2004 Ranks as 2nd-lowest year for Mortgage Rates

Mortgage rates around the country moved up last week, but for all of 2004, rates on 30-year mortgages registered their second-lowest year on record.

Freddie Mac's weekly survey, released Wednesday, showed that rates on 30-year, fixed-rate mortgages increased to 5.81 percent last week, compared with 5.75 percent the previous week.

For the entire year, rates on benchmark 30-year mortgages averaged 5.84 percent, second only to last year's 5.83 percent, the lowest annual rate in Freddie Mac's record keeping, a mortgage company spokeswoman said. The rate came in under 6 percent for the last 22 weeks of the year.

Long-term mortgage rates remained well behaved even as the Federal Reserve boosted short-term interest rates five times this year. That's because inflation, while creeping higher, is not viewed as a danger to the economy, analysts said.

Low mortgage rates powered homes sales and they're expected to end at record highs for all of 2004, analysts said.

Some analysts believe rates on 30-year mortgages could climb to around 6.5 percent by the end of next year. That still would be considered low by historical standards. A few think rates could hit 7 percent next year.

Rates on 15-year, fixed-rate mortgages, a popular option for refinancing, rose to 5.23 percent last week, compared with 5.18 percent the week before.

Rates on one-year, adjustable-rate mortgages increased from 4.17 percent to 4.19 percent.

The nationwide averages for mortgage rates last week do not include add-on fees known as points. Each loan type carried a 0.6-point fee.

A year ago, rates on 30-year mortgages averaged 5.85 percent; 15-year mortgages were at 5.15 percent, and one-year ARMs averaged 3.72 percent.

The Mortgage Bankers Association reported that refinancing accounted for 46.2-percent of all mortgage applications filed last week, down from 48.9 percent.

Personal Bankruptcy Cases Continue to Rise

Four years ago, Chris, a 38-year-old engineering manager from Chicago, would not have thought he'd be in the position he's in today. He was just starting to see his dreams materialize.

Everything was falling into place. Chris had a good paying job and was working and living in Winona, Minn. He and his wife had been married for four years. They had three boys and they found a nice affordable lot in Centerville, Wis., and built a brand new house.

They both got caught up in the excitement of the long-term planning for their young family.

It was a lifelong dream for Chris.

The couple knowingly got to a point where they were financially thin but still happy, but they were prepared to make some sacrifices together to make their dream come true.

Chris moved to the area eight years ago, but his troubles started in 2003. He didn't notice, but things were starting to unravel.

Underneath the surface a storm was brewing, which is how Chris describes it. Not long after moving into his new house, Chris found himself in the middle of a divorce after only four short years of marriage. It came as a shock.

"I'm not completely innocent let's just say I was unaware," Chris said. "I was trying to be a good husband."

Bills were piling up. A mortgage. Payments for the truck and mini van. With the divorce he was now paying child support for his three boys. On top of all that, just before the divorce his wife had run up credit card bills that were in Chris's name.

Things didn't look good.

The couple filed for divorce in March 2003 and by April Chris realized something had to be done.

Life in general led to his financial situation, but he needed to find a way out.

He couldn't get out from under the mounting debt and he found himself considering something he'd never thought about before, filing for bankruptcy.

While he and his wife considered going through it together, Chris ended up going it alone.

By the time he was looking for a lawyer Chris said he already knew by looking at the numbers that there was going to be trouble. That's when he decided to call Mark Huesmann, a Holmen attorney.

The number of personal bankruptcy filings in La Crosse County has climbed steadily over the past five years. In 1999 there were 243 individual bankruptcy filings. The number jumped to 436 by 2004, a 79 percent increase.

While filings are up locally, nationwide they are down a bit, though still at historic highs, according to the Administrative Office of the U.S. Courts. The nation set a record of 1.5 million filings in 2002. During the 12-month period ending September 2004, 1.58 million people filed for bankruptcy, down from 1.62 million in 2003, a drop of 3 percent.

Huesmann, who has been practicing for the past 10 years, said he gets a lot of calls in January and February from people who face a financial situation that makes them consider bankruptcy.

They're the kind of cases he finds himself working on more and more.

"We've literally done hundreds of cases in the past few years," Huesmann said. "It's an increasing part of our practice."

According to a 2004 release from the American Bankruptcy Institute, the 99 percent increase in nationwide personal bankruptcy filings in the last decade was consistent with the growth in consumer debt.

The institute studied data from the Federal Reserve Board which indicated that household debt, at $8.9 trillion in 2003, was at a record high relative to disposable income and some analysts are concerned that this unprecedented level of debt might pose a risk to the financial health of American households.

