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Demand for home-purchase mortgages also continued to fall last week, according to the weekly application survey from the Mortgage Bankers Association. That means there have now been five straight weeks of declining demand for purchase mortgages, which have fallen to their lowest level since February 1997.

“Home buyers have not yet returned to the market following the expiration of the home-buyer tax credit at the end of April,” said Michael Fratantoni, the MBA’s vice president of research and economics.

Early indications show that home sales activity plunged in May, the first month after the tax credit’s expiration. Sales in markets including Minneapolis, Denver, Seattle, Phoenix and New Jersey were down by around 25% in May from one year earlier.

Most analysts expected housing demand to fall after the tax credit expired, but few had predicted that mortgage rates would tumble to such low levels after the Federal Reserve ended its purchases of mortgage-backed securities in March. Average rates on 30-year fixed-rate loans fell to 4.81% last week from 4.83% at the end of May.

Mortgage rates tracked by Zillow’s Mortgage Marketplace index reached their lowest level of the current cycle on Tuesday, with participating brokers quoting an average 4.58% rate for 30-year fixed-rate loans.

Nearly half of all borrowers with 30-year conforming fixed-rate mortgages have mortgage rates of 5.75% or higher and could reduce their rates by a full percentage point if they refinanced at current rates, according to investment bank Credit Suisse. And a one-percentage-point decline in mortgage rates can cut $1,500 off the annual payment on a $200,000 30-year fixed-rate mortgage.

But many borrowers can’t refinance because they don’t have enough equity, their credit isn’t strong enough, or they’re income has fallen in recent years. Others may qualify but face extra fees that make refinancing too expensive to justify. Also, many of those who could refinance likely did so when rates fell to comparable levels last year in March, August and December.

Source:Wall Street Journal

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However, this window of opportunity may close soon due to rising home loan rates. This will occur if investors grow more confident and shift money out of the safety of government bonds. These bonds are what influence mortgage rates.

Despite the threat of the window closing soon, rates are tantalizingly low at the moment. The average 30-year fixed-rate loan sank to 4.78 percent this week. That is the lowest this year and barely above the record of 4.71 percent, which was set in December. In addition, 15-year loans are at their lowest rates in two decades.

Some homeowners are taking advantage of the low rates. Applications to refinance surged this week to the highest level in seven months, according to the Mortgage Bankers Association .

Anxiety over Europe has caused global investors to snap up Treasury bonds since they see these as much safer than other investments. Consequently, treasury yields have fallen. This has also brought mortgage rates down as well.

When the European crisis eases and if the American economy recovery continues, investors are expected to move out of bonds and back into stocks. This will make mortgages more expensive.

As cheap as mortgages are these days, the number of loans being taken out to buy homes remains at its lowest point in more than 13 years. One reason is that a special tax credit for homebuyers expired last month and many people had rushed to sign contracts.

Another obstacle is the trouble involved in qualifying for a mortgage. Borrowers need solid credit and a down payment of at least 3.5 percent. Banks tightened lending standards after millions of borrowers fell into default and foreclosure during the housing bust.

Analysts had expected mortgage rates to rise when the government ended a program designed to bolster the housing market. Instead, they fell because of fears that Greece would default on its debt.

Also keeping rates low is the government’s decision last year to provide unlimited support through 2012 for Freddie Mac and Fannie Mae, which buy mortgages and package them into securities and help keep rates low.

Since the financial crisis ended, mortgages of all types have become more affordable. For example, the premium borrowers pay to take out large loans for more expensive homes has dropped by a full percentage point since late 2008 to just 0.8%.

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Refinance rates have been slowly going lower since mid April. Lower mortgage refinance rates drove demand for refinancing higher in the latest Refinance Index survey released by the Mortgage Bankers Association. The Refinance Index, which is a measure of mortgage applications for refinancing jumped 14.8 percent.

10 year U.S. Treasury yields were also lower last week as investors fled the Euro and bought Treasuries. The European Union and the IMF finally put together a rescue package for Greece.

15 year refinance mortgage rates were also lower this week over last. The current average 15 year mortgage refinance rate is averaging 4.35 percent, down from last week’s average 15 year mortgage rate of 4.42 percent.

Jumbo Mortgage Refinance Rates

30 year jumbo refinance mortgage rates are averaging 5.52 percent this week, down from the prior week’s average jumbo refi rate of 5.54 percent.

Current 15 year jumbo mortgage interest refinance rates are under 5.00 percent at 4.95 percent, down from the prior week’s average jumbo refinance loan mortgage rate of 5.03 percent.

Adjustable Mortgage Refinance Rates

Current average 1 year conforming adjustable mortgage refinance rates are at 3.85 percent, unchanged from the last week’s average 1 year adjustable refinance mortgage interest rate.

