Salt Lake Mortgage Market Update for December 11, 2008

More than half of all homeowners who had their loans modified to make the payments more affordable in the first half of the year are already in default again, banking regulators said Monday.

The new data raise questions about whether government money may be better spent on creating jobs, rather than averting foreclosures, said John Reich, director of the federal Office of Thrift Supervision office at a housing industry forum sponsored by his agency.

That was the word from Forbes the other day.  Which echoed what I’ve been squawking all along, although there are some bad mortgages out there, the real problem, the biggest problem is in the fact that unemployment is at it’s highest level since 1973.  It’s not that people can’t afford their mortgage if (and I emphasize “if”) their interest rate reset, they can’t afford any mortgage.  That is why the loan modifications aren’t working.  All it did was buy unemployed and underemployed (those who’ve had their hours dramatically cut) a few more months in their house.

Until our elected officials pull their heads out of their collective butts and do something about the loss of jobs in this country (maybe not reward U.S. companies for sending jobs over seas?) this problem is not going to go away.

Mortgage applications for home purchases is down 36.8% from this same time last year.  The consensus is that purchases are forestalled due to public uncertainty about their employment and the economy.  It seems nobody wants to make such a large commitment when things seem so shaky.  And again, the news media only makes it worse by reporting only half the story; the sensational part of the story.

That said, refinances only fell 0.9% last week and are actually up over last year, partially due to the current low interest rates.  In fact we opened yesterday at 5.00% for a 30-year fixed mortgage.  These kind of rates haven’t been seen in nearly 5 years now.

We’ll see what happens in the coming weeks.  Home prices are good, and rates are great.  The big banks may be sitting on that $700 Billion bailout, but smaller lenders are not, they are funding loans left and right.  Call me if you have any questions about market conditions, current rates or to apply for a loan.

Well, on to the important stuff.

For Salt Lake City, UT today’s average mortgage rates are as follows:

30-year fixed: 5.00%

15-year fixed: 4.875%

Conforming Jumbo 30-year fixed: 5.00%

FHA 30-year fixed: 5.00%

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