Mortgage Rates At 37-Year Low

Freddie Mac says mortgage rates at 37-year low, spurring historic refinancing opportunity

WASHINGTON (AP) -- Rates on 30-year-fixed mortgages dropped this week to their lowest levels in at least 37 years, as the Federal Reserve pledged to pour money into the mortgage market in an effort to spur the moribund U.S. housing market.

Freddie Mac, the mortgage company, reported Thursday that average rates on 30-year fixed-rate mortgages dropped to 5.19 percent, down from the year's previous low of 5.47 percent, set last week.

The rate is the lowest since Freddie Mac's weekly mortgage rate survey began in April 1971.

Mortgage rates started falling after the Federal Reserve launched a sweeping new effort in late November to aid the U.S. housing market by purchasing up to $600 billion of mortgage-related securities and other debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks.

A daily survey found that the national average rate fell even lower Wednesday. Rates on 30-year, fixed mortgages was 5.06 percent, according to financial publisher HSH Associates, the lowest since the 1960s and down from 5.3 percent Tuesday.

It was the best news in months for anyone looking to lock in a 30-year, fixed-rate mortgage. But it was not expected to be a cure-all, and borrowers already in danger of foreclosure probably won't be able to take advantage because only borrowers with stellar credit can qualify.

"It's a call to action for homeowners looking to get out of adjustable-rate mortgages," said Greg McBride, senior financial analyst at Bankrate.com. "Unfortunately, it's not an equal-opportunity party."

Faced with a dramatic surge in defaults, both Freddie and its sibling company, Fannie Mae, are stepping up efforts to prevent foreclosures.

The federal agency that regulates the two companies anticipates they will modify about 75,000 troubled loans next year, up from about 60,000 this year. The program applies only to borrowers who have missed three months of payments and have not filed for bankruptcy and still live in their homes.

Most of the increase is expected to result from a mass loan modification program for loans owned by Fannie or Freddie that was launched this week. Loan servicing companies, which collect mortgage payments for Fannie and Freddie, are expected to send out thousands of letters to eligible borrowers in the coming weeks.

But for borrowers who are current on their mortgages, they can take advantage lower interest rates, refinance and save money.

The average rate on a 15-year fixed-rate mortgage dropped to 4.92 percent from 5.2 percent last week, Freddie Mac said.

Rates on five-year, adjustable-rate mortgages fell to 5.6 percent, compared with 5.82 percent last week. Rates on one-year, adjustable-rate mortgages dropped to 4.94 percent, from 5.09 percent last week.

The rates do not include add-on fees known as points. The nationwide fee for 30-year and 15-year mortgages averaged 0.7 point last week. The fee on five-year, adjustable-rate mortgages averaged 0.6 point, while the fee on one-year adjustable-rate mortgages averaged 0.5 point.

Mortgage application volume jumped last week, fueled by borrowers seizing on lower rates to refinance home loans, the Mortgage Bankers Association said Wednesday.

The trade group's seasonally adjusted application index rose 2.9 percent for the week ended Dec 12.

The Federal Reserve, aiming to free up lending and jolt the economy back to life, on Tuesday cut the federal funds rate from 1 percent to a target range of zero to 0.25 percent and pledged to keep funneling money into the market for mortgage investments.

Mortgage brokers are already reporting a surge of calls from borrowers trying to take advantage of the Federal Reserve's extraordinary actions.

On Wednesday, some mortgage brokers were quoting interest rates of close to 4.5 percent for people with strong credit and hefty down payments.

Falling interest rates mean Americans could suddenly find billions of extra dollars in their pockets at a time when consumers have sharply cut back on spending in the face of rising unemployment and declining household wealth. But many experts believe that the interest rate cuts alone won't be enough to jump-start the economy.

Work To Start On Seaholm Redevelopment Late Next Year

By Shonda Novak
AMERICAN-STATESMAN STAFF

Construction could begin by late next year on the $117 million redevelopment of the former Seaholm Power Plant in downtown Austin.

