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Average 30 Year Fixed Mortgage Rates Remain Very Low

The 10 year treasury rate yield and the 30 year fixed mortgage have had a very strong correlation for several decades.  As the 10 year yield dropped we saw 30 year fixed mortgage rates pierce the 4% mark.  For a very brief period of time the average 30 year fixed mortgage rate was being reported above 4% in early April.  The drop on April 9th in the 10 year yield changed that quickly.  For the month the 30 year fixed mortgage rate averaged 3.75% for most states.

It is important to note that interest rates can fluctuate based on a state and city.  There are some cities that saw interest rates well above 4% for several days in April but this was uncommon across the board.  Those looking for Bank of America Refinance Rates were often rewarded with very low quotes.  The best borrowers of money, with credit scores above 750, had a chance to refinance to some of the lowest levels of 2012.  This opportunity has allowed some homeowners to sink more money into principal.  This extra cash going towards principal will make it much easier to pay off a home.

Banks Stocks Struggle in April 2012

Although the banks stocks have lead the stock market for much of 2012 that was not the case in April.  In fact, many of the big names had a very bad month.  The XLF (Financials SPDR) was down around 1.4% and banking giant Bank of America (BAC) was down over 13% monthly heading into the final day of trading for April.  It will be interesting to see if the banking stocks can turn around in May 2012 as some analysts feel these financials need to lead the market if we are going to see higher highs during the summer.

Some feel as if light vehicle sales numbers can be used as an economic indicator but these numbers must be taken with a grain of salt.  While the economy has significantly improved since the “great recession” we are still seeing home prices at a post bubble low.  The good news is that light vehicle sales are at a level that we have not seen since the end of 2007 and beginning of 2008.  The month of February 2012 saw sales eclipse even the “cash for clunkers” month back in the summer of 2009.

The bad news is that 11.1 million United States properties had negative equity in the fourth quarter.  By crunching this data it looks as if Americans are still seeing property and home prices stabilize but they have a positive outlook on the future.  Most households would not be willing to make a vehicle purchase if they did not feel good about their future.  The stock market has reached new decade highs and the net worth of many Americans has increased which may be another reason that some are willing to part with some of their hard earned cash.

In the next several months we will likely see light vehicle sales increase even more as the summer driving season is just around the corner.  It tends to be the case that Americans are willing to make vehicle purchases during the months from February to July.  After these months vehicle sales drop off all the way through the Christmas holiday.  When making a purchase it is also true that more Americans are looking for used car options.  It is no longer the case that every American household wants to lease the brand new Lexus or Mercedes model.  Using Craigslist, AutoTrader and CarMax, individuals are finding that there are much lower prices on used vehicles.  Some buyers are still struggling with bad credit issues so a used car purchase simply makes sense.

The average age of automobiles on the road in the United States in 2011 was 10.8 years.  This number has steadily been on the rise since the housing market top in the mid 2000s.  It is no longer the case that American families look to buy a new vehicle every two to three years.  In fact, many Americans families are taking every necessary step to keep their “paid off” vehicle on the road.  Rather than adding another bill to the monthly stack some consumers are willing to upgrade parts and accessories on an older vehicle.

The companies that are greatly benefitting from this trend are both new and used auto part retailers.  One of the largest used auto part retailers in the United States, LKQ Corp, reported earnings on Thursday, February 23rd.  For the first time in the company’s history $3 billion in revenue was achieved.  The auto part retailer also saw “double-digit total organic revenue growth” which has impressed investors in 2012.  Year to date LKQ Corp (LKQX) is up 8.38% and the stock has moved higher by over 30% in the 365 days.

This is not the only company that has seen increased revenues as vehicles get older.  AutoZone, Advance Auto Parts and O’Reilly Automotive have all exceeded earnings expectations in the last three months.  Early in February both Advance Auto Parts and O’Reilly blew out earnings and Autozone is set to report on February 28th.  All three of these companies have seen their stock prices move up by over 40% in the last year.  During this same time period the S&P 500 is up 4.26%.

After the AutoZone (AZO) earnings report on February 28th it will be interesting to see how the entire sector trades on their respective stock exchanges.  As the sector continues to improve companies are planning on expansion as they open new stores.  During the “great recession” almost every major company in American halted expansion and growth plans but that is not the case in early 2012.