Current 3 year conforming adjustable mortgage interest refinance rates are averaging 4.54 percent, an increase from last week’s average refinance home loan rate of 4.47 percent.

Today’s 5 year conforming adjustable refinance mortgage rates are averaging 3.67 percent this week, down from last week’s average home loan refinance rate of 3.68 percent.

7 year conforming adjustable mortgage refinance rates are averaging 4.16 percent this week, down from an average 7 year loan refi rate of 4.31 percent.

Current 10 year conforming refinance ARMs are averaging 4.52 percent, down from last week’s average rate of 4.55 percent.

Jumbo Adjustable Refinance Mortgage Rates

The current average 1 year jumbo refinance ARM is at 5.95 percent, unchanged from last week’s average 1 year jumbo refinance loan rate of 5.95 percent.

Current 3 year jumbo adjustable mortgage refinance loans are averaging 5.10 percent, a decrease from the prior week’s average jumbo reifnance loan mortgage rate of 5.14 percent.

Today’s 5 year jumbo adjustable refinance rates are averaging 4.46 percent, down from an average mortgage refi rate of 4.51 percent last week.

7 year jumbo refi adjustable rates are averaging 5.26 percent, down from last week’s average loan mortgage refinance rate of 5.48 percent.

Current 10 year jumbo mortgage refinance interest rates are averaging 5.72 percent, down from last week’s average 10 year jumbo mortgage refinance interest rate of 5.76 percent.

Source: MonitorBankRates.com

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So how do you know what your home is worth? The easiest way is to ask your Realtor! If you’re in The Woodlands, check out this 2009 market report for a head start:

TX – The Woodlands Home Values, 2009

In this report, we break down The Woodlands by village, offering detailed statistics, charts, graphs, and analysis. If you find it useful, please send us comments or suggestions!

Outside The Woodlands? Head over to our Houston market snapshot request, and register for your neighborhood market report (sent to you via monthly email).

About the author
Johnny Schiro is a Houston Realtor and co-owner of Icon Real Estate — an elite brokerage in The Woodlands, Texas. Johnny writes mostly about local market trends, buying & selling strategies, and industry insight. Comments and feedback encouraged.

› More about Johnny

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Embattled Wall Street firm Goldman Sachs is now facing an investigation by the City watchdog, the Financial Services Authority, following the $1bn (£650m) fraud allegations brought by the US regulators.

Goldman Sachs insisted its actions were “entirely appropriate” and that it would “vigorously contest” the charges brought by the US Securities and Exchange Commission (SEC).

Goldman stressed that it had lost $90m on the transaction, known as Abacus 2007-AC1, and tried to argue that its clients had been professional investors highly experienced in the complex financial instruments they were buying.

The statement comes ahead of the bank’s first-quarter results tomorrow, which are expected to show it has been able to earmark $5bn for staff pay and bonuses.

As Fabrice Tourre, the bank’s 31-year-old vice-president named in the case brought by the SEC stayed away from his desk in the London headquarters of the firm, calls were mounting for the City’s watchdog, the FSA, to launch its own inquiry into the affair which dates back three years.

The FSA confirmed today that it was investigating the events. “As you would expect the FSA is investigating the circumstances of this case and whether there are any implications for the UK-regulated entities of Goldman Sachs. If there are, we will take appropriate action. We are working closely with overseas regulators and will co-operate fully with the SEC investigation” the FSA said.

In a detailed statement today, Goldman stepped up its defence. It said: “Based on all that we have learned, we believe that the firm’s actions were entirely appropriate, and will take all steps necessary to defend the firm and its reputation by making the true facts known.”

The SEC’s 22-page suit charges Goldman with working with US hedge fund, Paulson & Co, to structure and sell a complex package of mortgages to clients while Paulson took a “short” position betting that the same mortgages would fail. The mortgages were packaged into a collateralised debt obligation (CDO) – the instruments at the heart of the 2007 credit crisis – and lost investors more than $1bn in just nine months. During the same period, Paulson made a similar amount in profit. The SEC asserts that Goldman did not disclose Paulson was on the other side the transaction.

Goldman believes the charges are politically motivated and come at a time when President Barack Obama is trying to force through legislative changes to clean up the US banking industry.

The firm said the two professional investors which bought the Abacus instrument – Germany’s IKB and ACA Capital Management of the US – were experienced investors. ACA has managed 26 CDOs and “independently approved” the 90 residential mortgage-backed securities used in the Abacus deal.

Royal Bank of Scotland lost up to $800m on the transaction as a result of its takeover of Dutch bank ABN Amro which had intermediated a credit default swap between Goldman and ACA to help them insure against potential losses.

The Goldman Sachs statement said: “The core of the SEC’s case is based on the view that one of our employees misled these two professional investors by failing to disclose the role of another market participant in the transaction, namely Paulson & Co, and that the employee thereby orchestrated the creation of materially defective offering materials for which the firm bears responsibility.