The public-private venture is expected to transform the decommissioned power plant on West Cesar Chavez Street into a mix of shops, offices, condominiums, a boutique hotel and special-events space.

The Austin City Council last week approved a new taxing district to cover some costs of the project, including the renovation of the power plant and the construction of streets and a public plaza.

The taxing zone will capture new property and sales tax revenue generated within the 7.8-acre project over 30 years. The new revenue will be used for future payments on debt issued to finance $8.1 million worth of work.

The taxing zone "is a way for the city to participate in the Seaholm project without having to come up with out-of-pocket funds," said John Rosato, principal with Southwest Strategies Group, the lead developer in Seaholm Power LLC, which the city chose to redevelop the site after a competitive selection process.

The city is forecasting that sales and property taxes will be enough to cover the bond payments. However, if the project doesn't generate as much in taxes as expected, the city will be responsible for making the payments, said Jeff Knodel, Austin's deputy chief financial officer.

After the bonds are repaid, taxes generated by the project will go into the city's general fund.

The city expects to spend an additional $10.5 million on utility and water work and a parking garage west of the site. The city plans to pay for that work from parking revenues and capital improvement funds.

The developers will pay most of the cost for the total project.

"The developers would have the vast majority of the risk," said City Council Member Brewster McCracken, who has been a champion of the project.

City leaders long have wanted to create a lively corridor of development along West Cesar Chavez, Second and Third streets. Today, the city will officially decommission the Green Water Treatment Plant east of Seaholm as part of that initiative.

In the summer, the City Council selected a developer group led by Trammell Crow for that six-acre project.

The developers will buy the land from the city.

The focal point of Seaholm will be the preservation of the landmark power plant, a 136,000-square-foot building with more than 110,000 square feet of usable floor space. Once renovated, the building will house an events center, offices, shops and restaurants.

Jeff Trigger and his La Corsha Hospitality Group will oversee the construction, management and operations of a 180-room hotel planned for the project. Trigger is the former managing director of the Driskill Hotel in downtown Austin.

Trigger said there's interest from "Austin-centric retailers" who want to be part of Seaholm.

"We're not going to be generating a whole lot of electrical power, but we sure want to generate a lot of energy," Trigger said. "As you can tell, I'm jazzed about this."

The groundbreaking is expected late next year, starting with excavation at the site. Next would come construction of an underground garage and foundation work for some of the buildings, along with work on the power plant.

Austin To See Modest Job Growth

Survey finds "fair" outlook for 2009.

By Claudia Grisales
AMERICAN-STATESMAN STAFF

Central Texas employers have modest plans to add jobs in the first three months of 2009, according to a Manpower Inc. survey set to be released today.

The employment services firm, which surveyed a sample of employers in the country's 200 largest metropolitan regions, found that 15 percent of firms in the five-county area planned to add jobs in the first quarter of the new year.

That figure is significantly lower than the anticipated hiring in the Houston and Dallas areas, but it is on par with the study's national findings: 16 percent of surveyed U.S. employers said they expect to add jobs during the same period — the smallest share of employers with hiring plans in the past five quarters of tracked data.

"A significant percentage ... of employers plan to hold staff levels steady," Jeffrey Joerres, chairman and CEO of Manpower, said in a statement. "This may suggest that a majority of employers are carefully monitoring the uncertain economic environment prior to making any additional employment decisions."

So far, Central Texas has continued to add jobs and have relatively low unemployment, escaping the full impact of the national economic turmoil. However, the Manpower study suggests that the region will continue to feel the effects of the downturn in the new year.

The Manpower study says 70 percent of area employers expect to maintain their current staffing levels, 10 percent expect to cut jobs and the remaining 5 percent are unsure. The strongest sectors locally include construction, financial activities, leisure and hospitality (which includes hotels) and government.

The local survey "looked better than I anticipated," said Shirley Sanders, branch manager for Manpower Inc.'s South Austin office. "I thought we would have a higher percentage expecting to reduce. So we have modest gains, which is encouraging."

