California Foreclosure Rates Drop

Mortgage Rates rise big time today

Freddie Mac reported today interest rates on fixed mortgages jumped big time, lenders are offering the 30-year home loan at 3.625%, up from  yesterday’s rate at 3.42% and 3.38% last week.  The rate for a 15-year fixed mortgage today is 2.875%,  up from yesterday’s rate at 2.71%, and  2.66% last week.

Interest rates have been near all-time record lows for months now, but with today’s rates it seems to be clear the economy its gaining momentum and the determining factors of an increase or decrease in rates point to economic uncertainty.  In the coming months, we will be able to see if the economy is picking up steam or not as the government deals with fiscal cliffs, debt ceilings and increased tax rates.  Until stable economic certainty is reached, rates will continue to fluctuate week to week.  

 As we progress into 2013, the number of foreclosures in California continues to decline pointing to signs the economy is improving.  Home values will continue to increase at a steady rate which means fewer homes are underwater.  The decline in foreclosures in California is boasting home values and has contributed to the overall progress of the housing market recovery.  Banks have turned to short sales and other kinds of loan plans for the borrowers who cannot make their mortgage payments.  The percentage of notices of default and trustees deeds filed on California properties has also declined dramatically in 2012 and continues in 2013.  Currently, notices of default in California have dropped to the lowest levels since the 4^th quarter of 2006.  Nationwide, the percentage of foreclosures have also dropped however, the percentage of buyers behind their payments have slightly increased.

This week will be packed with major economic news. The biggest story will be Wednesday's Fed meeting, as investors watch for hints about the duration of the Fed's bond-buying program.  The biggest economic report next week will be the important Employment data on Friday. As usual, this data on the number of jobs, the unemployment rate, and wage inflation will be the most highly anticipated economic data of the month.  Before the employment data, Durable Orders and Pending Home Sales will be released on Monday.  Fourth quarter GDP will come out on Wednesday.  Personal Income, Core PCE inflation, and Chicago PMI will be released on Thursday.  ISM Manufacturing and Construction Spending are scheduled for Friday.  In addition, there will be Treasury auctions on Monday, Tuesday, and Wednesday.

Mortgage rates fall to near record lows this week

Today, mortgage rates fall once again to  near record lows again. A 30-year mortgage rate this week has dropped to 3.38% compared to 3.4% last week.  This week’s rate is slightly above the record low that was reached in November at 3.31%, which marked the lowest rate on record dating back to 1971. A 15-year mortgage remained unchanged this week at 2.65%. The record low for a 15-year mortgage is 2.63%. With rates so low at this time, any bit of inflation can push them higher.

Last month, the Fed said they would keep interest rates near zero until the jobless rate falls to 6.5 percent and as long as the central bank believes inflation will stay below 2.5 percent. At this point, inflation remains flat. Labor Department reported on Wednesday, CPI was unchanged last month thus with this new data, inflation will continue to remain flat and not hit the Feds threshold to raise interest rates.

Construction rates have also increased as builders began to build 780,000 homes just last year -- up 28.1% from 2011, when new home construction hit a record low, the lowest since 2008. Although, increases in construction became a part of the housing recovery last year, it hasn’t made a significant contribution to the hiring. With these reports, increased construction rates have made investors more optimistic about the US economy.

With the unemployment rate projected to fall lower this year and home sales expected to rise at a rate similar to last year's, interest rates are projected to remain relatively low throughout 2013. Assuming the uncertainty of the fiscal policy, debates during the first quarter fails to disrupt the economic expansion and the U.S. should see about two million new jobs created this year.

We are most definitely amidst a period of financial uncertainty as the government deals with fiscal cliffs, debt ceilings and increased tax rates, these uncertainties have caused rates to fluctuate over the past several weeks. Banks are increasing mortgage lending in Southern California, so this is an excellent time for buyers.  These lower mortgage rates will help strengthen the housing market and road to recovery and we will start to see inventory levels rise.