" ($1,000 refundable deposits) are up over last year.
Countering this positive news was another negative S&P/Case-Shiller home price index. Case-Shiller has been heavily criticized lately from experts who doubt whether limiting the data to 20 selected metro areas gives an accurate picture of price changes across the country. Many of these areas have been heavily affected by foreclosure sales. At least the latest Case-Shiller did NOT set a new record low – for the first time in 16 months!
Last Thursday it was reported the rate for 30-year fixed-rate conforming mortgages averaged 4.78% with an average 0.7 point. It's down over 1.6% from the peak in October, which adds up to a savings of around $212 per month on a $200,000 loan. It should be noted these rates and fees are for borrowers with 20% down payments and good credit ratings. Other loans carry higher rates and points.
>> Review of Last Week
BACK ON TRACK… The major stock market indexes went up again last week, as they did for six straight weeks until some minor slippage the week before. This was encouraging because there were a few fairly negative pieces of news, although positive indicators prevailed as the week wore on. The negatives started with Sunday's concerns over a swine flu outbreak, which stayed in the headlines throughout the week. Thankfully, there were only 331 worldwide cases confirmed by Friday.
Other off-putting news included Wednesday's advanced Q1 GDP reading of –6.1%, worse than expected. Thursday, Chrysler declared bankruptcy to ease its debt burden, though it seems poised for recovery with a deal that gives Fiat a big stake in the company. We also had reports that Bank of America and Citigroup may have to rai se more capital based on their stress tests. Friday, the government said it would postpone publishing full stress test results until this Thursday.
The week's good news? April's ISM Manufacturing index surpassed expectations for the fourth month in a row! Some economists say this shows the contraction in manufacturing is quickly slowing and the overall economy is on the verge of recovery. This view was bolstered by a better than expected reading on manufacturing from the Chicago PMI. Consumer Confidence was well above estimates and the University of Michigan's consumer sentiment index also had a big boost for April. Some experts feel this shows Q1's increase in consumer spending will continue.
The Dow ended the week UP 1.7%, to 8212.41; the S&P 500 was UP 1.3%, to 877.52; and the NASDAQ went UP 1.5%, to 1719.20.
Inflation concerns and the stock market's resurgence all slowed demand in the bond market and drove prices down. So the benchmark 10-year Treasury's yield, which runs counter to price, inched up again, to 3.176%. In spite of this rise, mortgage rates on average are still at historically low levels. This post information was provided by: Greg Brooks southwest area manager San Diego Mortgage Network (800) 287-8292 x 225 San Diego real estate
Fed Spends $750 billion to Lower Mortgage Rates
The Federal Open Market Committee (FOMC) informed the public this week that it will expand its dominating position in the mortgage-backed security (MBS) market, throwing an additional $750 billion there. Markets rallied on the news with Treasuries shedding up to 51 basis points.
Economists were up in arms about the Fed's measures. Stephen Stanley of RBS Greenwich Capital said via the WSJ blogs:
Bloomberg summed it up in the lead of their coverage:
By committing to buy Treasuries and double his purchases of mortgage debt, Federal Reserve Chairman Ben S. Bernanke signaled his determination to avoid a repeat of the Great Depression and his willingness to pump as much cash into the economy as needed to end the current crisis. San Diego real estate
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San Diego Real Estate … Will Low Interest Rates Help?
Will historically low interest rates be the key to turning around or putting a bottom in place for the San Diego housing bust?
Mortgage rates are near their lowest levels in nearly 40 years. Plus, the government wants to offer new borrowers a 4.5% mortgage rate as an incentive.
Ivy Zelman, chief executive of housing-research firm Zelman & Associates, estimates that nationally, even with such a low rate, only about 67% of U.S. households can afford a house. Homeownership was nearly 68% in the third quarter, according to the Census Bureau, implying there is virtually no untapped demand for homes.
Fed Head … Finished Cutting Interest Rates?
Federal Reserve Chairman Ben Bernanke signaled he is finished cutting interest rates for now and has turned his attention to concerns about inflation in the world’s foreign exchange markets in the wake of the U.S. dollar’s 16 percent decline against the Euro over the past year. Speaking to the International Monetary Conference, Bernanke stated that, “For now, policy seems well positioned to promote moderate growth and price stability over time. We will, of course, be watching the evolving situation closely and are prepared to act as needed to meet our dual mandate.”
Bernanke called financial market conditions “strained” and reiterated that U.S. consumers face challenges from declining home prices and stricter mortgage and other lending standards, a weaker job market and higher energy costs. He added that economic growth will remain limited until home prices and the housing market show clearer signs of stabilization. San Diego California downtown real estate market