In the fourth quarter of 2011 Advance Auto Parts opened 19 stores.  During the fiscal year of 2011 the company opened 104 stores to bring the grand total to 3,662.  Prior to the recent economic recovery some national corporations were opening a total number of stores in the single digits for an entire year.  The Advance Auto Parts stock (AAP) is up 122% since the stock market bottom during March of 2009.  This extra stock valuation has given the company an opportunity to grow stores and jobs.  Finding stocks that can double in one year is the objective for many but a double in under three years is impressive as well.

The summer driving season is just around the corner and some cities throughout the United States are already seeing gas prices reach $4 a gallon.  Some analysts have predicted that this would hurt any type of automotive stock but this has yet to happen with the auto parts industry.  In fact, O’Reilly, Advance Auto Parts, AutoZone and LKQ Corp have hit all time highs in February of 2012.  A less than stellar earnings report for AutoZone in late February 2012 could hurt the sector but all signs are pointing towards an earnings beat.  Even if the company beats earnings it may have to revise future earnings higher to see the stock break into new all time high territory.

According to Zillow, average home prices are at $120,000 for the entire state of Florida.  When looking at St Augustine, Florida statistics show that home prices are up 12.3% when comparing the first quarter of 2012 to the first quarter of 2011.  The average price listing in this historical part of Florida is up to $264,000 this week compared to $260,000 last week.  It is very important to note that the data only show four homes sold so far in the first quarter of 2012.  To come up with a true statistical analysis we will need much more data that will conclude at the end of March.

Over the last several weeks average 30 year fixed mortgage rates have moved slightly higher to a level around 3.8%.  This move higher has followed the move up in the 10 year treasury rate yield.  In the month of February the 10 year yield has increased from 1.8% to 2.01%.  As of February 20th the 10 year treasury rate yield sits above its 50 day moving average which will likely hold as support around 1.95%.

The state of Florida will be in the news quite a bit in the month of February as the Daytona 500 will kick off the NASCAR Sprint Cup season and the NBA All Star game will take place in Orlando.  Both of these huge sporting events will occur during the final Sunday of February on the 26th.  Fox Sports will be broadcasting the “Great American Race” while TNT will have exclusive coverage of the 61st NBA All Star game.  Both television stations will likely have many blimp TV shots that will show the expansion of both Daytona Beach and Orlando.

Although many people do not think of big time sporting events as a way to improve the housing market it is definitely a way to bring money into a community.  Millions of dollars will be spent during Speed Week in Daytona Beach and the city of Orlando will see shoppers galore at the many outlet malls and other areas near Universal Studios and Disney World.  Some of these visitors may recognize that home prices are at attractive levels.  Any type of extra exposure to a housing market is often a good thing.

There are several housing markets in the United States that have put in a bottom over the last several months and February might be the turn around that the state of Florida needs.  When the data is released for the first quarter analysts will be able to better decide if a significant run up in home prices is going to happen in the next year and beyond.  Finding a buyers market in the United States is not difficult as investors are finding low interest rates and extremely low home prices easy to come by with a credit score above 740 and a debt to income ratio around 20%.

Year to date the S&P 500 is up over 8% while the NASDAQ has powered higher by 13.6%.  This move higher in technology and the broader indices likely means that many individuals have seen their net worth expand.  With a little bit more money to spend some feel as if the housing market could grow quite rapidly in certain areas of the country.  Florida is very attractive to small business owners and athletes because there is no state income tax.  Although this should not be the only reason to move to the Sunshine state it does cause many to consider relocation.

In the coming weeks we will begin to learn a lot more about the housing market in the state of Florida as the government will release home price data that will illustrate the overall landscape of home sales.  If homes are being sold simply to investors then it may take awhile to see a steady increase in prices.  If homes are being sold to everyday Americans looking for a place to reside then the bottom may have been put in.

The government reported that retail sales moved higher by 0.4% after a flat holiday spending season.  The higher sales number suggests that the increase in hiring has caused a positive mindset in many American households.  This, in turn, increased the amount of money spent.  The unemployment rate has been on a steady decline over the last several months and many retailers are seeing more opportunities to increase jobs with record profits.

The Retail Sales Graph shows that the economy has gradually improved since March of 2009.  Interestingly, this is the exact same month that the S&P 500, NASDAQ and Dow Jones Industrial Average hit their decade low.  Recently the NASDAQ closed slightly above 2930 which is the highest level since the Tech Bubble all the way back in 2000 and 2001.  This is a very good sign for investors as new highs often increase consumer confidence which, in turn, “could” increase consumer spending.

