Average rates on 30-year fixed mortgages decline to 4.57 percent, lowest level in 5 decades

NEW YORK (AP) — Mortgage rates fell for the second straight week to the lowest point in five decades, but they may not be enough to jump-start the housing market.

Mortgage company Freddie Mac said Thursday the average rate for 30-year fixed loans dropped to 4.57 percent. That’s down from the previous record of 4.58 percent set last week and the lowest since Freddie Mac began tracking rates in 1971. The last time rates were lower was in the 1950s, when most long-term home loans lasted just 20 or 25 years.

Rates have fallen over the past two months. Investors, concerned with the European debt crisis, have poured money into the safety of Treasury bonds. Treasury yields have fallen and so have mortgage rates, which tend to track yields on long-term Treasurys.

However, low rates have yet to fuel home sales. The housing market has slowed since federal tax credits for homebuyers expired at the end of April.

To calculate the national average, Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.

Rates on 15-year fixed-rate mortgages increased to an average of 4.07 percent, up from 4.04 percent last week. That was the lowest on records dating to September 1991.

Rates on five-year adjustable-rate mortgages averaged 3.75 percent, down from 3.79 percent a week earlier. That was also the lowest on Freddie Mac’s records, which date back only to January 2005.

Average rates on one-year adjustable-rate mortgages fell to 3.75 percent from 3.80 percent.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for all types of loans in Freddie Mac’s survey averaged 0.7 a point.

J.W. Elphinstone, AP Real Estate Writer, On Thursday July 8, 2010, 10:15 am

NEW YORK (CNNMoney.com) — Americans are not as far behind on their bills as a year ago.

The number of consumers behind on their credit card payments fell to an eight-year low in the first quarter of 2010, the American Bankers Association said Wednesday. Overall, delinquencies across a wide-range of consumer debt categories have also fallen.

High unemployment and plummeting home values during the financial meltdown appear to have spurred consumers to shore up their finances and banks to limit their lending, resulting in fewer Americans being late with payments, the industry group said.

About 3.88% of bank credit card accounts were past due by 30 days or more in the first quarter of the year — the first time since 2002 that the rate has fallen below 4%, the ABA said Wednesday.

And ABA’s composite ratio, which tracks delinquencies across eight key categories, fell to 2.98% from 3.19% the previous quarter — a sign of modest improvement in the U.S. economy, the group said.

“Consumers are doing a much better job managing their finances, building their savings and spending and borrowing less,” ABA Chief Economist James Chessen said.

The ABA’s report confirms what other government studies have shown: Americans appear to be taking a more prudent approach to their finances.

The Commerce Department’s most recent reports on personal spending and income showed consumers stashed a higher portion of their earnings into savings in May than they did a month earlier.

But while Americans may be more careful with their money, that doesn’t mean the economy is a bed of roses.

Unemployment, at 9.5%, is still high 9.5%. There was a loss of 125,000 jobs in June. That was the first month of job losses in a year. And that doesn’t include the record-high 1.21 million so-called “discouraged workers” who want to work, but aren’t even looking because of the weak labor market.

Because consumer debt delinquencies are directly related to job losses and income trends, the ABA’s second quarter report is likely to reflect the slower economic growth, Chessen said

Odds are good that the middle-class will get to keep their tax cuts. The question now is for how long.

The 2001 and 2003 tax cuts expire in six months. President Obama had promised to make them permanent for the majority of Americans. But the reality of the federal budget’s impending shortfalls is making that a hard promise to keep.

Indeed, some influential players in Washington have signaled that it’s no longer a given that the tax cuts will be made permanent, at least not right away.

The most prominent Democrat to suggest as much is House Majority Leader Steny Hoyer, D-Md. In a speech last month, Hoyer said point-blank that lawmakers can’t ignore the budget consequences of extending the cuts.

“We need to have a serious discussion about their implications for our fiscal outlook, including whether we can afford to permanently extend them before we have a real plan for long-term deficit reduction,” Hoyer said.

In May, conservative economist Martin Feldstein, who was President Reagan’s top economic adviser and now sits on Obama’s recovery advisory board, wrote in a Wall Street Journal commentary that while he favors temporarily extending the cuts for everyone, the country can’t afford to make them permanent.

