Dow Enjoys Strong Week on Solid GDP, Euro Zone News

Last week, the Dow enjoyed significant gains and broke the 12,000 mark for the first time since early August.  The market benefitted from a European debt deal and better-than-expected Gross Domestic Product (GDP) growth in the third quarter.

On the home front, the US economy grew at a 2.5 percent annual rate from June through September.  This is the strongest quarter of 2011 and the best we have seen in a year.  While positive, the number is still less than the first and second quarters of 2010, which saw growth near 4 percent.  The number is enough to ease double-dip recession fears, but there are still a number of reasons to be cautious.  Unemployment remains over 9 percent and disposable income actually fell in Q3. We will need to see more positive numbers before we are convinced of an optimistics economic outlook.

European debt uncertainty has dragged on the market for months, and the recent debt deal has given cause for optimism of much needed stability from the region. European leaders persuaded private banks and insurers to accept a 50 percent loss on Greek government bonds, which will cut Greece’s debt by 100 billion Euros and bring debt down to 120 percent of GDP (from 160 percent).  The EU is also aiming to complete a package of full aid for Greece by the end of the year to total 130 billion Euros. Euro zone leaders also agreed to increase the European Financial Stability Facility to 1 trillion Euros. The fund had dropped to 290 billion Euros after giving aid to Ireland, Portugal and Greece.

A few notes about the housing market.  Rob Chrisman puts out Daily Mortgage News and Commentary on his Blog, and is an excellent source of information.  In a recent post he noted that CoreLogic estimates that about 53 percent of borrowers with equity in their homes are paying above market rates, which is defined as the current average plus 1 percent.  Nearly 36 percent pay more than 5.5 percent, and nearly 17 percent pay above 6 percent.  These numbers suggest that plenty of home owners can still benefit from refinancing.

Also from Mr. Chrisman – September saw a 5.7 percent increase in New Home Sales, which is the highest rate in five months.

Rates this week have ticked up as influenced by the strong market showing.  We have the 30 year fixed at 3.750 percent (3.902 percent APR), and the 15 year fixed at 3.000 percent (3.345 percent APR).

We will be looking at October’s economic numbers over the coming weeks as they are released.  This should give us some further context for the market’s strong finish to the month.  Check in with our Facebook and Blog for this information as it comes.


I just watched the news and saw all the snow back East along with the traffic jams some accidents have caused.  Then I went outside (9 pm) and enjoyed the weather we are having here!!!   Another great weather day tomorrow (and for the rest of the week it appears).

Take Credit Card Payments…Yourself!

There’s a really cool product I just picked up. It’s called the Square and it’s a small credit card reader that plugs into an IPAD, Iphone, or Android device. You need to download the free app, configure the bank account you want payments to go to and that’s it.

You can use it when you sell something to someone on Craigslist or just to get payment from a friend that owes you some money. Small businesses and non-profits can use it to take payments or donations. It will also email a receipt to the person.

It doesn’t cost anything for the Square or the app. You can pick one up from Target for $10 which includes a code to redeem on their website and they’ll put $10 into your back account or just register on their website and they’ll ship you one for free.

It only costs 2.75% for the transaction which is very reasonable for a credit card transaction. There are no other fees.

Check it out!


HARP Program “Eased” to Expand Refinance Eligibility

Breaking News:  The Federal Housing Agency has eased refinance standards under the Home Affordable Refinance Program (HARP) in order to help homeowners qualify for current low rates.  The modification eliminates the cap of 125 percent loan-to-value ratio, removes the representations and warrants rule, and reduces some of the program fees.  The program is directed at “responsible” homeowners that have a mortgage backed by Freddie Mac or Fannie Mae, and are current on loan payments, but are not able to take advantage of the low rates for refinance due to a loss of home equity.

The original HARP program was passed in 2009 under the Obama Administration and has been underwhelming.  When passed, the program sought to bring relief to 5 million struggling homeowners with Fannie Mae or Freddie Mac backed loans, but only 894,000 have refinanced thus far.  Part of the problem has been that banks are reluctant to fund loans over 105 percent LTV due to an assumed risk, in which banks assume liability for any mistakes during underwriting and must purchase back the loan from Freddie or Fannie.  With the cancellation of this representations and warrants rule, it is hoped that banks will loosen lending standards.

This time around the program has lower standards, and is aiming to enable another one or two million refinances.  With 11 million homeowners underwater, many analysts say that the action is not enough and the impact will be minimal.  Other analysts suggest that there is little reason to think banks will relax lending standards further.  Some are optimistic, stating that refinance to record low rates will free up money for families to spend in other places.

FBR analyst Paul Miller told the San Francisco Chronicle that Fannie and Freddie still have 22 to 23 million mortgages with an interest rate above 5 percent.

If you have any questions about the program specifics and want to learn more, give us a call at 805.543.LOAN.  Use us as a free resource.

The Senate voted to reinstall elevated conforming loan limits on mortgages backed by the government (Freddie Mac and Fannie Mae), and the bill will now go to the House of Representatives for consideration.  The high balance limit for San Luis Obispo County is 561,200, but had been elevated to 687,500 under the previous extension.  Senators Johnny Isakson (R-Ga) and Robert Menendez (D-N.J.) introduced the extension after higher limits expired on September 30.

