Mortgage Rates Hover Just Above 5%

Mortgage rates held steady this week," said Frank Nothaft, Freddie Mac vice president and chief economist. "The index of leading indicators rose 0.3 percent in December, the first increase in 6 months, fueled by an expansion in the money supply. However, the Federal Reserve acknowledged in its January 28th policy committee statement that since December the economy has weakened further.

More EXCITING Statistics!

Another plotting of Case Shiller data shows the price "appreciation" (we haven't seen that in awhile) on a month to month basis. Let me point out the GOOD news that, according to these data, prices in November dropped 'only' 2.19% compared with 2.97% the previous month. The fastest price drop was in March '08 (4.51%).

Case-Shiller Stats

Case Shiller statistics for November 2008 were released today. The tiered value analysis shows a continued drop in all categories. It is interesting to note that the "high tier", which held value in the early part of the correction is now showing the highest percentage drop from the peak of the market (47%).

Average Mortgage Rates Dip Below 5%

Interest rates for 30-year fixed rate mortgages fell for the 11th straight week to another record low, due in part to the slowing economy and government actions," said Frank Nothaft, Freddie Mac vice president and chief economist. "So far, both the U.S. Treasury Department and the Federal Reserve have added over $100 billion in liquidity to the mortgage market since September 2008, which put downward pressure on interest rates for fixed-rate mortgages. The Federal Reserve may add up to an additional $570 billion more this year, based on its November 25, 2008 announcement, to further shore up mortgage lending and keep rates low.
In December, the unemployment rate rose to 7.2 percent, the highest since January 1993, and the economy lost 2.6 million jobs over 2008, the largest annual drop since 1945. That brought down yields on Treasury securities and mortgage rates followed

Analysis of Property Value
According to the latest findings released by Case-Shiller; property values in South Florida (single family homes are depicted here) are falling at an accelerating rate. Clearly this is the impact of sales of distressed properties (foreclosures & short sales) which have dominated the sales activity in the market. While this pattern may be unsettling for most homeowners, it should indicate that the elusive 'bottom-of-the-market' is coming sooner rather than later.

Fed Purchase of Mortgage Backed Securities Pushes Rates Down 10th Consecutive Week
Interest rates for 30-year fixed-rate mortgages fell for the tenth week to a fourth consecutive record low due in part to the Federal Reserve's recent purchases of mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae," said Frank Nothaft, Freddie Mac vice president and chief economist. On November 25, 2008, the Federal Reserve announced that it planned to purchase up to $500 billion of these securities by the end of June of this year. For the sake of comparison, there were roughly $4.7 trillion of such securities backed by home mortgages available as of September 30, 2008

Interest Rates Still Dancing the Limbo

Interest rates for 30-year fixed-rate mortgages fell for the ninth straight week and represented a third consecutive all time record low since Freddie Mac's survey began in April 1971," said Frank Nothaft, Freddie Mac vice president and chief economist. "Since the end of October of this year, these rates have declined by about 1-1/3 percentage points, or payment savings of approximately $173 a month for a $200,000 loan. As a result, the number of refinance applications for conventional mortgages jumped over 500 percent between the weeks ending on October 31st and December 26th.
Lower rates and falling house prices are also making homeownership more affordable to potential homebuyers. For instance, house prices fell 18 percent over the 12-month period ending in October, according to the S&P/Case-Shiller® 20-city composite index. Every city posted a second consecutive month of decline in October. From its peak set in July 2006, the composite index is down 23.4 percent.