The cost of doing so for everyone would top $3 trillion over 10 years. Making them permanent for families making less than $250,000 — which tracks with Obama’s promise — would cost less but not much less: an estimated $2.2 trillion.

Two prominent Senate Democrats recently told The Hill, a newspaper that covers Congress, that the $250,000 threshold is not necessarily a done deal with Congress.

Sen. Byron Dorgan, D-N.D., who chairs the Senate Democratic Policy Committee, said he didn’t think there was “any magic” in $250,000. Sen. Dianne Feinstein, D-Calif., noted “you could go lower … why not $200,000? With the debt and deficit we have, you can’t make promises to people.”

Meanwhile, the House Ways and Means Committee is considering a one-year extension of the tax cuts for families making less than $250,000, according to a report in Congress Daily. The extension would be accompanied by a two-year “patch” to protect the middle class from getting hit by the Alternative Minimum Tax. The estimated cost of those measures combined is $270 billion over 10 years.

The political response

Looming over the debate about extending the tax cuts is the mid-term elections in November.

Republicans who like to campaign as deficit hawks are portraying the potential change in direction on tax cuts as a betrayal of Obama’s promise to the American people. Spending, they say, is what needs to be cut to tame the growth in debt.

Budget and debt experts, however, have said repeatedly that the magnitude of changes needed to bring better balance to the U.S. fiscal situation will require changes both to the spending and tax sides of the ledger.

They acknowledge that an immediate increase in taxes could harm the economic recovery. They favor extending the cuts for a short period of time but not making them permanent. Any long-term extension would constrain lawmakers as they consider broader tax reform.

Republicans and fiscally conservative Democrats have blocked benefits for the long-term unemployed because they would add $33 billion to the deficit. So it’s easy to think there would be even more opposition to a one-year extension of the tax cuts that would cost almost 10 times as much.

Ironically, though, there could be less pushback.

“Sometimes it’s easier to do things that are bigger rather than smaller,” said Clint Stretch, managing principal of tax policy at Deloitte Tax LLC. For instance, he said, it might be easier to vote for a $270 billion package because it will benefit far more Americans than the far less expensive extension of unemployment benefits.

But there will likely be plenty of objections along the way, especially in the Senate, Stretch said. Among the potential points of disagreements: Should the tax cuts be extended temporarily for everyone, or everyone except high-income households? Should the cuts be extended for one or two years? And should the extension be paid for, even though it’s not required?

The jury is also out on when Congress will take up formal legislation on the issue. Since the legislative agenda is so back-logged, especially in the Senate, a tax-cut extension bill might not come up for a vote until after the mid-term elections.

But there’s good reason to believe it may come before, Stretch said. “It’s hard to understand why you’d want to campaign defending your inaction on the middle class.”

Jeanne Sahadi, senior writer, On Wednesday July 7, 2010, 9:44 am EDT

My previous posting from 3-8-10

With unemployment at 9.7%, unemployment benefits continuing for over 2 million people in question,  consumer confidence at extremely low levels, and March 15th quickly approaching, I do not see the markets going higher.  I  see  the DJIA  falling  back  to 10,000  in  the  next  few weeks. ( I  was  wrong  for  weeks,  but  the   DJIA did  fall  below  10,000 since  3-8-10,  and  may  very  well  be  on  its  way  again) If it does, I will be buying stocks, but am not buying aggressively at current market levels.

Historically, the worst period for investing in the stock market is between March 15th, and October 15th, which starts very soon.  Last year, the markets rallied from the March 6th, lows, but during that time we were not sure if we would even have a stock market any more, relatively speaking.

Although earnings last quarter were good for corporate America, the economy needs Mr. & Mrs. America to be out spending money.  Outside of the lines I saw at Home Depot this weekend, I don’t see many people out in restaurants or cars at the shopping malls.  Even if the overall stock market is not going to go much higher at these levels, there is always stocks to buy.  If the market pulls back, that is when you want to keep buying and waiting for the consumers to help corporate America push the economy forward, and the DJIA over 11,000.

During a period of time which the markets are trading sideways, one option to use for making money is Selling Covered Call Options.  If you are not familiar with that strategy, ask your current financial advisor or some of you who are working with financial salespeople, ask them about Selling Covered Call Options.  When they tell you they don’t know much about it or use those strategies, because they only know how to promote mutual funds, you should email or call me.  I will be happy to educate you on this strategy.

