Mtg rate update Fri 9-18, How to Increase Net Worth

TGIF! Here are today's rates - and below the rates are various commentaries on the current economic climate. There are rumors that the Tax Credit might be extended beyond the end of November; I'll keep you updated as this rumor develops.

Mary Taylor Sales Manager/Sr. Loan Officer Golf Savings Bank Phone: (503) 701-2269 Fax: 1-888-287-1675 metaylor@golfsavingsbank.com

Financial Reasons to Buy There are a number of personal and emotional reasons to buy a home. But there are also some strong financial reasons to make the investment. Here are just a few of those reasons: Increase Net Worth: Few things have a greater impact on net worth than owning a home. In a comparison of renters versus homeowners, the Federal Reserve Board of Consumer Finance found that the average net worth of renters was just $4,000 compared to homeowners at $184,400. A Big Tax Deduction: One of the largest tax deductions available is the amount of interest paid on a mortgage. In fact, a $150,000 home at a 5.50% interest rate can add up to approximately $8,000 in first year's interest. This amounts to a significant savings - effectively reducing the amount of a homeowner's monthly mortgage payment. Long-Term Appreciation: Over the last few years, home prices have corrected and become more affordable. While that's good news for potential buyers, it has overshadowed the long-term appreciation of a home's value. The reality is, despite market ups and downs between 1950 and 2002, US home prices appreciated at an annual growth rate of 4.8%. Even if you calculate a modest appreciation of 3%, a home purchased today for $150,000 will grow in value to $364,000 over 30 years. In addition, don't forget that the government is offering an $8,000 tax credit for first-time buyers through November 30, 2009.

Mortgage Interest Rates*

Rates as of Friday, 18th September, 2009:

Conforming APR Payment per $1,000 Jumbo APR Payment per $1,000 Conv 30 Yr 5.00% 5.131% $5.37 % 0.000% $0.00 Conv 15 Yr 4.375% 4.501% $4.99 % 0.000% $0.00 Conv 5/1 Arm 3.75% 3.969% $7.27 % 0.000% $0.00 FHA/VA 30 Yr 5.00% 5.131% $5.37 % 0.000% $0.00 FHA 3/1 Arm 3.875% 3.998% $4.70 % 0.000% $0.00

*Rates are subject to change due to market fluctuations and borrower's eligibility.

All loans subject to credit approval and property appraisal. Programs, rates, and terms subject to change without notice. For ARM loans, rate may increase after settlement. Prequalification is not a commitment to lend, a condition of loan approval, or an application for credit. Pre-approvals will result in a loan decision subject to conditions. Consult a tax advisor regarding the deductibility of interest.--

From Think Big, Work Small

Treasuries and mortgages opened weaker this morning,

No follow-through from the strong rally yesterday. Pushing prices lower, the stock indexes started better pointing to a firm opening at 9:30.

There are no economic reports to deal with today; it is however a day that may see increased volatility with all financial options expiring as well as futures contracts, quadruple witching.

Yesterday's better headline economic reports are getting the credit this morning for the better open in the equity market, but as we noted in yesterday's afternoon report the interior data on the Philly Fed business index, weekly jobless claims, and housing starts were not so strong. Nevertheless, with Bernanke, Warren Buffet and about every analyst now convinced the recession is over, investors are continuing to buy equities. As long as the economic outlook remains positive lower interest rates will be difficult to achieve. Not much concern in the markets yet that the recovery will likely be at a snails pace compared to other recessions in the past 50 yrs.

Given the lack of follow-though frm yesterday so far this morning the rate markets may be vulnerable to more selling next week ahead of Treasury's $112B of supply (2 yr, 5 yr, and 7 yr note auctions). Technically the 10 yr note and MBSs are still holding key moving averages and chart support levels, (3.50% for the 10 yr note and 100.03 on the Nov FNMA coupon now at 100.07). Still will hold to our slightly bullish outlook for rates but time and price equation is working against us; unless the 10 yr note and mortgages gain traction in the next few sessions both may turn technically bearish. The 10 can't sit at this level for much longer before traders will turn more bearish. Mtg rates hovering at 5.00% levels have to break below it or that market also will give up the fight.

From Dick Lepre, San Francisco

Thursday September 17, 2009

Initial Jobless Claims was 545,000. Housing Starts were 598,000 (annualized). Treasury yields are down today.

Wednesday September 16, 2009

Core CPI was +0.1% (overall was +0.4%). Industrial Production was +0.8%. Capacity Utilization was 69.6%. The Capital and IP data are not nearly as significant as they were when this was a manufacturing economy but their psychological value is helping equities and endorsing the message that the recession in ending.

LONG-TERM RATES DOWN FOR THIRD CONSECUTIVE WEEK

Shorter-Term Rates Are Mixed

McLean, VA - Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 5.04 percent for the week ending September 17, 2009, down from last week when it averaged 5.07 percent. Last year at this time, the 30-year FRM averaged 5.78 percent. The last time the 30-year FRM was lower was the week ending May 28, 2009, when it averaged 4.91 percent.

The 15-year FRM this week averaged 4.47 percent down from last week when it averaged 4.50 percent. A year ago at this time, the 15-year FRM averaged 5.35 percent. This is the lowest the 15-year FRM has been since Freddie Mac started tracking it in 1991.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.51 percent this week, up from last week when it averaged 4.51 percent. A year ago, the 5-year ARM averaged 5.67 percent.

"Interest rates for fixed-rate mortgages eased for the third consecutive week and remained at 3-month lows," said Frank Nothaft, Freddie Mac vice president and chief economist. "Interest rates for 30-year fixed-rate mortgages have averaged just above 5 percent through mid-September, which is roughly a percentage point below last year's average and suggests that 2009 may reach a record annual low since the survey began in 1971.

"Low mortgage rates are aiding new home construction. Housing starts for single family homes have increased consecutively over the five past months ending in July, although starts eased slightly in August. Moreover, homebuilder confidence improved for the third straight month in September, with all four regions showing positive gains, according the National Association of Home Builder's Housing Market Index."