Last Week in the News (March 23, 2009)

The Commerce Department reported that housing starts unexpectedly jumped 22.2% in February to a seasonally adjusted annual rate of 583,000 units. This ended the longest streak of declines in 18 years. Economists had anticipated a 3.4% decline to 450,000 units. Leading the surge was an 82% increase in the building of multifamily homes — condominiums, apartments and townhouses — to 226,000 units in February from 124,000 in January. Housing starts for single-family homes rose 1.1% to 357,000 units. Building permits for single-family homes climbed 11% in February to 373,000, compared to 336,000 in January.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ending March 13 increased 21.2% to 876.9 from the previous week. Purchase volume rose 1.5% to 257.1, while refinancing applications jumped 29.6% to 4,497.6.

The Federal Reserve reported that industrial activity at the nation’s factories, mines and utilities fell by 1.4% in February. Economists had expected a decline of 1.2%. The factory-operating rate was down to 67.4% of capacity in February, the lowest level on records dating back to 1948. On a positive note, motor vehicle and parts production rose 10.2% after four consecutive months of declines.

The National Association of Home Builders/Wells Fargo housing market index in March stood at nine, the same level it was in February. The index hit a record low of eight in January. An index reading higher than 50 indicates positive sentiment about the housing market. The index has been below 50 since May 2006, and below 20 since April 2008.

On Tuesday, March 17, the Labor Department reported the producer price index, which tracks wholesale prices, rose 0.1% in February. Economists had expected a 0.8% increase.

The Labor Department reported Wednesday that consumer inflation rose 0.4% in February, the biggest one-month jump since a 0.7% rise in July 2008. The increase was largely due to an 8.3% rise in gasoline prices.

The Conference Board reported Thursday that its index of leading economic indicators fell 0.4% in February. That was slightly better than the 0.6% decline economists had expected. The index is designed to forecast economic activity in the next three to six months.

Upcoming on the economic calendar are reports on existing home sales on March 23, and durable goods orders and new home sales on March 25.

Mortgage Rates are EXTREMELY LOW!

Due to recent stimulus action by the Federal government, mortgage rates have dropped to historically low levels.

This provides a tremendous refinance opportunity to reduce your monthly mortgage payment and potentially save thousands of dollars over the life of your home loan.

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Name Change

Metrocities Mortgage will proudly take the name of its parent company, Prospect Mortgage, LLC in the second quarter of 2009. Only our name is changing – our people, locations, phone numbers, competitive loan products and great customer service will remain the same!

Last Week in the News (March 16, 2009)

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ending March 6 increased 11.3% to 723.4 from the previous week. Purchase volume rose 7.1% to 253.3, while refinancing applications jumped 13.3% to 3,470.7.

On Tuesday, March 10, the Commerce Department reported that sales at the wholesale level fell 2.9% to $326.1 billion in January, the lowest level in more than three years. The Commerce Department also reported that total business inventory decreased 0.7% in January. This follows a revised 1.5% decrease in December 2008.

According to the ICSC-Goldman Sachs index, store sales rose 0.2% in the first week of March compared to the previous week. Compared to a year ago, retail sales were down 0.9%.

The Labor Department said initial claims for unemployment benefits rose to 654,000 from the previous week's upwardly revised figure of 645,000. In the first week of March, the number of people continuing to claim jobless benefits increased by 193,000 to 5.317 million.

The Commerce Department reported that retail sales dropped 0.1% in February following a revised 1.8% jump in January. Economists had anticipated a 0.4% drop in February. The revised estimate for January sales was almost double the initial estimate of 1%. The upward revision, combined with the better than expected February report, left some analysts feeling the economy is starting to stabilize. Excluding automobiles, retail sales posted an unexpected 0.7% gain in February.

Upcoming on the economic calendar are reports on the housing market index on March 16, housing starts on March 17 and the index of leading economic indicators on March 19.

The American Recovery and Reinvestment Act

On February 17, President Barack Obama signed into law a $787 billion economic stimulus plan. That package includes many provisions that may directly benefit you:

Tax Breaks. Individuals earning $75,000 or less will receive a tax credit of $400 on payroll taxes paid in 2009 and 2010. Married couples are eligible for an $800 credit. The tax credit would phase out for single taxpayers with adjusted gross incomes (AIG) of $75,000 to $90,000 and married couples with AGI of $150,000 to $190,000. Retirees who receive Social Security benefits and individuals on disability would receive a one-time tax credit of $250.

Healthcare. The bill provides a subsidy to cover 65% of COBRA premiums for up to nine months. The subsidy is limited to workers who were laid off between September 1, 2008, and December 31, 2009.