If you would like me to review your portfolio, have me give you a second opinion on your investments or hire me to be your Financial Advisor/Portfolio Manager, please email me at JimWigen@GetWealthyStayWealthy.com.  Continue to check my website for updates on stocks I am buying and selling for my clients.

Over the years, the debate regarding life insurance has generally been between Term and Whole Life insurance.  Whole Life insurance provides cash value over the years, but requires a larger monthly premium commitment than Term insurance does, however, Term insurance does not build cash value over the years of ownership.

Moving forward, I would like to see people looking at Universal Life insurance versus other life insurance products.  Universal Life premiums are close to Term Life insurance premiums, however, Universal Life does not have a set “Term” which it covers you.  The only time you could outlive your Universal policy, is if you lived to be over 100 years old.

As baby boomers look for a new life insurance policy in the coming years, I would strongly recommend Universal Life insurance over Term Life insurance.  Most insurance companies offer 20-25 year Term Life policies as the longest time period you can buy, however, with people living longer these days, do you really want to be 75 to 80 years old having to buy new Term Life insurance or allowing your old Term Life policy to expire?  If your Term Life policy expires, you will continue to be covered, however, the annual premium will increase dramatically.

If you would like a Free quote or more information on Universal Life insurance, please email me at JimWigen@GetWealthyStayWealthy.com.

http://www.WHIFinancial.com

This article provides very positive news regarding the financial “crisis” in Europe! - My opinion.

FRANKFURT (Reuters) - Banks borrowed less than expected from the European Central Bank in a key funding operation on Wednesday, easing fears about how they would cope with repaying close to half a trillion euros in emergency loans on Thursday.

The relatively low take-up helps to ease concerns about bank finances which have rocked stock and debt markets this week, but also raises the risk of market interest rates ticking higher as liquidity supplies may recede.

The ECB said 171 banks borrowed 131.9 billion euros ($161.4 billion) over three months, below expectations in a Reuters poll for demand of 210 billion euros.

The amount is still the highest ever borrowed in a three-month operation but pales beside the 442 billion euros of one-year money which 1,121 banks must repay to the ECB on Thursday as the ECB’s first-ever one-year loans expire.

European shares gained on the news while the euro rose across the board and yield spreads for Spanish and Italian government bonds eased.

“All in all it is a positive signal for the European banking system,” said UniCredit fixed income strategist Kornelius Purps.

“This is, in my view, why we see the reaction in the market … some of the fear is being priced out of the fixed income universe.”

Investors are watching the euro zone money market closely for signs of the sort of problems in bank to bank lending which broadened the financial crisis in 2008. It is also vital that the market functions well to generate affordable loans for consumers and businesses, needed to spur economic growth.

Deutsche Bank economist Gilles Moec said the low take-up blunted concerns about an unhealthy dependency on ECB funds, which have focused on Spanish, Greek and Portuguese banks.

“It’s definitely a good sign and means there is still some interbank lending occurring within the European money market, and that’s it’s not just a vertical relationship between banks and the ECB,” he said.

LIQUIDITY SQUEEZE?

The roll-over accounts for less than a third of the 12-month money which the ECB has flushed through the financial system since the height of the financial crisis, pushing interbank rates to record lows. Banks, though, will still have the chance to borrow unlimited six-day funds at another operation on Thursday.

Market participants said the results of this operation would also be fundamental to gauging the extent of bank funding stress and the likely impact on interest rates.

“We still have the six-days to be filled, it’s about the total,” one euro zone money market trader said, predicting demand of about 180 billion euros.

“In my opinion there will be enough over-liquidity to keep rates around current levels … but we will see tomorrow.”

Benchmark Euribor rates have risen to 9-1/2 month highs as the repayment date approached but still remain below the ECB’s 1 percent benchmark for maturities out to five months, and overnight rates around 0.3 percent.

Commerzbank analyst Christoph Rieder said without including the results of the six-day operation, there would be a net outflow of 269 billion euros from euro-zone money markets on Thursday and this could push rates higher.

“This is a level where upside pressure on overnight rates could be building,” he said.