"You can tie some of this together with the proliferation of easy credit," Huesmann said. "We have to shift our thinking about credit in this society."

High household indebtedness could lead to more household delinquencies and bankruptcies, which could threaten the health of lenders if loan losses are greater than anticipated, according to the bankruptcy institute.

It's the kind of thing Huesmann has seen quite often with his clients. Many people are taking on more debt than they can reasonable handle.

"People are getting into trouble by buying homes that are too expensive for them," Huesmann said. "People are using too much of their disposable income for mortgage payments."

Bankruptcy probably isn't the first word that comes to a persons mind when they are thinking about getting their financial situation in order.

It has a troubled past. The word still carries a lot of baggage.

While people are no longer thrown into jail for not being able to pay their debts, people still have reservations about filing.

La Crosse County bankruptcies are discharged in the 7th District Court in Eau Claire. That was where Chris found himself in September 2003.

Individuals have two options when considering bankruptcy. Chapter 7, allows a debtor to eliminate most of their debts in exchange for giving up property that is not protected by state and federal exemption laws.

A bankruptcy trustee sells property and distributes the money to creditors. Any remaining unpaid debt is wiped out. If a person doesn't have much property, they often get to keep what little they have.

Certain kinds of debts like child support, student loans, taxes and any debts that might be challenged by creditors during a hearing cannot be successfully eliminated in Chapter 7 bankruptcy.

Once a person files for bankruptcy all creditors are required to stop calling.

Another option for individuals is to file Chapter 13 bankruptcy, which allows them to rearrange their financial affairs, repay a portion of their debts and get back on track.

Under a typical Chapter 13 plan, a person makes monthly payments to a bankruptcy trustee, who is appointed by the bankruptcy court, for three to five years. The bankruptcy trustee distributes the money to your creditors.

While it is often frowned upon by creditors, filing for bankruptcy is a way for people who find themselves in a dire financial situation to get a new start.

"So many people do not look at bankruptcy as a financial planning tool," Huesmann said.

Driving back from Eau Claire, Chris said he was aghast. He couldn't believe how easy it was. While the process might have been relatively easy, going through it still had a lasting affect.

Chris had always thought he was the one doing well in his family. He was proud. Having been in the military, where he developed a sense or trust, honor and respect, Chris said he found it ironic that he filed for bankruptcy.

It can happen to anyone. Huesmann said it cuts across socioeconomic lines.

If people are thinking about taking out a credit card to pay off another credit card, or taking their car title in for a loan, they should consult someone immediately, Huesmann said.

Filing for Chapter 7 gives people the opportunity to wipe out most of their debt, but some people choose to keep some in order to maintain a relationship with a creditor.

While Chris chose to reaffirm some of his debts - debtors may choose to keep and pay off some debts - the bank did foreclose on his home. The home he helped design. The place where he thought he was building a family.

He said he probably didn't feel the sting that some do when filing bankruptcy.

"I can see how people can get themselves in trouble," Chris said. "I don't know that people have the same financial accountability that our parents had."

It wasn't long before he was getting information in the mail about loans and credit cards, but he knew better. He kept one of his credit cards through the bankruptcy and only uses it for emergencies.

After his bankruptcy was discharged Chris sought counseling to deal with the situation and his feeling of guilt and disappointment.

Chris didn't lose everything. In fact he came out OK. He kept his job. He eventually got custody of his three boys and he got remarried on New Year's Eve 2004.

Most people who file for bankruptcy don't lose everything. For many, it is a opportunity to wipe the slate clean. But it does not solve their problems.

"Sometimes it is a reality check for people," Huesmann said.

Mortgage interest rates begin the new year with a decline

Mortgage rates around the country moved lower last week, marking a good start to a new year of home buying.

Freddie Mac's weekly survey of mortgage rates showed that rates on 30-year, fixed rate mortgages averaged 5.77 percent for the week ending Jan. 6. That was down from the previous week's 5.81 percent.

For all of 2004, rates on benchmark 30-year mortgages averaged 5.84 percent, second only to 2003's 5.83 percent, the lowest annual rate on Freddie Mac's records.

Low mortgage rates powered home sales. Analysts believe sales hit a record high for all of 2004. The housing market is expected to post another good year in 2005, analysts said.

"Economic news seems to reflect steady growth and low inflation, placing little upward pressure on interest rates," said Amy Crews Cutts, Freddie Mac's deputy chief economist.