Foreclosure activity decreased year-over-year in the third quarter.  There were 610,337 properties that filed for foreclosure from July through September, down 34 percent from last year.  This number is expected to increase through the coming months.

Mortgage applications dropped 15 percent last week, with a 17 percent drop in refinance and a 9 percent drop in purchase.  According to the Mortgage Bankers Association, purchase applications are the lowest they have been since 1996.

Central Coast Lending offers rates starting with a low of 3.750 percent (3.902 percent APR) for the 30-year fixed and 3.000 percent (3.271 percent APR) for the 15 year fixed.

Make sure to like our Facebook for updates on the housing market and our Blog for lengthier posts with our own take.


Missing Persons Cancels Concert Appearance

Missing Persons won’t be performing at 80’s concert tonite at the Madonna Expo Center.  I got an email yesterday saying the lead singer had dehydration and was under doctors orders to not perform for the next 10 days.  They replaced Missing Persons with a mid-80’s band I really don’t care to see but I’m still excited about seeing the other 4 groups.

New IPhone 4s

I picked up an IPhone 4s to replace the Android-Thunderbolt I had recently upgraded to.  The Thunderbolt’s battery was horrible and other things about that phone I didn’t like.  I’ve had the IPhone for not quite a week and LOVE it.  The personal assistant, Siri, is a game changer, IMO.  I never was good at sending text messages on these small keyboards but now with Siri, it’s fast and easy.

I found this list of commands Siri recognizes. Very cool!

Here’s a photo I took yesterday with the new IPhone’s camera.


Europe Debt Debate Could Effect Stock Market This Week

Expect for some market volatility this week, as European debt problems come back into focus with an important Thursday vote in Greece. The Greece parliament will vote on another round of austerity measures, including tax increase, pension cuts, and a measure that would effectively eliminate the minimum wage for millions of workers.

Currently, Greece relies on the European Union and the International Monetary Fund for cash support to keep the government meeting payroll. In return, the country has used “austerity measures” to curb spending and raise income in an attempt to get out of its unsustainable debt and spending habits.  Leading up to the vote this Wednesday and Thursday, Greek workers have called for a general strike, which will virtually shut the country down. Greek politicians will vote amidst this vocal discontent.


The US stock market has responded to this debt crisis, along with other Eurozone country debt problems (Spain, for example), by rising and falling with news. The market typically rises on news of a comprehensive solution to Eurozone debt, and falls when such a solution runs into difficulty.

Most recently, Europe took strides toward a potential solution, only to be temporarily foiled by Slovakia. Sixteen of the 17 European countries voted to expand the euro rescue fund to $590 billion, which would be used as support in the debt crisis. Slovakia did not get the votes, and the plan would need to be approved unanimously, and so it has stalled. Stay tuned to see the next step.

Closer to home, we will have three important housing reports released this week: October homebuilder confidence (Tuesday), September housing starts (Wednesday), and September existing home sales (Thursday).

Last week, the Dow finished up over 400 points, extending two-week gains. The strength of the market brought interest rates up off of all-time record lows. The national average of the 30-year fixed rate, which had dropped below 4 percent for the first time ever, moved back up to 4.12.  Central Coast Lending offers rates starting with a low of 3.75 percent (3.903 percent APR) for the 30-year fixed and 3.000 percent (3.522 percent APR) for the 15-year fixed.

Make sure to check in with our Facebook for updates on the important housing figures and our Blog at the end of the week for analysis of the situation.

Rate Update

We have a bank holiday today, but we are all in the office working hard. Interest in mortgage refinance is booming. Over the past week, rates have reached record lows for the 30-year fixed (3.94 percent on average) and the 15-year fixed (3.29 percent on average). These rates have caused an increase in refinance activity, but we are still running into the same availability problems. With declining equity in homes and tightened credit standards, many individuals are finding themselves shut out of better rates. Many analysts see the refinance activity and suggest that it is being driven from the same pool of qualified individuals.

Furthermore, individuals that do qualify for purchase or refinance loans are having a hard time getting the lowest rate available. The “mortgage rate spread” – the spread of the rate you get against the available national average, is actually widening.  In other words, despite an average of 3.94 percent offered on the 30-year fixed, individuals are having a hard time meeting the criteria necessary for getting the lowest rates, and often simply qualify for the same type of rate they would have four or five months ago. Make sure you have an in-depth conversation with your loan officer to discover your options. Give us a call for a free (and easy) consultation… 805.543.5626.

The employment picture (or lack thereof) remains grim. Nearly one-third (4.5 million) of the unemployed have been out of work for over a year now. Companies did add 103,000 jobs in September, but unemployment remains at 9.1 percent. The unemployment rate has hovered over 9 percent for over two years now. President Barack Obama described the state of the economy as “an emergency” in a speech last Thursday and pushed for passage of his jobs bill.

Look for the September retail sales report and the August trade balance report to be released later this week.

Check in with us for daily market updates on our Facebook and more in depth analysis at our Blog.