“Funding conditions look set to become more restrictive during this summer with the volume and maturity of outstanding ECB operations declining.”

Calculations based on ECB data show there is about 327 billion euros in excess liquidity in the system on Wednesday, suggesting banks will need to borrow around 60 billion euros over six days to keep current buffers in place.

The next crunch day for liquidity supply is September 30, when banks must repay a total of 225 billion euros in 12-, six- and three-month funds — including the latest operation — and can take advantage of the ECB’s last scheduled three-month operation with unlimited allotment to meet liquidity needs for the remainder of 2010.

(Reporting by Krista Hughes, editing by Mike Peacock and Patrick Graham)

Senate Democrats combine jobless benefits, homebuyer tax credit in effort to get GOP support

WASHINGTON (AP) — Senate Democrats are working on a new way to jump-start their stalled election-year jobs agenda while saving unemployment benefits for hundreds of thousands of laid-off workers.

The plan is to create one bill that combines the unemployment benefits with an extension of a popular tax credit for people who buy new homes.

Under current law, homebuyers who signed purchase agreements by April 30 must close on their new homes by Wednesday to qualify for credits of up to $8,000. The bill would give those buyers until Sept. 30 to complete the purchases and qualify for the credit.

Democrats hope to pick up Republican support for the bill by combining the two provisions. They have been trying for weeks to pass an extension of unemployment benefits as part of a larger tax and spending package, but the larger bill died in the Senate last week.

Without an extension, unemployment payments would continue to be phased out for more than 200,000 people a week.

Many Democrats see the benefits as insurance against the economy sliding back into recession. Many Republicans, however, worry that adding nearly $34 billion to the budget deficit will only add to the nation’s economic problems.

“Look around the world. Countries are sinking in debt,” said Rep. Dave Camp of Michigan, the top Republican on the Ways and Means Committee. “Yet the Democrat leaders of this House seem among the last to understand this reckless spending cannot go on forever.”

Senate Majority Leader Harry Reid filed a motion Tuesday to end debate on the bill and force a vote by Thursday.

“These common-sense solutions to help millions of Americans deserve bipartisan support and should be passed swiftly,” Reid said.

The House, meanwhile, overwhelmingly passed a bill Tuesday to extend the deadline for the homebuyer tax credit. House Democrats plan to vote on a bill extending unemployment benefits as early as Wednesday.

House Republicans blocked the unemployment bill Tuesday, denying Democrats the two-thirds majority they needed to pass the bill under a special procedure that limited debate and allowed no amendments. Afterward, the House Rules Committee passed a rule allowing a vote on the unemployment benefits anytime this week with only a simple majority needed for passage.

The measure, which is the same as the one in the Senate bill, would provide up to 99 weekly unemployment checks averaging $335 to people whose 26 weeks of state-paid benefits have run out. The benefits would be available through the end of November, at a cost of $33.9 billion. There are no offsets in the bill, so the cost would add to the budget deficit.

It’s a tough vote for some lawmakers who want to help constituents hit hard by the recession but are wary of being labeled big spenders. The economy is starting to pick up, but unemployment is still high as the nation continues to struggle from the loss of more than 8 million jobs. At the same time, angst over deficit spending is growing as midterm congressional elections near in November.

The homebuyer tax credit is a much easier sell. Nearly 3 million taxpayers claimed the tax credit through May 22 — totaling more than $21 billion — according to the Treasury Department.

The National Association of Realtors estimates that 180,000 homebuyers who already signed purchase agreements are likely to miss the Wednesday deadline because mortgage lenders and appraisers were swamped with borrowers trying to get approved by the end of the month.

Stephen Ohlemacher, Associated Press Writer, On Wednesday June 30, 2010, 3:07 am EDT

Postage2go.com allows you to order Postage Stamps online and have them delivered right to your home or office.

WASHINGTON (Reuters) - Senator Christopher Dodd is considering a proposal to change the funding of the financial reform bill to a funding source that would raise the Federal Deposit Insurance Corp premium ratio to 1.35 from 1.15, according to a memo being circulated on Tuesday.

Dodd, the chief architect of financial reform in the Senate, is circulating the possible offer as an alternative to a $19 billion tax on financial firms — a proposal that has threatened its final passage.

(Reporting by Rachelle Younglai)