Active duty military entitled to lower interest rates

 Interest Rates, Regulations, Residential Mortgage  Comments Off on Active duty military entitled to lower interest rates
Aug 282014

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By G. Steven Bray

I applaud the government for doing something right for a change. It partnered with a few of the big banks and mortgage servicers to help our servicemembers who have been called to active duty. Back in 2003, Pres. Bush signed the Servicemembers Civil Relief Act. The law provides a number of legal protections for active-duty servicemembers, including protection against eviction for non-payment of rent and the right to terminate a housing lease. It also prohibits creditors from charging more than 6% interest for any debt. This includes mortgage and credit card debt. And importantly, the creditor must reduce the servicemember’s monthly payment to reflect the lower interest rate and must forgive any amount of interest in excess of the 6% rate.

One deficiency in the law is that it requires servicemembers to ask that it be applied and prove they are eligible. The partnership alleviates that burden. The Dept. of Defense agreed to share its active duty database with these partner banks and servicers so they can notify servicemembers of their eligibility. Let’s hope they expand the initiative to other partners.

Europe keeping US mortgage rates low

 Interest Rates, Residential Mortgage  Comments Off on Europe keeping US mortgage rates low
Aug 252014

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By G. Steven Bray

The storyline hasn’t changed. European economies are struggling, and markets are anticipating new measures from the European Central Bank to try to stem the tide. As a result, European interest rates are flirting with all-time lows. Add to that the various global conflicts, and you have an effective block against rising US interest rates.

But of course, I’m assuming rates have a reason to rise. And they probably do. Recent Federal Reserve communications have hinted that it may raise the federal funds rate sooner than expected, and the US economy is showing some life. Both factors would tend to push rates up.

We’ll get a lot more economic data this week with the highlight being updated 2nd quarter GDP. While this is backward looking data, it could be relevant if it differs much from the initial report of 4% growth. But I still think any bond market reaction would be muted by the global factors cited earlier. On the other hand, next week is a jobs report week. That has a better chance of setting the direction of rates for the fall.

Fewer bargain homes but still opportunity for home buyers

 Real Estate Market  Comments Off on Fewer bargain homes but still opportunity for home buyers
Aug 222014

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By G. Steven Bray

Corelogic, a real estate analytics company, reported this week that distressed home sales, short sales and foreclosed homes, fell again last month to 11.4% of all sales, their lowest level since 12/07. The diminishing share and the competition for those homes have contributed to home price increases, as distressed sales typically sell at a discount.

The improvement in this measure of home industry health is susbtantial. At the height of the housing bust, distressed sales accounted for almost 1/3 of the total. However, a more sobering view is to compare it to the share before the bust. At that time only 2% of the market was distressed sales.

But let’s take the glass half full view. Other data also points to an improving market. Existing home sales rose for the 4th straight month in Jul, the inventory of homes for sales is increasing, and home prices are moderating. With still very low mortgage rates, this fall could be great opportunity for homebuyers.

East coast, left coast, no coast

 Real Estate Market  Comments Off on East coast, left coast, no coast
Aug 202014

The fastest growing US cities now are in the middle of the country in states like TX. This is a big change from last decade. The reason is simple – more affordable housing. Before the financial crisis, easy credit allowed folks with even modest means to buy expensive homes. Those homes on the coasts are now out of reach.

The census bureau reports that of people moving more than 500 miles, 18% now say they were chiefly motivated by housing. This is up from 8% before the financial crisis.

Redfin reports that 6 TX cities rank among the 10 most affordable, including San Antonio, Ft. Worth, Dallas, and Houston. Notice that Austin is not on the list as its housing costs have risen faster than the rest of the state.

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