"Although we expect mortgage rates will start to trend gently upward over the year, 30-year, fixed-rate mortgage rates should stay under 6 percent, at least through the first quarter," she said.

Some analysts believe rates on 30-year mortgages could climb to around 6.5 percent by the end of this year. That still would be considered low by historical standards.

Rates on 15-year, fixed-rate mortgages, a popular option for refinancing, dipped last week to 5.21 percent, from 5.23 percent the previous week. For one-year adjustable-rate mortgages, rates fell to 4.10 percent last week, from 4.19 percent.

Freddie Mac added another type of mortgage to the weekly survey it releases each Thursday: the five-year, hybrid adjustable-rate mortgage. It's fixed for five years and then adjusts each year thereafter. The rate on that mortgage averaged 5.03 percent.

Nationwide averages for mortgage rates last week do not include add-on fees known as points. The thirty-year and one-year adjustable mortgages carried 0.7-point fees. Fifteen-year mortgages carried a 0.6-point fee and five-year adjustables carried a 0.5-point fee.

Realtors' Lead Volume Soars to Record Levels Due to Internet Alliances

The internet is where 70% of consumers start their search for homes according to the National Association of Realtors, but it's still the Realtor® that closes the deal. In fact, 78% of homebuyers visited a home with a real estate agent as a result of their use of a real estate website. Because of partnerships like the one between the countries largest real estate publication, The Real Estate Book® and its online distribution alliances, such as Lendingtree.com, Realestate.com, Homes.com, Lycos.com and BobVilla.com to name a few, Realtors are closing even more deals than before.

“Our proven superior print circulation combined with our extraordinary online reach continues to deliver all time highs in lead volume, says Glenn Goad, Senior Vice President of online services at The Real Estate Book. The increased lead volume is coming primarily from The Real Estate Book’s integrated online strategy, which just last month alone was responsible for over 273,000 leads sent directly to our advertisers in The Real Estate Book.” He adds, “Buying or selling a home remains one of the most important decisions in a consumer's life. It’s a
complicated transaction that requires good, professional help. Both home sellers and homebuyers will continue tovalue and appreciate professional representation by a Realtor. In addition, with our online distribution alliance we have provided remarkable exposure for our advertisers’ listings to millions of interested and active consumers each month. We are delivering on our goal of providing a quality response to our advertisers.”

Today's Realtors are doing a better job of marketing their listings, and they are savvy when it comes to advertising. In addition, they recognize home seekers are utilizing multiple channels and are more educated about properties when they begin their search for a home.

Source: 2003 NATIONAL ASSOCIATION OF REALTORS® Profile of Homebuyers and Sellers*

A familiar prediction about mortgage rates

Every December for the past few years, there have been forecasts calling for higher mortgage rates in the new year. Yet rates have remained in the bargain basement, to the delight of commercial and residential home borrowers.

While rate have remained low, it is my personal opinion that 2005 may finally be the year rates go up.

Even though interest rates remain around historic lows, it's unrealistic to think they're going to stay there for any extended time in the near future.

Right now, 30-year mortgage rates are well below six percent, lower than they were a year ago. The only thing that might keep long-term rates at those levels is another recession -- and most economists are not expecting a recession.

Mortgage company Freddie Mac predicts rates will go up by about half a percentage point within the next year.

Still, interest rates are inherently unpredictable, so who really knows what's going to happen?

Interested individuals can download historical graphs of various interest rate indices.

Residential Conforming Loan Rates Rise for 2005

Effective 12/6/2004 Residential Conforming Loan Rates rise for 2005.

Year 1-Unit
2005 359,650
2004 333,700
2003 322,700

Year 2-Unit
2005 460,400
2004 427,150
2003 413,100

Year 3-Unit
2005 556,500
2004 516,300
2003 516,300

Year 4-Unit
2005 691,600
2004 641,650
2003 620,500

Welcome to my blog

My name is Bryant Nielson, and I am the Managing Director of MortgageMac LLC. which specializes in assisting commerical borrowers in obtain commercial mortgages on nationwide; and I am a Branch Manager for 1st Metropolitan Mortgage in Northern New Jersey. I have been in the mortgage business for more than 24 years and have both owned and managed residential and commercial loan shops.

The purpose of my blog is to help/assist borrowers in the navagation of the complex residential and commercial mortgage process. The process 'seems' simple enough that many are confused and perplexed by the steps that they are asked to take to obtain the financing they seek.

My hope is that with this blog and with the subsequent posts, that you can find relevent and useful information in managing your expectations in this financial process.

For those with questions, you can email me at: mortgagedirector@gmail.com