“Goldman Sachs would never condone one of its employees misleading anyone, certainly not investors, counterparties or clients. We take our responsibilities as a financial intermediary very seriously and believe that integrity is at the heart of everything we do.”Were there ever to emerge credible evidence that such behaviour indeed occurred here, we would be the first to condemn it and take all appropriate actions.”.

It is expected that the SEC case against Goldman could open the floodgates for other suits after Dutch bank Rabobank accused Merrill Lynch of embarking on a similar practice when selling it a CDO.

Goldman reckoned the action it was facing would not have an effect on the wider CDO market. “The SEC complaint is related to a single transaction in 2007 and involves a highly particularised set of alleged facts. It would not appear to have broad ramifications for the CDO market generally,” the bank said.

Source:Guardian

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SOURCE Bankrate, Inc.

NEW YORK, March 4 /PRNewswire-FirstCall/ — Mortgage rates moved lower this week, with the average conforming 30-year fixed mortgage dipping to 5.12 percent, according to Bankrate.com’s weekly national survey. The average 30-year fixed mortgage has an average of 0.39 discount and origination points.

(Logo:  http://www.newscom.com/cgi-bin/prnh/20040122/FLTHLOGO )

To see mortgage rates in your area, go to http://www.bankrate.com/funnel/mortgages/

The average 15-year fixed mortgage tied a record low of 4.46 percent and the larger jumbo 30-year fixed rate fell to 5.92 percent. Adjustable rate mortgages were also lower, with the average 3-year ARM declining to 4.43 percent while the 5-year ARM hit a new low of 4.46 percent.

Mortgage rates slipped following higher than expected jobless claims. Continued nervousness about the strength and sustainability of the economic recovery has helped keep rates low, and this week, bring them even lower. However, mortgage rates could start marching higher in the coming weeks as the Federal Reserve stops buying mortgage-backed securities. The Fed gets much of the credit for the ultra-low mortgage rates enjoyed over the past 16 months as they’ve been the primary buyer of mortgage bonds in that time. Mortgage rates were last above 6 percent in November 2008, right before the Fed began those purchases.

The last time mortgage rates were above 6 percent was Nov. 2008. At that time, the average rate was 6.33 percent, meaning a $200,000 loan would have carried a monthly payment of $1,241.86. With the average rate now 5.12 percent, the monthly payment for the same size loan would be $1,088.36, a savings of $153 per month for a homeowner refinancing now.

                                    SURVEY RESULTS
        30-year fixed: 5.12% -- down from 5.15% last week (avg. points: 0.39)
        15-year fixed: 4.46% -- down from 4.52% last week (avg. points: 0.40)
           5/1 ARM: 4.46% -- down from 4.53% last week (avg. points: 0.36)

Bankrate’s national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

For a full analysis of this week’s move in mortgage rates, go to http://www.bankrate.com/mortgagerates

The survey is complemented by Bankrate’s weekly Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next week. Don’t expect mortgage rates to fall any further. The respondents believe rates will either rise, as 43 percent voted, or remain unchanged, as the other 57 percent voted. None of the panelists forecasts a decline in mortgage rates over the next week.

For the full mortgage Rate Trend Index, go to http://www.bankrate.com/RTI

About Bankrate, Inc.

The Bankrate network of companies includes Bankrate.com, Interest.com, Mortgage-calc.com, Nationwide Card Services,Savingforcollege.com, Fee Disclosure, InsureMe CreditCardGuide.com and Bankaholic.  Each of these businesses helps consumers to make informed decisions about their personal finance matters. The company’s flagship brand, Bankrate.com is a destination site of personal finance channels, including banking, investing, taxes, debt management and college finance. Bankrate.com is the leading aggregator of rates and other information on more than 300 financial products, including mortgages, credit cards, new and used auto loans, money market accounts and CDs, checking and ATM fees, home equity loans and online banking fees. Bankrate.com reviews more than 4,800 financial institutions in 575 markets in 50 states. Bankrate.com provides financial applications and information to a network of more than 75 partners, including Yahoo! ( YHOO), America Online ( AOL), The Wall Street Journal and The New York Times ( NYT). Bankrate.com’s information is also distributed through more than 500 newspapers.  Bankrate, Inc. was acquired by Apax Partners, one of the world’s leading private equity investment groups, in September 2009.  Apax operates across the United States, Europeand Asia and has more than 30 years of investing experience. For more information on Apax, visit: www.Apax.com.

www.bankrate.com

For more information contact:
Kayleen Yates
Senior Director, Corporate Communications
kyates@bankrate.com
(917) 368-8677

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Despite Obama’s bold promises, unemployment remains stubbornly high. But job losses have slowed dramatically.

