Archive for April, 2010
Federal Reserve Chairman Ben Bernanke testified today before President Obama’s commission tasked with dealing with the federal deficit. He did not mince words when he said that failure to pay down the huge federal deficit would cause “great damage” to the U.S. economy. Bernanke said that current government spending is on “an unsustainable path”.
The Fed Chairman advocated the committee to develop a plan to pay down the federal deficit, which hit a record amount of $1.4 trillion last year. Large portions of the debt are a result of recent economic bailout efforts and the cost of fighting multiple wars.
US commercial real estate investors may turn to other opportunities as vacancies remain high and interest rates rise, according to Barry Sternlicht, chief executive officer of Starwood Capital Group LLC.
“There are a lot of tourists in property and REITs right now,” Sternlicht said at a panel discussion yesterday at the Milken Institute Global Conference in Beverly Hills, California. “Everybody is racing for yield.”
If interest rates head higher, “you will see a pause that will take a lot of capital out,” he said. Corporate bonds may benefit, according to Sternlicht.
Mortgage brokers could be facing a threat on ban commissions if the government in the UK pushes its campaign against kickbacks.
Financial Services Minister Chris Bowen said including mortgage brokers on a ban of kickbacks may be subjected for review since brokers are selling loans and not investments.
"They are covered by a different regime but we will consider that as part of our national credit reforms, and phase two of that is coming," he said.
Minister Bowen declared yesterday that financial planners are forbidden to receive kickbacks, volume discounts, and commissions from its clients and investors, and will only charge its clients for advice rather than recommend services which appeared to be free.
Mortgage rates hovered near 5% for purchase loans that closed during the last week of March, according to a report (download here) by the Federal Housing Finance Agency’s (FHFA) Monthly Interest Rate Survey (MIRS).
The average interest rate for a 30-year fixed-rate mortgage (FRM) of $417,000 or less was 5.09%, down from 5.13% one month ago. The average rate for a 15-year FRM of $417,000 or less was 4.57%, down from 4.65%. The FHFA measured interest rates on loans that closed between March 25 and 31. Since the rate is typically determined 30 to 45 days prior to closing, the report depicts market conditions prevailing in mid- to late-February, the FHFA said.
According to the above chart, mortgage rates in March were level with rates in November.
The average rate for both FRMs and adjustable-rate mortgages (ARMs) was 4.99% in March, down from 5.03% in February. The effective interest rate, which reflects the amortization of initial fees and charges, was 5.08% in March, down 4 basis points from 5.12% in February.
The FHFA said initial fees and charges were 0.61% of the loan balance in March, down from 0.63% in February. In addition, 44% of the purchase-money mortgages originated in March were “no point” mortgages, down from 46% in February. The average term was 27.6 years in March, up 0.1 years from 27.5 years in February. The average loan-to-price ratio in March was 74.2%, down from 74.8% in February and the average loan principal was $212,600 in March, up $4,000 from $208,600 in February.
In a separate report, FHFA said the national average contract mortgage rate for the purchase of previously occupied homes was 4.99% in March, down from 5.05% last month. This rate is commonly used to adjust ARM rates and previously was the only index rate that federally chartered savings and loan associations could use as an adjustable-rate mortgage index in the early 1980s, FHFA said.
Write to Austin Kilgore.
Yields on bonds backed by commercial-property mortgages rose relative to benchmarks following seven straight weeks of tightening.
The gap, or spread, on top-ranked debt tied to commercial real estate rose 0.14 percentage point to 2.33 percentage points more than similar-maturity Treasuries last week, according to a Barclays Plc index. Some top rated securities widened as much as 0.2 percentage point, the firm said April 23 in a report.
“The seven-week rally in super-senior spreads came to an abrupt end,” New York-based analysts Aaron Bryson and Tee Yong Chew wrote in the report.
Federal Reserve chairman Ben Bernanke said Tuesday the US needs to soon come up with a plan to cut the budget deficit, urging President Barack Obama's debt commission to look at how the tax system can be changed.
Speaking to the bipartisan commission, Bernanke stressed that an economy is stronger when taxes aren't too high and are collected in an efficient, equitable and transparent way.
"At present, a broad consensus exists that the US tax code does not satisfy these criteria and is in need of reform," Bernanke said.
Speaking to the bipartisan commission, Bernanke stressed that an economy is stronger when taxes aren't too high and are collected in an efficient, equitable and transparent way.
"At present, a broad consensus exists that the US tax code does not satisfy these criteria and is in need of reform," Bernanke said.Federal Reserve chairman Ben Bernanke said Tuesday the US needs to soon come up with a plan to cut the budget deficit, urging President Barack Obama's debt commission to look at how the tax system can be changed.
Speaking to the bipartisan commission, Bernanke stressed that an economy is stronger when taxes aren't too high and are collected in an efficient, equitable and transparent way.
"At present, a broad consensus exists that the US tax code does not satisfy these criteria and is in need of reform," Bernanke said.Federal Reserve chairman Ben Bernanke said Tuesday the US needs to soon come up with a plan to cut the budget deficit, urging President Barack Obama's debt commission to look at how the tax system can be changed.
Speaking to the bipartisan commission, Bernanke stressed that an economy is stronger when taxes aren't too high and are collected in an efficient, equitable and transparent way.
"At present, a broad consensus exists that the US tax code does not satisfy these criteria and is in need of reform," Bernanke said.Federal Reserve chairman Ben Bernanke said Tuesday the US needs to soon come up with a plan to cut the budget deficit, urging President Barack Obama's debt commission to look at how the tax system can be changed.
Speaking to the bipartisan commission, Bernanke stressed that an economy is stronger when taxes aren't too high and are collected in an efficient, equitable and transparent way.
"At present, a broad consensus exists that the US tax code does not satisfy these criteria and is in need of reform," Bernanke said.Realtors, home buyers and sellers are rushing to complete sales agreements before the tax credit for home purchases expires this week.
Home buyers must have a deal by April 30 and close by June 30 to qualify for the federal tax break, up to $8,000 for first-timers and $6,500 for those merely moving to a different residence.
Though the Treasury Department and the real estate industry have termed the program a success, helping 1.8m people buy homes, many tax policy experts say it has been singularly cost-ineffective: most of the $12.6bn in credits through end of February was collected by people who would have bought homes anyway or who in some cases were not even eligible.
Realtors, home buyers and sellers are rushing to complete sales agreements before the tax credit for home purchases expires this week.
Home buyers must have a deal by April 30 and close by June 30 to qualify for the federal tax break, up to $8,000 for first-timers and $6,500 for those merely moving to a different residence.
Though the Treasury Department and the real estate industry have termed the program a success, helping 1.8m people buy homes, many tax policy experts say it has been singularly cost-ineffective: most of the $12.6bn in credits through end of February was collected by people who would have bought homes anyway or who in some cases were not even eligible.
In the aftermath of the turmoil in the real estate industry, it's no surprise that there's a drop in the number of real estate licensees and stricter license requirements for mortgage lenders. The message was conveyed by California Department of Real Estate commissioner Jeff Davi to real estate professionals at the April meeting of the Filipino American Real Estate Professional Association.
Davi said there are currently 490,201 real estate licensees, a big drop from a peak of 548,000 a couple of years ago. Davi estimated only half are actually practicing in today's market. He expects the number of licensees will continue to drop by the end of this year, but not below 450,000.
"We see that once people obtain their license, they tend to keep it even if they don't practice," Davi said.
