30-Year Mortgage Rates Reach 7-Month Low , Sunday, September 21, 2008

Freddie Mac reports a decline in the 30-year fixed mortgage rate to 5.78 percent during the week ended Sept. 18 from 5.93 percent the prior week, marking the lowest level in seven months. During the same period, the 15-year mortgage rate dropped to 5.35 percent from 5.54 percent. Meanwhile, interest on five-year adjustable mortgages slipped to 5.67 percent from 5.87 percent; and the one-year ARM slid to 5.03 percent from 5.21 percent. (San Diego Union-Tribune, 09/19/08)

$700 Billion Proposed Bailout of the Banking System - According to the administration's proposal, the federal government would buy up as much as $700 billion of illiquid mortgage assets at a deep discount from banks. The Treasury Department would run the program directly, unlike the savings and loan crisis of the 1990s when Congress created the Resolution Trust Company to spearhead a financial bailout. Lawmakers are reviewing the plan and have scheduled hearings on the matter in the next few days. (CNN, 9/21)

The Federal Reserve voted yesterday to keep the federal funds target rate at 2 percent, where it has been since April. (Investor’s Business Daily, 09/16/2008)

The housing market is a year away from improvement, says Steven Preston, secretary of the U.S. Department of Housing and Urban Development. Preston predicts that it will be “the middle of next year or well into next year” before “we begin to see more consistency in buyers coming back into the marketplace.” The recovery from the housing crisis in 2009 is likely to be regional in nature, the HUD secretary says. “The crisis will begin abating in a number of regions of the country. That is what I am hopeful of. But I think it will be more intractable in other regions,” he says. “It is going to be some time” before recovery comes to certain communities in California, Florida, Arizona, and Nevada. (Christian Science Monitor, 09/16/08)

Refinance Applications Jump 88% from prior week - Homeowners rushed to take advantage of the drop in interest rates following the government's takeover of Fannie Mae and Freddie Mac, data released Wednesday showed. Applications by homeowners looking to refinance their mortgages spiked 88% last week, according to the Mortgage Bankers Association. Refinances accounted for nearly 52% of all application activity, up from 36% the previous week, the trade group said. The volume of purchase applications also edged up last week by 5%. The average rate for traditional, 30-year fixed-rate mortgages dropped to 5.82% from 6.06% the prior week. The average rate for 15-year fixed-rate mortgages, often a popular option for refinancing a home, fell to 5.54% from 5.73%. (CNN, 9/17)

Home Values Fall 34% in Southern California - The cost of new and resale homes and condos dropped to $330,000 last month in a six-county region. It was down from $500,000 in August 2007 and down 5.2% from $348,000 in July, MDA DataQuick said. A total of 19,366 homes and condos were sold last month, up about 9% from August 2007 but down almost 5% from July. MDA DataQuick president John Walsh said much of the sales activity has been logged in lower-priced inland areas where the market has been driven by foreclosures. Foreclosures accounted for almost 46% of all resold properties last month, up from 10% in August 2007 and almost 44% in July. (CNN, 9/17)

Sources: CNNMoney, Christian Science Monitor, Investor's Business Daily, San Diego Union-Tribune.