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Rate Update

Mortgage interest rates continued their slide last week, reaching new lows for 2011! Unfortunately, that was on the only silver lining to otherwise dark economic skies. Housing numbers released this week confirm that the double-dip is here as national home prices fall to their lowest level since the housing crisis started. The S&P/Case-Shiller 20-City Home Price Index fell for the seventh month in a row, a 3.6% decline from March 2010 and 0.2% from the month prior. The monthly gauge was the weakest since March 2003 and the quarterly gauge was the weakest since 2nd quarter 2002. Other housing news did not fare any better. Pending Sales of Existing Homes were down 12% in April and Existing Home Sales fell 0.8% in April. Core Logic estimated about 1.8 million homes are in a delinquent status, comprising the so-called “shadow inventory” set to add to the unsold supply of 3.87 million homes on the market at the end of April. Not surprisingly, the Homeownership Rate is now back down to the level of 1998, and some experts believe it could decline even further. While the national data is as bad as it gets, home prices in SLO County look much more stable. The median price in SLO County has not shown any evidence of a double-dip and actually rose 3.5% from last month and up $2,500 year-over-year.

Housing wasn’t the only dismal data released last week. The Unemployment Rate inched up in May, rising from 9% to 9.1%. Only 54,000 jobs were created in May, the fewest in eight months. Private companies also hired the fewest workers in nearly a year while the government shed 30,000 jobs. Initial Jobless Claims were at 422,000, above the level necessary for sustainable job growth. Manufacturing grew at the slowest pace in 20 months in May. Oh, and Moody’s Investors Service warned that it might downgrade the US government’s credit rating as the stalemate over whether to increase the nation’s debt limit continues in Congress. After all this, it’s no wonder that Consumer Confidence declined in May to a six-month low.

Currently, the 30 Year Fixed is 4.250% (4.341% APR) and the 15 Year Fixed is 3.375% (3.684% APR). There is not a lot of economic news items scheduled this week. The Fed Beige Book highlights the week and will be released on Wednesday, one of eight Beige Book reports published each year. Each of the 12 Federal Reserve Banks gather anecdotal information on current economic conditions in their Districts through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources.

Written by Central Coast Lending - Go to Central Coast Lending's Website/Profile