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Mortgage rates lower again this week 


Mortgage rates lower again this week - After surging in the weeks following the election, mortgage rates have settled in a little lower dropping slightly in the past couple weeks. The Freddie Mac Primary Mortgage Survey released on January 12, 2017 revealed that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-year fixed rate average was 4.12%. The 15-year fixed average rate was 3.37%.   The 5/1 ARM average rate was 3.23%.

Moody's settles investigation for $864 million - It's not really big news, but I was glad to see thatMoody's, the rating company, was fined $864 million for its role in the financial crises.  Moody's was accused of over rating mortgage securities. For example, they rated some mortgage backed security products as high as U.S. Government Bonds. When those investments  collapsed and lost all or nearly all their value the Justice Department and other agencies investigated them.  It appeared they were selling ratings to investment firms, rather than doing a true evaluation. The ratings especially the AAA ratings made these products seem risk free and investors around the world, which included mutual funds, governments, retirement funds, unions, individuals, etc. stocked up on them only to lose all or almost all of their money when these investments collapsed. The amount of money lost was so great it almost collapsed the world's financial system.  The ratings agencies' defense has been that they didn't understand how these products were structured because they were so complicated and that is why they were so wrong! Unfortunately, Moody's made much more in rating fees than $864 million so who knows if this is a deterrent to keep something like this from happening again. Trillions were lost. It could not have happened without the rating companies being so wrong. Nobody was criminally charged!

Consumer confidence at peak levels - University of Michigan Surveys of Consumers chief economist, Richard Curtin wrote this week "Consumer confidence remained unchanged at the cyclical peak levels recorded in December. The Current Conditions Index rose 0.6 points to reach its highest level since 2004, and the Expectations Index fell 0.6 points which was lower than only the 2015 peak during the past dozen years. The post-election surge in optimism was accompanied by an unprecedented degree of both positive and negative concerns about the incoming administration spontaneously mentioned when asked about economic news. The importance of government policies and partisanship has sharply risen over the past half century. From 1960 to 2000, the combined average of positive and negative references to government policies was just 6%; during the past six years, this proportion averaged 20%, and rose to new peaks in early January. The Expectations Index was a strong 90.9, supporting a real consumption growth of 2.7% in 2017."


From what we are seeing out in the marketplace it looks like prices are beginning to move up  at a good pace. Activity is strong and inventory levels are low.  I'd expect home prices to increase at the quickest pace in the next few months.  Home prices don't move at a consistent even  pace throughout the year. It's not unusual to see prices begin to increase from February through spring and level out for the remainder of the year. It looks like the seasonal moving up process is starting just a little early this year as the economy has improved, and buyers are more optimistic than they were last January. Interest rates which have risen are on everyone's mind, but nobody seems to realize that they are about at the same level that they were in December of 2015 before dropping sharply last year as the economy stalled. This year growth has picked back up both in the U.S. and around the world

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