Market and retail psychology is very interesting in that customers tend to spend more when they feel that the economy is recovering or in very good shape.  Even though the unemployment rate is in the double digits in some states consumers are seeing a slight increase in home prices.  When a home price is increasing some feel they have a strong reason to believe the economy is moving in the right direction.  This is not always the case as a double dip recession is a possibility.

Over the past several weeks many analysts felt as if the very slight increase in wages would cause customers to reduce overall spending.  The pace of inflation has been higher than the increase in wages which means that consumers might have to dip into savings or other areas to have money to spend.  Even though this is the case, the retail sales report shows that consumers are still increasing their spending at the same pace as last year.

Since the beginning of the year the NASDAQ is up 11.93% while the S&P 500 is up 6.81%.  This should come as no surprise as consumers continue to spend more on electronics.  The advancements in technology have pushed some consumers to upgrade to tablet devices and smartphones.  In a recent earnings report, Apple stated that the company sold 15.4 million iPad tablets for the quarter.  This industry has become very competitive with the Amazon Kindle Fire and many other Android tablet devices available.  Even with great competition Apple continues to report very impressive growth numbers.

For 2012, analysts have predicted that Amazon.com will sell almost 15 million Kindle Fire units.  This upward revision from 12.7 million includes the new 7 and 9 inch models that are going to be available sometime in 2012.  All of these tablets, eReaders and smartphones being sold means that Americans are spending money on discretionary items.  Americans consumers do not consider a tablet, eReader or smartphone a staple as they are not a necessary part of survival.  Some younger generation Americans may make an argument but it is possible to survive without these items unlike food and water.

As popular February Presidents Day Sales roll out retailers are looking to keep the momentum going.  After seeing great sales numbers in the month of February several retail stocks have hit all time highs.  Some of these companies include Dollar Tree, Tractor Supply Company, Lululemon Athletica, Ulta Beauty & Salon and AutoZone.  Analysts have made it a habit of revising earnings for these companies as they are seeing impressive growth.

The February 2012 retail sales report will be available in the middle of March.  Both investors and consumers will be interested to see if sales reach an all time high above $402 billion.  The report will be available at the Census.gov website.  The government website also provides past retail sales numbers which could help analysts find trends and make predictions.

As far as the active permanent modifications that have been tracked over the past months, the most recent data we have comes from the October Making Home Affordable report which indicates that permanent modifications with Bank of America increased from 148,033 to 152,220 between September and October. While the active number of trial modifications did decrease slightly from 17,434 in September to a 15,043 in October, some homeowners still remain in a position where they are looking for other options that may be available from similar mortgage assistance programs.

Homeowners who are in a position where negative equity is a problem may be able to take advantage of such programs from Bank of America as the Principal Reduction Alternative, which has been part of the extension programs offered from the Making Home Affordable modification effort over the past months, which have allowed for some form of principal assistance on homes where negative equity is the problem. In some cases these federal modifications can be coupled with this principal reduction plan and, in these instances, homeowners have been able to benefit from a reduced mortgage principal and, hopefully, more affordability. In this area, the Treasury Department reported that Bank of America had started 13,203 trials where this principle reduction opportunity was in place, with the number of permanent modifications started as of October coming in at just under 10,000 where the PRA was offered.

Bank of America has also continued efforts in the area of second liens as the Second Lien Modification Program with Bank of America was reported to have started 19,177 of these particular plans with Bank of America in October, again according to Treasury Department reports. This plan has been offered to some who are in a position where homeowners are struggling with a second mortgage and, in instances where homeowners may be unable to benefit from a primary modification, homeowners have been able to couple a primary home loan modification plan with this secondary mortgage payment assistance program and avoid foreclosure in some cases.

Yet, there are still some issues of homeowners face issues that may require a short sale or deed in lieu of foreclosure plan, which has been made available by major financial institutions like Bank of America through the Making Home Affordable initiative in such programs as the Home Affordable Foreclosure Alternatives plan, that has been used to the advantage of some homeowners who may have found themselves in a position where financial distress was so severe that foreclosure prevention plans did not help or in cases where negative equity was a problem options like short sales have been the way that these men and women have been able to avoid further financial problems related to their home if, indeed, the opportunity to sell their home at a loss or surrender the deed to their home was an option. Bank of America has completed 3808 of these foreclosure alternatives, according to the October Making Home Affordable report, but of course this opportunity to rid a homeowner of financial burden is not to be taken lightly as it should be remembered that homeowners are not going to always qualify for these plans and there are loss prevention programs that can be more beneficial in the long run when it comes to keeping a homeowner in their property.