Overall, 67 percent of 31,800 surveyed employers expect to "sit on the sidelines," Jonas Prising, president of Manpower North America, said in a statement. Thirteen percent expect to cut jobs, and 5 percent are unsure.

The Houston region, a 10-county area that includes Sugar Land and Baytown, is among the top places for hiring, the survey found. Manpower reported that 26 percent of sampled employers there said they plan to add jobs, 62 percent plan to maintain staffing levels and 6 percent plan to cut jobs.

Twenty percent of employers in the 12-county Dallas region and 17 percent of San Antonio employers said they plan to add jobs.

In a broader measure of the overall health of the job markets, several Texas cities made the list of strongest areas. The Texas cities included oil towns such as Beaumont, Houston and Amarillo and border cities including Laredo, McAllen, Brownsville and El Paso.

Among major tech cities, San Jose, Calif., ranked among the country's weakest job markets. Only 9 percent of the area's employers plan to add jobs in the first three months of 2009 while 17 percent said they planned job cuts.

The job outlook was more like Austin's in other tech cities. Seventeen percent of surveyed employers in Seattle said they planned to hire, and 13 percent of surveyed employers in Raleigh, N.C., said they would add jobs in the first quarter.

cgrisales@statesman.com; 912-5933

Mortgage Rates Sink to 4 1/2 Year Low

Rates on 30-year fixed rate U.S. mortgage loans fell last week to their lowest point since March of 2004, a more than four and a half year low, according to data from mortgage company Freddie Mac Thursday.

“Following the release of the November employment report, which showed the largest monthly decline in jobs since December 1974, bond yields fell slightly this week allowing fixed-rate mortgage rates room to ease back a little further,” said Frank Nothaft, Freddie Mac vice president and chief economist.

The 30-year fixed rate mortgage carried an average rate of 5.47 percent, excluding points, during the week ended December 11, a drop from 5.53 percent the previous week. At the same time last year, the average rate was 6.11 percent.

Rates on 15-year fixed rate loans also fell, declining to 5.20 percent from 5.33 percent the previous week. One year ago, the average rate on these loans was 5.78 percent. The last time the 15-year mortgage rate was that low was at the beginning of the year, during the week of February 7, 2008, when the average was 5.15 percent.

One-year Treasury-indexed adjustable rate mortgages had an average interest rate of 5.09 percent, an increase from 5.02 percent one week earlier. During the same week of 2007, the average one-year ARM rate was much higher at 5.50 percent.

Things in the mortgage arena remain unstable, leaving the future of interest rates equally volatile, according to Freddie Mac.

“The housing market still hangs in the balance, however,” commented Nothaft. “On a year-over-year basis, after rising in both August and September, pending existing home sales fell 1.0 percent in October, based on figures from the National Association of Realtors®. Meanwhile, conventional mortgage applications for home purchases over the week ending December 5th were up 2.0 percent from four weeks prior, but were still 51 percent below the same period last year, according to the Mortgage Bankers Association.”

3 News Stories Every Homeowner Should Know

During tough financial times, news is king. A simple announcement from the media can instantly send the financial and mortgage markets racing in either direction. As the financial markets continue to adjust to the credit crisis, current and potential homeowners will have to adjust and react immediately as well.

Headline #1: Mortgage Rates Plummet Thanks to the Fed
In late November, an announcement that the Federal Reserve and US Treasury would purchase up to $600 billion in asset-backed securities over the next year or so sent mortgage rates on many programs plunging below 6%. This is a bold step by our federal regulators towards a more stable economy. Not only will this increase the availability of credit, but it should help support the housing and financial markets as well. For new buyers and for homeowners looking to refinance, this is great news – especially borrowers with adjustable-rate mortgages.

Current Homeowners – those who have been on the fence about refinancing should investigate their options quickly. Remember, interest rates are incredibly volatile and extremely susceptible to news events that directly affect the economy, especially in today's marketplace. Whether you're looking to lower your interest rate or hoping to switch into another more stable program, applying now and locking in a lower rate will save you a lot of money. Make sure your mortgage professional has the knowledge and ability to access and follow the performance of mortgage-backed securities in order to get the best mortgage pricing available.

