By Tony Stevenson/SWBC Mortgage
Economic News Week: March 14, 2011
The DOW finished down for the week ending last Friday with modest gains ending at 12044. The disaster in Japan hasn’t had much of an effect on stocks but the reports of the devastation are still coming in. Especially, the nuclear meltdown chances at one of its nuclear plants. Japan is the World’s 3rd largest economy. Here at home, American’s spending was up 6% in February. The economy still needs companies to do the same thing. Businesses have stock piled nearly $1.9 trillion in cash, the government said last Thursday. Consumer borrowing rose 2.5% in January according to a report by the Federal Reserve. It was the fourth consecutive gain. Americans are a bit less dependent on oil and gas, according to a recent report in the New York Times. In 2008 we were caught almost by surprise by how much gas had risen. This time around most Americans are prepared as they traded in their gas guzzlers for gas savers. Fears still remain as the middle east supply is still being disrupted. But, fear vs. reserves is what is driving gas prices upward. The recovery here in the U.S. should be able to handle this disruption.
Local Economic News
San Antonio’s unemployment rate dropped to 7.4% in January from 7.6% in December. “I think this is the year that we will really start to see some movement downward in the unemployment rate,” said Steve Nivin-a St Mary’s economist. The Eagle Ford is helping to fuel the area’s economy as well. According to a report in the S.A. Express News, development of the Eagle Ford shale, a vast oil and gas region, shows promise by being the most important economic generator South Texas has ever seen. 6,800 full time jobs have been contributed to the region so far. When other spin-off jobs were added to the tally---everything from oil field support to the waiters serving driller’s food---the numbers jumped to 12,600 jobs. By 2020, the Eagle Ford is expected to account for an estimated $21.5 billion in economic output and support 68,000 full-time jobs in South Texas.
Real Estate and Mortgage Industry News
The Real Estate market is improving. The question is, “how do we keep it improving and at a faster pace?” If we had a crystal ball or new the answers then there wouldn’t be a need for the question(s). However, this is not the case. One thing for sure is, if you are interested in buying a home, you had better do it now-than later. As Ken Harney said in his weekly article in the San Antonio Business Journal, “take a snapshot of today’s mortgage market conditions and frame it.” “That’s the inescapable conclusion of the Obama administration’s “white-paper” on optional remedies for the two ailing giants on housing finance--Fannie Mae and Freddie Mac ,” he said. Besides gradually fading Fannie and Freddie out, consumer borrowing costs are going to increase-such as add-on costs and higher rates, along with qualifications relating to FICO credit scores and increasing down payment requirements. Among the proposals: Make 20%-30% down payments the minimum to meet he “qualified” test. If you only have enough money for a small down payment, you’ll be charged significantly higher rates he concluded. In short, find a local Realtor and Mortgage lender and get busy while the times are good. Why pay more when you can pay less-Now? Freddie Mac reported that the 30 year fixed rate index rose to 4.88% from 4.87% last week-just so you are aware.