Bay Area Weekly Mortgage, Interest Rate and Real Estate News

Bay Area Weekly Mortgage, Interest Rate and Real Estate News

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This weeks trend,

Rise in mortgage rates:

Freddie Mac has announced that the mortgage rate (30-year fixed rate) for the week ending May 7 rose to 4.84%, from 4.78% for the earlier week. Incidentally, 4.78% was an all-time low. The rise in rate is significant more from a directional perspective than from the point of view of the magnitude. Does the rise indicate that the underlying sentiment has turned bullish? Frank Nothaft, the chief economist of Freddie Mac said, “Mortgage rates rose slightly this week amid positive economic news that the economy may be approaching the bottom of the recession.” The initiative of Federal Reserve, since November 2008, to prop up the real estate market by buying $1.25 trillion worth mortgage backed securities seems to be working. The slump in the real estate market is closely linked to credit crisis and economic downturn. Is the underlying strength in the market for real, and will it lead to economic recovery? We will know in the months to come.

Mortgage Banking News:Big U.S. banks to repay TARP funds soon

The recently released stress results suggests 9 out of 19 biggest banks have enough capital to withstand economic shocks. Big banks such as JP Morgan and Goldman Sachs have announced that they would repay the Troubled Asset Relief Program (TARP) funds soon. The government injected funds into banks last year under the TARP program to stave off liquidity crisis in banking. The TARP funds came with onerous conditions, and bankers weren’t exactly comfortable with the strings that came with the money. JP Morgan received $25 billion under the program and Jamie Dimon, its CEO, said the bank will repay the TARP fund as soon as it can. Other banks such as Goldman and Morgan Stanley have also expressed interest in returning TARP funds at the earliest. Government officials, however, have made it clear that banks should prove they have sufficient capital and are in a position to raise equity and debt capital without government guarantees, before they are allowed to return TARP funds.

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