March 2009

Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending March 27th, 2009, my take on the week’s financial news and how it affected Illinois mortgage rates. One of the major factors in getting the economy back on track will be getting the banking system re-capitalized and lending again. The biggest obstacle to that goal is what to do with all the toxic assets, mostly bad pools of mortgages, that are corroding the balance sheets of the big banks. Treasury Secretary Geitner took a first stab at a plan nearly two months back, but that attempt was a bust, no specifics and no real plan. He tried again this week, announcing the Public-Private Investment Program (PIPP) which will use some public funds along with big government guarantees  to encourage private investment in these bad assets and actually make a market for what has up to now…

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Home Sales Up -But That is Normal in the Spring Market

The report for existing home sales came out this week and it surprised many observers by being positive. Sales in February were up by 5.1% over January. But this number is a little misleading. This is a month to month comparison, and compared to last February we are still down about 4.6%. The increase in sales is more of a seasonal factor than an unexpected surge in buying. Every year around this time, new home buyers start shaking off the winter doldrums and begin to look for new homes. Here in the Chicago area it is called the Spring Market, and a hefty percentage of the homes sold in the year occur between February and June. No matter what the economic conditions, there are a couple of big reasons why this happens like clockwork every year: First time home buyers file their taxes and their tax return checks help give…

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Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending March 20th, 2009, my take on the week’s financial news and how it affected Illinois mortgage rates. Underneath his conservative banker’s suit, I wonder if Ben Bernanke wears a Lycra suit with a big S on his chest? Behind the closed doors of the Fed Open Market Committee meetings does he fly around the room and challenge the other Fed members to arm wrestle? He seems like a mild mannered guy but he flexed his muscles again this week. Big time. With interest rates set at 0 the fed has been active using the other tools in its utility belt, providing extra financing and pushing money out the door as fast as it could. But this move is something different. This time Ben and the Fed went down to the basement and cranked up the printing…

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Fed issues Statement – Mortgage Rates Dropping

Yesterday I wrote about 2 possible Fed actions that could effect mortgage rates for the better – one, a commitment to extend their program to purchase mortgage backed securities, and two, if they decided to buy treasuries. They just came out with their statement (FOMC Statement), and they decided to do both. The Fed has extended their purchase plan so they will buy an additional $750 billion in mortgage bonds, for a total of $1.25 Trillion. They also plan on buying $300 billion in long term treasuries over the next six months. The market is approving these moves, and the 10 year Treasury note is up over 400 basis points as I write this (absolutely HUGE), and mortgage backed are skyrocketing, too. So what does this mean for home buyers and those sitting on the fence waiting for the right time to refinance? It is time to pull the trigger,…

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Fed Meeting Today – How Will this Influence Mortgage Rates?

The Federal Open Markets Committee (FMOC) begins its 2-day policy meeting today. The FMOC is a 12 member committee made up of the Board of Governors and the five regional Fed Reserve Bank presidents. The Fed sets monetary and economic policy and the decisions it makes have a big impact on our over all economy. The goal of the Fed is to promote growth and employment while keeping prices stable, that is, grow the economy while keeping inflation in line. This is always a balancing act. Last year there was a split among members of the FOMC with some more concerned about a return of inflation while others were more focused on the economic slowdown. Now it seems that all parties are in agreement that the economy has to pull out of its dive and grow, or deflation will be a much bigger problem than future inflation. Controlling interest rates…

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Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending March 13th, 2009, my take on the week’s financial news and how it affected Illinois mortgage rates. The dark clouds parted this week and we saw a few rays of sunshine. The stock market went up 4 days in a row for a 9% increase on the Dow and its best showing since December. Citi Group and Bank of America, the two mega-banks under the most pressure, announced that they were profitable so far this year and wouldn’t need any more infusions of federal funds. GM said they could muddle through for a little longer, too, and consumer confidence, though still bleak, came in a tad higher than expected. Retail sales also came in better and the first signs of the stimulus showed with a little extra in people’s paychecks this week. So does this mean…

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What Does a Bottom Look Like? Is the Chicago Area Real Estate Market Close to the Bottom?

It’s hard to watch the news or read the papers without feeling depressed. Unemployment is up, the stock market is down. Fear is in the air and we wonder how much worse this can all get – which makes me think we are getting close to the bottom, or at least close to the bottom of the housing market. The economy in general is still likely to get worse. Unemployment is growing at an alarmingly fast pace, and that is likely to continue for at least several more months. The stock market could get worse, too, and we won’t see any economic growth until something is done to get banks to start lending money again. But housing was the first sector to fall, and odds are that it will recover before the economy bounces up. Here are some reasons I think we are at, or close to a bottom in…

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Illinois Mortgage Rates Weekly Update

Welcome to Illinois Mortgage Rates and News week in review for the week ending March 6th, 2009, my take on the week’s financial news and how it affected Illinois mortgage rates. The question of the week is, where is the bottom? This question could apply to a number of things, the stock market, unemployment, the housing crisis and our over all economy. These are all interrelated, of course, and bad news in one area means more pressure on the other areas. For now we are trapped in a cycle and the negative feedback loop has us in free fall, wondering if there even is a bottom. Markets run on a battle between fear and greed and right now fear is winning, hands down. We’ve gotten used to bad news, and as a rule, much of the bad news is already baked into the market prices of both stocks and bonds….

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Home Affordable Mortgage- Refinancing and Loan Modifications

The details of the Home Affordable Program, the Obama mortgage plan, have now been released. The initial response is that this is a move in the right direction and will help a lot more people than previous plans did. The plan is broken into 2 parts, one for homeowners who are behind on their mortgage and facing foreclosure, and the other for homeowners who are paying off their loan as agreed, but haven’t been able to take advantage of refinancing into a lower rate because they have lost equity in their homes. Here is a quick breakdown of both parts of the plan: Home Affordable Refinance This part is designed to help homeowners who are well qualified but can’t refinance because they have lost equity in their homes. It is available only for those homeowners whose mortgages are held by Fannie Mae or Freddie Mac. The refinance can be done…

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The Good News About a Bad Economy

These are perilous times. The news is filled with stories of unemployment, foreclosures and bailouts. If you have a 401K or stock account, your retirement date just got pushed further into the future. According to the ADP employment report released today, 697,000 jobs were lost in February, 70,000 more than expected. It seems like bad news is the only news and our economic future is obscured by dark clouds. But the thing about dark clouds is they tend to have a silver lining, and that is the case now. The silver lining here is that homes are becoming affordable again – especially for first time home buyers, or those who don’t have a home to sell. How affordable a home is depends on several factors, home prices, interest rates and your income among them. Here are 3 ways that homes are more affordable now: Home prices are down – Over…

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