Education. Parents of college students will be eligible to claim a tax credit of up to $2,500. Available in 2009 and 2010, the credit covers tuition, fees and course supplies such as textbooks. The credit phases out for individuals with AGI of $80,000 to $90,000 and married couples with AGI of $160,000 to $180,000.

New Housing. First-time homebuyers are eligible for an $8,000 tax credit, which does not have to be repaid unless you sell your home within three years. The credit is available for purchases between January 1, 2009, and before December 1, 2009. The credit phases out for individuals with AGI of $75,000 to $95,000 and married couples with AGI of $150,000 to $170,000.

Green Homes. New tax credits are now available for green home improvements on a principal residence starting January 1, 2009, through December 31, 2010. The credit covers 30% of qualifying upgrade costs, or a maximum amount of $1,500. Qualifying modifications must meet a certain efficiency level to be eligible for the credit. For record keeping, experts advise that you retain all receipts.

New Cars. New car buyers can deduct the sales tax from their AIG on purchases of up to $49,500. The deduction is limited to car and truck purchases made on the date of the enactment of the bill through December 31, 2009. The credit phases out for individuals with AGI above $125,000 and married couples with AGI above $250,000.

Green Cars. From January 1, 2009, to December 31, 2010, there is a tax credit for plug-in hybrid vehicles. This credit — based on the capacity of the battery system — for electric hybrid cars and trucks starts at $2,500 and is capped at $7,500. Previous tax credits for electric vehicles would have been phased out after 250,000 total vehicles. The current stimulus package has increased that number to 200,000 vehicles per manufacturer.

Always consult your tax advisor for tax information and advice.

Last Week in the News (March 2, 2009)

On Tuesday, February 24, the Conference Board reported that its consumer confidence index fell 12.4 points to 25 in February. Economists had expected the index to decrease to 35.5. In February 2008, the index was at 76.4. The index was benchmarked at 100 in 1985, a year chosen because it was neither a peak nor a trough in consumer confidence.

The Standard & Poor’s/Case-Shiller 20-city housing price index dropped a record 18.5% from December 2007 to December 2008. Since August 2006, the 20-city index has declined every month.

On Wednesday, the National Association of Realtors said existing home sales fell 5.3% in January to a seasonally adjusted annual rate of 4.49 million, from 4.74 million in December. Economists had expected an annualized rate of 4.79 million homes.

Orders for durable goods fell for a record sixth consecutive month in January. The Commerce Department said orders dropped by 5.2%, more than twice as much as forecast.

The Commerce Department said Thursday that new home sales fell 10.2% in January to a seasonally adjusted annual rate of 309,000. It was the slowest monthly pace since recordkeeping began in 1963.

The Labor Department said initial claims for unemployment benefits rose to 667,000 from the previous week's figure of 631,000. The number of people continuing to claim jobless benefits increased by 114,000 to 5.11 million in the week ended February 14.

Upcoming on the economic calendar are reports on construction spending on March 2, pending home sales on March 3 and factory orders on March 5.

Last Week in the News (February 23, 2009)

On Tuesday, February 17, it was announced that the National Association of Home Builders/Wells Fargo housing market index rose one point to nine in February, after falling to an all-time low of eight in January. An index reading higher than 50 indicates positive sentiment about the housing market.

On Tuesday, President Barack Obama signed into law a $787 billion economic stimulus plan designed to spur consumer spending and create millions of jobs. The American Recovery and Reinvestment Act contains numerous provisions: roughly $300 billion in tax breaks for individuals and businesses, more than $250 billion in aid to distressed states, and almost $200 billion to upgrade the nation’s infrastructure. The package also includes an $8,000 tax credit for first-time homebuyers, which does not have to be repaid unless you sell your home within three years.

The Commerce Department reported Wednesday that construction of new homes and apartments fell 16.8% in January to a seasonally adjusted annual rate of 466,000 units, the lowest on record. Economists had anticipated a decline to 530,000 units. Meanwhile, building permits fell 4.8% to a rate of 521,000 units.

The Federal Reserve reported Wednesday that industrial production at the nation’s factories, mines and utilities fell 1.8% in January. Economists had expected a 1.5% decline. Manufacturing, which accounts for about four-fifths of industrial production, decreased 2.5%, utilities posted a 2.7% gain and mining output dipped 1.3%.

On Wednesday, Obama unveiled the $75 billion Homeowner Stability Initiative. The multi-step plan would help struggling homeowners by providing incentives to lenders, servicers, mortgage holders and borrowers to help modify mortgage loans. The goal is to prevent as many as nine million Americans from losing their homes to foreclosure.

The Labor Department reported the producer price index, which tracks wholesale prices, rose by 0.8% in January. It was the largest increase since July 2008. Economists had expected a 0.2% increase.

Upcoming on the economic calendar are reports on consumer confidence on February 24, and durable goods orders and new home sales on February 26.