New and First-time Buyers – interest rates near historic lows, home prices at 2003-2004 levels in many markets, and a tax credit up to $7,500 for first-time buyers (anyone who hasn't owned a home in the last three years) all make for a great opportunity to purchase the home of your dreams at a major discount.

Cash-strapped Borrowers – low and no down-payment programs still exist through the government, including Federal Housing Administration (FHA), the Veterans Benefits Administration (VA), and the US Department of Agriculture (USDA).

For FHA loans, the down-payment requirement has increased this year, but it's still only 3.5% which isn't bad for a government-secured mortgage. With a VA loan, 100% financing is available to eligible veterans and, for non-vets, 100% financing is available in many communities through a loan guaranteed by the USDA. It's important to note that VA and USDA loans also do not require monthly mortgage insurance like FHA loans, creating even more savings for these special mortgages. If you're looking to take advantage of today's buyers' market, be sure to ask your mortgage professional about these special programs.

Headline #2: Rescue Program Offers Hope for Homeowners
In Washington, federal rescue and stimulus packages have made headlines for most of 2008. The intent of these programs has been both to stabilize the credit markets and to encourage lending to companies and consumers alike.

For the majority of struggling homeowners, however, these programs offer little relief from declining home prices, increased living expenses, and decreasing incomes.

Legislation passed earlier this year did contain a well-intentioned lending program called Hope for Homeowners (H4H) designed to help homeowners behind on their payments or who owe more on their mortgage than their home is currently worth. The $300 billion program aimed to replace the consumer's old loan with a new one set at 90% of the current value of the home. Lenders would absorb the difference or loss. In return, the consumer would pay higher than normal FHA insurance premiums, agree to share the remaining 10% equity with the government, and to split future appreciation on the home. There are, of course, other restrictions on how the loan should be structured and who qualifies, so talk to your mortgage professional to see if this option is right for your individual goals and needs.

Also, be prepared for some hitches and delays when it comes to H4H. Unfortunately, the program as it stands today is deeply flawed, and may offer very little hope for many distressed homeowners as it is currently applied. The main problem with H4H is that the program was introduced to the marketplace without requiring full participation from lenders. In other words, it is completely voluntary, resulting in a program that just doesn't meet the needs and demands of the homeowners who need it the most.

The Department of Housing and Urban Development (HUD), however, recently made some changes to the program that go into effect in mid-December. These changes are designed to engage (though still not require) more lenders to participate. It's hard to say how these changes will enhance H4H, so be sure to investigate any and all options and alternatives available with your mortgage professional.

Headline #3: Loan Modification Offers Alternatives to Foreclosure
Loan Modification is another "voluntary" program designed to help homeowners facing foreclosure. A favorite of the media, this program seeks to change the terms of a mortgage, including a reduction in the interest rate (permanently and temporarily), an extension in the term of the loan, a reduction in the principal balance, or some combination of the three.

There are two ways a consumer can approach getting his or her mortgage modified. The first is to reach out to the lender directly, detailing the situation and waiting for the lender to offer a plan. The second is to employ a professional to handle the negotiations on his or her behalf. (September 2008).

The primary benefit to employing a professional to assist you with a modification is knowledge and experience. They know what they're doing. A loan modification company or consumer credit company is accustomed to working with lenders to obtain a successful modification. The key for you then is to work with someone skilled in obtaining the best modification for your needs. Be sure to get a referral from your real estate or mortgage professional, or at least someone you know who has successfully gone through the process themselves. Whatever you do, do not be afraid to ask for and check all references because, unfortunately, there are scammers out there looking to take advantage of desperate homeowners during this extremely vulnerable time in their lives.

This doesn't mean you won't pay for the services of a professional. The typical costs for employing a loan modification company could be in the range of $3,000 to $5,000 depending on your situation and if you employ a company to negotiate for you as well. Items that can impact the fee can be the number of loans you need modified and the company you select.

