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.”