After 5 Weeks of Decline, Rates Move Up
Rates on 30-year mortgages, which had been falling for five weeks, jumped sharply this week, reflecting the turbulence in global credit markets. Freddie Mac reported Thursday that its nationwide survey found that the average for 30-year, fixed-rate mortgages rose to 6.09 percent this week, up from 5.78 percent last week. Last week’s rate had been the lowest level for 30-year rates since February.
The increase, which pushed rates above 6 percent for the first time since early September, was blamed on turbulent financial markets, which in recent weeks have been hit by the biggest upheavals on Wall Street since the Great Depression.“Mortgage rates followed Treasury bond yields higher this week amid market uncertainty over the current state of the economy,” said Freddie Mac chief economist Frank Nothaft.
The big declines in mortgage rates before this week were attributed in part to the government’s announcement on Sept. 7 that it was taking over Fannie Mae and Freddie Mac following huge losses the companies experienced because of soaring defaults on mortgage loans, reflecting the deep slump in housing.

Average Mortgage Rate Lowest in Seven Months

Rates on 30-year mortgages dropped sharply again this week, falling to the lowest level in seven months, as rates continue to decline following the government's dramatic takeover of mortgage giants Fannie Mae and Freddie Mac. Freddie Mac reported Thursday that its nationwide survey found 30-year, fixed-rate mortgages declined to 5.78 percent this week, down from 5.93 percent last week.It was the fifth consecutive weekly decline and pushed the 30-year mortgage to the lowest level since it stood at 5.72 percent the week of Feb. 14.

The decreases have accelerated over the past two weeks since the government announced on Sept. 7 that it was taking control of Fannie Mae and Freddie Mac because of huge losses the companies were experiencing due to soaring defaults on mortgage loans as home prices slump.

Mortgage Rates Drop Significantly

Rates on 30-year mortgages dropped sharply this week, falling to the lowest level in five months, as the government’s dramatic takeover of mortgage giants Fannie Mae and Freddie Mac had the hoped-for impact of lowering mortgage rates.
Freddie Mac reported Thursday that its nationwide survey found that 30-year, fixed-rate mortgages dipped to 5.93 percent this week, down from 6.35 percent last week.
The sharp decline pushed the 30-year rate below 6 percent for the first time since late May and marked the lowest level for this rate since they averaged 5.88 percent the week of April 17.
Private economists had predicted that the government’s move on Sunday to take control of Fannie Mae and Freddie Mac would result in lower mortgage rates for consumers because it removed a huge uncertainty about the future of the two firms, which own or guarantee half of the nation’s mortgages.

Homestead Exemption-The Recapture Rule,
or What Goes Around Comes Around
You may be rushing to check the assessed value of your homesteaded property in the next couple of years as values in the neighborhood decline. Won't you be shocked to find that your assessed value has gone UP! Welcome to Florida's Recapture Rule.
Homesteaded property owners have enjoyed the Save our Homes assessed value cap of 3%/annum since 1993. As values skyrocketed, property taxes for homesteaded owners remained low thanks to the Save our Homes amendment. If you'd like to check out the amount of assessed value reduction for your property take a look at your tax statement (or look up your address on www.bcpa.net/search.asp) and compare the SOH value with the Just Value. Now that values are declining, the Recapture Rule, passed in 1995, will come into play. The Recapture Rule provides that county Property Appraisers may increase assessments up to the 3% cap, even in declining markets, until the Just Value figure is reached.

Short Sale BUYERS May be Responsible for Doc-Stamps
Many of you have heard or seen reports that the State dept of Revenue for purposes of determining the transfer tax (stamps on the deed) will base the tax on the sale price + the amount of forgiven debt on the mortgage. So if a property with a mortgage of 300,000 sells for $200,000 the tax would be $2,100 (SP 200,000 + debt forgiven 100,000 X .007). This policy is not in effect now as a final decision from the Dept of Revenue is not expected for several weeks. However, here’s the kicker so please pay close attention. If the above ruling is issued and a deal closes and the tax on the debt that was forgiven is not paid the State will look to the BUYER for payment. The tax, although normally paid by the seller, may be paid by either buyer or seller so both are liable and it is much easier to find the Buyer as they can usually be reached at the property they purchased. The seller on the other hand may have left the state and it could be difficult to track them down. Any buyer pursuing a short sale needs to make sure the closing agent is calculating the tax using the total amount of the mortgage debt as the basis and make sure the lender authorizing the short sale agrees to pay the full amount.

Mortgage Rates Continue Decline

Rates on 30-year mortgages fell for a third straight week, dropping to the lowest level since mid-July. Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages dipped to 6.35 percent this week, down from 6.40 percent, the previous week. It marked the third consecutive decline and left rates at the lowest level since July 17 when they stood at 6.26 percent.

The 30-year mortgage, which hit a high for this year at 6.63 percent on July 24, has been above 6 percent since late May as financial markets have become convinced that rising inflation pressures will keep the Federal Reserve from cutting interest rates further to bolster the weak economy. Frank Nothaft, chief economist for Freddie Mac, attributed this week’s decline in mortgage rates to recent reports indicating that consumer spending may slow further now that the boost from the economic stimulus payments is fading.

Nothaft noted that personal incomes, the fuel needed to support consumer spending, dipped by 0.7 percent in July, the worst showing in three years and a worrisome signal that spending could falter in the months ahead.

Trend in Monthly Value Decline Continues to Slow

WHEW...that's a mouthful! Last month we noted that the decline in prices slowed for the first time since October of last year. This trend continued for the period ending 30 June according to the Case-Shiller Value Analysis just released.

We're not out of the woods yet as far as price softening is concerned but this is an encouraging sign of the turnaround that will eventually occur.