Homeowners do still have options to get a trial modification as Bank of America did see an increase in the total number of trials that they had started cumulatively as this number rose between September and October by almost 3500 homeowners. Understandably, homeowners are not always able to benefit from even a reduced payment as the financial situations that some homeowners have have grown so severe that they simply cannot continue to make payments on their home when factors like unemployment, illness, or even simple reductions in their wages have become a problem and lead to other areas of their financial life being hindered, not simply their mortgage obligation.

Homeowners do need to remember that there is assistance available through housing counselors, that may go beyond information or aid available from representatives by major financial institutions, despite the fact that representatives from these large banks like Bank of America may help homeowners also explore what options are available through various loss mitigation efforts directly from that institution or from programs like the Making Home Affordable initiative. Counselors like those from the HOPE Hotline have been used by homeowners with a variety of institutions to better help them explore options from both federal and state programs to help prevent foreclosure, and as a result homeowners may benefit from consulting these particular resources before resigning themselves to particular programs if simple efforts such as a reduced mortgage payment does not address the complexity of their financial distress.

While not all the efforts that homeowners make to save their home may be successful, nor will homeowners always find the help they need from certain programs or their mortgage servicer, officials are still urging these homeowners to pursue assistance plans from both federal and state programs, or even take advantage of proprietary modification plans and loss mitigation efforts directly from their bank, if indeed there are alternative programs that can be of help when it comes to keeping homeowners in their property and avoiding foreclosure.

Homeowners with J.P. Morgan Chase may be in a position where they can benefit from a modification, despite the fact that some homeowners have not been successful in this particular area with a variety of financial institutions, as all banks that have been participating in the federal Making Home Affordable Program have not seen a success rate where every homeowner is able to avoid foreclosure. Yet, in this area of permanent loan modifications, J.P. Morgan Chase saw increases from 97,354 active permanent modifications in August to 103,160 in September.

Homeowners are still being urged to contact housing counselors or representatives from the servicer to inquire what they will have to do in order to begin this process as Chase has seen increases in the number of trial modifications that have been started offered between August and September as well. Again though, homeowners do need to remember that a modification is no guaranteed solution but it does offer a chance for homeowners to get a lower payment on their mortgage and if other areas of their financial life are also facing distress, and are distressed in a similar manner, a modification or home loan could be what keeps a homeowner from losing their property.

While there are some alternatives that homeowners may be able to pursue, it does need to be kept in mind that homeowners who are delinquent on their home loan would typically benefit from taking action sooner as those who delay an attempt to stay afloat without the use of these mortgage assistance plans may do more damage to their financial life as a result. Yet, not every homeowner is going to benefit from the same route of mortgage assistance but again, there are resources that can help men and women explore these options so that the best help available for their situation can be explored and, if foreclosure prevention assistance is not available homeowners may be able to benefit from plans such as a short sale if the situation warrants this particular action.

There are servicers who are still seeing increases in the area of permanent home loan modifications, this again is one of multiple routes that some homeowners have available to them and, specifically for homeowners with J.P. Morgan Chase, it may also benefit these homeowners look at their state for certain foreclosure prevention programs, if it appears that the federal home loan modification plan from Chase will be unhelpful for their situation. Once again, these options are not always helpful but homeowners do stand to benefit more from addressing their problems early than waiting to see if they can simply stay afloat even when financial problems do become more severe.

While there are those who may argue against the helpfulness of a college degree, many still feel that an education is of worth not only in the personal aspects of a student’s life but over their lifetime and career they stand to earn more as a result of having higher education. Yet, what concerns many officials, students, and parents is not necessarily how beneficial college will be for a student but how the financing for a particular student’s college education will be found or how much debt may be acquired if loans are indeed needed.

Some students have actually left college as a result of their debt situation, but many officials feel that this is not the best route to take as, once again, a college education is likely to pay off in the long run despite the fact that the job market right now has not exactly been welcoming for recent graduates in some areas of study. However, since financial problems in the lives of parents are in place, graduates are seeing trouble when it comes to getting a job after graduation, and some students are simply finding it more difficult to get free sources of financial assistance, many argue that these tuition increases across the nation could not be coming at a worse time as, once again, many students are already facing potential high levels of debt if they have to borrow student loans.