Choosing a consumer credit counseling company may not cost you anything, but the expertise of the people you work with and the outcome itself may not be equal to employing a company that is dedicated solely to mortgage modifications.

One key point to remember is that the lender, while often willing to work with you, always puts its own interests first. This means that, while the lender may be willing to work with you personally to avoid a more substantial loss on its part, the solution offered may not be the best possible scenario available to you. Keep in mind, with a loan modification, you are asking the lender to take a loss, and you can bet that the lender will always try its best to minimize these losses.

Whichever path you choose, timing is of the essence. If you're struggling to make your payments or you've already fallen behind a few months, this is not the time to bury your head in the sand. Communication is the key to your success. This means answering the phone calls and opening up the letters from lenders. It means getting on the phone and calling your lender's loss mitigation department and following any advice they offer.

Unfortunately, accurate statistics are not currently available on the success rate of homeowner-negotiated transactions versus those who utilized the services of paid professionals. The best advice we can offer is to find out the right course of action for your individual needs. You've already taken the first step. You've read this article and you've learned the basic steps you need to take to save your home. Don't wait until it's too late.

Which Cities Will be Strongest During the Economic Crunch?

According to Bizjournals, they will be:

Las Vegas, NV
Raleigh, NC
Cape Coral-Fort Meyers, FL
Austin, TX
Phoenix, AZ
McAllen-Edinberg, TX
Houston, TX
Salt Lake City, UT
Wichita, KS
Charlotte, NC

Texas has three cities on the list and Austin is at #4. What Bizjournals looked at was four key indicators — population, private sector employment, per capita income and gross metropolitan product. Read the story here.

Market Update

September Austin real estate stats are below. Average and median prices are doing what they’ve been doing most of the year, which is treading water, trending down somewhat, but most notable is that the expired and withdrawns continue to rise, and for September moved past the 50% mark, meaning over half of the homes that departed the MLS in September did not sell.

Here is a quick summary of the September 2008 sales stats:

• Number of homes sold is down 14% (24% last month) from 1,763 Sep 2007 to 1,512 Sep 2008. (This represents a decrease in the slowing of sales)
• Average list prices in Austin were down 3.62% over the same month last year to $257,761.
• Average sold prices in Austin were down 3.65% over the same month last year to $248,026.
• Median sold price was flat at 0%, remaining at $185,000.
• Average List to Sold price about even with last year at 96.25%, down from 96.25% last year.
• Avg sold price per square foot is down 4.33% to $116 compared to $122 a year ago in Sept.
• Avg days on market is up 11 days (20%) from 56 last year to 67 this September.
• Median days on market is up 11 days (30%) from 37 days last year to 48 this year.
• Number of “Not Sold” (exp or withdrawn) is up 28% over the same month last year, to 53% of all removed listings.

So, while the numbers are trending downward, they continue to hold somewhat steady as a large amount of inventory simply goes away each month, leaving the homes that actually sell to paint a somewhat better picture of the market than the average seller experiences.

Austin Real Estate Sales Market Update for Sept 2008
Homes only (condos, duplexes, etc. not included) compiled from Austin MLS data
	Aug 2008	Sep 2008	Sep 2007	Yr % Change
# Sold	1837	1512	1763	-14.24%
Avg List	$269,807	$257,761	$267,445	-3.62%
Med List	$204,409	$189,900	$189,900	0.00%
Avg Sold	$259,500	$248,026	$257,414	-3.65%
Med Sold	$199,000	$185,000	$185,000	0.00%
Sold/List %	96.18%	96.22%	96.25%	-0.03%
Avg SQFT	2187	2131	2116	0.71%
Med SQFT	1986	1924	1942	-0.93%
Avg $ SQFT	$118.66	$116.39	$121.65	-4.33%
Avg DOM	63	67	56	19.64%
Median DOM	43	48	37	29.73%
# Expired	721	797	581	37.18%
# Withdrawn	857	891	660	35.00%
Not Sold	1578	1688	1241	36.02%
Not Sold %	46.21%	52.75%	41.31%	27.69%