And the nation’s recent economic growth is real, even though the government has spent just one-third of the massive stimulus plan. The program- originally estimated at $787 billion but now priced at $862 billion – is to continue pumping federal money into the economy into 2011.

One year into the program:

- Many states and local governments owe their fiscal survival to the stimulus. But those governments are scrambling to find ways to fill the holes in the coming year.

- Thousands of road and bridge projects broke ground with stimulus money, helping to keep the anemic construction industry afloat. But job losses still were significant, with as many as one in four construction workers unemployed.

Obama used Wednesday’s one-year anniversary to offer his own assessment and, predictably, rated the effort an unprecedented success.

“There has never been a program of this scale, moved at this speed, that has been enacted as effectively and as transparently as the recovery act,” the president declared.

But the legacy of the American Recovery and Reinvestment Act is yet to be sealed.

In the next 12 months there will be a second wave of government spending, perhaps topping $300 billion. By this time next year, the country could have a better idea whether the program was a costly, debt-increasing blip that made ripples in the nation’s economy, or a lifesaving jolt that shielded the country from a financial abyss.

Obama argued on Wednesday that the history already had been written. “One year later, it is largely thanks to the recovery act that a second depression is no longer a possibility,” he said.

How are others to judge the recovery program?

When Obama launched it last year, he cast the program as bigger and better than just an ordinary jobs bill. The program, he said, would provide lasting public works projects, improve education, save ailing state and local governments, offer relief to millions devastated by losing their jobs and homes and help provide much-needed health care.

Despite the broad range of those promises – and evidence shows that at least some of them have been kept – Obama’s stimulus will forever be judged by jobs. By the time the stimulus program kicked in last April, the recession had cost the economy more than 6 million jobs. Since the program began, the nation has lost 2 million more.

Job creation became the administration’s mantra. And the White House said the program would be held accountable with an unprecedented public report of every job linked to the stimulus.

Indeed, the jobs were documented one by one on a new government Web site, and the administration proudly pointed to more than 640,000 linked to the stimulus in the early months. It was the best evidence to prove that the stimulus was well on its way to fulfilling Obama’s promise of 3.5 million jobs saved or created by the program.

But those counts were seriously flawed, including greatly exaggerated job claims, positions included that had nothing to do with the stimulus, and spending that had nothing to do with saving or creating jobs. It was a blow to Obama’s efforts to prove the stimulus truly performed as promised, and it ended with the White House deciding to count jobs the old fashioned way – by estimating.

When Obama signed the stimulus law, the nation’s unemployment rate was 7.7 percent. His administration had promised the program would stop the jobless rate from passing 8 percent. But weeks after the stimulus became law, that threshold was broken.

Since that time, Republicans repeatedly asked “where are the jobs?” as monthly unemployment rates rose to as high as 10 percent before dipping to 9.7 percent last month.

Some of those Republicans critical of the stimulus also have taken credit for projects in their districts paid for by the program. “They can’t really have it both ways,” White House communications director Dan Pfeiffer said Wednesday.

The job losses have slowed over the past year, from a startling 779,000 in January 2009 to about 20,000 last month. Obama’s advisers are predicting actual job growth in the next few months.

Perhaps the best news for Obama has been the overall economic growth in recent months, a sure indication of recovery. The gross domestic product, the broad mixture of the nation’s economic activity, sank at an annual rate of 6.4 percent at the beginning of last year but has rebounded to gain at a rate of 5.4 percent in the most recent quarter.

Economists generally agree the infusion of federal money contributed to that impressive growth, although many credit a combination of other recovery programs including bank rescue efforts by Treasury and the Federal Reserve.

There are more concrete examples of success when considering the other promises Obama made when signing the stimulus law – better health care, better schools, better infrastructure.

The stimulus provided more Medicaid health benefits, unemployment checks, food stamps, tax cuts and other relief to millions crippled by a tough economy. In fact, the expanded benefits led congressional budget analysts to increase the overall cost of the stimulus by $75 billion.

The program also allowed states and local school systems to hold onto hundreds of thousands of teachers and other school workers who might have been let go but for the extra federal money. The single greatest count of jobs saved under the stimulus goes to school employees whose jobs were threatened by deep deficits in local and state budgets.

Obama’s promise of a better infrastructure remains at least partially unfulfilled. Last year, he said stimulus spending would pay for “remaking the American landscape” with new highways, bridges and transit that “will bring real and lasting change for generations to come.”

But much of the transportation stimulus money spent last year went to paving existing roads and repairing bridges that were not among those in the worst shape. State transportation officials described them as necessary projects, but the initiative doesn’t live up to Obama’s claim that his infrastructure spending compared to President Dwight D. Eisenhower’s mammoth Interstate building program of the 1950s.

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