It’s because of this that many officials are urging young men and women to look into scholarships, grants, and other areas that may offer them the financing for college, like savings plans, but of course we have seen cutbacks in not only the earnings that some savings plans may bring but the elimination of certain scholarships and grants programs as well. While students can look directly to their university, in their local community, or even state, it does need to be remembered that students have options when it comes to getting financial assistance which, if these sources will not meet the entirety of their financial need, could at least make the burden of borrowing less troublesome in the long run.

Again though, since students do have relatively easy access to loans, like federal student loans or even private loans, these tuition increases are of concern as, at some universities they are needed to make up for losses in state funding, but of course this financial burden that is being put on students is of concern as many feel that the student loan industry could see negative impacts of this borrowing frenzy that we have seen over the past years, specifically at a time where many graduates are not finding the employment opportunities that will allow them to pay off these debts that, once again, may be quite high as a result of tuition costs.

As an example, homeowners do still have a maximum limit for adjustable rate mortgages, but one of the more common issues that homeowners may need to look into when it comes to this program is whether they will benefit from refinancing. Homeowners are not guaranteed a lower rate when this program is available to them, as there are homeowners who may have fallen into an area of financial distress, missed payments, or may simply not have a good credit score where today’s low mortgage rates will be and option for them.

However, homeowners do still have options that may be available from their state housing agency, or directly from their mortgage servicer, that may help address negative equity despite the fact that such options as a principal reduction had not been widespread nor used by every mortgage servicer. The Home Affordable Refinance Program can be beneficial for homeowners and, as it does include more individuals than previously may have been able to benefit from this program, homeowners do need to keep in mind that they will not always qualify for this particular refinancing option, but again, homeowners do have opportunities to make their mortgage payments more affordable even when negative equity is in place, and if refinancing may not be an option.

The Principal Reduction Alternative plan and some principal forgiveness options that may be part of modification agreements could bring some benefits to homeowners in a negative equity position but of course homeowners who are hoping to take advantage of this underwater mortgage refinance program do need to keep in mind that the type of mortgage they have, their financial position and ability to refinance to a lower rate, and their servicer may all come into play as to whether this particular option for underwater mortgage refinancing will even be available or helpful for their specific mortgage situation.

While nothing is set in stone, reports have indicated that students who attend for-profit universities, like many online institutions, are more likely to not only see a high amount of debt in terms of student loans but are in a position where repaying these loans is not as easy. There is data to suggest that students who graduate from a for-profit university will likely have a more difficult time repaying student loans, but this is up for debate as of course some students may have graduated from an online university and have received not only a job that has allowed them to repay what they owe in student loans but of course some are able to attend online university courses without the need to borrow at all.

Yet these for-profit universities do sometimes add up in terms of costs and, there are still arguments that some employers may not view a degree from these institutions as reputable or will see graduates from these schools as someone they potentially want to hire over an individual that may have attended a more traditional institution. Furthermore, there are those who say that students who graduate from traditional colleges are in a better position when it comes to repaying what they owe, but again there are students from every type of university who have indeed had trouble repaying their student loan debts and this does not necessarily mean that only for-profit university graduates are suffering.

However, when students get to a point where they are borrowing a substantial amount of money or a high amount of student loan debt will likely be acquired, officials have prompted these young men and women to take a step back and look at whether the university they plan to attend is the best for what they hope to achieve in their education and, when it comes to graduation, how easy will it be to repay a high amount of debt or find a job in their particular area of study. Understandably, some students have been able to borrow a sizable amount of loans but are in areas of high-need, in terms of the career they enter into, and some have found that they can repay their debt were easily as a result or, in certain situations, some students may have their debt forgiven if they are in certain careers.

It’s because student loan debt has become more of a problem for many that officials are not only asking that students reconsider borrowing, especially when scholarships and grants may be available, but students need to look at the universities they plan to attend to see which ones may be more affordable, offer financial aid outside of loans, and of course students also need to keep their borrowing to a minimum in cases where there are questions over whether students will find jobs in their career field after graduation.

Officials also argued that federal loans, as opposed to private, may offer more opportunities for affordable repayment plans so that students do not begin missing payments, get into financial trouble early in life, and potentially do damage to their credit before they had even made major purchases like an automobile or home. Ultimately, the choice to use student loans or attend a certain university will be up to each individual, but since there are schools that do offer help in terms of financial aid more than others, ways that students may avoid borrowing, and certain types of loans that may be more easily repay others, it’s hoped that future students will weigh these factors in their choice of where they go to school and how they may finance their education.