Weekly Recap (06/06/11-06/11/11)by Tim Manni
Between the massive flooding, the devastating tornadoes and the wildfires, natural disasters have taken an extreme toll on American homes so far this year, and we’re only halfway through 2011.
“Few states are immune to natural disasters,” writes HSH.com contributing writer Marcie Geffner, “and each event affects thousands of homeowners who are forced to cope with the physical and emotional damage, as well as the prospect of perhaps not being able to manage their mortgage payments.”
Unfortunately, natural disasters don’t guarantee mortgage relief.
…The truth is, if you can qualify for mortgage financing, mortgage rates are expected to remain “fantastic” through the spring. The “bad” news: They’re not expected to remain at unprecedented levels (buyers will have to settle for fantastic).
Two months later, current mortgage rates are “fantastic” to say the least.
The most recent jobs report has upset Wall Street and caused stock prices to tumble. But was the higher unemployment rate anything but unexpected?
If you keep your eye on the mortgage and real estate markets, then the employment news seemed both logical and predictable. There’s little chance of increasing home sales to any great degree when millions of Americans remain unemployed or underemployed.
HSH.com VP and resident expert Keith Gumbinger visited CNBC yesterday to discuss the role adjustable-rate mortgages are playing in “serial refinancing.”
Many Americans are taking advantage of the ongoing low-rate environment by refinancing multiple times. This, of course, only tends to happen when mortgage rates are falling, and keep falling.
Yet, what has made this phenomenon of serial refinancing even more pronounced is that more homeowners are seeking to refinance into adjustable-rate products which are currently hovering around 3 percent.
There’s a lot of talk these days about a double dip recession, an idea which is surely puzzling.
In terms of housing, economic data from the Federal Housing Finance Agency shows that real estate prices reached a bottom in the first quarter of 2009, rose and are now headed down again.
So, yes, there’s a factual basis for double-dip claims.
But such charts don’t tell the whole story.
The economy continues to exhibit very little forward traction, and we are likely to start the summer with a bit of an economic swoon. Optimism about future growth still remains, but high food, energy and commodity prices have definitely trimmed forward momentum to a considerable degree. For whatever it has contributed to growth, the Federal Reserve’s program of purchasing an additional $600 billion worth of Treasuries comes to a close by month’s end, and that could exacerbate the slowness somewhat.
Mortgage rates, of course, love slow economic times, since that lessens both demand for credit and the potential for inflation. We do have an inflation problem, but it is not yet of the nature which causes overall price spirals; rather, we have the kind which acts like a tax on the economy, putting the brakes on economic growth — and at a time when it is least welcome.