Dennis' Mortgage Blog

Question of the week:  Question Free This Week!

Answer:  In honor of Independence Day I am foregoing a question of the week. 

While we celebrate our Declaration of Independence from England on July 4^th, it was actually on this day, July 2, 1776, that the Continental Congress passed a resolution that “these United Colonies are, and of right, ought to be, Free and Independent States."

John Adams at the time felt that future generations of Americans would celebrate “this day,” meaning July 2^nd, as the time the nation became free from English rule.  Being Americans we celebrate Declarations not resolutions!

The ability for American families to own their own homes and land is a freedom that has endured throughout our history.  Home ownership is not a right enumerated in our Constitution, but it is a freedom that endures in our hearts and our character.  I am proud to be in an industry that enables home ownership and the realization of the American Dream.

As our nation celebrates its 234^th year of Independence with parades, picnics, barbecues and fireworks, I am hopeful that everyone takes a moment to appreciate the boldness, the courage and the vision our ancestors had in declaring an independent nation.  Our rights, freedoms and liberties are precious, at least as precious as our homes and families.

Happy Independence Day!

Have a question for me?  Ask me!

Not a good week for economic data and prognostication.  Continuing the trend of data that showed an economy whose recovery slowed way down in May, news on consumer confidence and employment have made it difficult for even the most optimistic of economists or pundits to take pause. 

Our economy is dependent upon the consumer, who is responsible for approximately 70% of our Gross Domestic Product.  Consumer sentiment is a subjective index, but consistent in its sampling and questions and as such is an important index for economists, and important to us and mortgage rates to investors.  Consumer confidence fell from 62.7% in May to 52.9% for June, barely half of those polled have a positive outlook, i.e. confidence, in the economy. 

The shrinking confidence is supported by and reflected in declining consumer spending and increased savings.  Not only are individuals but so are companies and corporations as I stated a few weeks ago.  Consumers increasing savings and decreasing spending hurts retailers.  Companies, i.e. employers, increasing savings and decreasing spending hurts employment. 

Jobs numbers this week provide some opportunity for false optimism but at their core reflect a very troublesome job market.  After adding barely 30,000 jobs in the private sector in May, the Labor Department reported today that 88,000 jobs were added in the private sector in June.  Meanwhile because of the temporary census hires now being laid off as their jobs come to an end over 200,000 former government employees will not be seeking work again.  With over 14 million Americans unemployed, adding 120,000 jobs over two months to the private sectors gives no cause for optimism.

Searching for the silver lining in the cloud of economic news, the data continues to support the Federal Reserve retaining near zero interest rates for a very extended period of time.  This is good news for those with equity lines, adjustable rate mortgages and those seeking mortgages in general. 

Rates for Friday July 2, 2010:  Rates are near points of resistance and with some inter day movement have been fairly flat week to week, fairly flat at very low rates.  We are in a new rate range that coming out of the long weekend we will know if the range will extend or bounce. 

FIXED RATE MORTGAGES AT COST OF 1 POINT*

30 year conventional 4.25%                              Down 0.125%

30 year conforming-jumbo 4.50%                     FLAT

30 year FHA    4.25%                                      FLAT

30 year FHA jumbo 4.50%                              FLAT

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. 

Please note that rates quoted are based on average of several lenders for a purchase transaction with 20% down payment with an impound account for taxes and insurance and a minimum FICO score of 740; APR is not quoted as it is dependent upon specific loan amounts, lenders and services selected.  Numbers provided are for comparative purposes only.

July 4^th weekend, signifies not only our national celebration but also that the year is half over.  Has it gone by quickly for you or slowly?

Have a wonderful weekend, Happy Independence Day! 

Have a great week,

Dennis